Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 21, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Cancellation of GST registration of petitioner - principles of natural justice - The show cause notice as well as the order cancelling the registration are quashed and set aside with a liberty reserved to the respondent to issue a fresh notice with particulars of reasons incorporated with details, and thereafter, to provide reasonable opportunity of hearing to the writ petitioner and to pass appropriate speaking order on merits. - HC
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Cancellation of GST registration of petitioner - The order impugned dated 9.8.2023 assigns no reason whatsoever to cancel the petitioner's registration - Relegating the petitioner to the forum of alternative remedy in face of undisputed facts noted above may be of no real use or purpose. - GST authority directed to decide the matter afresh - HC
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Validity of Show Cause Notice (SCN) - Clandestine supplies of Pan Masala without payment of GST and Cess - Evasion of duty - Once allegations of infraction of law arise the adjudication proceedings may not be interjected in exercise of extra ordinary jurisdiction conferred under Article 226 of the Constitution of India - Writ petition dismissed - HC
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Validity of Show Cause Notice (SCN) - Wrongful availment of TRAN Credit - Payment of tax under the compounding scheme u/s 8(f)(i) - it is not found that the show cause notice issued is without jurisdiction or the authority is not vested with the power to investigate the matter and issuance of show cause notice for alleged incorrect availing of input tax credit. - Writ petition dismissed - HC
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Levy of penalty - Movement of goods wherein e-way bill was cancelled by the purchaser - Since there is no intention to evade GST, no penalty can be imposed - The legislation makes intent to evade tax a sine qua non for initiation of the proceedings u/s 129 and 130 of the CGST Act. - HC
Income Tax
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Reopening of assessment u/s 147 - validation of notice issued to the old address - The argument advanced on behalf of the appellant/revenue that, as per Section 292BB, Section 148 notice would be deemed as served on the respondent/assessee as it did not object to it during the assessment proceedings is misconceived as perusal of the reply would show that, amongst other aspects, the respondent/assessee had objected to the notice under Section 148 being directed to the old address - HC
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Validity of Revision u/s 263 - PCIT was of the view that the cash withdrawn was utilised to purchase inventory - if the AO did not bring to tax the amount which was adverted to in the “reason to believe” framed in the first instance, then the PCIT could not have triggered proceedings for cash withdrawals u/s 263 of the Act. - HC
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Penalty u/s 271(1)(c) - assessee had not filed return of income despite having received salary income - the levy of penalty is not automatic. If the assessee makes out a case that the default was due to reasonable cause in that case, no penalty would be called for in terms of section 273B of the Act. - AT
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Capital gain computation - Cost of acquisition - indexed cost of interest paid - The expenditure which is allowable u/s 24 cannot be capitalized, claimed as cost of acquisition. It is settled position of law that when the Statute provides for deduction in particular manner i.e. the AO is bound to compute the income in the manner prescribed under the Statute not in any other manner. - AT
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Unexplained cash credit/deposits u/s 68 - just because the assessee made a wrong statement during the assessment proceedings, stating that the difference belongs to the gift received from his wife, does not mean that the assessee should be punished, particularly when the assessee has direct evidences to explain the difference. - AT
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Denial of treaty benefits treating the assessee as a conduit company set up - Taxability of long-term capital gain claimed as exempt under Article 13(4) of India – Mauritius DTAA - Though, AO has alleged that the assessee is a conduit company and has been set up as a part of tax avoidance arrangement, surprisingly, he has not invoked the provisions of GAAR as provided under Chapter XA of the Act. - TRC issued by the competent authority in Mauritius has to be accepted - AT
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Exemption u/s 11 - Absence of registered instrument - ITAT Bar Association - Denial of Registration u/s 12AA/12AB - The assessee failed to fulfil the primary condition for registration under registrar of company, registrar of farm and society or registrar of Public Trust and in absence of such registered instrument, the application filed by assessee is premature and cannot be proceeded to examine their object and the activities, if in accordance with their object. - AT
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Registration of Society u/s 12AB - cancellation of the provisional registration/approval - The charging of any amount towards consideration for such an activity (advancing general public utility) which is on cost-basis or nominally above cost, cannot be considered to be "trade, commerce, or business" or any services in relation thereto. - CIT(E) directed to grant approval u/s 12AB - AT
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Treaty benefits - ‘gains from alienation of shares' - Undisputedly, the shares were acquired prior to 01.04.2017 - There cannot be any dispute with regard to assessee’s claim of exemption under Article 13(4) of India-Mauritius DTAA - AT
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Disallowing the investment allowance claimed u/s 32AC(1A) - The plain reading of Section 32AC makes it very clear in case the assessee claim depreciation on new asset then it cannot claim investment allowances on the new asset to the extent of depreciation already claimed as per the provisions of Section 32AC of the Act. - AT
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Revision u/s 263 - Claim of interest against rental income - Proof of availing loan for acquisition or construction of property - the proviso contained in section 24(b) is not applicable to assessee who borrows the capital for the purpose of earing income by letting out the property under the head “income from house property”. Therefore, the interpretation of third proviso to 24(b) in isolation is not proper - AT
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Treatment of expenses incurred on renovation & refurbishment of Hotel - Assessee will be entitled to claim the deduction, as it is in the nature of revenue expenditure. - HC
Corporate Law
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Restoration of the name of the Company - the Company had complied with the statutory filings till Financial Year 2016-17 and the statutory filings for Financial Year 2017-18 were not due as on the date of striking off of the Company. - Since the Company has substantial assets and liabilities, it cannot be said that the Company is not carrying on any business for operations. - Name restored - AT
Indian Laws
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Game of chance or game of skill - rummy and poker - Constitutional validity of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 - The prayer to declare the entire impugned Act of 2022 as ultra vires is negated. The Schedule of the impugned Act, including the games of rummy and poker, are set aside. Sections 2(i) and 2(l)(iv) of the impugned Act shall be read as restricted to games of chance and not games involving skill, viz., rummy and poker. - HC
Central Excise
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Validity of order of Tribunal - waiver interest and penalty - Revenue appeal - Low Tax Effect - Tribunal has decided in favor of assessee subject to the condition that amount deposited under Protest shall not be claimed as Refund - Revenue appeal dismissed - SC
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Invocation of extended period of limitation - Denial of exemption - manufacture of allopathic generic medicaments - The appellant was under no obligation to seek any clarification from the department during self-assessment - There is no mis-statement as all the facts have been correctly indicated in the ER-8 Returns filed by the appellant and also on the aluminium foils and packing of the goods even as per the SCN. - Demand beyond the normal period of limitation confirmed - AT
VAT
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Exigibility to tax under the Delhi Tax on Luxuries Act, 1996 - Club and Association service - doctrine of mutuality - provision of residential accommodation in a club - Validity of the provisions of the Act not challenged - In the absence of such a challenge having been mounted and bearing in mind the statutory position which prevailed, we find ourselves unable to hold in favour of the petitioner on this score. - HC
Case Laws:
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GST
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2023 (11) TMI 715
Levy of penalty - goods being transported without e-way bill under U.P. G.S.T. Act, 2017 read with Rules framed thereunder - HELD THAT:- The infraction occurred during the period 01.02.2018 to 31.03.2018 - Learned Division Bench of this Court in M/S VARUN BEVERAGES LIMITED VERSUS STATE OF U.P. AND 2 OTHERS [ 2021 (10) TMI 429 - ALLAHABAD HIGH COURT] held so far as the matter is squarely covered by a decision of Division Bench of this Court in M/S GODREJ AND BOYCE MANUFACTURING CO. LTD., L.G. ELECTRONICS INDIA PVT. LTD., BHARTI AIRTEL LIMITED, M/S GUALA CLOSURES (INDIA) PVT. LTD., M/S. RAS POLYTEX PVT. LIMITED, RIMJHIM ISPAT LIMITED, RIMJHIM ISPAT LIMITED, M/S. GAURANG PRODUCTS PVT. LTD., M/S. ADITYA BIRLA FASHION AND RETAIL LTD., M/S. NAVYUG AIRCONDITIONING AND M/S. PROACTIVE PLAST PVT. LTD. VERSUS STATE OF U.P. AND 02 OTHERS AND STATE OF U.P. AND 3 OTHERS [ 2018 (9) TMI 1261 - ALLAHABAD HIGH COURT] , with which we are in agreement, the present writ petition is allowed. The petitioner is entitled to the benefit of the judgment rendered in M/s Varun Beverages - the impugned order dated 25.04.2019 is quashed - petition allowed.
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2023 (11) TMI 714
Seeking provisional release of goods seized - search and seizure operations that were conducted in the premises of the petitioner - It is the respondents case that the petitioner had invested the sale proceeds of such clandestine trade in purchasing silver - HELD THAT:- The silver seized by the respondents was released to the petitioner at their office on 09.11.2023. The office of the respondent is located at the fourth and fifth floor of the building at Plot No. 6, Arrow Corporate Tower, Kaushambi, Ghaziabad. However, after releasing the said silver, the respondents had once again, seized the same from the petitioner at the ground floor of the said premises. Thus, in effect, the petitioner was permitted to carry the silver out of the office but a seizure was once again effected on the ground floor of the said premises. Clearly, the respondent had no ground to believe that silver was being secreted at the said premises. The fact that the petitioner was in possession of the silver, is not disputed, this is the subject matter of the proceedings in the present petition - the respondents have carried out the charade of releasing the silver from their office and then attempting to repossess the same at the ground floor. Thus, subject to the petitioner depositing the sum of ₹16,00,000/- with the Registry of this Court, within a period of one week from today, the respondents shall release and deliver the silver in question, at the residence of the petitioner on 20.11.2023 at 10:30 a.m. - List on the date already fixed, that is, 30.11.2023.
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2023 (11) TMI 713
Cancellation of GST registration of petitioner - registration has been obtained by means of fraud, willful mis-statement and suppression of facts and no details were furnished to the petitioner - principles of natural justice - HELD THAT:- The Court had held that by issuing a cryptic show cause notice, the authorities had violated the principles of natural justice. From the impugned order as well as the show cause notice, the reasons for cancellation are not decipherable therefrom. The show cause notice and the impugned order are quashed and set aside. The petition is allowed solely on the ground of violation of principles of natural justice. The show cause notice as well as the order cancelling the registration are quashed and set aside with a liberty reserved to the respondent to issue a fresh notice with particulars of reasons incorporated with details, and thereafter, to provide reasonable opportunity of hearing to the writ petitioner and to pass appropriate speaking order on merits. Petiton allowed.
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2023 (11) TMI 712
Cancellation of GST registration of petitioner - existence of statutory alternative remedy - HELD THAT:- From a bare reading of the notice, reply furnished thereto and the impugned order it transpires, in the first place a wholly non-speaking show- cause notice was issued to the petitioner. Besides making reference to the statutory requirement/ obligation on a registered person to issue a tax invoice only against actual business transaction, no fact allegation was made in that notice of any violation/ infringement of that statutory requirement, committed by the petitioner. Neither date or detail of the tax invoice nor goods involved nor their value etc. nor the purchaser were disclosed. Even the period during which the law may have been allegedly infringed by the petitioner, was not specified in the show-cause notice. At the same time, the said communication suspended the registration of the petitioner. Though the petitioner's reply dated 28.3.2023 may also be described as vague at the same time it is difficult to accept that an adverse conclusion may have been drawn against the petitioner solely on that basis. Unless the show-cause notice had made any fact allegation against the petitioner, the vagueness of the reply may remain inconsequential. The order impugned dated 9.8.2023 assigns no reason whatsoever to cancel the petitioner's registration - Relegating the petitioner to the forum of alternative remedy in face of undisputed facts noted above may be of no real use or purpose. The writ court regularly relegates petitioners specifically in tax matters, to the forum of the statutory remedy of appeal where minimum compliances of law have been made - the objection of the maintainability of the present writ petition is over ruled. The petition is disposed off.
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2023 (11) TMI 711
Validity of impugned notice and order - notice was issued against the dead person - ex-parte impugned order - Legal representative - HELD THAT:- The Assistant Commissioner, Central Goods Service Tax, Division-I, Noida in the impugned order has taken note of the factum of the death of the husband of the petitioner. The impugned order also states that opportunity of personal hearing was accorded and dates were fixed but neither any authorized representative appeared nor any communication was received from the party even though the communication was made by the department on registered address and registered e-mail - the department was required to serve notice upon the petitioner being the legal representative of the deceased before proceeding in the matter. The impugned order nowhere records that notice issued by the department was served upon the petitioner being the legal representative of the deceased assessee. The impugned order dated 27.02.2023 is liable to be set aside and is, accordingly, set aside. The matter is remitted back to the Assistant Commissioner, Central Goods Service Tax, Division-I, Noida, for decision afresh after affording personnel hearing to the petitioner or to her representative considering the age of the petitioner, which is stated to be 79 years. The Assistant Commissioner, Central Goods Service Tax, Division-I, Noida shall not be required to issue fresh notice to the petitioner - Petition disposed off.
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2023 (11) TMI 710
Validity of Show Cause Notice (SCN) - Clandestine supplies of Pan Masala without payment of GST and Cess - Evasion of duty - it is alleged that notice issued with oblique motive, based on incorrect facts, contains numerous inaccuracies - HELD THAT:- Having perused the records particularly to the contents of the Show Cause Notice impugned, prima-facie, it is found that the allegations leveled against the petitioners have substance. It is not required to venture into the correctness or otherwise of the allegations set out in the impugned Show Cause Notice as the same would involve fact appreciation and with respect to the same the petitioners have adequate statutory remedies available by filing appropriate objections to the Show Cause Notice and lead defence evidence controverting the allegations. Suffice is to note that there is no inherent lack of jurisdiction of the Competent Authority to issue the impugned Show Cause Notice. The argument raised by learned counsel for the petitioner that the Show Cause Notice has been issued with a premeditated mind does not merit consideration at this stage of the proceedings. Once allegations of infraction of law arise the adjudication proceedings may not be interjected in exercise of extra ordinary jurisdiction conferred under Article 226 of the Constitution of India particularly in view of the fact that reference made to other facts narrated in the Show Cause Notice would also remain to be examined in the adjudication proceedings. Writ petition dismissed.
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2023 (11) TMI 709
Validity of Show Cause Notice (SCN) - Payment of tax under the compounding scheme under Section 8(f)(i) of the KVAT Act - Wrongful availment of TRAN Credit - HELD THAT:- TRAN credit is transitional input tax credit made use of by a dealer under the KVAT Act regime under Section 140(6) of the KGST Act 2017, it is specified that the dealer who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day. The petitioner has claimed credit of this TRAN credit in its returns for the period from 01.07.2016 to 30.06.2017. The Judgment in the case of M/S. USHA MARTIN LIMITED, VERSUS ADDITIONAL COMMISSIONER, CENTRAL GST AND EXCISE, EXCISE, JAMSHEDPUR, JOINT COMMISSIONER, CENTRAL GST AND EXCISE, JAMSHEDPUR, COMMISSIONER OF CGST CX, JAMSHEDPUR, UNION OF INDIA [ 2022 (11) TMI 1266 - JHARKHAND HIGH COURT ] wherein it has been held that initiation of proceedings under Section 73 (1) of the CGST Act, 2017 for contravention of Central Excise Act and Finance Act, read with Central Credit Rules by filing TRAN 1 in terms of Section 140 of the CGST Act for transition of CENVET Credit is without jurisdiction has no application to the facts of the present case. In the present case the petitioner has claimed the TRAN in respect of the purchases made by him during 01.07.2016 to 30.06.2017 for which he has claimed credit in GST TRAN. On examination, the authority has found that the claim of the petitioner is not borne out from the records. Challenge to the show cause notice in writ Court is maintainable only in certain situations that is where the notice is wholly without jurisdiction or there is violation of principles of natural justice - it is not found that the show cause notice issued is without jurisdiction or the authority is not vested with the power to investigate the matter and issuance of show cause notice for alleged incorrect availing of input tax credit. There are no substance in the writ petition and it is hereby dismissed.
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Income Tax
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2023 (11) TMI 708
Reassessment proceedings u/s 147/148 - Reason to believe - increase in the source of funds from the previous AY in the form of share capital, security premium, share application money, and long-term unsecured loans without corroborating evidence - HELD THAT:- As because AO realized that the information received by him from ITO (Nahan) via letter dated 12.03.2018 concerned the preceding period, he attempted to commence reassessment proceedings under Section 147/148 of the Act by simply comparing the source of funds reflected under various heads in the balance sheets for the preceding AY and the AY in issue. Furthermore, that there was a gap in the enquiry is evident from the following. First, the respondent/revenue emphasized the fact that information was sought from the petitioner/assessee via notice dated 20.03.2018 before it issued the impugned notice on 31.03.2018. The notice dated 20.03.2018 could not have reached the petitioner/assessee [and nothing to the contrary has been placed on record by the respondent/revenue] as concededly, it did not bear the complete address of the petitioner/assessee. Second, the AO did not even have the list of shareholders of the petitioner/assessee, as indicated in the reason to believe . AO did not have the tangible material on record that could have persuaded him to form a belief that income, otherwise chargeable to tax, had escaped assessment. The AO did not carry forward the enquiry process once he had received communication from ITO (Nahan). As noticed above, the AO did not furnish either the letter dated 12.03.2018 received from ITO (Nahan) or the relevant intimation received from the ADIT(Inv)/Unit-4(2) New Delhi, along with the document containing reason to believe. Had the AO furnished the documents, he would have been able to reach a firmer conclusion that crossed the threshold of suspicion and conjecture. Thus we are inclined to quash the impugned notice issued to the petitioner/assessee u/s 148 - Decided in favour of assessee.
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2023 (11) TMI 707
Reopening of assessment u/s 147 - appellant/revenue did not issue a notice u/s 143(2) - assessee had objected to the notice u/s148 being directed to the old address - belated return of income filled - HELD THAT:- The notice issued under Section 148 of the Act to the respondent/assessee, was, indeed, directed to its old address even though the AO had been intimated, that there had been not only a change in the physical address of the respondent/assessee but also its email ID. Furthermore, the appellant/revenue had directed the intimation issued under Section 143(1) of the Act, concerning AY 2013-14, to the new address. This occurred even though the ROI, filed for AY 2013-14 on 01.08.2013, bore the old address. The reason, perhaps, was that the AO was already aware of the address change. Tribunal has also recorded a finding of fact that the new address was available in the record of the AO. The AO had in his record the screenshot of the material available with the MCA indicating a change of address. The argument advanced on behalf of the appellant/revenue that, as per Section 292BB, Section 148 notice would be deemed as served on the respondent/assessee as it did not object to it during the assessment proceedings is misconceived as perusal of the reply would show that, amongst other aspects, the respondent/assessee had objected to the notice under Section 148 being directed to the old address - Since the objection was taken before the completion of the assessment/reassessment proceedings, in our opinion, the provision of Section 292BB would have no application. Consequences of the failure of the appellant/revenue to issue notice under Section 143(2) of the Act before framing the assessment order - Concededly, the appellant/revenue did not issue a notice under Section 143(2) of the Act, although it had on record the ROI filed by the respondent/assessee for the AY in issue, i.e., 2010-11. The return was, concededly, filed on 04.12.2015. This return was considered while framing the assessment under Section 147/144 of the Act. The only reason furnished for not issuing a notice u/s 143(2) of the Act is that the ROI was not filed within the thirty (30) days provided via the notice dated 30.03.2015 issued under Section 148. This argument does not impress us because if we were to hold [as we have], that the said notice was directed towards the wrong address, the respondent/assessee could have not adhered to the timeline provided in the said notice. Therefore, in our opinion, before framing an assessment order, the AO ought to have issued a notice under Section 143(2) of the Act. The submission advanced on behalf of the appellant/revenue that, while it could consider the invalid return while framing the assessment order, it was not obliged to issue a notice under Section 143(2) of the Act because it was not filed within the timeframe given in the Section 148 notice is untenable in law, since the ROI, which was belated, was considered by the AO while carrying out the assessment. As for the foregoing reasons, which are i) that notice under Section 148 of the Act was improperly served, and ii) that notice under Section 143(2) should have been issued before framing of assessment order u/s 147/144 of the Act, we are not inclined to interfere with the impugned order passed by the Tribunal. Decided in favour of assessee.
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2023 (11) TMI 706
Validity of Revision u/s 263 - PCIT was of the view that the cash withdrawn was utilised to purchase inventory and was thus, directly hit by the provisions of Section 40A(3) - As per the PCIT, there was non-application of mind by the AO since he had not noticed the provisions of Section 40A(3) - ITAT set aside revision orders - HELD THAT:- It is this order of the PCIT which has been reversed by the Tribunal. What is not in dispute is that the respondent/assessee had not claimed any expenditure with regard to the cash that was withdrawn. The reason for this was that the said money was utilised for the purchase of a parcel of land, which in the books of accounts of the respondent/assessee was shown as stock-in-trade, which in essence got neutralised being reflected in the closing stock. Therefore, clearly the provisions of Section 40A(3) of the Act were not applicable. Thus, the order passed under Section 263 of the Act wrongly took recourse to Section 40A(3) of the Act and therefore, in our view, correctly set aside by the Tribunal. Also Tribunal appears to have adverted to is that if no addition was made viz-a-viz the deposit of Rs.16.80 crores, which was the subject matter of the reassessment proceedings, then it was not open to the AO to make an addition qua any other amount. In other words, if the AO did not bring to tax the amount which was adverted to in the reason to believe framed in the first instance, then the PCIT could not have triggered proceedings for cash withdrawals amounting to Rs. 35.70 crores under Section 263 of the Act. We agree with the view taken by the Tribunal on this score as well. This view is covered by the various judgments including the judgment rendered in Martech Peripherals Pvt. Ltd [ 2017 (4) TMI 727 - MADRAS HIGH COURT] Decided in favour of assessee.
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2023 (11) TMI 705
Certificate of deduction of lower tax u/s 197(1) - mandation of recording satisfaction determining the existing and estimated liability of an Assessee - Claim rejected on the ground that the petitioner has not filed Returns for the four years preceding the subject financial year i.e., 2023-24 - Whether the respondent s rejection of the petitioner s application by the impugned order is based on satisfaction that is contemplated under Section 197(1) of the IT Act ? - HELD THAT:- The provisions of Section 197(1) of the IT Act stipulate that where tax [at the rates in force under the different provisions mentioned therein] on the income of any person , or a sum payable to any person , is required to be deducted at the time of credit or at the time of payment as the case may be, the Assessing Officer, on an application made by an Assessee, shall give a Certificate, as may be appropriate, if satisfied that the total income of a recipient justifies no deduction of income tax or the deduction of income tax at any lower rate. Assessing Officer, in view of the provisions of Rule 28AA (1) of the IT Rules, must record satisfaction as contemplated under Section 197(1) of the IT Act determining the existing and estimated liability of an Assessee taking into consideration [a] tax payable or estimated income of the previous year relevant to the assessment year, [b] tax payable on the assessed or returned or estimated income as the case may be for the four previous years, [c] the existing liability under the IT Act or Wealth Tax Act 1957, and advanced tax payment, and [d] tax deducted at source and tax collected at source for the assessment year relevant to the previous year till the date of making an application. AO u/s 197(1) of the IT Act will have to be satisfied objectively that the total income of a recipient justifies either deduction at a rate lower than the rates mentioned in the provisions of Section 197(1) of the IT Act or that no deduction is necessary. This objective satisfaction must be based on the determination of the existing and the estimated liability, and the estimated liability and income will have to be determined considering the details mentioned in Rule 28AA (2) of the IT Rules. AO must also be satisfied that issuance of Certificate while convenient to the Assessee will not adversely affect the Revenue s interest. If the Assessing Officer, only upon examination of the circumstances mentioned in Rules 28AA of the IT Rules, is satisfied based on the estimated income and liability justifies a Certificate for either deduction of income tax at a rate lower than the prescribed rate or no deduction of the income tax, the Certificate must be issued. This would be the true import of the expression that the Assessing Officer shall on an application give such Certificate as may be appropriate and therefore, the liability of another entity, even if it is the sister concern, would be extraneous. This Court is of the considered view that, without expressing any opinion on whether the petitioner s explanation must prevail resulting in a Certificate under Section 197 of the IT Act, the petition must be disposed of quashing the impugned order dated 28.02.2023 restoring the application for reconsideration within a time frame. The petition is allowed in part and the respondent s impugned order is quashed restoring the petitioner s application to the respondent for reconsideration.
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2023 (11) TMI 704
Accrual of income - Exemption u/s 10(37)- Taxability of interest received under Section 28 of the Land Acquisition Act (hereinafter referred to LA Act) from Government, on delayed Award of compensation on compulsory acquisition of agricultural land - HELD THAT:- As decided in Smt Ramesh Bai vs. ITO [ 2022 (5) TMI 1056 - ITAT DELHI] interest received under Section 28 of the LA Act by the assessee is part of enhanced compensation and is not liable for Income tax.
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2023 (11) TMI 703
Unexplained cash deposit in the bank account - onus to prove - cash deposited by the assessee was treated as unexplained income of the assessee by the AO on the reasoning that the assessee failed to make satisfactory explanation regarding the sources of such cash deposit - HELD THAT:- We note that the assessee offered explanation regarding the sources of deposit made in the bank accounts and in support its explanation furnished copy of cash book and bank books - As the activity of withdrawing the cash, keeping the same as it is and redeposit the same in the bank after considerable period is very unusual practice but there is no prohibition under any of the law for the time being in force for doing such activity. Thus, merely an unusual activity of the assessee does not give an authority to the revenue to make the addition to the total income of the assessee. In fact the assessee in the given facts and circumstances has discharged the onus imposed under the provisions of section 68/ 69 of the Act by furnishing the necessary details which have been elaborately discussed in the preceding paragraph. Thus, the onus shifted upon the revenue to disprove the contention of the assessee based on the tangible materials. But we note that the learned DR has not brought any iota of evidence suggesting that the amount of cash deposit was not out of the cash withdrawal from the bank. Likewise, there was no information that the assessee has spent the cash withdrawal somewhere else towards the capital or revenue expenses. As there cannot be any addition to the total income of the assessee on account of cash deposited in the bank unless the revenue demonstrates that the amount in question has been used by the assessee for any other purpose. Thus, in our considered view the addition on account of cash deposit in the bank is based on assumption and presumptions of wrong facts which is bad in law. Decided in favour of assessee.
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2023 (11) TMI 702
Penalty u/s 271(1)(c) - assessee had not filed return of income despite having received salary income - case of the assessee is that it had filed return of income in response to the notice issued u/s 148 and disclosed the particulars of income and Merely because the assessee failed to file return of income under a wrong conception of law, should not be the basis for imposing the penalty - HELD THAT:- The undisputed facts are that the employer have deducted the tax on the salary and deposited in the bank accounts. So far the employer is concerned, there is no default reported by the lower authority. The default on the part of the assessee is regarding non-filing of the Income Tax return. The factum of receipt of salary came into notice of AO through 26AS. The explanation regarding non-filing of income tax return is stated that the assessee was under impression that if the tax is deducted at source, she is not required to file income tax return. But when she received notice u/s 148 of the Act, she duly filed her income tax return and disclosed all her income. In our considered view, the levy of penalty is not automatic. If the assessee makes out a case that the default was due to reasonable cause in that case, no penalty would be called for in terms of section 273B of the Act. The Hon ble Supreme Court in the case of Motilal Padmavat Sugar Mills Co.(P.) Ltd. vs State of Uttar Pradesh Ors. [ 1978 (12) TMI 45 - SUPREME COURT] observed that it must be remembered that there is no presumption that every person knows the law. The assessee has demonstrated reasonable cause for the default. We hold accordingly. The AO is hereby, directed to delete the impugned penalty. Decided in favour of assessee.
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2023 (11) TMI 701
Scope of Limited scrutiny under CASS - Capital gain computation - deduction u/s 48(ii) from the Long Term Capital Gains in respect of the indexed cost of interest paid for acquisition of the house property sold by the assessee - whether disallowance of deduction u/s 48(ii) from LTCG in respect of the indexed cost of interest paid for the acquisition of the house property sold by the assessee, made by AO by travelling beyond the issue for which this case was selected for limited scrutiny under CASS is without jurisdiction - HELD THAT:- The assessment order is silent as to the allowability or otherwise as to why this indexed cost of interest expenditure on loans borrowed cannot be allowed as deduction. However, the appellant had claimed deduction towards interest expenditure while computing the capital gains on sale of said two flats. The NFAC placing reliance on the decision of Tata Iron Steel Co. [ 1997 (12) TMI 5 - SUPREME COURT ] had confirmed the disallowance. The undisputed fact is that the two flats purchased by the appellant company were held as capital assets. Therefore, the income from these two flats is assessable under the head income from house property as per the provisions of section 22 of the Act. The provisions of section 24 specifically provide that where the property had been acquired with borrowed capital, the interest expenditure incurred on such borrowed capital is allowable as deduction. The expenditure which is allowable u/s 24 cannot be capitalized, claimed as cost of acquisition. It is settled position of law that when the Statute provides for deduction in particular manner i.e. the AO is bound to compute the income in the manner prescribed under the Statute not in any other manner. Therefore, the approach adopted by the Assessing Officer is totally in accordance with provisions of the Income Tax Act and requires no interference. Case was selected under CASS for following reasons like Sale consideration of the property in ITR is less than sale consideration of property reported in ITR and Sale of property reported in form 26QB. The cost of acquisition of property also forms integral part of the sale of property. Therefore, it cannot be said that the Assessing Officer had travelled beyond the items for which the case was selected for scrutiny assessment. Accordingly, the grounds of appeal/additional grounds of appeal filed by the assessee stand dismissed.
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2023 (11) TMI 700
Foreign tax credit - belated submission of Form No. 67 which was mandatorily required to be filed before the filing of Income tax return - where Form 67 is filed belatedly even though the credit amount of all foreign tax credit has been claimed in the Income tax return whether the assessee is eligible to claim such FTC - HELD THAT:- We notice that this issue had come up for adjudication before us in various other cases wherein also, the decision of other Tribunals have been cited and it has been consistently held that filing of From 67 is merely directory in nature and even if it is filed belatedly, the assessee deserves the FTC. We find support from the decision of Sonakshi Sinha vs. CIT [ 2022 (10) TMI 107 - ITAT MUMBAI ] and Satreena Consultants Pvt. Ltd., Kolkata v. ITO [ 2023 (2) TMI 1154 - ITAT KOLKATA ] We are thus inclined to hold that the ld. CIT(A) has rightly allowed the claim of FTC - Ground raised by the revenue is dismissed.
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2023 (11) TMI 699
Unexplained cash credit/deposits u/s 68 - negative cash balance shown by assessee - assessee`s case was selected for limited scrutiny under CASS on reason that there is large cash deposit during the year - HELD THAT:- As assessee furnished the bank statement and the cash details before the Assessing Officer - certain cheques were dishonoured and there are some contra-entries in the bank statement, which were not considered by the Assessing Officer, for example in the bank statement of State Bank of India, there is a cash deposits to the tune of Rs. 1,01,500/- on 08.04.2016, such cash deposit has been reversed by the bank on 11.04.2016. Such contra-entries getting reflected in the bank statement of State Bank of India. Similarly other cheques deposited to the tune of Rs. 1,01,090/- has not been examined by the Assessing Officer, which is getting reflected on the bank statement. Besides, there is typographical error to the extent Rs. 60,000/-. Considering the above reconciliation, we find that assessee has explained the difference of Rs. 3,99,365/-, and just because the assessee made a wrong statement during the assessment proceedings, stating that the difference belongs to the gift received from his wife, does not mean that the assessee should be punished, particularly when the assessee has direct evidences to explain the difference . Thus addition should not have been made in the hands of the assessee. Hence, this ground of the assessee is allowed.
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2023 (11) TMI 698
Penalty u/s. 271D - mandation of recording satisfaction - as pr AO no reasonable cause for acceptance of cash by the assessee company from one of its Directors and considered that it is a fit case for levy of penalty - contravention of the provisions of section 269SS - HELD THAT:- Admittedly, in the quantum proceedings both in the case of the assessee company and in the case of Sri Arunachalam Manickavel [ 2018 (11) TMI 1325 - ITAT VISAKHAPATNAM] the Hon ble Tribunal has held in favour of the assessee. Further, the reliance placed by the Ld. AR on the judgment of the Hon ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills Ambala City [ 2015 (11) TMI 1453 - SUPREME COURT] wherein the Hon ble Supreme Court has held that the Ld. AO has to record his satisfaction for the purpose of initiating penalty proceedings under the Act. Also decided in Kanchumarthi Venkata Sita Ramachandra Rao [ 2022 (9) TMI 53 - ITAT VISAKHAPATNAM] when there is no satisfaction report recorded by the Ld. AO in the assessment record, no penalty could be levied. As, in the instant case, the Hon ble jurisdictional Bench of the Tribunal has deleted the additions both under the protective basis and the substantive basis as the creditworthiness and genuineness of the source of the funds were proved beyond doubt. Considering all we are of the considered view that the penalty order u/s. 271D passed by the Ld. AO without recording proper satisfaction, deserves to be quashed - Decided in favour of assessee.
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2023 (11) TMI 697
Denial of treaty benefits treating the assessee as a conduit company set up - Taxability of long-term capital gain claimed as exempt under Article 13(4) of India Mauritius DTAA - assessee is non-resident corporate entity and tax resident of Mauritius holding a valid TRC - HELD THAT:- It is fairly well settled that TRC issued by the competent of a particular country determines the tax residency of a particular person/entity. The aforesaid position has not only been accepted by the Revenue in Circular No. 789, dated 13.04.2000, but while upholding the validity of the aforesaid Circular, the Hon ble Supreme Court in case of Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT ] has also held that the person/entity holding a valid TRC would be entitled to the treaty benefits. Subsequently, the aforesaid legal position has been followed in many decisions, including the recent decision of Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd. Vs. ACIT [ 2023 (2) TMI 35 - DELHI HIGH COURT ] Whether assessee is a conduit entity set up in Mauritius only for the purpose of availing treaty benefits? - AO has made various allegations to conclude that the assessee is a conduit entity, however, such conclusion is not backed by any substantive and cogent material brought on record. In sum and substance, AO has made mere allegations and has failed to substantiate the fact that the assessee is a conduit company through clinching evidences. Unfortunately, learned DRP without going deep into the issue factually, has simply endorsed the view of the AO. Undisputedly, the provisions of section 90(2A) read with Chapter XA of the Act are applicable to the impugned assessment year. Though, AO has alleged that the assessee is a conduit company and has been set up as a part of tax avoidance arrangement, surprisingly, he has not invoked the provisions of GAAR as provided under Chapter XA of the Act. Departmental Authorities have not invoked the LOB clause as provided under Article 27A of India Mauritius DTAA. Thus, facts on record clearly indicate that the departmental authorities were accepting that the shares in the Indian companies having been acquired prior to 01.04.2017, the capital gain derived from sale of such shares would be exempt from taxation in India in terms of Article 13(4) of the Indian Mauritius DTAA. Only for the purpose of defeating assessee s claim of exemption under Article 13(4) of the treaty, the AO has introduced the theory of tax avoidance arrangement and Conduit Company. Since, the allegations of the departmental authorities that the assessee is a conduit company and has been set up under a scheme of tax avoidance arrangement remains unsubstantiated through cogent evidence brought on record, we are inclined to accept assessee s claim of exemption under Article 13(4) of India Mauritius DTAA, qua the capital gain derived from sale of subject shares. Decided in favour of assessee.
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2023 (11) TMI 696
Denial of Registration u/s 12AA/12AB - Absence of registered instrument - as assessee neither registered with registrar of Public Trust nor it is registered with Companies Act and that assessee failed to file documentary evidence to satisfy the genuineness of such activities against such order - HELD THAT:- It is an admitted fact that assessee / Bar Association has not obtained any registration either under Gujarat Public Trust Act or under any other statutory provision. We find that Rule 17A, which deals with the registration u/s 12AB has been substituted with effect from 01.04.2021 and as per substituted provision prescribed under clause-(c) of sub-Rule-2 of Rule 17A, the assessee is required to furnish certified copy of registration with registrar of Companies or registrar of farm and society or registrar of Public Trust, as the case may be. Since, the application of the assessee for registration was pending either before this Tribunal or restored back to ld CIT(E), therefore, this application is treated under section 12AB. In our view, this is a condition precedent for making application under Form 10A or 10AB, however, before us Ld. AR for the assessee vehemently submitted that furnishing of self-certified copy is required only if it is so registered and it was also argued that there is no provision that institute should be constituted under any law. Such submission of Ld. AR for the assessee is not acceptable to us, as clause-(c) of sub-Rule (2) of Rule 17A is clear and unambiguous. Income Tax Rules 1962 amended from time to time is framed to supplement of statutory provision under the Act and have approval of Parliament. Thus, in our view the assessee failed to fulfil the primary condition for registration under registrar of company, registrar of farm and society or registrar of Public Trust and in absence of such registered instrument, the application filed by assessee is premature and cannot be proceeded to examine their object and the activities, if in accordance with their object. Therefore, we do not find any merit in the submission of Ld. AR for the assessee. CIT(E) has duly considered the direction of this Bench and granted full opportunity to the assessee, before passing the order in accordance with law. CIT(E) has nowhere exceeded his jurisdiction while passing the order afresh, rather the assessee itself failed to fulfil the requisite conditions for making application as per the condition of clause-(c) of sub-Rule (2) of Rule 17A. In the result, grounds of appeal raised by assessee are rejected.
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2023 (11) TMI 695
Penalty u/s. 271B - Assessee not getting the books of account audited as per requirement of law - HELD THAT:- As decided in the case of Hindustan Steel Ltd. [ 1969 (8) TMI 31 - SUPREME COURT ] liability to pay penalty does not arise merely upon proof of default and that penalty cannot be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. In the present case, the assessee offered its explanation in the penalty proceedings stating the delay for getting the books audited for want of letter from Buldhana Urban Credit Co-op. Society, Buldhana and the books were audited immediately after the letter received from the said society. Further, books were audited on 01-02-2010 and were available for examination during the assessment proceedings which was completed on 20-12-2011 u/s. 143(3) of the Act. Therefore, it was a mere technical breach as the books were not audited before specified time as provided by the statute, in our opinion that the delay as explained by the assessee flows from bonafide belief and no penalty could be imposed for a mere technical or venial breach of the provisions of the Act. Thus, penalty imposed by the AO and confirmed by the CIT(A) u/s. 271B of the Act is not justified and it is set aside. Decided in favour of assessee. Disallowance of payments made to sub-contractors - HELD THAT:- We find the AO after examining the record asked the assessee to furnish the list of sub-contractors to whom sub-contract has been allotted with PAN, ledger accounts of the said contractors with identity proof. On perusal of the assessment order, we note that the assessee failed to prove the identity furnishing of PAN of the said sub-contractors. Accordingly,CIT(A) correctly confirmed an amount(partly) as no evidence whatsoever furnished in support of remaining four sub-contractors regarding identity, ledger, PAN and Aadhar Card. Decided against assessee.
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2023 (11) TMI 694
Registration of Society u/s 12AB - cancellation of the provisional registration/approval granted by the CPC on the ground that the assessee is found to be engaged primary in business activities in violation of proviso to Section 2(15) - as per physical verification report submitted by ITO(E). Gwalior the society has installed three different types of automatic machines used for kneading dough, rolling of Puris and peeling of potato's respectively but in the Balance Sheet for F.Y. 2021-22, no machine has been shown as fixed assets only one car has been shown - HELD THAT:- As per the copy of the agreement produced by the applicant all the three machines were acquired after 01.04.2022 i.e. in the financial year 2022- 23 on rent and its rental charges would appear in the accounts of next year and in the preceding year all the operations were manual. CIT(E) found that out of total 01 to 27 objects the society has started activity only on the object mentioned at point 27 which is providing food for poor at free of cost or at concessional rates. Further. During physical verification at the given address, one temporary counter was set up near the entrance gate of building and one person was distributing small packets of Puri Sabji. The applicant society has been established with various charitable objects which inter alia included an object for providing free/subsidized food to patients in hospital, to aged, poor, deprived and other needy section of the Society and also to create awareness of eradication of hunger and malnutrition. The assessee has submitted a submission on 23/08/2020 by narrating the activities currently undertaken and future plans which have not been considered by the CIT(E). In our opinion, starting only one activity out of many may not be or a bar for registration so long that activity is charitable. Temporary counter and selling of food packets , it is the specific case of the assessee that there was neither any counter nor food packets were being sold as such. The food was distributed though a small window at the site. Society was found using domestic LPG cylinder for cooking of foods - It is found that clause 7(1)(c) of the Liquefied Petroleum Gas (Regulation of Supply and Distribution) Order 2000 mandates that No person shall poses filled or empty cylinder, gas cylinder valve or pressure regulator unless he is a distributor or a consumer. Since the assessee not using unauthorized cylinders but was using them as a customer in our opinion, the above observation of the CIT(E) is completely misplaced. Assessee is providing food some time on free of cost also out of the income from sells of Poori sabji - As per the proviso to Section 2(15) of the Act and clarification of the Hon ble Supreme court has made it clear that the proviso is applicable irrespective of application of income; and further observed that the assessee is found to be engaged primarily in business activities and in violation of proviso to Section 2(15) of the Act and also in violations of any other law as mentioned in Section 12AB(1)(b)(i)(B) of the Act. It is the specific case of the assessee that at no point of time the assessee has claimed that the assessee was using the proceeds from the sale of food for providing food some times on free of cost . On the other hand, it is found that the assessee was regularly providing free food Tiffin to all the patients of the cancer hospital, which can be corroborated from the submission made by the Assessee dated 10/10/2022. Thus, the above findings of the CIT(E) contrary to factual matrix. As noted that the charging of any amount towards consideration for such an activity (advancing general public utility) which is on cost-basis or nominally above cost, cannot be considered to be trade, commerce, or business or any services in relation thereto. It is only when the charges are markedly or significantly above the cost incurred by the assessee in question, that they would fall within the mischief of cess, or fee, or any other consideration towards trade, commerce or business . We are of the opinion that the CIT(E) has not justified in not granting the approval u/s 12AB of the Act - Decided in favour of assessee.
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2023 (11) TMI 693
Revision u/s 263 - PCIT held that the assessment framed by the AO u/s. 153C r.w.s. 153A is erroneous and prejudicial to the interest of Revenue - argument of the assessee that in the case of search assessments u/s. 153A or 153C of the Act, no revision proceedings u/s. 263 - HELD THAT:- We are of the view that in the provisions of section 263 of the Act, there is no exclusion or exception craved out. The provision of section 263 of the Act is very clear that any order passed by the AO if it is erroneous insofar as it is prejudicial to the interests of the Revenue, the PCIT, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, can pass a revision order. Hence, this objection to the revision order is dismissed as such. Sale amount disbursed remained untaxed - On merits of the case, we noted from the assessment order that the AO in his assessment order passed u/s. 153C r.w.s. 153A of the Act dated 31.03.2015 made a passing reference to the filing of details as filed the details called for and this was with the prior approval of Joint Commissioner of Income- Tax, Central Range 3, Chennai as required u/s. 153D of the Act. We noted that the above seized document found from the premises of Indo Asia Finance Ltd., which contains the details of agreement for sale dated 13.03.2006 of Shri Jayanthilal Challani, one of the Directors of Saravana Foundations Ltd., now known as Saravana Global Holdings Ltd., i.e., assessee-company, who gave a power of attorney to Shri T. Krishnarajan to purchase certain lands from Shri B. Govindaraj and others. The seized documents are never examined by the AO as is apparent from the assessment order and to counter the same, the assessee has not filed any evidence before us. Even otherwise, there is no evidence that the transaction has been carried out by Shri Jayanthilal on his own and not behalf of the assessee company. This has to be established. Hence, we find no infirmity in the revision and hence, the same is confirmed. Accordingly, this appeal of assessee is dismissed. Assessment framed by the AO u/s. 143(3) treated as erroneous and prejudicial to the interest of Revenue for the reason that the AO framed assessment without verifying the details and expenses as the assessee failed to file details of expenses despite a query was raised - We noted that the AO while framing assessment has gone into the details filed by the assessee and noted that the assessee s gross turnover is at Rs. 38.19 crores whereas net loss in the profit and loss account declared is Rs. 35.11 crores. The AO also examined the expenses incurred by the assessee and made disallowance of the same in the absence of details We noted that the AO himself recorded while issuing questionnaire along with notice u/s. 142(1) of the Act dated 14.11.2016 and asked certain details including the details of expenses incurred and claimed in the profit loss account. We noted that once the AO has raised a query and gone into the details, the AO has formed one of the possible views and once there is one of the possible views, the revision is not possible. Accordingly, the revision order passed by PCIT u/s. 263 of the Act is quashed and the appeal of the assessee is allowed.
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2023 (11) TMI 692
Treaty benefits - gains from alienation of shares' - taxability or otherwise of capital gain from sale of equity shares under Article 13(4) of India-Mauritius DTAA - beneficial tax rate under grandfathering clause - treating the assessee as a conduit company set up - assessee is non-resident corporate entity and tax resident of Mauritius holding a valid TRC - HELD THAT:- Departmental authorities have miserably failed to establish the fact of the assessee, being a conduit company with reference to Article 27A of India-Mauritius DTAA (Limitation on Benefit clause). Therefore, having regard to the relevant facts and ratio laid down in the judicial precedents, discussed above, we have no hesitation in holding that the assessee, having been granted a valid TRC, has to be treated as tax resident of Mauritius, hence, eligible to avail benefit under India-Mauritius DTAA. There cannot be any dispute with regard to assessee s claim of exemption under Article 13(4) of India-Mauritius DTAA, as, undisputedly, the shares were acquired prior to 01.04.2017. Therefore, the gain derived from sale of such equity shares is taxable only in the country of residence of the assessee, i.e., Mauritius and not in India. However, in so far as the capital gain arising from sale of shares of Veritas Finance Pvt. Ltd. is concerned, the facts are slightly different. Though, in the original return of income, the assessee claimed the resultant capital gain to be exempt under Article 13(4), however, subsequently, the assessee filed revised return of income offering the capital gain to tax under the provisions of Article 13(3A) read with Article 13(3B) of the Treaty by claiming beneficial tax rate under grandfathering clause. The word shares bas been used in a broader sense and will take within its ambit all shares, including preference shares. Thus, since, the assessee had acquired the CCPS prior to 01.04.2017, in our view, the capital gain derived from sale of such shares would not be covered under Article 13(3A) or 13(3B) of the Treaty. On the contrary, it will fall under Article 13(4) of India-Mauritius DTAA, hence, would be exempt from taxation, as the capital earned is taxable only in the country of residence of the assessee. No doubt, the assessee has offered the capital gain under Article 13(3B) of the Treaty in its revised return. However, that will not preclude the assessee from claiming benefit under Article 13(4) of the Treaty when the capital gain clearly falls within the ambit of Article 13(4) of the Treaty. In view of the aforesaid, we allow assessee s additional ground and hold that the capital gain derived by the assessee from the sale of equity shares is not taxable in terms of Article 13(4) of the India-Mauritius DTAA.
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2023 (11) TMI 691
Disallowing the investment allowance claimed u/s 32AC(1A) on Co-generation power plant and Anaerobic Digester - CIT(A) has rejected the appeal of the assessee by observing that the assessee has already claimed 100% depreciation - AR submitted that the assessee did not claim depreciation allowance in any of the prior years other than A.Y 2015-16 and the restriction not to allow the depreciation allowance with retrospective effect is for new asset only on which previously there was claim for allowance - HELD THAT:- We find that as per the provision of Section 32AC(4)(v) of the Act, the term new asset means any new plant or machinery but does not include, any plant and machinery, the whole of actual cost for which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head profit and gains of business or profession of any previous year. The plain reading of Section 32AC makes it very clear in case the assessee claim depreciation on new asset then it cannot claim investment allowances on the new asset to the extent of depreciation already claimed as per the provisions of Section 32AC of the Act. In the present case, the appellant claims that it has claimed depreciation for the A.Y 2015-16, but as per the provisions of Section 32AC, if assessee claims depreciation in any previous year then to that extent it cannot claim deduction u/s. 32AC of the Act. In our considered view, the counsel for the assessee misconstrued the provisions of section 32AC(4)(v) of the Act in as much as per said provisions, it is very clear that if assessee claims depreciation then it cannot claim investment allowances on new asset. The A.O and Ld. CIT(A) after considering the facts that the assessee already claimed 80% depreciation on new asset and further 20% additional depreciation giving total 100% depreciation on new asset has rightly re-computed u/s. 32AC of the Act and thus, we are inclined to uphold the order of Ld. CIT(A) and dismiss the appeal filed by the assessee. Higher depreciation @ 80% is allowable even in respect of those machineries which do not form part of Part A (ii) (8) (ix) D of New Appendix-1 of the depreciation table given in the IT Rules - CIT(A) has correctly decided the issue of 80% depreciation issue in favour of the assessee. Thus, we reject the appeal of the Department on that issue. Disallowing the claim of the assessee on the asset of Electrical installation - CIT(A) considered the submission of the assessee as well as the observation of the Ld. AO while disposing of the appeal. The Ld. CIT(A) observed that, the ld. AO did not give any reason while disallowing the depreciation allowance on the Electrical Installations. In our view, the observation of the Ld. CIT(A) should not be interfered as no disallowance should be made without stating any reason. Therefore, we upheld the decision of the Ld. CIT(A) on the issue of depreciation allowance on that Electrical Installation.
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2023 (11) TMI 690
Revision u/s 263 - Claim of interest against rental income - Proof of availing loan for acquisition or construction of property - CIT mentioned that assessee has claimed deduction u/s. 24(b) and assessee has not furnished documentary evidences in support of its claim during the assessment proceedings - HELD THAT:- As in our considered view proviso of section 24(b) states that where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital ; however, we observe that this proviso is directly linked to the 1st and 2nd proviso. The first proviso, states that in respect the property referred to in sub section (2) of section 23, which is the property consists of house or part of house which is in the occupation of the owner for the purpose of his own residence or it cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him. In such situation, the annual value of such house shall be taken to be NIL. The first proviso has specifically relates to the situation discussed in section 23 sub-section 2 of the Act, where the individual can claim deduction not exceeding ₹ 30,000/-. The second Proviso is also in relation to first proviso, wherein the above said individual has acquired a constructed with the borrowed capital [within five years from the end of the Financial Year in which capital was borrowed] the amount of deduction shall not exceed two lakhs rupees. The third proviso is also closely linked to the proviso 1 and 2 and gives certain contingencies in order to claim the deduction mentioned in proviso 1 and 2 therefore all the proviso mentioned in section 24(b) are relation to an individual who intend to claim deduction u/s. 23(2) of the Act. Therefore, the proviso contained in section 24(b) is not applicable to assessee who borrows the capital for the purpose of earing income by letting out the property under the head income from house property . Therefore, the interpretation of third proviso to 24(b) in isolation is not proper and we are not inclined to agree with the findings of the CIT u/s. 263 of the Act. As per the facts on record, we observe that assessee is in business of construction and letting of the property as well as maintenance of the property, in such combined business, it is normal in the construction business to borrow the capital for the overall business and apportion the same based on the head of income. It is not in dispute that assessee has paid the relevant interest to the bank. We observe from the record that AO has collected the information from the assessee and as per the assessment records there is no evidences to show that AO has verified the same in detail. Assessee has submitted all the relevant information, the basis of allocation before the AO. Even otherwise if we consider that Assessing Officer has not verified the claim made by the assessee it can be considered as erroneous order. However, in order to invoke provisions of section 263 of the Act, both conditions has to be satisfied, not just erroneous, even the condition, prejudicial to the revenue. But as per the discussion in the above paragraph we do not agree with the Ld. Pr.CIT that the condition of prejudicial to the interest of the Revenue is satisfied. Therefore, twin conditions as per provisions of section 263 are not satisfied in this case. Hence the order passed u/s. 263 is set aside.
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Customs
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2023 (11) TMI 689
Valuation of imported goods - Chips of Sodium Isethionate /Chips of Sodium Isethionate HEBE - appellant related to the overseas suppliers in terms of Rule 2(2) of the Customs Valuation (Determination of Price of Import Goods) Rules 1988 or not - HELD THAT:- There are no reason to interfere with the judgment and order impugned in these appeals. Appeal dismissed.
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Corporate Laws
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2023 (11) TMI 688
Seeking for restoration of the name of the Company Garg Medical Solutions Private Limited in the register maintained by the Registrar of Companies (RoC) - HELD THAT:- The said Company was struck off on 08.08.2018. The Appellant had complied with the statutory filing for the Financial Year 2016-17 and statutory filing for Financial Year 2017-18 was not due. The said Company had outstanding payable to three Creditor totalling to Rs.21 Lakhs/-. The said Company is also owing one Immovable Property. In Calcutta Rubber Factory Pvt. Ltd. Ors. Vs. Registrar of Companies, Delhi and Haryana, 2019 [ 2019 (12) TMI 342 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI ] it was held that restoration of the Company was considered just and equitable on the grounds that the Company is having Assets. In the present case, the Company had complied with the statutory filings till Financial Year 2016-17 and the statutory filings for Financial Year 2017-18 were not due as on the date of striking off of the Company. The Company is having assets and liabilities. It owns one property and has liability to repay credits of Rs.21 Lakhs/- Since the Company has substantial assets and liabilities, it cannot be said that the Company is not carrying on any business for operations. The impugned order set aside - The name of the Appellant Company is restored to the Register of Companies subject to the compliances imposed - appeal allowed.
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Service Tax
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2023 (11) TMI 687
Condonation of delay of 2281 days in filing this appeal - sufficient reason for delay or not - HELD THAT:- There is an exorbitant delay of 2281 days in filing this appeal. Having regard to the judgments of this Court, the delay cannot be condoned. The application seeking condonation of delay is hence dismissed.
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2023 (11) TMI 686
Specific relief or universal relief - HELD THAT:- The relief specifically granted by the Division Bench is limited to those who are parties before the Court - Further clarification made by the Division Bench is that it was not making a universal declaration in respect of all institutions in whatever manner they are being conducted. Again, the Court has reiterated that the declaration granted under the impugned judgments will apply to the parties to the appeals who are the petitioners in the Writ Petitions and the Department is free to examine the cases of the parties who are not before the Court independently in accordance with law. Appeal dismissed.
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2023 (11) TMI 685
Refund of service tax paid - receiving the consulting Engineers service from the Overseas service provider during 1998 to 2002 - Hon ble Supreme Court upheld the liability to discharge the tax by the Appellant - HELD THAT:- The taxability of services received by the respondent from overseas service provider namely M/s SNC Lavalin, Canada has been ultimately settled by the order of the Hon ble Supreme Court dated 12.12.2007 [ 2007 (12) TMI 2 - SUPREME COURT] and thereafter, rejection of the review application filed by the Respondent on 06.04.2010. The ld. Commissioner (Appeals) in the impugned order has completely ignored the order of the Hon ble Supreme Court and by following the judgment of the Larger Bench of the Tribunal in the case of Hindustan Zinc Ltd Vs. CCE, Jaipur [ 2008 (6) TMI 6 - CESTAT NEW DELHI (LB)] de hors the records of the case, opined that the respondent are not liable to pay service tax during the said period. The impugned order passed by the ld. Commissioner (Appeals), which is contrary to Judgment of Hon ble Supreme Court cannot be sustained - Appeal of Revenue allowed.
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2023 (11) TMI 684
Levy of service tax - business auxiliary services or not - difference between the purchase price and sale price that is reimbursed to the distributors by M/s Tata Tele-Services Ltd. in the guise of subsidy - HELD THAT:- Reliance placed upon the decision of this Tribunal in BALAJI ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, JAIPUR-I [ 2020 (3) TMI 17 - CESTAT NEW DELHI] where it was held that The subsidy, on the other hand, is paid to the Appellant by Tata Tele Services to compensate for the loss incurred by the Appellant on the sale of mobile handsets at a lower price and cannot be said to have any relation to the service of promotion or marketing. Thus, in the absence of any services provided by the Appellant to Tata Tele Services, service tax could not have been levied on the amount of subsidy received by the Appellant. Appeal allowed.
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2023 (11) TMI 683
Levy of Service Tax - Erection, Commissioning or Installation services - Appellant engaged as a sub-contractor by M/s Simplex Infrastructure [Main contractor] which had been awarded a contract for construction of New International Terminal building complex at Jaipur Airport - HELD THAT:- The reasoning given by the Commissioner (Appeals) that the services rendered by the appellant would not fall under works contract service for the reason that the appellant had not discharged the VAT liability on the transfer of goods involved in the execution of the contract is not correct. Classification of a service would depend upon the nature of service provided and not on whether VAT had been discharged on the goods portion of the contract. Such being the position, the order dated 27.03.2018 passed by the Commissioner (Appeals) deserves to be set aside and is set aside - Appeal allowed.
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2023 (11) TMI 682
Levy of Service Tax - Inclusion of expenses on board and lodging incurred by the appellant for the visiting technical experts from Honda Motors, Japan. as consideration for their services or not - Extended period of limitation - HELD THAT:- This issue is no longer res integra. It has been decided by the Hon ble High Court of Delhi in INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] that reimbursable expenses are not exigible to Service Tax. This decision was upheld by the Supreme Court. It is to be noted that the expenses on travelling, lodging and boarding were specifically considered in the aforesaid judgment and it has been held that no Service Tax is payable on them. Since the issue found in favour of the appellant on merits, the matter of extended period of limitation need not be looked into - The demand cannot be upheld - the penalties imposed on appellants also need to be set aside - appeal allowed.
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2023 (11) TMI 681
Levy of service tax - market fee - mandi shulk - whether the appellant(s) being an Agricultural Produce Market Committee was/were excluded from tax liability on and after 01.07.2012? - HELD THAT:- Similar issue decided in KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR [ 2022 (2) TMI 1113 - SUPREME COURT ] where it was held that it is required to be noted that it is not the case on behalf of the Market Committees that the activity of rent/lease on shop/land/platform as such cannot be said to be service. Appeal dismissed.
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Central Excise
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2023 (11) TMI 680
Maintainability of appeal - monetary limit involved in the appeal - HELD THAT:- In view of the low tax effect, the Appeals are disposed of, keeping open the questions of law, which arise in these appeals from the side of the appellant/Department as well as from the side of the respondent, to be agitated in any other appropriate case. Application disposed off.
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2023 (11) TMI 679
Validity of order of Tribunal - Revenue appeal - Low Tax Effect - Waiver of interest and penalty - Tribunal has decided in favor of assessee subject to the condition that amount deposited under Protest shall not be claimed as Refund - HELD THAT:- Having regard to the disputed period being July 2000 to December 2001 under consideration, in respect of which, the outstanding demands made under the five impugned Show Cause Notices have been complied with inasmuch as the amount has been paid and in view of the categorical submissions made by learned senior counsel to the fact that the assessee would not claim refund of the said amount, we find that the Revenue would not in any way be prejudiced if the submission of assessee is accepted, the appeals would not call for further consideration at the hands of this Court. Secondly, insofar as the demand of Rs. 14,27,384/- is concerned, which is towards facility charges, without going into the details of the said demand, it can be stated that on account of the low tax effect, it would not be necessary to consider the said aspect of the matter on merits in these appeals. These appeals are disposed of having regard to the submissions noted above, leaving all substantial questions of law, if any, which arise in these appeals to be agitated in any other case and not to be re-agitated insofar as these appeals are concerned.
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2023 (11) TMI 678
Seeking grant of anticipatory bail - appearance before the trial Court to face the trial in pursuance of summoning order - HELD THAT:- It is apparent from the record that after presentation of the complaint by the respondent, the present petitioner alongwith other accused have been ordered to be summoned by the trial Court. All the documentary evidence has already been collected by the respondent and the custody of the petitioner will not serve any meaningful purpose, at this stage. Without commenting any further on the merits of the case, the petitioner is directed to surrender before the trial Court, within a period of two weeks from today and on his appearance, he shall be admitted to bail subject to furnishing surety bonds/bail bonds to the satisfaction of the learned trial Court/Illaqa Magistrate - Petition disposed off.
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2023 (11) TMI 677
Clandestine removal of undeclared manufactured sponge iron - lower declaration of the produced sponge iron to the extent of 11089.730 MT, during the period July 2006 to November 2009 - quantification of the alleged clandestine manufacture has been arrived at estimated production basis - admissibility of oral evidence - time limitation - HELD THAT:- In the entire investigation, the Department has not brought out any evidence towards excess procurement of coal and dolomites. Since the coal is bought from the coal mine, proper records were kept both by the vendor as well as by the receiver. Such huge quantity of coal could not have been bought by way of cash. There is also no evidence towards deployment and movement of hundreds of vehicles to transport such huge quantity of coal and dolomite. Further, it is seen that no investigation has been taken up towards alleged sale of the huge quantity of Sponge Iron. No statements have recorded from any of the alleged purchasers of the finished goods. There is no allegation about recovery of any private records towards cash receipt/cash payment for the alleged clandestine transactions. In case of allegations of clandestine manufacture/sales, it is essential for the Department to bring in as much corroborative evidence as possible. Sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a Gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein - the evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the Gazetted Central Excise officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word shall in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. In the absence of the corroborative evidence, particularly taking into account that the entire estimated production has been arrived at based on certain formula with no statutory backing, there are no merits in the OIO passed by the Adjudicating Authority. Accordingly, the impugned order set aside on merits. Time Limitation - HELD THAT:- There are force in the arguments of the Appellant that the Show Cause Notice has been issued after 1 years 4 months from the date of receipt of the officials to the Appellant s factory. There is no documentary evidence placed that such delay was caused by any non-cooperative attitude of the Appellant. Therefore, the confirmed demand is required to be set aside even on account of limitation also. The Appeal is allowed both on merits as well as on account of limitation.
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2023 (11) TMI 676
100% EOU - Sanction of refund by cash - It is alleged that the appellant is not eligible for the credit availed on the raw materials used for manufacture of finished goods, which were subsequently exported - HELD THAT:- The very same issue has been considered by the Department in the Order-in-Original where it was held that the credit of duty paid on the inputs under Notification No.22/2023 CE dated 52/2003 CUS (to the extent of CVD) indigenously procured and imported respectively lying in stock at the time of de-bonding, availed by M/s.Kadri Wovens amounting to Rs.55,64,436/- is allowable under Rule 3 (1) (i), (vii) and (via) of CCR. The appellant is eligible for the credit - since the notice proposing to recover the erroneously sanctioned refund has been dropped by the department nothing survives. The appellant is therefore eligible for the refund claim - Appeal allowed.
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2023 (11) TMI 675
Denial of exemption of Notification No. 01/2011-CE dated 01.03.2011 - manufacture of allopathic generic medicaments - Whether the allopathic medicaments are eligible for the exemption of central excise duty but for at the rate of 2% in terms of Notification No. 01/2011 dated 01.03.2011? - invocation of extended period of limitation. HELD THAT:- In the notification column (3) of Entry No. 37 in use of word including in context of the content of column (3) of Entry No. 37 of the notification. But we are of the opinion that Tribunal ought not to have traversed beyond interpreting the provision as per the language employed in the statute itself. It is the settled proposition of law that while interpreting the taxing statutes the authorities cannot import which is not expressed in the provision itself - reliance placed upon the decision in the matter of COMMISSIONER OF SALES TAX, UP. VERSUS MODI SUGAR MILLS LTD. [ 1960 (10) TMI 65 - SUPREME COURT] applying above discussed principles of interpretation and the meaning/purpose of word include . On reading column (3) of the impugned notification (Entry No. 37), it is observed that it talks about the medicaments manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetic Act, 1940 or Homeopathic Pharmacopoeia of India or the United States of America or the United Kingdom or the German Homeopathic Pharmacopoeia, as the case may be, and sold under the name as specified in such books or pharmacopeia. The books mentioned in First Schedule are with respect to the Ayurvedic, Unani, Siddha Formulae. Hence, there is no ambiguity created by the legislature by using the word includes with the medicaments when medicaments prepared in accordance of books about Ayurvedic, Unani, Siddha are being discussed. From no stretch of imagination such medicaments can mean to include allopathic medicaments within their scope by the mere use of word include . More so, for the reason that there is no possibility of description of any formula for allopathic medicament in the books meant for medicaments manufactured under Ayurveda and Siddha systems - the arguments submitted by the appellant are not at all acceptable to set aside the order confirming the demand against them nor for doing away with the penalties. The said findings are therefore upheld. Invocation of Extended period of Limitation - HELD THAT:- Section 11A does not provide for extended period of limitation because someone is in that line of business for any length of time. While the appellant was in this line of business, the department was in the business of issuing exemption notifications, applying them and scrutinising tax returns for a much longer period. In this case, even as per the SCN, the nature of the goods manufactured by the appellant was explicitly stated not only on the packets but also in the ER 8 Returns filed by the appellant. The irresistible conclusion is that the officer had not either scrutinised the returns or having scrutinised, did not issue the demand within time. Another reason for invoking extended period of limitation in the SCN was that the appellant was operating under self-assessment and in an era of self-assessment and self-removal, it was required to correctly self-assess duty and pay it and the appellant did not do so by claiming the benefit of an ineligible exemption notification. In the context of demand of service tax under section 73 of the Finance Act, 1994 which is similar to section 11A of the Central Excise Act. The facts that the appellant was operating under self-assessment and that it was in the business of manufacturing pharmaceuticals are both not relevant to invoking extended period of limitation. The appellant was under no obligation to seek any clarification from the department during self-assessment as has been held by the Delhi High Court in Mahanagar Telephone Nigam Ltd. There is no mis-statement as all the facts have been correctly indicated in the ER-8 Returns filed by the appellant and also on the aluminium foils and packing of the goods even as per the SCN. The appellant had also not violated Rules 4,6,8 and 12 of Central Excise Rules 2002 as the appellant had self-assessed and paid duty and filed returns as per its understanding. The demand for extended period of limitation cannot be sustained. Consequently, the penalty under section 11AC imposed on the appellant also needs to be set aside Appeal allowed partly.
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2023 (11) TMI 674
CENVAT Credit - capital goods/inputs - Angles, Channels, Beams, Joists, Sheets, Plate, Coils etc - HELD THAT:- The issue is no longer res integra. The said issue has been settled by the Hon ble Chhattisgarh High Court in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT ], wherein it has been held that any steel item which has been used for fabrication of capital goods or inputs is entitled for cenvat credit in terms of Rule 2(l)/2(k) of the Cenvat Credit Rules, 2004. Thus, the Angles, Channels, Beams, Joists, Sheets, Plate, Coils etc used in the manufacture of furnace equipment and furnace structure, raw material handling system and pollution control equipment, are eligible for credit as inputs - the demand confirmed in the impugned order is not sustainable. As the demand itself is not sustainable, the question of demanding duty or imposing penalty does not arise. Appeal allowed.
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CST, VAT & Sales Tax
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2023 (11) TMI 673
Validity of assessment order - exigibility to tax under the Delhi Tax on Luxuries Act, 1996 - Club and Association service - doctrine of mutuality - HELD THAT:- While we find no ground to doubt the principles of mutuality as were explained in Calcutta Club and which constitutes the foundation for the decision handed down by the Kerala High Court in Madhavaraja Club, we find that the petitioner did not question the validity of the provisions of the Act as it originally stood and which extended the incidence of tax to the provision of residential accommodation in a club. If it were the contention of the petitioner that the tax on the provision of such residential accommodation could not be levied, it was incumbent upon it to question the validity of the provisions of the Act as they originally stood. However, and in the absence of such a challenge having been mounted and bearing in mind the statutory position which prevailed, we find ourselves unable to hold in favour of the petitioner on this score. When one reverts to the facts of the case, it is evident that the Act as it stood during the assessment period in question extended its application also to the providing of residential accommodation in a club and in any case did not at the relevant time exclude the provisioning of accommodation to members of a club from the expression luxury . In fact, the word luxury did not even exist on the statute book prior to its insertion by virtue of the 2012 Amendment Act. In view of the above and bearing in mind the statutory position which prevailed at the time when the assessment orders came to be passed, there are no justification or ground to interfere with the ultimate conclusion arrived at by the first respondent. The decision of the Commissioner assailed shall not be liable to be treated as a precedent for any assessment period post the promulgation of the 2012 Amendment Act. Any assessments made or proceedings pending would have to be considered bearing in mind the observations rendered - Application disposed off.
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Indian Laws
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2023 (11) TMI 672
Constitutional validity of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 - HELD THAT:- The petitioners are challenging the Act of 2022, namely the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022. The impugned Act is enacted in the backdrop of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 (hereinafter referred to as the Amendment Act of 2021 ), which had sought to ban online games such as rummy and poker played with stakes or money. The said Amendment Act of 2021 was struck down in its entirety by this Court and was declared as ultra vires the Constitution of India under the detailed judgment dated 03.08.2021 in the case of Junglee Games [ 2021 (8) TMI 1377 - MADRAS HIGH COURT ]. The intention and object of promulgating the impugned legislation, no doubt, appears to be laudable and bonafide. However, mere intention and bonafides would not be sufficient to uphold the legislation. The legislation has to withstand the test of legislative competence and should be free from manifest arbitrariness. The same will also have to be viewed on the premise of the rights of the parties being trampled or otherwise - The State is empowered to legislate in respect of the Entries in List II of the VII Schedule. Entry 34 of the State List includes betting and gambling . The State certainly has the authority to legislate in respect of betting and gambling. This Entry 34 of the State List viz , betting and gambling was the subject matter of consideration before the Apex Court in catena of cases. In the present case, the platform provider or the game provider is charging a fixed sum and is not claiming shares in the profits. If the game providers have been claiming shares in the profits, then that would be a different situation altogether, but here, a fixed percentage of sum is charged - The State has relied upon its power to legislate in view of Entry 1 and Entry 6 of the State List. Entry 1 of the State List deals with public order and Entry 6 of the State List deals with public health, sanitation, hospitals and dispensaries. The concern expressed by the State about public health of its citizens is but natural. The State has to take care of the public health of its citizens. Section 5 of the impugned Act authorises the authority, by notification and with the previous approval of the Government, to make regulations to carry out the provisions of the Act namely, time limit, monetary limit, age restriction or such other restrictions in regard to playing of online games. The State certainly has the power to regulate online games of skill. It can control and regulate the games of skill. The State can provide for the time limit, that the game may not be played after a particular time and it would have the necessary infrastructure and expertise to take all the measures that the games would not be played within the State after a particular time. It can also regulate the age restriction and other aspects. The same would be within the competence of the State. The impugned Act, in its entirety, need not be held to be ultra vires . It is held that the State is competent to legislate to the extent of prohibiting online gambling, i.e., games of chance, at the same time, it has got the authority to regulate online games of skill. The definition of online gambling under Section 2(i) of the impugned Act shall be read as restricted to games of chance and not games involving skill. Section 2(l)(iv) of the impugned Act would not be entirely valid. The games of rummy and poker are games of card, but are games of skill. Section 2(l)(iv) is being read down, to mean, it excludes games of skill viz ., rummy and poker - Having held that the State has got the authority to legislate on online games of chance, as gambling would be betting on the games of chance, it is not necessary to declare Sections 7, 8 and 9 of the impugned Act as ultra vires . The prayer to declare the entire impugned Act of 2022 as ultra vires is negated. The Schedule of the impugned Act, including the games of rummy and poker, are set aside. Sections 2(i) and 2(l)(iv) of the impugned Act shall be read as restricted to games of chance and not games involving skill, viz ., rummy and poker. Petition allowed in part.
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2023 (11) TMI 671
Dishonour of Cheque - discharge of legally enforceable debt or not - rebuttal of presumption u/s 139 of NI Act - HELD THAT:- As the mode of advancing the amount to the revision petitioner was not a circumstance appearing in evidence against the revision petitioner, absence of a question in the 313 examination regarding the mode of payment will not in any way vitiate the trial. The revision petitioner if wanted to rebut the presumption under Section 139 of the N.I Act, he should have adduced cogent evidence for disproving the entry dated 27.09.2006 in Ext.P6 document. It is true that, the revision petitioner can even rely on the materials submitted by the complainant/1st respondent, in order to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, without adducing separate evidence of his own. In the case on hand, the materials and evidence on record adduced from the side of the 1st respondent are not capable of rebutting the presumption, in favour of the revision petitioner even by preponderance of probabilities. So he was bound to adduce evidence of his own so as to rebut the presumption but it was not done. Since the presumption stands unrebutted, this Court has to hold that, the appellate court rightly upheld the conviction of the revision petitioner under Section 138 of the N.I Act, and sentenced him to undergo imprisonment till rising of the court and to pay fine of Rs. 4 lakh and in default to undergo simple imprisonment for two months, with a further direction that if the fine amount is realised, it will be paid to the 1st respondent as compensation under Section 357(1) of Cr.P.C. The revision petition is dismissed, upholding the impugned judgment in Crl. Appeal No. 213 of 2009. The revision petitioner is directed to surrender before the trial court on or before 28.11.2023 to receive the sentence and to pay the fine amount. In default, the trial court has to issue arrest warrant against the revision petitioner for executing the sentence.
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2023 (11) TMI 670
Condonation of delay in filing review petitions - whether the petitioners have established sufficient cause for not preferring the review petitions within the statutory period? - ground for the exercise of the discretion in condoning the delay, established or not - HELD THAT:- The expression sufficient cause contained in Section 5 of the Limitation Act is elastic enough to yield different results depending upon the circumstances of the case. The criteria to be applied in condoning the delay in different claims may be different. For example, in the case of beneficial legislations a liberal interpretation must be given to the expression sufficient cause to serve its object. The concept of reasonableness demands that the courts, while taking a liberal approach, must also consider the rights and obligations of both the parties. When a right has accrued in favour of one party due to gross negligence of the other, the Court shall refrain from exercising the discretionary relief. It is a settled legal proposition that law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the Statute mandates so. The Court has no power to extend the period of limitation on equitable grounds. In Basawaraj [ 2013 (12) TMI 274 - SUPREME COURT ], the Supreme Court held that sufficient cause means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has not acted diligently or remained inactive. The Supreme Court further held that the applicant must satisfy the court that he was prevented by any sufficient cause from prosecuting his case, and unless a satisfactory explanation is furnished, the Court should not allow the application for condonation of delay. The Court has to examine whether the mistake is bona fide or was merely a device to cover an ulterior purpose, the Supreme Court added. The review petitions have been filed by the power of attorney holder of the petitioners. No materials have been placed before the Court to show that the review petitioners had any inconvenience or difficulty in prosecuting the matter. The power of attorney holder of the review petitioners pleaded that he was suffering from asthmatic complaints. No materials have been produced to explain the delay of 288 days in preferring the review petitions. The claim of the review petitioners lacks bona fides. Application dismissed.
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2023 (11) TMI 669
Dishonour of Cheque - insufficient funds - discharge of legally enforceable cheque or not - vehicle covered by the hire purchase loan agreement was already seized by the complainant/1st respondent and it was sold out for profit - HELD THAT:- The case of the 1st respondent is that the cheque was issued after seizure and sale of the vehicle, and after adjusting the sale price towards the loan amount. But PW1 admitted that Rs. 57,000/- was already repaid in ten installments and the vehicle was seized and sold, and to his memory, the sale price was Rs. 25,000/-. But he has not produced any scrap of paper to show that the balance amount was calculated as Rs. 1,24,500/-. No notice was seen issued to the revision petitioner intimating the balance due, and asking him to remit that amount. The vehicle was seized and sold in the year 1998. The cheque is dated 06.02.2002. There is nothing to show that in the year 2002, the revision petitioner reached the office of the 1st respondent to issue Ext.P3 cheque. No evidence is there to prove that Ext.P3 cheque was issued towards the balance amount due, after adjusting the sale price. The conviction and sentence imposed on the revision petitioner under Section 138 of the Negotiable Instruments Act is set aside - Revision petition is allowed.
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2023 (11) TMI 668
Dishonour of Cheque - insufficient funds - It is alleged that illegality has been committed by the Trial Court in passing hasty judgment depriving the rights of the accused to cross-examine PW1 - HELD THAT:- On reading Indian Bank Association case [ 2014 (5) TMI 750 - SUPREME COURT ], there is no observation or the law laid down by the Hon'ble Apex Court that the statement of accused under Section 313 of Cr.P.C., has to be recorded on the date of the appearance before the Trial Court. In the said judgment, the Hon'ble Apex Court has issued guidelines to the Trial Courts dealing with N.I. Act cases to expedite the Trial. The Trial Court is duty bound to follow the mandates of the Apex Court in expediting the trial of the cases by following the provisions of N.I. Act. The hasty procedure adopted by the Trial Court is unknown to law. Thereby, it has affected the principles of natural justice. When lis is pending, either civil or criminal, it is the duty of the Court to afford sufficient opportunity to the parties to prove their respective cases. Unless opportunity is given to the parties to the litigation, it cannot be said that justice is being given to the parties to the lis. It is submitted that the accused has got good defence to defend himself. The Trial Court hurriedly passed the judgment of conviction. Therefore, in view of these factual features coupled with non-following of proper procedure by the Trial Court, the impugned judgments are required to be interfered with and are liable to be set aside - The criminal revision petition filed by the petitioner-accused is hereby allowed.
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2023 (11) TMI 667
Seeking grant of Bail - applicant was not arrested during the investigation - cheating 13000 investors to the tune of Rs.5600 crores - HELD THAT:- The FIR, for the offences u/s 409, 465, 467, 468, 471, 474, 477- A, 120-B of IPC, u/s 3 of the MPID Act and sections 21(a), 21(b), 21(c) and 21(g) of the FCR Act, 1952 was registered way back in the year 2013. According to applicant, he has furnished all record and documents in the form of electronic data in soft copies, hard-disk, server and e-mails to the investigation agency. Today the applicant is present before the court pursuant to the fact he was served with the summons issued by this court. The investigation machinery choose not to arrest the applicant, for 10 long years, inspite of the fact that, the applicant was available. Rather, it can be gathered that the I.O. did not want his custody. The offences u/s 467 is punishable for imprisonment for life. The prosecution has not placed any criminal antecedents on record except for the present case. There are no allegations that the applicant has not co-operated with the investigation agency. There will be no point in sending the accused in jail as investigation is completed and charge-sheet is filed. It is directed that Applicant/accused Sunil Gupta, be released on execution P.R. bond of Rs.50,000/- with one or two sureties in the like amount - Today the applicant/accused Sunil Gupta, be released on furnishing Provisional cash bail of Rs.50,000/- - bail application allowed.
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