TMI Tax Updates - e-Newsletter
November 22, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Law of Competition PMLA Service Tax Central Excise Indian Laws

Articles

1. NON-SUBMISSION OF FORM 15G/15H TO THE COMMISSIONER FOR TDS UNDER SECTION 194A

   By: DR.MARIAPPAN GOVINDARAJAN

2. UNDERSTANDING AMNESTY FOR WAIVER OF INTEREST / PENALTY U/S 128A OF GST LAW (Part-2)

   By: Dr. Sanjiv Agarwal

3. Department cannot pass an order on the dated personal hearing

   By: Bimal jain

4. How to register a Company in India: A Step-by-Step Guide for 2024

   By: Ishita Ramani

News

1. Balancing Inflation and Growth: The Cardinal Principle of Monetary Policy (Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - November 21, 2024 - “High-Level Policy Conference of Central Banks from the Global South Building Synergies”, Mumbai)

2. Shri Piyush Goyal urges FICCI to utilise Anusandhan National Research Foundation Fund to foster innovation ecosystem in the country

3. 18th NCB International Conference and Exhibition on cement, concrete and building materials to be held from 27-29 November 2024 at Yashobhoomi,IICC Dwarka

4. Post event press release of Brainstorming Session on “The Treatment of PDS Items and other necessities in Consumer Price Index Compilation” on 20th November,2024 in Delhi

Notifications

FEMA

1. FEMA 10 (R)/(4)/2024-RB - dated 19-11-2024 - FEMA

Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fourth Amendment) Regulations, 2024

Income Tax

2. 06/2024 - dated 19-11-2024 - IT

Specifying Forms prescribed in Appendix-II of the Income Tax Rules 1962, to be furnished electronically under sub-rule (1) and sub-rule (2) of Rule 131 of the Income-tax Rules, 1962.

SEBI

3. SEBI/LAD-NRO/GN/2024/211 - dated 20-11-2024 - SEBI

Securities and Exchange Board of India (Bankers to an Issue) (Amendment) Regulations, 2024.

4. SEBI/LAD-NRO/GN/2024/210 - dated 20-11-2024 - SEBI

Securities and Exchange Board of India (Buy-Back of Securities) (Second Amendment) Regulations, 2024

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2024/0161 - dated 21-11-2024

Withdrawal of Master Circular on issuance of No Objection Certificate (NOC) for release of 1% of Issue Amount

Customs

2. 26/2024 - dated 21-11-2024

Clarifications on the applicability of concessional duty under IGCR Rules, 2022 in certain instances

3. 25/2024 - dated 21-11-2024

Implementation of automation in the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022

4. 24/2024 - dated 20-11-2024

Mandatory additional qualifiers in import declarations in respect of coking/ non-coking coal w.e.f 15.12.2024

Highlights / Catch Notes

GST

• Court Overrules Harsh Dismissal of Tax Appeal Due to Spouse's Critical Illness; Restores Petitioner's Rights.

  Case-Laws - HC : Petitioner challenged dismissal of appeal by Appellate Authority against levy of penalty for excess Input Tax credit due to delay in filing appeal caused by unavoidable circumstances like critical illness of spouse requiring extensive medical care. Despite providing supporting documentation, Appellate Authority refused to condone delay citing rigid interpretation of statutory time limits lacking judicial empathy. Court held Appellate Authority's approach unduly harsh, legally unsound obstructing petitioner's statutory right to higher appeal due to non-formation of GST Appellate Tribunal. Considering procedural irregularities, arbitrary actions and misapplication of statute, Court allowed writ petition, quashed impugned orders, restored petitioner's rights under WBGST Act with attendant benefits without adverse consequences arising from annulled orders.
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• Court Quashes GST Levy on Chit Funds; Writ Petition Deemed Maintainable Despite Alternative Adjudication Pathways.

  Case-Laws - HC : The High Court held that the writ petition challenging the show cause notice issued for levying GST on commission received under the Chit Funds Act is maintainable. Despite the availability of an alternate adjudication mechanism, the Court can exercise jurisdiction under Article 226 when proceedings are challenged as being without jurisdiction, based on the Supreme Court's judgment in Calcutta Discount Co. Ltd. v. ITO. In the present case, as per the Supreme Court's decision in Oriental Kuries Limited and Notification No.12 of 2017, the issuance of the show cause notice alleging GST levy on transactions under the Chit Funds Act is clearly without jurisdiction, without any disputed questions of fact. Therefore, the show cause notice is quashed as being issued without jurisdiction, and the writ petition is allowed.
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• Court Finds Breach of Natural Justice in GST Case Due to Inadequate Notice; Order Set Aside for Further Response.

  Case-Laws - HC : The High Court found a violation of principles of natural justice as the notices were uploaded on the "view additional notices and orders" tab of the GST portal, and the petitioner was unaware of the proceedings. The impugned order pertained to discrepancies between the petitioner's GSTR-3B return, auto-populated GSTR-2A, and reconciliation of turnover as per the Income Tax return and GSTR-3B return. The tax proposal was confirmed due to the petitioner's failure to reply to the show cause notice. Considering these circumstances, the High Court set aside the impugned order dated 9-8-2023 on the condition that the petitioner remits 10% of the disputed tax demand within two weeks and submits a reply to the show cause notice within the same period. The petition was disposed of accordingly.
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• Electricity Surcharge for Open Access Consumers Taxable Under CGST Act; Input Tax Credits Allowed for Capitalized Goods.

  Case-Laws - AAAR : Taxability of additional surcharge collected by a government-owned electricity distribution company from open access consumers who source electricity from private generators. The key points are: The company is exempt from filing certain GST returns and can claim input tax credit on capitalized goods/services and services for support/auxiliary supplies. It can also claim proportionate input tax credit on taxable output supplies of support services and goods like scrap. The company is eligible to claim taxes paid under reverse charge mechanism as input tax credit. The additional surcharge collected from open access consumers is to meet the fixed costs arising from the company's obligation to supply electricity as per power purchase agreements. This collection mechanism is backed by the Electricity Act, policies of the central and state governments, and regulations. The additional surcharge does not constitute consideration for tolerating an act but is collected to cover fixed costs incurred due to power purchase agreements. Therefore, it should form part of the taxable value u/s 15 of the CGST Act, 2017. However, the supply of electricity as goods or distribution of electricity as a service is exempt from GST under relevant notifications.
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• GST Exemption Denied for GTA Services Without Consignment Notes to Unregistered Foreign Entities.

  Case-Laws - AAR : The ruling pertains to the exemption from GST on pure services provided by a Goods Transport Agency (GTA) to an unregistered foreign entity. The applicant, a GTA-cum-Packing & Moving Company, claimed exemption under relevant notifications. However, the ruling clarified that the exemption is exclusively for services by a GTA to an unregistered person, where a GTA is defined as one issuing consignment notes for road transport of goods. As the applicant did not issue consignment notes, it was held ineligible for the exemption. Additionally, the applicant provided a bundle of services like customs clearance, loading/unloading, port handling, etc., individually charged, further disqualifying it from the exemption meant for pure GTA services. Consequently, the exemption was deemed inapplicable to the applicant's case.
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Income Tax

• Payment Under Co-Marketing Agreement Deemed Capital, Not Revenue, Due to Restrictive Covenant and Relinquished Rights.

  Case-Laws - HC : The court held that the sum received under the co-marketing agreement was a capital receipt, not a revenue receipt. The intention of the parties gathered from the agreement's language is crucial. The Supreme Court's test distinguishes capital receipts that impair the trading structure or income source from revenue receipts that are normal business incidents. The agreement was a negative/restrictive covenant where the payment compensated for surrendering rights in capital assets like patents and trademarks. This impaired the profit-making apparatus, making it a capital receipt. The Tribunal's finding based on evidence appreciation cannot be termed perverse, and the High Court cannot interfere with factual findings unless demonstrated as perverse.
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• Cooperative society eligible for tax deduction on interest from cooperative bank investments.

  Case-Laws - HC : The High Court upheld the Tribunal's decision allowing deduction u/s 80P(2)(d) of the Income Tax Act to the assessee, a cooperative society, on the interest income earned from investments made with a cooperative bank. This is in line with previous judgments that cooperative societies are eligible for deduction on interest income from investments with cooperative banks, which are also cooperative societies. The Principal Commissioner's invocation of revisionary powers u/s 263 was unjustified as the assessment was not erroneous or prejudicial to revenue interests. The twin conditions for invoking Section 263 were not met.
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• AO Oversteps in Tax Case: Tribunal Quashes Order for Ignoring Procedure in Scrutiny Scope Expansion.

  Case-Laws - AT : The case involved the scope of limited scrutiny and the validity of a notice u/s 143(2) of the Income Tax Act. The assessee's case was selected for limited scrutiny to verify cash deposits during demonetization. However, the Assessing Officer (AO) attempted to convert the limited scrutiny into a full scrutiny. The Tribunal held that although the notice mentioned limited scrutiny, the subsequent paragraphs referred to scrutiny without specifying its limited nature. The AO identified the issue for examination as cash deposits during demonetization, indicating a limited purpose. To enlarge the scope and make other additions, the AO should have followed the procedure laid down by the CBDT's Instruction No. 5. Since the AO did not make any addition regarding cash deposits during demonetization and the assessee had deposited small accepted amounts, the assessment order was quashed for exceeding the AO's limited powers. The appeal was allowed, and the Tribunal emphasized the need to follow due procedure for converting a limited scrutiny into a full scrutiny.
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• TDS Credit Restricted to Current Year Income; Tribunal Orders Adjustment for Previously Taxed Receipts.

  Case-Laws - AT : Tax deducted at source (TDS) credit was denied in the intimation u/s 143(1) to the assessee. The Commissioner of Income Tax (Appeals) upheld the Centralized Processing Centre's action of restricting TDS credit to the extent relating to receipts reflected in the return for the impugned assessment year, in line with Section 199 and Rule 37BA. The assessee failed to demonstrate any infirmity in the CIT(A)'s findings regarding the interpretation of law on TDS credit and the fact that TDS was deducted on a portion of income already returned in preceding years. While upholding the CIT(A)'s order confirming the adjustment restricting TDS credit to Rs. 4,07,968/- against Rs. 5,24,600/- claimed, the Appellate Tribunal directed the Assessing Officer to give necessary TDS credit for income returned in the preceding two assessment years, as the gross receipts of Rs. 5,24,60,000/- included receipts already taxed in those years.
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• Genuine anonymous donations not taxable. Grants not income if utilized. AO erred in disallowing grants & donations.

  Case-Laws - AT : Anonymous donations maintained record of identity, address, PAN, Aadhaar details of donors, hence provisions of section 115BBC not applicable. AO doubted genuineness without following procedure, providing opportunity; CIT(A) rightly deleted addition. Tied-up grants not voluntary contributions, not income; no requirement to file Form 9A when application doesn't fall short of 85% income from trust property. AO wrongly added unspent grants shown in balance sheet but not income and expenditure account; CIT(A) correctly deleted addition. No interference required.
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• Property investment source verification not valid grounds for reopening assessment. Taxpayer wins appeal against reassessment.

  Case-Laws - AT : Reopening of assessment u/s 147 was done solely for the purpose of verification of the source of purchase of property, which is not a valid reason as per settled judicial precedents. The Bombay High Court in Nivi Trading Ltd. v. Union of India has categorically held that reassessment u/s 147 cannot be done solely for verification purposes. Since reopening was done only for verification of source of investment in property, as evident from the reasons recorded by the Assessing Officer, relying on the judicial propositions that reopening cannot be done for verification, the reopening of assessment is held invalid and unjustified, and consequently, the assessment order does not survive. The appeal is allowed on this ground.
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• Income Tax Assessment Notice Issued by Non-Jurisdictional Officer Quashed, Defective Notice Renders Assessment Invalid.

  Case-Laws - AT : Notice u/s 143(2) issued by a non-jurisdictional Assessing Officer/Deputy Commissioner is invalid and cannot be cured. The assessment order framed u/s 143(3) based on such an invalid notice is quashed. As per CBDT Instruction No.1/2011, for cases with total income above the specified limit, the notice u/s 143(2) must be issued by the Assistant Commissioner/Deputy Commissioner themselves and cannot be transferred to the Income Tax Officer. Any inherent defect in the jurisdictional notice u/s 143(2) is not curable, rendering the subsequent assessment order invalid.
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• Tribunal Rules No Permanent Establishment for US Company in India; No Income Attribution or Royalty Payments Required.

  Case-Laws - AT : The assessee, a US-based company engaged in offshore sales of goods and software to customers in India, contended that it had no permanent establishment (PE) or dependent agent permanent establishment (DAPE) in India. The Assessing Officer (AO) treated the assessee's liaison office (LO) as a PE, leading to the attribution of income to India. However, the assessee provided relevant documents to substantiate the closure of the LO and the absence of expatriate employees in India during the relevant period. The Tribunal observed that the Revenue failed to rebut the assessee's contentions or provide contrary evidence regarding the closure of the LO operations. Consequently, the Tribunal held that the assessee had no PE or DAPE in India during the assessment year, precluding the attribution of profits to a PE. Regarding the treatment of receipts from software supply as royalty u/s 9(1)(vii), the Tribunal noted that the AO disregarded the Dispute Resolution Panel's directions to verify if the software was embedded in hardware. The Tribunal referred to its coordinate Bench's ruling in the assessee's own case for preceding years, which held that payments by resident end-users/distributors to non-resident computer manufacturers/suppliers for resale/use of computer software through EULAs/distribution agreements do not constitute royalty payments for the use of copyright in computer.
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• GST Exclusion from Profit Calculations for Non-Resident Shipping: Simplifying Taxation in Line with Section 44B.

  Case-Laws - AT : Section 44B is a special provision for computing profits and gains of shipping business for non-residents at 7.5% of specified amounts like freight receipts. The issue was whether GST should be included in these specified amounts for computing presumptive income u/s 44B. It was held that Section 145A dealing with income computation and disclosure standards relates to valuation of inventory and cannot be extended to alter the computation mechanism u/s 44B. GST being a statutory levy cannot be considered part of the specified amounts u/s 44B(2), as it would amount to charging income tax on GST itself. Judicial precedents under the earlier service tax regime support excluding indirect taxes from such presumptive taxation provisions. Including GST would go against the intent of Section 44B which aims to simplify taxation for non-residents by avoiding complexities of normal provisions. Deduction for GST paid cannot be allowed u/s 43B if GST is included, as Section 44B overrides regular provisions. The minority DRP view upholding exclusion of GST for Section 44B was affirmed. Book profit u/s 115JB was held inapplicable due to Explanation 4A. Directions were issued regarding tax deducted at source and advance tax credit claims.
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• Indian Company's Ocean Freight Charges Not Royalties, No Tax Deduction Required per India-Korea Tax Treaty.

  Case-Laws - AT : The assessee, a resident Indian company engaged in manufacturing boiler pressure parts and engineering plants, paid ocean freight charges to a non-resident Korean logistics company, Hyupjin Shipping Co. Ltd. (HSC), for availing logistics services. The Assessing Officer treated the freight charges as royalty u/s 9(1)(vi) and made disallowances u/s 40(a)(i) for non-deduction of tax at source. The key points are: The freight charges were not royalty as the services did not confer any right to use industrial, commercial or scientific equipment. HSC did not have a permanent establishment or business connection in India, and its profits from logistics services were taxable only in Korea under Article 7 of the India-Korea tax treaty. Section 195 mandates tax deduction only on chargeable income paid to non-residents. Since HSC's income was not chargeable in India, no tax was required to be deducted. The disallowance u/s 40(a)(i) was devoid of merits and decided against the revenue.
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• Income Tax Reassessment u/s 147 Unjustified Due to Lack of Independent Verification of Evidence.

  Case-Laws - AT : The crux of the matter revolves around the reopening of assessment u/s 147 of the Act and the addition made u/s 68 treating the share application received as a non-genuine transaction and accommodation entry. The key points are: The reopening was initiated based on the incriminating material found during a search operation at the premises of a third party, indicating that the assessee had obtained an entry from an entry operator. The Assessing Officer heavily relied on the report of the Investigation Wing without independently verifying the facts. The assessee contended that the reopening u/s 147 was unjustified as the incriminating material was recovered during a search, and the proper course should have been proceedings u/s 153C. The ITAT held that the Assessing Officer was not justified in reopening the assessment u/s 147 when the incriminating material was found during a search at a third party's premises. The CIT(A) failed to address the specific grounds raised by the assessee regarding the legality of reopening the assessment.
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• SAP and Microsoft reimbursements classified as taxable royalties under DTAA; ICT charges assessed as fees for technical services.

  Case-Laws - AT : The income deemed to accrue or arise in India, including reimbursement received for SAP Software and Microsoft License fees, was held to be taxable as royalty receipts u/s 9(1)(vi) and Article 12 of the Double Taxation Avoidance Agreement (DTAA). The Dispute Resolution Panel (DRP) directed the Assessing Officer (AO) to examine the taxability of Information & Communication Technology Service Charges (ICT Service Charges) received from PVM India as Fees for Technical Services (FTS) under Article 12 of the DTAA. The Tribunal's decision in the assessee's own case for the previous year was limited to examining the factual aspects of the agreements and the nature of services in the context of the 'make available' clause introduced by the amendment dated 30.08.1999 in the India-Netherlands DTAA. The issue was restored to the AO to re-examine in light of the Tribunal's observations regarding the restricted scope of the 'make available' clause.
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Customs

• Import Duty on Vessels: Freight Inclusion Disputed; Adjudicating Authority's Order Upheld.

  Case-Laws - AT : The case pertains to the assessment of duty on a vessel and its ship stores during import. The key points are: freight, either actual or at 20% of FOB value, was required to be added to the value of the vessel for discharging duty at the time of import. A common bill of entry was filed for payment of duty on the vessel and the total quantum of ship stores ascertained by customs officers upon entry. The assessing authority correctly deducted the duty involved in ship stores consumed during the voyage while finalizing the bill of entry after the coastal run. The inclusion of freight is covered by a previous CESTAT Mumbai judgment in Sachin Kshirsagar's case, which held that the Commissioner (Appeals)' contention to include freight is not legally correct. The Adjudicating Authority's order is upheld as there is no infirmity found.
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• Pregnancy Test Kits Exempt from Customs Duty Due to Agglutinating Sera Component; Aligns with Tribunal Decision.

  Case-Laws - AT : The disputed goods, "hCG Pregnancy Rapid Test Strip" and "hCG Pregnancy Rapid Test Cassette," are rapid chromatographic immunoassays for detecting hCG in urine to aid early pregnancy detection. They are prepared using agglutinating serum/sera, which provides the essential character and is the most crucial active component on which the test reaction is based. The other components like membrane sheet, plastic cassette, and absorbent are passive, providing stability and shelf life. As the disputed goods are based on agglutinating sera, they deserve classification under CTH 3002 and are eligible for exemption from basic customs duty at a nil rate under the relevant Exemption Notifications. This aligns with the Tribunal's decision in Inter Care, where pregnancy test kits based on agglutinating sera were granted the exemption benefit.
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Corporate Law

• Sectoral regulation & CCI mandate distinct. Internet exchange services market sans dominance concerns.

  Case-Laws - CCI : The Competition Commission of India (CCI) observed that compliance with sectoral regulator's framework remains independent of any practice falling afoul of the Competition Act. CCI's jurisdiction is not ousted by overlap with sectoral regulator. Allegations in the matter are determinable within CCI's legal mandate. CCI delineated the relevant market as 'provision of internet exchange services in India'. Based on data, CCI found that the Opposite Party does not appear dominant in the relevant market. Consequently, no competition concern arises, and the matter is closed u/s 26(2) of the Act.
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IBC

• Supreme Court Directs 90-Day Resolution Process in Corporate Insolvency; RP Authorized to Present Agenda to Creditors.

  Case-Laws - AT : Appeal against order filed by Resolution Professional (RP) was disposed of. Resolution Plan submitted by Appellant was approved by Committee of Creditors (CoC) on 07.11.2020. Excise & Taxation Officer's claim was initially allowed by Adjudicating Authority but reversed by Appellate Tribunal, leading to Civil Appeal before Supreme Court. Supreme Court directed completion of process within 90 days. RP filed application seeking directions, which Adjudicating Authority allowed but without specifying process to be conducted. Appellate Tribunal permitted RP to place agenda before CoC regarding necessary steps in Corporate Insolvency Resolution Process as per Supreme Court's directions. CoC, being in overall control, may take decisions and complete process as directed by Supreme Court. Appeal disposed off granting liberty to RP to place appropriate agenda before CoC.
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Indian Laws

• Company email service triggers time limit; late complaint quashed for exceeding deadline.

  Case-Laws - HC : The complaint was time-barred and filed beyond the stipulated period u/s 142(b) of the NI Act. The demand notice was served to the accused company through email on 11.03.2022, which constituted effective service on the directors as well. The limitation period commenced from the date of service, and the complaint filed on 28.04.2022 was beyond the prescribed time limit without seeking condonation of delay. The trial court took cognizance without considering the delay, rendering the complaint not maintainable. Consequently, the criminal complaint was quashed, and the order taking cognizance was set aside by the High Court.
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PMLA

• Massive financial fraud via sham deals to launder ill-gotten wealth; accused mastermind denied bail in multi-crore scam.

  Case-Laws - HC : Money laundering case involving proceeds of crime, financial irregularities through paper sale transactions without actual business resulting in false inflation of financials. Evidence shows accused knowingly involved in the process, beneficiary of proceeds. Sufficient material reflecting guilt u/s 45 of PMLA. Considering serious economic offence involving siphoning off public funds worth Rs.3035.52 crores, co-accused's bail rejection by Supreme Court, accused denied bail by High Court.
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Service Tax

• Tribunal Exempts Service Tax on Foreign Services; Dismisses Extended Demand Due to Lack of Suppression Evidence.

  Case-Laws - AT : Liability to pay service tax for services provided to a foreign entity. The appellant argued that their turnover within the domestic market was below the threshold limit, and they were not required to pay service tax. The adjudicating authority partially dropped the demand but confirmed the service tax demand along with interest and penalty. The tribunal held that for 'Business Auxiliary Services' or 'Business Support Services,' if the services are provided to an entity abroad and the consideration is received in convertible foreign exchange, they are exempted from service tax as per the Export of Services Rules 2005 and Board Circular. Since these conditions were met in the present case, the confirmed demand was set aside. Regarding 'Erection, Commissioning and Installation Services,' the appellant's turnover from 2008-09 to 2011-12 was below the threshold limit, and hence no service tax was payable. For 2012-13, the appellant had already paid the required service tax, considering the threshold exemption. Therefore, the confirmed demand for this period was set aside. The tribunal also set aside the confirmed demand for the extended period, as the appellant had declared foreign exchange earnings, was registered for service tax, and filed returns, and the department failed to establish suppression of facts.
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• Services to Parent Company Classified as Export, Not Intermediary; Revenue's Appeal Dismissed.

  Case-Laws - AT : The respondent's services rendered to their parent company in the USA are classified as an 'intermediary service' or 'export service'. The basic requirement for an intermediary is the presence of at least three parties, where the intermediary arranges or facilitates the supply of goods or services between two or more other persons but does not provide the main supply. The case is similar to an illustration where a BPO firm provides customer care services to a manufacturer by interacting with the manufacturer's customers, charging the manufacturer for this service. The BPO firm is involved in supplying the main service of customer care to the manufacturer and is not an intermediary. Therefore, the respondent's services are not considered an intermediary service, and the Revenue's appeal lacks merit.
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Case Laws:

• GST

• 2024 (11) TMI 979
  Levy of penalty for availing excess Input Tax credit - delay in filing the appeal by the petitioner - HELD THAT:- This Court allows the writ petition on the grounds that the delay in filing the appeal by the petitioner was due to an unavoidable personal circumstances, including the critical illness of her husband, which required extensive medical attention. The petitioner provided supporting medical documentation, but the Appellate Authority refused to condone the delay. This rigid approach fails to account for genuine extenuating circumstances, reflecting a lack of judicial empathy and an unreasonable interpretation of statutory time limits. Given the petitioner s situation, this decision by the Appellate Authority to dismiss the appeal based solely on timing considerations was unduly harsh and legally unsound. Moreover, the petitioner s right to further appeal has been obstructed by the non-formation of the GST Appellate Tribunal, effectively denying her a statutory right to a higher appeal. In light of the procedural irregularities, the arbitrary nature of the actions and the statutory misapplication, this court finds the petitioner s case to be meritorious. Accordingly, the writ petition is allowed, and the impugned orders dated May 24, 2024 is quashed. The petitioner s rights under the WBGST Act, 2017, are restored, with all benefits that accompany this decision, without any adverse consequences arising from the annulled orders. Application disposed off.

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• 2024 (11) TMI 978
  Scope of Supply - GST on supply agreed to be made - Constitutional validity of Sections 7, 12, 13, and 16 of the CGST Act and corresponding MGST Act - Entitlement to Input Tax Credit (ITC) on receipt vouchers - the case of the petitioner is that the petitioner was precluded from availing of the Input Tax Credit (ITC) of the GST paid to L T (its constituent) for the reason that Section 16 (2) (b) of the CGST and MGST Act provided that no ITC could be taken unless the service had been received - Refund of GST and ITC - HELD THAT:- It is not in dispute that for execution of the project work, purchase orders dated 23 March 2018 back-to-back with the Contract Agreement, were issued by the petitioner to its member, i.e. L T. Reciprocally the constituent of the petitioner would raise bills on the petitioner for the portion of the work executed by it each month. In turn, the petitioner would raise a single consolidated invoice on the employer (MMRDA). On availing of these advances, the petitioner issued advance receipt vouchers to the MMRDA for both the first and second installment of the mobilization advance received by it. Such advance receipt vouchers as issued/ executed by the petitioner in favour of the MMRDA, indicated several details inter alia the total amount of advance claimed before tax and the GST amounts payable on such advance and the total invoice value. In State of M. P. Vs. Rakesh Kohli Anr. [ 2012 (5) TMI 262 - SUPREME COURT ], the Court was considering the challenge whether the High Court was justified in declaring Clause (d) of Article 45 of Schedule 1-A of the Indian Stamp Act, 1899 which was brought in by the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 as unconstitutional being violative of Article 14 of the Constitution of India. In such context, the Supreme Court, not agreeing with the view taken by the High Court, held that the well defined limitation in the constitutional validity of the statute enacted by the Parliament or the State Legislature has not been kept in mind by the High Court. On a plain reading of Section 7, the expression supply includes all forms of supply of goods or services or both , such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration (as defined under Section 2 (31)) by a person in the course or furtherance of business. It is well settled that every word as contained in the provision as used by the legislature, is required to be given its due meaning, so as to gather the object and intention behind the provision as intended by the legislature. In the context of Section 7 (1) (a), it is apparent that it inter alia includes all forms of supply of goods or services or both , of the nature as specified therein which are made or agreed to be made for a consideration by a person in the course or furtherance of business - Once the test in such form is satisfied in relation to the supply of goods or services, the levy of collection of tax under Chapter III and more particularly, Section 9 (charging section) would stand attracted. As to how the expression in the course or furtherance of business is legally understood and interpreted by the Courts can be discussed. Adverting to the interpretation of the expression in the course of business and in the present context, an expression added to it namely of the words in furtherance of business , as used in Section 7 (1) (a) would necessarily mean that the supply is connected to or in relation to the activities in question or is the integral part of such activity. By applying such interpretation, it cannot be denied that once an advance was received by the petitioner in the course of or in furtherance of the contract in question, it would necessarily amount to a supply attracting payment of GST - the legislative intention behind Section 7 is quite clear that such composite contract would fall within the definition of supply as envisaged by Section 7 (1) (a). The petitioner s case challenging the vires of Section 12 and 13, is to the effect that these provisions are invalid and ultra vires as they apply to supply agreed to be made , for the reason that Article 246A applies only in respect of the supply of goods or services and not in relation to supply agreed to be made - It is hence the petitioner s case that once the actual supply itself is not made, there is no warrant for the levy in question either by virtue of the applicability of Section 7 read with Section 9 and Sections 12 and 13. The petitioner merely referring to the provisions of Article 246A read with Article 366 (12A) of the Constitution which provide that the Parliament as also the State Legislature would be empowered to make laws in respect of goods and services tax to be imposed by the Union or a State, would be required to be interpreted in a broad sense. Thus, the Parliament as also the State Legislature were within their constitutional authority, to not only enact the provisions which are assailed by the petitioner, but also to prescribe / stipulate the manner and the method under which the scheme of the GST laws ought to work, in regard to the applicability of such provisions, was also the domain of the respective legislatures. In the present case as contended on behalf of the petitioner, the provisions of Section 31 read with Rule 36 are being applied by the Revenue to deny the input tax credit to the petitioner on the ground that on account of lack of supply, no invoice was available or issued so as to entitle the petitioner to claim the input tax credit - the rigour and the mandate of sub-section (1) and (2) of Section 31 is not applicable to the operation of sub-section (3) which stands on its independent legs, when it recognises the tax paying documents as referred thereunder. In any event sub-section (3) of Section 31 is also required to be read in the context of the companion provisions namely sub-section (4), (5), (6) and (7). These provisions contemplate a variety of situations, even when at a belated stage, an invoice can be issued and which can be a situation of advance payment being received in relation to the transactions between the parties. Thus, Section 31 is required to be holistically read so as to make the provision meaningful and more particularly in the context in hand. For such reason, when the petitioner satisfied the requirements of Section 31 (3) (d) as also accepted by the revenue to be a tax paying document, it would not be correct in law that the petitioner is denied input tax credit, merely because the petitioner has not complied with the part of the provisions, namely sub-section (1) of Section 31 read with Rule 36. The prayers of the petitioner challenging the constitutional validity and legality of Sections 7, 12, 13 and 16 (2) (b) of the CGST/MGST Act are rejected - It is declared that in the peculiar facts of the case on the basis of Receipt Voucher issued by L T in favour of the petitioner, the petitioner was entitled to avail the Input Tax Credit under section 16 of the CGST/MGST Act. Petition disposed off.

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• 2024 (11) TMI 977
  Maintainability of the writ petition - Jurisdiction of SCN - quashing the exercise of the jurisdiction vested in this Court under Article 226 of the Constitution of India - challenge to Ext.P9 notification which relates to the rate of GST for commission received in terms of the provisions contained in Section 21(1)(b) of the Chit Funds Act, 1982. Maintainability of the writ petition - HELD THAT:- The contention of the Senior Standing Counsel appearing for the respondents that this Court should not interfere with a show cause notice should be accepted in normal circumstances. However, where on admitted facts, the show cause notice is found to be without jurisdiction, it is not that an objection raised to the maintainability of the writ petition is sustainable. It is settled law that where the proceedings are challenged as being without jurisdiction, the availability of an alternate mechanism for resolution of disputes (here through adjudication of the show cause notice) is no ground for the Court to refuse to exercise jurisdiction. The judgment of a Constitution Bench of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO and Anr, [ 1960 (11) TMI 8 - SUPREME COURT] is the authority for this proposition. When faced with an argument that the question as to whether re-assessment notices were properly issued under the provisions of Section 34 of the erstwhile Indian Income Tax Act, 1922 should not be investigated in a writ petition under Article 226 of the Constitution of India it was held We have therefore come to the conclusion that the Company was entitled to an order directing the Income Tax Officer not to take any action on the basis of the three impugned notices. In the facts of the present case, it is clear on the authority of the judgment of the Supreme Court in Oriental Kuries Limited [ 2019 (11) TMI 1818 - SUPREME COURT] and the provisions of Notification No.12 of 2017 that the issuance of a show cause notice alleging that the transactions, which are the subject matter of Ext.P1 show cause notice, should be subject to a levy of GST is clearly without jurisdiction. There are no disputed questions of fact. The matter can be decided purely as a matter of law. Therefore, the fact that this writ petition has been filed challenging a show cause notice is no ground to refuse the exercise of jurisdiction under Article 226 of the Constitution of India. Ext.P1 show cause notice is confined to the interest received from the defaulting subscribers. In such circumstances, for reasons indicated, it must be held that the amount of interest received by the foreman of a chit on defaulting subscriptions cannot be said to be amounts received as consideration for the supply of services. It is declared that Ext.P1 show cause notice is issued without jurisdiction. It is accordingly quashed - this writ petition is allowed.

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• 2024 (11) TMI 976
  Violation of principles of natural justice - notices were uploaded on the view additional notices and orders tab of the GST portal - the petitioner asserts that he was unaware of proceedings - HELD THAT:- On examining the impugned order, it is evident that the order pertains to discrepancy between the petitioner s GSTR-3B return and the auto populated GSTR-2A and also reconciliation of turnover as per the Income Tax return and GSTR-3B return. It is also clear that the tax proposal was confirmed because the petitioner did not reply to the show cause notice. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary that the petitioner be provided an opportunity to contest the tax demand on merits. The impugned order dated 9-8-2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is directed to submit a reply to the show cause notice - petition disposed off.

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• 2024 (11) TMI 975
  Governmental Authority or Local Authority - Government of Karnataka holds 99.99% of equity in the Corporation - exemption from filing of Annual Return in Form GSTR9 and Form GSTR9C - input tax credit on the inward supply of goods and services, which are capitalized in the books of accounts - input tax credit on the inward supply of services against output taxable supplies of support and auxiliary services and other supply of taxable goods - input tax credit (on inputs, input services and capital goods) proportionately on the taxable output supply of support services and goods (scrap etc.) - eligibility to claim taxes paid under RCM, as input tax credit - levy of Additional Surcharge collected from Open Access Consumer - taxability of Wheeling and Banking Charges allowed by Commission (KERC) as 5% and 2% of the energy input into the distribution system by Open Access consumer. HELD THAT:- The clause 8.5.4 of the Tariff Policy, 2016 notified by the Ministry of Power, Government of India provides that: The additional surcharge for obligation to supply as per section 42(4) of the Act should become applicable only if it is conclusively demonstrated that the obligation of a licensee, in terms of existing power purchase commitments, has been and continues to be stranded, or there is an unavoidable obligation and incidence to bear fixed costs consequent to such a contract. The fixed costs related to network assets would be recovered through wheeling charges. As per National Electricity Policy, an additional surcharge be levied for meeting the fixed cost of the distribution licensee arising out of his obligation to supply in cases where consumers are allowed open access. As per Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulation, 2004, the open access customer shall be liable to pay such additional surcharge as may be determined by the Commission from time to time. It is also noticed that Regulation 3 of KERC (Electricity Supply) Code, 2004 empowered the appellant to charge additional surcharge from their open access consumers. Thus, it is apparent that the appellant is collecting additional surcharge as per the Electricity Act; Tariff Policy; National Electricity Policy of Ministry of Power, Government of India and Karnataka Electricity Regulatory Commission (Terms and conditions for open Access) Regulation, 2004, KERC (Electricity Supply) Code, 2004 of Karnataka Electricity Regulatory Commission, Government of Karnataka from the open access customers, and therefore it forms part of tariff for the supply and distribution of electricity. It is found that collection of Additional Surcharge from OA consumers on the basis of quantum of energy wheeled from the private generators of OA consumers is only to meet the fixed cost of the appellant arising out of this obligation to supply. Such collection mechanism is backed by an Act and policies of Central Government as well State Government. In the instant case, the Appellant has entered into agreements with their customers, basically for supply of electricity - From the submissions of the appellant, there are no independent arrangement entered into by the appellant for tolerating an act against which the consideration is collected as Additional Surcharge. It is found that such amounts do not constitute payment (or consideration) for tolerating an act, rather these amounts are collected only to cover the fixed costs the appellant has to incur in terms of power purchase agreements they have entered into with power generating companies. The Additional Surcharge levied under Electricity Act from their customers who opted for sourcing electricity from open access, over and above the consideration charged towards supply and distribution of electricity should form part of taxable value, determined in terms of Section 15 of the CGST Act, 2017 - the supply of electricity as goods and/or distribution of electricity as service are covered under exemption either in terms of entry No. 104 of Notification No.02/2017 CT(R) dated 28.06.2017 applicable to goods and /or entry No.25 of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 applicable to services.

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• 2024 (11) TMI 974
  Exemption from charge of GST under Notification No.32/2017-Central Tax (Rate) dated 13-10-2017 (entry number 21A) IGST Notification No.33/2017-IGST(Rate) dated 13-10-2017 (entry number 22A) - supply of pure service made by our organization, (being a GTA- cum-Packing Moving Company) to or on behalf of a foreign entity unregistered in India (unregistered person) - HELD THAT:- From the description of service in the aforesaid entry at S.No 21A it is evident that the said exemption is exclusively in respect of Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person, other than certain specified recipients. The term goods transport agency is defined in para 2 (ze) of the Notification supra, goods transport agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. In the instant case the applicant has nowhere claimed to have issued a consignment note in relation to transport of goods and therefore his claim that he is providing goods transport agency service is not justified. It is also observed that applicant is providing a bundle of services of customs clearance (CHA service), loading unloading services, port handling, liner fee and destination services in India. Further it is observed from the copy of invoice raised by the applicant that many services are individually charged. The exemption is not applicable to the applicant s case.

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• Income Tax

• 2024 (11) TMI 973
  Revision u/s 263 by CIT - assessee had purchased the property in question with an intention to build Tech Park, but due to recession, the building was not constructed and as the firm had no funds, assessee sold the land - As decided in HC [ 2022 (10) TMI 1120 - KARNATAKA HIGH COURT] merely because two plausible views are available and the AO has taken one view, the jurisdiction u/s 263 cannot be exercised. Invoking Section 263 in the facts and circumstances of the case was erroneous. Land was purchased and sold without any development, no elaborate enquiry was required and the AO has noted the facts required for the case and passed the AO. HELD THAT:- We find no reason to interfere with the view taken by the High Court. The Special Leave Petition is accordingly dismissed.

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• 2024 (11) TMI 972
  Nature and Character of receipt - sum received under the co-marketing agreement - capital receipt or revenue receipt - HELD THAT:- It is well settled that contract or an agreement between the parties must be construed having regard to the intention of the parties and such an intention has to be gathered from the language employed in the agreement. It is equally well settled proposition that an agreement has to be read as a whole. The Supreme Court in Kettlewell Bullen and Company Limited [ 1964 (5) TMI 4 - SUPREME COURT] has laid down the test to distinguish the capital receipt from the revenue receipt. It has been held that where payment is made under a covenant to compensate a person which does not affect his trading structure or his business or deprive him of his source of income, such a covenant being a normal incident of business, which leaves him free to carry on his trade shall be treated as revenue receipt. However, if the covenant impairs the trading structure of the assessee or results in loss of income to the source of income of the assessee, the payment made under such a covenant shall be treated as capital receipt. The issue whether an amount received by the assessee on the condition not to carry on a competitive business was in the nature of capital receipt was considered in Gillanders Arbuthnot and Company Limited [ 1964 (5) TMI 5 - SUPREME COURT] - as held that the compensation received by the assessee for loss of agency was revenue receipt, whereas compensation received for restraining from carrying on the competitive business was capital receipt. The nature and character of a receipt whether the same is a capital receipt or a revenue receipt has to be ascertained in the facts and circumstances of the case. The payment of the amount under the agreement has been made to the assessee as it has surrendered its rights in a capital asset, namely patent and trademark. The agreement in question is a negative/ restrictive covenant and the amount has been paid to the assessee in lieu of the rights which it has surrendered under the agreement. The surrender of the rights results in impairment of profit making apparatus of the company and therefore, is a capital receipt. The finding recorded by the Tribunal that the amount received under the agreement is a capital receipt, which has been recorded on the basis of meticulous appreciation of evidence on record. The aforesaid finding cannot be termed as perverse. It is well settled in law that this Court in exercise of powers under Section 260A of the Act cannot interfere with the finding of fact until and unless the same is demonstrated to be perverse. (see Syeda Rahimunnisa vs. Malan Bi [ 2016 (10) TMI 1233 - SUPREME COURT] and Softbrands India Private Limited [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] ). Decided in favour of the assessee.

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• 2024 (11) TMI 971
  Revision u/s 263 - Deduction u/s 80P - taxability of the interest earned by assessee from the investment made with the Co-operative bank - HELD THAT:- The controversy sought to be canvassed with regard to deduction u/s 80P(2)(d) of the Act is no more res integra in view of the decision of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. [ 2022 (1) TMI 1309 - GUJARAT HIGH COURT] as well as in case of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein it was held that the deduction of u/s 80P(2)(d) of the Act is available to the cooperative societies on the income earned as interest on the investment made with the cooperative bank which in turn, is a cooperative society itself. Provisions of section 80P(2)(d) would be applicable in the facts of the case and the PCIT was not justified in invoking revisional powers under section 263 of the Act which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act and in view of the various decisions of the Court, the Tribunal after following the same has come to the conclusion that the assessment was not erroneous allowing deduction of section 80P(2)(d) of the Act which is in consonance with the various decisions of the Court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled. Decided in favour of assessee.

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• 2024 (11) TMI 970
  Scope of limited Scrutiny - Validity of Notice u/s 143(2) - case of the assessee was selected for limited scrutiny i.e. for verifying the cash deposits during demonetization - DR concluded that notice would indicate that the case was selected for scrutiny assessment, thus tried converting the limited scrutiny to a full scrutiny, HELD THAT:- Though in the heading, it exhibits limited scrutiny (Computer Aided Scrutiny Selection) but thereafter in the first paragraph, it only talks of scrutiny and then in second paragraph, it talks upon the opportunity being provided to the assessee what he wants to say in support of the return. It is pertinent to observe that in para one, the ld. AO has to identify the issues for examination. If this proforma is being read with the first paragraph of the assessment order, then, it would reveal that in the third line of the first paragraph, ld. AO has used the expression this return was selected for scrutiny in CASH on the issue of cash deposits during demonetization period . It would indicate that the case was selected for scrutiny but for the issue of cash deposit during demonetization, this mention of the issue would indicate that it was for a limited purpose of scrutinizing the cash deposits during demonetization. Its scope for making other additions would only be enlarged by following due procedure laid down by the CBDT vide its Instruction No. 5 AO has not made any addition of cash deposit during demonetization period. The assessee has deposited small amounts, which have been accepted by the ld. Assessing Officer. Therefore, the assessment order itself is not sustainable because it has been passed by the AO by exceeding his limited powers. The ld. Assessing Officer ought to have followed the procedure contemplated in CBDT Instruction bearing No. 5 of 2016 for converting a limited scrutiny assessment into a full scrutiny. Accordingly, we quash the assessment order. Appeal of the assessee is allowed.

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• 2024 (11) TMI 969
  Denial of Tax relief u/s 89 towards the arrears of salary received - Form 10E was not filed on or before filing of the return on 23.12.2021 - claim of the assessee u/s 89 was rejected by the CPC while issuing the intimation u/s 143(1) - HELD THAT:- As per provisions of first proviso to section 143(1)(a), it was mandatory on the part of department to make any adjustment as prescribed in the said section after giving an intimation to the assessee in writing or in electronic mode to which the assessee would be entitled to respond within 30 days, which has to be considered before making such adjustment. In present case, whether such opportunity was afforded to the assessee are not prima facie coming out from the material available before us, therefore, in all fairness to verify such aspects, the matter needs to be restored back to the files of AO to examine and verify such material aspects before rejecting the claim of the assessee u/s 89(1). An application for rectification was filed by the assessee on 05.11.2022, whereas Form 10E and relevant documents was furnished online which were available with the department on 04.11.2022, however, such information was not considered by the department while passing the order u/s 154. This matter deserves to be set aside and to be adjudicated afresh by the Ld. AO on the basis of material furnished by the assessee and after considering the explanations therein. Appeal of the assessee is partly allowed for statistical purposes.

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• 2024 (11) TMI 968
  Validity of order passed by CIT(A) passed u/s 250 - demands raised u/s 143(1) was wiped out vide order U/s 143(1)/ 154 - HELD THAT:- AO has nullified the demand by issuing a rectification order u/s 143(1)/154 of the Act. Consequently, no demand remains outstanding against the assessee as per the rectification order of the ld. AO in impugned assessment year. Therefore, the demands upheld in the impugned appellate order cannot be sustained against the assessee. The Ld. DR has acknowledged this position and accepted the submissions of the Ld. AR. In light of this, the grounds raised by the assessee are allowed, and the impugned appellate order is hereby quashed. Assessee s appeal is allowed.

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• 2024 (11) TMI 967
  Adhoc disallowance of business expenses - HELD THAT:- We are in agreement with the contention of the Ld. A.R. that ad-hoc disallowances, without pointing out any specific instance and for the general reason of covering any possible revenue leakage, cannot be upheld. There have been innumerable orders of this Tribunal where such adhoc disallowances were held to be bad in law. Assessee cannot be put to pay increased tax demand only on account of presumption that there could have been possible revenue leakage, especially when the assessee has duly offered explanations regarding each and every expenditure under dispute. Both the lower authorities have not given due weightage to the explanations offered by the assessee and have rather proceeded in a hasty manner to first make the disallowances and then uphold such disallowances. Therefore, in the absence of any specific finding, ad-hoc disallowances in appeal before this Tribunal (that is as sustained by the Ld. First Appellate Authority), cannot be held to be justified. Decided in favour of assesee.

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• 2024 (11) TMI 966
  Bogus purchases/transaction of shares - onus to prove - HELD THAT:- As the shares were purchased in the FY 2010-11 relevant for AY 2011-12 through Motilal Oswal Investment Services and securities transaction tax and service tax along with other charges were paid to the broker. The assessee has relied upon the decision of Smt. Sudha Loyalka [ 2018 (7) TMI 1892 - ITAT DELHI] in support of the claim that since the shares were not sold during the FY 2010-11 and nothing has been brought on record in support of the claim of the sale of the same, therefore, the same could not be treated as bogus transaction relating to sale of shares in the AY 2011-12 and the assessee succeeds. Incorrect credit of TDS - AO is directed to verify the same and the assessee is also directed to furnish necessary evidences for the same before the ld. AO who shall allow the credit in accordance with law as this ground of appeal has not been adjudicated upon by the ld. CIT(A). The same was specifically raised as ground no. 12 (additional ground) before him.

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• 2024 (11) TMI 965
  Denial of credit of TDS in the intimation made to the assessee u/s 143(1) - CIT(A) held that the CPC was correct in restricting the grant of TDS credit to the extent of that relating to the receipts reflected in the return of income filed in the impugned assessment year - HELD THAT:- Assessee before us was unable to point out any infirmity in the findings of the Ld.CIT(A), as stated above, both with regard to the interpretation of law on the grant of TDS credit in terms of provisions of Section 199 read with Rule 37BA of the Income Tax Rules, 1962, as also with respect to the fact of the TDS being deducted on a portion of income which had already been returned to tax in the preceding assessment years. As we see no reason to interfere with the order of the Ld.CIT(A) confirming the adjustment made by the CPC in the intimation made u/s.143(1) of the Act, restricting the grant of TDS credit to the tune of Rs. 4,07,968/- as against TDS credit of Rs. 5,24,600/- claimed by the assessee. But, at the same time, since the assessee has consistently pleaded both before the CPC and also the CIT(A) that the gross receipts on which TDS was deducted during the impugned assessment year amounting to Rs. 5,24,60,000/- included receipts which had already been returned to tax in the preceding two assessment years; i.e. AYs 2021-22 2022-23 as tabulated above, the AO is directed to give necessary credit of TDS to the income returned to tax in those years. In terms of the aforesaid directions given by us, the appeal of the assessee is dismissed.

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• 2024 (11) TMI 964
  Unexplained cash deposits u/s.69A - rectification application had been filed to correct the amount of cash deposited in one of the bank accounts, which was initially noted as Rs.15 lakhs but was actually Rs.1.50 lakhs HELD THAT:- We do not find any merit in the appeal filed by the assessee against the addition made to its income on account of cash found deposited in nits bank accounts to the tune of Rs.32 lacs, except to the extent of addition to the tune of Rs. 13.50 lacs . For the simple reason that the AO himself has reduced the addition to this extent by passing a rectification order u/s.154 of the Act noting and agreeing with the fact brought to his notice of the incorrect quantum of cash noted to be deposited by the assessee in one of his bank accounts. This fact was brought to the notice of the CIT(A), but it seems to have not been taken note of by him since his order reveals no reason for confirming the addition made to the tune of Rs.32 lacs despite the AO having reduced it by Rs.13.50 lacs. Therefore, to this extent, we hold that the Ld.CIT(A) has erred in confirming the addition made to the tune of Rs.32 lakhs when the addition ought to have been confirmed only to the extent of Rs.18.50 lakhs. Having said so, we further hold that we do not find any merit in the contentions of assessee on the merits of the addition made. Undoubtedly the only manner in which the assessee has explained the source of cash deposit in his bank account is by way of furnishing book/cash flow statement, that too, all entries therein being unsubstantiated. Also the primary source of cash deposited in Bank is attributed to cash withdrawn from his bank account almost four years back and no reason has been given by the assessee for holding such huge amount of liquid asset for such a long period of time and redepositing it later. We agree with the findings of the Ld.CIT(A) that it is highly improbable that any person would withdraw such a huge amount of cash and retain it for such a long period of time for no reason at all. We agree with the Ld.CIT(A) that the assessee has given no reasonable explanation of the source of cash deposit in his bank account to the extent of Rs.18.50 lakhs. The addition to this extent made to the income of the assessee is accordingly confirmed by us. Decided partly in favour of assessee.

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• 2024 (11) TMI 963
  Deemed dividend u/s 2(22)(e) - AO calculated proportionate profit upto the date of advances and added the same to the total income of the assessee u/s 2(22)(e) - as argued accumulated profit must exclude the proration of current year s business profit - HELD THAT:- We direct the AO to restrict the addition on account of deemed dividend only to the extent of accumulated profits and delete the balance addition made.

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• 2024 (11) TMI 962
  Order of assessment in excess of jurisdiction vested in the AO in relation to Limited Scrutiny - additions made by the AO were not subject matter of limited scrutiny - HELD THAT:- We observe that undisputedly the case of the assessee was selected for scrutiny for examination and verification of large cash deposits during the impugned financial year. However, upon verification of facts by the ld. AO during the course of assessment proceedings, the AO did not make any addition after verification of Bank accounts towards large cash deposits. However, he made two additions of Rs. 1,02,17,061/- on peak credit of unexplained deposits which were not on account of cash deposits and second in respect of under misreporting of income of Rs. 34,43,814/- as per Form 26AS. It is pertinent to state that during the course of hearing, AO noticed that the assessee has deposited Rs. 1,73,10,349/- in Canara Bank account out of which cash deposit was of Rs. 4,01,390/- whereas credit entries of Rs. 6,26,597/- in ICICI Bank account were there out of which cash deposit was of Rs. 96,565/- during the financial year. We note that the assessee did not comply with the show-cause notice issued by the ld. AO and finally ld. AO framed the assessment under section 144 of the Act vide order dated 19.12.2019 making two additions as stated above. Therefore, it is abundantly clear that the additions made by AO were not in respect of the issue, which was the subject matter of the limited scrutiny as is apparent from the notice issued under section 143(2) of the Act dated 10.08.2018 and the AO passed the assessment order by making the above said additions without converting the limited scrutiny into complete scrutiny in terms of Circular issued by CBDT bearing No. 3/2017 dated 21.02.2019. In our opinion, the said additions made by the ld. Assessing Officer are without jurisdiction and cannot be sustained. The above issue is also covered by the decision of Vudatha Vani Rao [ 2024 (6) TMI 63 - ITAT VISAKHAPATNAM ] wherein the issue has been decided in favour of the assessee by holding that the additions made in the assessment order, which were not subject matter of the limited scrutiny, are beyond the jurisdiction of the ld. Assessing Officer and therefore, have to be deleted. Appeal of the assessee is allowed.

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• 2024 (11) TMI 961
  Assessment of trust - addition as anonymous donations u/s 115BBC - donation remained unverified due to donation denied by the persons, insufficient address and no reply received from the donors - HELD THAT:- As decided in Shri Dadasaheb Gawai Charitable Trust [ 2024 (7) TMI 836 - ITAT NAGPUR] anonymous donations are concerned, the assessee maintained the record of the identity and address of the persons who are making contribution and other particulars and, therefore, provisions of section 115BBC of the Act are not applicable. In the present case, the assessee has maintained identity of the donors i.e., complete details such as name, address, PAN card details, Aadhar details and, hence, provisions of section 115BBC of the Act are not applicable to the assessee Trust. We find that the assessee has given all the details of the donors including names, address, PAN card details, Aadhar details, etc. Thus, the assessee discharged onus casted upon it by producing all the details before the AO. AO without following the procedure and without providing proper opportunity to the assessee, doubted the genuineness of the donations and invoked the provisions of section 115BBC of the Act, which is not correct. CIT(A) after considering all the facts and explanation given by the assessee, deleted the addition. We find no infirmity in the order passed by the learned CIT(A). Addition being unspent grant shown in the Balance Sheet, but not shown as income in the Income Expenditure Account - HELD THAT:- As Tied up grants are not voluntary contribution and cannot be considered as Income . Form no.9A, is required to be filed under rule 17(1) of the Income Tax Rules, 1963. The requirement to file Form no.9A, arises only when application falls short of 85% of the income derived from the property held under the Trust. Once it is held that grants received under certain stipulated conditions, is not income, there is no requirement to file Form no.9A. Acquiescence on the part of the assessee cannot be held against them as there is no estoppel against the statute. So, the Assessing Officer had fallen under wrong premise to add which has been correctly deleted by the learned CIT(A) and such order needs no interference at our end. Accordingly, grounds no.1 2, raised by the Revenue are dismissed.

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• 2024 (11) TMI 960
  Reopening of assessment u/s 147 - Reason to believe or review/verification - case reopened purpose of verification of the source of purchase of the property - HELD THAT:- It is now well settled that no re assessment can be done just to make an enquiry or verification and in support of this, we rely on Chapter VI of the publication issued by the All India Federation of Tax Practitioners viz. Re assessment Law, Procedure Practice (Practical Guide) on the issue of No Re assessment Just To Make An Enquiry or Verification . Hon ble Bombay High Court in Nivi Trading Ltd. v/s Union of India [ 2015 (4) TMI 411 - BOMBAY HIGH COURT] has categorically held that the re assessment under section 147 of the Act cannot be done solely for the purpose of verification. Re opening was done only for the purpose of verification of the source of investment in the property, which is also evident from the reasons so recorded by the AO and also reproduced herein above. Relying upon the aforesaid judicial propositions, which categorically held that the re opening cannot be done for verification, therefore, we hold that re opening of assessment is invalid and accordingly the consequent assessment also becomes invalid, unjustified and bad in law. Accordingly, the re opening of assessment by the AO and confirmed by the CIT(A) is hereby quashed for the reasons stated herein above. Since the re opening itself is quashed, the corresponding assessment order does not survive as well. Thus, the assessee succeeds in ground no.1.

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• 2024 (11) TMI 959
  Penalty u/s 271(1) - concealed income representing quantum addition of unexplained cash credits - HELD THAT:- Revenue s foregoing vehement contention and find no reason to accept the same. This is for the precise reason that the assessee had filed all the relevant details and supportive evidence which ultimately failed to evoke the assessing authority s concurrence. We quote CIT v. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] that quantum and penalty proceedings are parallel proceedings wherein each and every addition/disallowance made in the course of former does not ipso facto attract the latter penalty provision, to delete the impugned penalty in very terms. Assessee s appeal is allowed.

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• 2024 (11) TMI 958
  Unexplained investment u/s 69 from the Assessee s business capital - Assessee has withdrawn capital from the business of the Assessee who was engaged in the business of Straw (Bhus) for long time and the Assessee has shown income u/s 44AD - HELD THAT:- Assessee has shown the income u/s 44AD of the Act and in the year under consideration and the Assessee has shown turnover of Rs. 18,35,000/- and declared the income of Rs. 2,50,000/- from the aforesaid business which has been accepted by the AO. The explanation given by the Assessee was that out of the withdrawn of his capital, the investment has been made. To substantiate the same, the Assessee has produced capital account and also statement of affairs which has not been considered by the lower authorities. Since, the Assessee has done the business in cash, it cannot be ruled out the availability of cash with the Assessee. Though, the Assessee has shown turnover of Rs. 18,35,000/-, CIT(A) observed that Assessee has marginal income. We are of the opinion that there is every chance of accumulation of cash from the earlier years, therefore, Assessee having availability of cash in hand which can be corroborated with capital account and statement of affairs for three years. Thus relying on the order of case of Mansukh K. Vaghasia [ 2022 (4) TMI 848 - ITAT SURAT] we delete the addition made u/s 69 of the Act. Addition on account of unexplained investment u/s 69 - Assessee contended that the said amount was invested by the wife of the Assessee and the same has been added in her hand by the AO u/s 143(3) substantially and made the present addition on protective basis in the hand of the Assessee - Assessee further submitted that the addition made in the hand of the wife of the Assessee has been accepted and the tax has been duly paid by the wife of the Assessee - HELD THAT:- As the substantial addition made in the hand of the Assessee s wife has been claimed to have been accepted and due tax has been paid, the protective addition made in the hand of the Assessee does not survive. Accordingly, the protective addition made in the hand of the Assessee on protective basis is hereby deleted. Appeal of the Assessee is allowed.

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• 2024 (11) TMI 957
  Notice u/s 143(2) issued by non jurisdictional AC/DC - notice issued by officer who did not have the authority over the assessee - HELD THAT:-Notice u/s 143(2) is the jurisdictional notice and any inherent defect therein is not curable. In the present facts of the case, after considering the instruction No.1/2011 cited notice u/s 143(2) dated 04/07/2017 having been issued by an Income Tax Officer who had no jurisdiction over the assessee, such notice in our view has not been issued validly and is issued without authority in law. Revenue also could not controvert the same by submitting any other Notifications/Circular/Instruction to this effect. As per the Instruction No.1/2011 dated 31.1.2011 by the Board as in the present case, the total income declared by the assessee is Rs. 59,29,270/- for the assessment year 2016-17 and therefore, the notice ought to have been issued by ld. AC/DC himself instead of transferring the same to the ITO, Ward-1(2)(1) in consequence to JCIT s Notification Order u/s 120(5) of the Act dated 27/08/2018. In the present case, the ITO, ward-1(2)(4), Bangalore had issued the notice U/s 143(2) on 04/07/2017 thereafter the case was transfer from ACIT, Circle- 1(2)(1), Bangalore on 29/08/2018 consequent to ld. JCIT s Notification Order U/s 120(5) of the Income Tax Act dated 27/08/2018. Therefore the notice issued U/s 143(2) of the Act dated 04/07/2017 is illegal, bad in law without jurisdiction. We set aside the order of the revenue authority by quashing the order of the assessment framed u/s 143(3) of the Act dated 26/12/2018 since the issue of notice u/s 143(2) of the Act dated 04/07/2017 was not issued by the jurisdictional ld. AC/DC as specified in the CBDT Instruction No.1/2011 dated 31.1.2011 which is not a curable defect. Hence, the additional ground raised by the assessee is allowed.

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• 2024 (11) TMI 956
  Jurisdiction of ITAT at Delhi to entertain an Appeal - Order of AO who framed the assessment is situated in the State of West Bengal and assessee is situated in Delhi - HELD THAT:- Since the impugned assessment order is passed by the Assessing Officer situated at Kolkata, the present appeal of the revenue before Delhi Tribunal is not maintainable in view of the decision of ABC Papers Ltd. [ 2022 (8) TMI 863 - SUPREME COURT] wherein it settled the law that it is situs of the Assessing Officer which forms the clinching factor for exercising the appellate jurisdiction. Hence the Delhi Tribunal does not have power to adjudicate this appeal as the Assessing Officer was located in the State of West Bengal. Hence we dismiss the appeal of the revenue as not maintainable with liberty given to the revenue to approach the appropriate Bench by filing a fresh appeal together with a delay condonation petition.

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• 2024 (11) TMI 955
  Income deemed to accrue or arise in India - assessee having business connection in India and the LO was treated as PE of the assessee in India - onus to prove - assessee is a US based company engaged in the business of supplying goods from outside India. The assessee is a wholly owned subsidiary of a General Electric Company and made offshore sale of goods and offshore sale of software and related support services to its various customers in India - as argued assessee has no PE or DAPE in India - HELD THAT:- Relevant documents were placed before the AO by the assessee to substantiate its claim of having no LO in India, the onus shifts on the Revenue to prove otherwise. The AO has made no effort to examine claim of the assessee and to check the veracity of documents furnished during the assessment proceedings. The Tribunal sought remand report from the AO in September 2023. Six weeks time was given to the AO to furnish the report. AO furnished the report in December 2023, the said report is stated to be based on the information provided by the assessee. AO had also expressed his helplessness in providing the said report without complete verification due to paucity of time. We do not agree with the Revenue/AO on the excuse of time limitation in furnishing the report. This appeal is taken up for hearing after almost 10 months from the date of furnishing report. If, the AO had something more to add to the report dated 19.12.2023 or had any contrary material to rebut the contentions of the assessee, the AO could have very well furnished the same by way of supplementary report. The AO has not placed on record any material whatsoever to rebut contentions of the assessee with regard to closure of LO operations and no expatriate employees in India during the relevant period. The closure of LO operations in India result in paradigm shift in taxability and attribution of profits in India. With the closure of LO operations in India, the assessee will have no PE or DAPE in India. Revenue has not placed on record any material to show that even after closure of LO operations, the assessee still has business connection that can be termed as PE or DAPE in India. In light of above, we find merit in the case of assessee. We have no hesitation in holding that the assessee has no PE in India during the impugned AY, hence, question of attribution of profits to PE in India does not arise. In the result, ground no. 1 to 11 of appeal are allowed. Holding receipts from supply of software in India as Royalty - We find that in the assessment order the AO has treated the receipts from sale of software as royalty under the provisions of section 9(1)(vii). The assessee raised objections before the DRP, the DRP directed the Assessing Officer to verify the records and, if, software supplied by the assessee is found to be embedded in hardware itself, the addition on account of royalty income was directed to be deleted. We find that the AO without complying with the directions of the DRP reiterated the findings given in draft assessment order and treated the receipts from software related support as Royalty. This issue was also considered by the coordinate Bench in assessee s own case in the preceding assessment years i.e. AY 2012-13, 2014-15 2015-16 [ 2022 (3) TMI 1209 - ITAT DELHI ] as held amounts paid by resident Indian end-users/distributors to non-resident computer manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the pay of royalty for the use of copyright in the computer software, and that same does not give rise to any income taxable in India, as a result of the persons referred to in section 195 were not liable to deduct any TDS u/s 195 - Decided in favour of assessee.

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• 2024 (11) TMI 954
  GST amount considered for the purpose of computing presumptive income u/s. 44B - Applicability of Section 145A in computing deemed income under Section 44B - HELD THAT:- Section 44B is a special provision for computing profits and gains of shipping business in the case of non-residents. Prior to insertion of Section 44B, taxable profits of foreign shipping enterprises were determined by suitably apportioning their global profits between their Indian business and foreign business or on the basis of voyage accounts which led to difficult and complicated issues in assessments. With a view to simplifying and rationalizing the assessments in such cases, Section 44B was inserted for computing profits and gains of shipping business in the case of non- residents at 7.5% of specified amounts. Insertion of Section 44B substituted computation as per normal provisions in which both debit of expenses and credit of income were considered. Interpretation of Section 145A inserted by the Finance Act 2018 with retrospective effect from 01/04/2017 on the issue of applicability of income computation and disclosure standards - Ergo, amendment to Section 145A was to include taxes of cost of sales / services for valuation of inventory to align with ICDS-2 and nowhere it can be inferred that it tantamount to change the computation mechanism on presumptive basis of taxation. Earlier Section 145A was inserted to bring clarity with the method of accounting for valuation of purchase and sale of goods and inventory, to determine business income. Section 145A of the Act takes into consideration valuation of sale or purchase of goods/services and of inventory , whereas Section 44B (2) considers specified amounts i.e. amount paid or payable on account of the carriage of goods shipped at any port in India and amount received or deemed to be received on account of the carriage of goods shipped at any port outside India. The terms amount paid or payable and amount received or deemed to be received mentioned under Section 44B cannot be replaced with the term valuation in the absence of any specific enabling provisions under Section 44B or Section 145A of the Act or any other provisions of the Act. For instance, Section 50CA is a deeming provision which enables replacement of consideration with fair market value where the amount of consideration is less than the fair market value determined in a prescribed manner. Thus, in our view adding GST component to the deemed income which has to be computed directly on specified amounts i.e. amount paid or payable on account of carriage of goods shipped which is revenue element only. For the earlier regime of service tax prior to GST, there were various judicial precedents which upheld exclusion of service tax while computing the provision u/s. 44B or other similar provisions. Full Bench of Hon ble High Court of Uttarakhand in case of DIT v. Schlumberger Asia Services Ltd [ 2019 (4) TMI 1177 - UTTARAKHAND HIGH COURT] held that service tax paid earlier by the assessee to Government of India is not on account of provision of services in connection with exploration and production of mineral oil, hence would not form part of aggregate taxable amount referred to in clauses (a) and (b) of sub-section(2) of section 44BB. On perusal of the comparison of the relevant provision of service tax law and GST law it can be seen that both are indirect taxes and is recovered by the service provider on behalf of assessee and as an agent of the Government as such rates are specified and thus, the provision under the service tax law are similar to provision of GST law and therefore, in our opinion the judicial precedents delivered in respect of erstwhile tax law would apply mutatis mutandis to the GST laws also. GST being a mandatory statutory levy cannot be said to be in the nature of charges by the shipping Company towards the carriage. The incidence of GST is on account of taxability of services under the relevant parliamentary statute i.e., GST laws and not on account of the business activities as envisaged in Sections 44B(2)(i) and 44B(2)(ii) of the Act. Otherwise, including GST in gross receipts for purpose of section 44B would be akin to charging income tax on GST i.e., tax on tax, which would promote cascading effect which cannot be the intent of legislation. A service provider acts in a fiduciary capacity out of statutory obligation casted upon it, while collecting service tax/GST on the behalf of exchequer and the same is ultimately deposited with the exchequer, hence there cannot be any iota of doubt that the impugned GST is not in the nature of specified income under Section 44B. As argued amendment in the provisions of Section 145A of the Act brought by Finance Act 2018, since it includes services within its code therefore, income has to be computed in accordance with Section 145A and any taxes levied under services is included - If it is held that Section 145A are applicable for computing deemed income u/s.44B and GST is added to the specified amounts and provisions of Section 29 are invoked, then deduction of GST paid should be allowed while computing income under the head profits and gains of business or profession as per Section 43B. Even otherwise also Section 44B over rights Section 28-43A and 43B and therefore, in case if department seeks to add GST on the turnover for the purpose of calculating the profit u/s.44B, then, deduction u/s.43B has to be allowed if it is paid on or before the due date and similarly it can be disallowed once GST has not been paid within the due date. However, this is purely academic, contention which has been raised because we have already held that for the purpose of Section 44B only specified amount mentioned in the sub-Section 2 of Section 44B alone is the subject matter of computation of profit @7.5% and Section 145A has no applicability. Thus we hold that while computing income u/s.44B, GST cannot be included. Thus, in our opinion, the minority view of the single member of the DRP is to be upheld that GST cannot be included while computing deemed income u/s.44B, accordingly, this issue is decided in favour of the assessee. Computing of book profit u/s.115JB - Since assessee has offered income of operation of ships to tax under the deemed provisions of Section 44B r.w.s.90(2) and Article 8 of India-Hong Kong Tax Treaty. Thus, in view of the Explanation 4A to Section 115JB(1), the provisions of Section 115JB are not applicable to the assessee. Short grant of tax deducted at source and credit of advance tax - As been stated that assessee has filed rectification application before the ld. AO which has not been disposed of. Accordingly, we direct the ld. AO to examine this issue and decide accordingly.

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• 2024 (11) TMI 953
  TDS u/s 195 - disallowances made u/s. 40(a)(i) - ocean freight charges paid by the assessee company for availing those services falls under the definition of Royalty as per article 12.3 of India-Korea DTAA - income deemed to accrue or arise in India - HELD THAT:- The assessee is a resident Indian Company, is engaged in the business of manufacture / job work of boiler pressure parts, panels, header and coils and designing, building, installation and maintaining engineering plants relating to thermal and coal power plants. During the assessment year the assessee had incurred expenses towards freight charges paid to a non-resident logistic company - Hyupjin Shipping Co. Ltd., Korea ( HSC ). The Assessee had engaged HSC, a Korean logistics company for availing logistics services along with coordinating with port authorities for vessel berthing, loading, unloading, port clearances, approvals, licenses, permits etc. at various ports outside India. Firstly, the impugned payment made by the assessee is not in the nature of Royalty under section 9(1)(vi) of the act as the payments were mere simplicitor freight charges. We note that the AO s conclusion in the Assessment order passed, referring to the explanation 2 of section 9(1)(vi) of the Act for treating the said consideration paid by the Respondent to HSC as Royalty towards to right to use of industrial, commercial or scientific equipment i.e., vessel, devoid of merits. As observed from the documents produced by the assessee and as per agreement entered into with HSC, the services does not confer any right to use of the equipment i.e. ship. The services relate only to logistic services, i.e., for movement of goods across various ports outside India and hence the contention of the Ld. FAO factually incorrect and wholly contrary to law. The claim of the assessee that the payment of ocean freight to a non-resident company does not tantamount to royalty. See A.P. Moller Maersk AS [ 2017 (2) TMI 993 - SUPREME COURT] DTAA between India Korea existing during the A.Y. 2015-16 - We note that the HSC does not have any place of business/office in India and further no activities are being carried out by HSC in India, there exists no business connection for HSC in India. Therefore, no income arises through business connection in India u/s. 9(1)(i).Further, as per the India-Korea tax-treaty, the business profits of a foreign company would not be taxable in India, if such company does not have a permanent establishment in India through which the business is carried on. HSC (non-resident logistics company) does not have any place of business/office in India through which business activities of the Company are carried on and thereby, the profits arising from logistics services would be taxable only in the resident state i.e., Korea. We note that HSC is a logistics company, the freight income earned by HSC would be governed by Article 7 and not Article 9 of the India-Korea tax-treaty. The Article 9 of the treaty covers only income which are earned from usage of ship / letting out of ships / charter of ships etc and not for providing logistics services in any manner whatsoever. Even on perusal of provisions of Section 195 of the IT Act, itattracts tax only on chargeable income, if any, paid to a non-resident. Where there is no liability, the question of tax deduction does not arise. Where no part of the income is chargeable in India, even clearance under Section 195(2) or 195(3) of the IT Act is not necessary. HSC does not have any place of business/office in India, the profits arising from logistics services would be taxable only in the resident state i.e., Korea, no taxes were required to be withheld by the assessee while making the remittance of freight charges. Hence, the disallowance u/s. 40(a)(i) made by the AO in reassessment is devoid of merits - Decided against revenue.

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• 2024 (11) TMI 952
  Reopening of assessment - reason to believe - borrowed opinion v/s independent inquiry - addition u/s 68 - Investigation Wing in its report had recorded that true nature of such transactions being sham transactions/accommodation entries and the entry giving entities had been shown to be mere shell companies of no means - as contended that the opinion of the AO is borrowed as it has highly relied on the report of Investigation Wing without independently verifying the issue and correct facts. HELD THAT:- There is no dispute that the re-opening of assessment u/s 147 of the Act has it genesis in the search operation carried out by the Revenue at the premises of one Shri Tarun Goyal wherein it was found that the assessee had obtained entry from the entry operator. This transaction is the subject matter of dispute between the parties herein. AO made addition being share application received from M/s. Tauraus Iron Steel Company Ltd. u/s 68 of the Act treating non-genuine transaction and accommodation entry. Assessee during the course of hearing, submitted that even if it is assumed without admitting the same that the transaction is not a genuine transaction then also the assessment could not have been re-opened on the incriminating material found during the course of search. AO was not justified in re-opening of the assessment u/s 147 of the Act. The proper course if any, under the facts of the present case when admittedly the incriminating material which is the basis of re-opening of assessment was recovered during the course of search at the premises of the third party would be proceedings u/s 153C of the Act. The impugned order passed by the AO thus, cannot be sustained. CIT(A) failed to advert to the submissions made by the assessee and the specific grounds taken before him regarding legality of re-opening of assessment.

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• 2024 (11) TMI 951
  Income deemed to accrue or arise in India - Taxability of reimbursement received on account of SAP Software and Microsoft License Fee - Royalty receipts u/s 9(1)(vi) as well as Article 12 of the DTAA stands - HELD THAT:- DR could not dispute the fact co-ordinate bench has categorically held that the issue of taxability of reimbursement of software licence fees stands covered in Assessee s favour by the Hon ble Supreme Court s decision in the case of Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ] Taxation of payment received from PVM India on account of Information Communication Technology Service Charges ( ICT Service Charges ) as FTS under Article 12 of DTAA - Where the DRP had directed the AO on the basis of the decision of the Tribunal in assessee s own case for AY 2017-18 to examine the issue, the controversy before the AO was limited. AO had not examined the factual aspects of the agreements and nature of services in context to make available clause introduced by the amendment dated 30.08.1999 in India Netherlands DTAA. As we go through the decision in favour of assessee in AY 2017-18 we find that the Mumbai Bench of the Tribunal decision in SEA Hygiene Products [ 2021 (1) TMI 323 - ITAT MUMBAI ] had been relied and squarely applied without any examination of the assessee specific agreements and nature of services. It is not the case before us that the nature of services in the case of SEA Hygiene Products are similar to that of assessee. On the other hand the decision in SEA Hygiene Products (supra) was based on principles of law laid in the case of Steria India Ltd. [ 2016 (8) TMI 166 - DELHI HIGH COURT ] and accordingly in SEA Hygiene Products (supra) it was held that the provisions of Article 12(4)(b) of the Indo-Portuguese Treaty being restricted in scope vis- -vis Article 12(3)(b) of Indo-Swedish Tax Treaty will apply in the Indo-Swedish Tax Treaty as well and it was pari materia applied in the case of the assessee for Indo- Netherlands Treaty also. There was no plea on the basis of the said benefit being independently available under India Netherlands DTAA, through an amendment vide Notification No. S.O. 693(E), dated 30.08.1999, issued under section 90(1) of the Act. Consequently we are of the considered view that as with regard to these grounds 11 to 13(d), the contentions as raised cannot be sustained without there being an opportunity with the AO, to examine the factual aspects involved about the nature of agreements and services in terms of the amendment dated 30.08.1999 in India Netherlands DTAA, with regard to restricted scope of make available clause. Issue is restored to the files of AO, to reexamine the issue in the light of aforesaid observation of this bench.

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• Customs

• 2024 (11) TMI 950
  Jurisdiction of tribunal to entertain appeal related to duty drawback - Validity of Notice u/s 128A(3) of the Customs Act, 1962 - recovery of Duty Drawback erroneously sanctioned and paid to the Firm alongwith interest - As decided by HC [ 2023 (12) TMI 695 - DELHI HIGH COURT] it would be erroneous to accept that the entitlement of the Firm claiming payment of Drawback cannot be considered by the learned CESTAT, but the Revenue s demand for recovery of the erroneously paid Duty Drawback, can be considered by learned CESTAT. This would lead to a situation where if the Drawback is not fully sanctioned by the Revenue, and the Revenue later claims the refund of the partly paid Drawback, the assessee resisting the Revenue s claim for recovery of the part Drawback would have to appeal before the learned CESTAT, but claim payment of the remaining part of the Drawback before another authority. There is merit in the contention that the Revenue s appeal is grossly delayed. Where the Revenue originally had not taken any objection on the appeal being heard by the learned CESTAT, and had also, following the order of the learned CESTAT, sanctioned refund of the Drawback, the Firm should not be left remediless - opportunity granted to the Firm to prefer a revision, under Section 129DD of the Customs Act HELD THAT:-Appeal admitted. Stay as prayed is granted pending disposal of the Civil Appeal. Accordingly, IA is disposed of.

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• 2024 (11) TMI 949
  Finalisation of assessment of duty - Assessment of duty on the vessel and ship stores - Freight, either actual or @ 20% of fob value was required to be added to the value of vessel for discharging duty at the time of import - filing common bill of entry for payment of duty on the vessels as well as total quantum of ship stores ascertained by the custom officers at the time of entry. HELD THAT:- We find that the assessing authority while finalizing the bill of entry after the coastal run has correctly deducted the duty involved in ship stores consumed during the voyage from Pipavav to Mumbai and back, therefore, on this count we do not find any error on the part of assessing authority . Hence the finalisation of assessment is correct and in order. As regard the inclusion of freight, the issue is squarely covered by this Tribunal judgment in the case Sachin kshirsagar [ 2022 (6) TMI 928 - CESTAT MUMBAI] The Commissioner (Appeals) contention that the freight should be included is not legal and correct. On careful perusal of the order-in- original, we find that there is absolutely no infirmity in the order of the Adjudicating Authority, therefore, the same needs to be upheld.

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• 2024 (11) TMI 948
  Classification of hCG Pregnancy Rapid Test Strip and hCG Pregnancy Rapid Test Cassette - Exemption from duty of customs provided to diagnostics test kits specified in List 4 - whether the hCG Pregnancy Rapid Test Strip and hCG Pregnancy Rapid Test Cassette deserve classification under CTH 3002 and whether basic customs duty @ Nil rate as required to be paid under the Exemption Notifications?- According to Rapid Diagnostics, the disputed goods are rapid chromatographic immunoassay for detection of hCG in urine to aid in the early detection of pregnancy. HELD THAT:- The disputed goods are prepared using agglutinating serum/sera. As the agglutinating sera used in the preparation of the disputed goods provide the essential character to the disputed goods. Further, agglutinating sera is the most essential and only active component on which test reaction is based. The other components like membrane sheet, plastic cassette and absorbent are passive components which provide longer shelf life and stability to the kit. As the disputed goods are based on agglutinating sera, the benefit of the Exemption Notifications would be available to Rapid Diagnostics. The decision of the Tribunal in Inter Care [ 1996 (10) TMI 201 - CEGAT, NEW DELHI] , wherein the benefit of the Exemption Notifications was allowed to the pregnancy test kits which were based on agglutinating sera, supports the aforesaid view. The Commissioner, in the impugned order, has dropped the demands proposed in the show cause notices for the reason that the disputed goods are classifiable under CTH 3002 and so basic customs duty would have to be paid at Nil rate of duty. To arrive at this conclusion, the Commissioner held that the disputed goods are based on agglutinating sera which is the chief component of the test kit that produces the result regarding the pregnancy. Thus, as agglutinating sera is the only active component and the rest of the components are passive, the pregnancy detection kits have their essential character defined by agglutinating sera only. Thus, the imported goods would be covered under the Exemption Notifications. The aforesaid findings recorded by the Commissioner are based on an earlier decision of the Tribunal in Inter Care[supra] and do not suffer from any infirmity.

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• Law of Competition

• 2024 (11) TMI 947
  Unlawful seizure of shares and the monopolization of the cable TV network business in Chhattisgarh by the Opposite Parties - contravention of Sections 3 and 4 of the Competition Act, 2002 - HELD THAT:- As regards contravention of Section 3 of the Act, the Commission notes that the provisions of Section 3(1) of the Act read with Section 3(3) thereof have no manner of application in the factual matrix of the present case as Section 3(3) of the Act requires two or more enterprises engaged in identical or similar trade of goods or provision of services and even if they are not engaged in identical trade, they must be presumed to be part of an agreement if they participate or intend to participate in furthering such an agreement. Looking at the relationship among OPs and the facts and circumstances of the case, as detailed above, it is evident that provisions of Section 3(3) of the Act are not applicable. Further, the Commission is of the view that, for the applicability of Section 4 of the Act and the examination of contravention thereof, it may be axiomatic to define a relevant market and assess the dominance of the entity alleged to be abusing its dominant position in such market. However, considering the facts and circumstances of the case and having regard to the abuses as alleged, the Commission does not find it imperative to define a precise relevant market in the instant matter. Furthermore, the Commission notes that the Informants have alleged violation of Section 4 of the Act against all the OPs. The Commission observes that it is a settled position that the provisions of the Act do not provide for inquiry into the cases of joint/collective dominance. Accordingly, no case of contravention under Section 4 of the Act has been established. The Commission notes that for the aforesaid reasons, it is unnecessary to delve deeper into the allegations. While the grievances raised by the Informant may give rise to a dispute, however, the Commission is not the right forum for adjudication of the same. The Commission is of the opinion, prima facie, no case of contravention of provisions of Section 3 and Section 4 of the Act is made out and accordingly, the Information filed against OPs is directed to be closed forthwith in terms of the provisions of Section 26(2) of the Act - no case for grant of relief(s) as sought under Section 33 of the Act arises and the prayer for the same is also rejected.

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• 2024 (11) TMI 946
  Contravention of the provisions of Section 4 of the Competition Act, 2002 - hospital specializing in infertility care through misleading statements on social media - HELD THAT:- Upon perusal of the Information, it appears that the primary grievance of the Informant is that the Opposite Party through Dr. Raju Nair, has made certain misleading statements/mis-information about the cost of IVF and fertility treatments on its You Tube channel against hospitals offering affordable treatment for infertility care. These statements are alleged to be detrimental to a competitive market and would prejudice market players who are willing to offer quality treatment at an affordable rate. This conduct has been alleged to be in abuse of dominant position by the Opposite Party in contravention of provisions of Section 4 of the Act. As per the Information available in public domain, it appears that Informant is running a hospital which offers services including infertility treatments such as IVF; pediatrics, laparoscopy (Endoscopy); obstetrics gynaecology; orthopaedics treatment etc. However, the allegations that the Opposite Party is allegedly spreading mis- information/mis-statements about the cost of such treatment do not fall within the ambit of the Competition Act, 2002. The Commission is of the view that there is no prima-facie case of contravention of provisions of the Act warranting an investigation into the matter - the Information is directed to be closed forthwith in terms of Section 26(2) of the Act. Consequently, no case arises for grant for relief(s) as sought under Section 33 of the Act.

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• 2024 (11) TMI 945
  Jurisdiction of the Competition Commission of India (CCI) in the matter - Contravention of the provisions of Section 4(2)(a)(ii) and 4(2)(c) of the Act by National Internet Exchange of India - it is submitted that the Informant has erroneously delineated the relevant market as the same is misconceived, baseless and incomplete - concealment of previous litigation by the Informant - erroneous delineation of the relevant market - whether there is any issue involved in the present matter which may oust the jurisdiction of the Commission or may merit invocation of Section 21A in the present proceedings? HELD THAT:- The Commission observes that the obligation to comply with the provisions of the Act and maintain fair competition in the market is independent of the obligation to comply with the provisions of TRAI Act/Regulations, and violation of one need not ipso facto result in violation of the other. The Commission is, inter alia, entrusted with the duty of eliminating practices having an adverse effect on competition, to promote and sustain competition in markets, to protect the consumers and to ensure freedom of trade carried on by other participants in the market. As a sectoral regulator, the TRAI may formulate and enforce obligations through appropriate code of conduct for the entities operating in the telecom sector, keeping in view its sector-specific objectives. However, compliance with the TRAI regulatory framework remains independent of the possibility of any practice of an entity operating in the telecom sector falling afoul of the provisions of the Act. The OP s submission that the entity s existence stems from sectoral regulator s recommendations and thus, it is within the domain of TRAI and not Commission s, does not hold water. It will be erroneous to interpret the judgment of the Hon ble Supreme Court in Bharti Airtel case [ 2018 (12) TMI 1683 - SUPREME COURT ] to mean that in every case of overlap of jurisdiction with a sectoral regulator, the Commission will have to withhold taking action and await examination by the sectoral regulator. This would render the object and purpose of the Competition Act, 2002, nugatory. The law laid down by Hon ble Supreme Court in the Bharti Airtel case was specific to the peculiar facts of that case. A universal application of the law laid down on those particular facts cannot be inferred and implied in all cases where the Commission is exercising its jurisdiction in sectors which are also regulated by a sectoral regulator. It is clear that the allegations involved in the present matter are determinable within the legal mandate given to the Commission. Thus, the Commission does not find any merit in the preliminary objection regarding lack of jurisdiction in the matter. Further, seeking opinion of any statutory authority such as TRAI under the provisions of Section 21A of the Act is the prerogative of the Commission and may be exercised in appropriate cases, as deemed fit by the Commission. The Commission notes that the Informant has alleged contravention of provisions of Section 4 of the Act. In this regard, the Commission notes that the Informant has delineated (in Information) relevant market as provision of internet exchange services for peering between content providers, CDNs and ISPs in towns/cities in India in which CDNs/content providers are not present/do not have their data centres - considering the homogeneous nature of services throughout India provided by the parties in the matter, the Commission deems it appropriate to delineate relevant market as provision of internet exchange services in India . Based on the data provided by the OP, it appears that in terms of volume of traffic and number of connected networks, the Informant has significant presence vis- -vis OP in abovementioned six cities. The Commission also notes that despite the OP being the oldest IX provider and the much later entry of the Informant in the market, the Informant has been able to increase its relative presence in the relevant market which suggests that the relevant market remains contestable - Thus, from the data available on record and the facts and circumstances present in the matter, the Commission is of the view that dominance of the OP is not getting established. Accordingly, the Commission is not inclined to delve further into the matter. The Commission is of the view that the OP does not appear to be dominant in the aforesaid delineated relevant market and consequently, there is no competition concern arising in the present matter. Therefore, the matter is directed to be closed forthwith under Section 26(2) of the Act. The Secretary is directed to communicate the decision of the Commission to the parties, accordingly.

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• 2024 (11) TMI 944
  Cartelization in respect of procurement of medicines by ESIC - contravention of provisions of Section 3(3) of Competition Act, 2002 - HELD THAT:- The Commission observes that there are numerous medicines and medical/healthcare products which are procured by ESIC and other government bodies. The Informant has not provided details of tenders/ medicines/ parties involved in the alleged conduct. Apart from making bald allegations, the Informant has not placed on record any cogent material to enable the Commission to examine the matter. Rather, the Informant failed to provide the requisite information in spite of being accorded two opportunities. The Commission finds that no prima facie case of contravention of the provisions of Section 3(3) of the Act is made out against any of the OPs in the instant matter. Accordingly, the information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises and the said request is rejected.

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• 2024 (11) TMI 943
  Contravention of provisions of Sections 3 and 4 of the Competition Act, 2002 - abuse of dominant position by the OPs - OPs have a monopoly in respect of provision of logistic services including cold storage facilities and movement of goods at the Visakhapatnam Port - HELD THAT:- The Commission has perused the Information and observed that the Informant appears to be aggrieved by the following conduct of the OP i.e. the lease agreement being camouflaged as a Leave and License Agreement for the purpose of avoiding stamp duty and registration charges to the State exchequer; enforcing the lock-in-period clause in the Leave and License Agreement and refusal by the OPs to adjust the rental arrears against the security deposit; repeated threats to forfeit the security deposit and restricting access of Informant s staff to the cold storage plant and threatening to switch off the power supply to the cold storage plant. The Commission observes that the Informant entered into Leave and License Agreement with OP-1 for a period of 5 years for a portion of the cold storage plant with a lease rent of INR 17,38,800/- per month and on payment of security deposit of a sum of INR 52,16,400/- (equivalent to 3 month s rent). The said agreement also contains a clause pertaining to a lock-in-period of 18 months from the date of taking possession of the cold storage plant during which the said agreement cannot be generally terminated unless there is a breach of the terms and conditions of the said agreement. The Commission notes that the alleged conduct of OPs of the lease agreement camouflaged as a Leave and License Agreement for the purpose of avoiding stamp duty and registration charges to the State exchequer is not a competition issue and does not fall within the four corners of the Competition Act, 2002 - The alleged actions do not appear to give rise to competition concerns as envisaged within the provisions of the Competition Act, 2002. The Commission is of the view that there is no prima-facie case of contravention of provisions of the Act warranting an investigation into the matter - the Information is ordered to be closed forthwith in terms of Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises.

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• 2024 (11) TMI 942
  Abuse of dominance and anti-competitive practices in violation of the provisions of Competition Act, 2002 - HELD THAT:- From the facts of the present case, the Commission observes that alleged disparate disputes raised in the Information appear to be individual/contractual disputes regarding alleged mis-representation/ mis-selling/ deficiency in service against various OPs and do not involve competition concerns as such. Further, no material has been provided by the Informant to indicate violation of any provision of the Act. The nature of disputes raised in the matter do not fall under the ambit of the Act and for redressal of the said grievances, remedy(ies), if any, may lie before an appropriate forum, in accordance with law. The Commission is of the considered view that no prima facie case of contravention of provisions of the Act is made out against any of the OPs in the present matter and decides to close the matter forthwith in terms of the provisions of Section 26(2) of the Act.

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• 2024 (11) TMI 941
  Contravention of provisions of Sections 3 and 4 of Competition Act, 2002 - abuse of dominant position - HELD THAT:- The Commission has perused the Information, including legal notices served by the Informant upon OP-1 and OP-2 and also their respective replies. The Informant appears to be primarily aggrieved by: (i) arbitrary change in delivery time of the car from two months to eight months; (ii) pick and choose policy in delivery of the car; (iii) unlawful demand of premium by DSAs; (iv) imposition of RPM; and (v) forcing customers to purchase accessories. The Informant has alleged that OP-1 has a dominant position in the relevant market of strong hybrid passenger vehicles in the territory of India and has violated provisions of Sections 4(2)(a)(ii) and 4(2)(c) of the Act. The Commission is of the view that the primary issue in the matter appears to be revolving around the waiting period in delivery of the car booked by the Informant and prices of accessories. The Commission notes that such kind of allegations bear the tone and tenor of inter se dispute between Informant and OP1/ OP2 and does not have market-wide anti-competitive ramifications, in the facts and circumstances of the instant matter. Normally, long waiting period cannot be the subject matter of antitrust scrutiny as they are dependent upon various factors including reasons adduced by the OP1 - As regard price, the Commission is of the view that the same is an outcome of demand and supply forces in the market and consumer preferences, among others. In the present case, the Informant has failed to highlight whether such prices have overtone of being unfair or discriminatory in terms of the provisions of the Act. Accordingly, the allegations levelled above do not reveal any anti-competitive concern and consequently, the Commission finds no reason to carry out an analysis of abuse of dominant position by the Opposite Parties. The allegation pertaining to RPM i.e., Section 3(4) of the Act requires the existence of an agreement amongst enterprises or persons at different stages or levels of the production chain in different markets in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services which causes or is likely to cause AAEC in India. The Commission notes that the Informant has not substantiated his allegation of RPM by way of any evidence to show the existence of any such agreement. Thus, no prima facie case of contravention of the provisions of Section 3 or 4 of the Act is made out against the Opposite Parties and the Commission directs that the matter be closed forthwith under Section 26(2) of the Act. Consequently, no case for grant of relief(s) as sought under Section 33 of the Act arises.

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• 2024 (11) TMI 940
  Contravention of provisions of Section 4 of Competition Act, 2002 - abuse of dominant position - it is alleged that Google is granting exclusive access to Truecaller to share private contact information of the users with everyone while prohibiting other apps from doing the same - HELD THAT:- The Commission has perused the rival submissions of the Informant and Google. Based on the experiment run by the Informant, it appears that users have voluntarily provided the contact details data to Truecaller. Therefore, the allegations of the Informant that Truecaller is engaging in unauthorised publishing or that Google has allowed any preferential access to Truecaller do not appear to be substantiated. The Commission is of the view that the allegation of the Informant remains unsubstantiated and despite sufficient opportunity, the Informant has not provided any evidence to prima facie establish that Google is according either preferential treatment to Truecaller or resorting to discriminatory practises by allowing access to user s contact data to Truecaller while denying the same to the competing applications. The Commission finds that no prima facie case of contravention of the provisions of Section 4 of the Act is made out against Google in the instant matter. Accordingly, the Information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises and the said request is also rejected.

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• 2024 (11) TMI 939
  Violation of Sections 3 and 4 of the Competition Act, 2002 - spreading false rumours in the market about the changes in prices by issuing rate cards with lower rates than those of suppliers which ultimately is having an adverse effect on the sellers and customers - HELD THAT:- The Commission notes that the Informant has levelled allegations against 5 OPs with the apprehension that they would collectively abuse their dominant position in future. The Commission observes that it is a settled position that the provisions of the Act do not provide for inquiry into the cases of joint/collective dominance. In view thereof, no case of contravention under Section 4 of the Act is made out. As regards alleged violation of provisions of Section 3 of the Act, the Commission, having considered the evidence submitted by the Informant viz FIR dated 23.06.2023 and two newspaper articles, notes that, prima-facie, the said evidence does not point towards alleged cartelization by the OPs. The Commission further notes that in the facts and circumstances of the present case, it is not getting established that spreading alleged false rumours/ misinformation is the result of cartelisation or are resulting into cartelisation as there are multiple buyers and sellers in the market and the price of the commodity is determined by way of negotiation on a day-to-day basis. The Commission is of the opinion that there exists no prima facie case and the Information filed is directed to be closed forthwith under Section 26(2) of the Act. Consequently, no case for grant of relief as sought under Section 33 of the Act arises and the same is also rejected.

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• 2024 (11) TMI 938
  Contravention under Section 19(1) (a) of the Competition Act, 2002 - fraudulent conduct leading to recovery proceedings against the property of the Informant - HELD THAT:- The Commission is of the view that the above facts and circumstances do not involve any competition issue, and resultantly, does not warrant scrutiny from the perspective of the Act. Given the facts and circumstances of the present case, the Commission finds that no prima facie case of contravention of the provisions of the Act is made out against the OPs. Accordingly, the information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises and the said request is rejected.

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• 2024 (11) TMI 937
  Contravention of the provisions of Section 4 of Competition Act, 2002 - delisting of plugins from the plugin s directory maintained by WordPress - abuse of dominant position - HELD THAT:- It is noted that the wordpress.org is primarily a CMS services which simplifies website development for non- technical users by providing pre-built templates, plugins, and a user-friendly interface for adding, editing, and organizing content and enables them to manage website content easily by reducing the need for extensive coding. Traditional website design and development agencies, as well as in-house website building and management teams, could also be considered to be competing with CMS providers - first relevant product market in the present case could be market for provision of Content Management Software (CMS). Furthermore, India may be considered as relevant geographic market. Accordingly, the primary relevant market in the present matter is the market for provision of Content Management Software (CMS) in India. In relation to dominance of WordPress within this market, the OP has submitted that WordPress.org is a leading directory for listing WordPress plug-ins, but not the only directory. The Plug-in Directory on WordPress.org is considered as one of the more reliable sources for downloading plug-ins because of the rigorous review each plug- in submitted to the Plug-in Directory has to go through. Further, based on the available information, it is noted that WordPress Plugin Directory hosts around 60000 plugins while other directories have significantly less number of plugins. Therefore, it appears that WordPress is a dominant player in this relevant market. The Commission is of the view that WordPress.org is justified in taking appropriate action against any developer found non-compliant with the prescribed standards and regulations. It is also noted that guidelines have not been applied in a discriminatory manner and around 35 developers including the Informant have been permanently banned from WordPress.org for repeated violation of the Guidelines. Therefore, the conduct of the Opposite Party does not appear to be either unfair or discriminatory. The Commission finds that no prima facie case of contravention of the provisions of Section 4 of the Act is made out against the Opposite Party in the instant matter. Accordingly, the Information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises and the said request is also rejected.

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• 2024 (11) TMI 936
  Contravention of Section 3(4) read with Section 3(1) of the Competition Act, 2002 - non-marketing of patented dietary supplement sold under the brand name Protestin due to the alleged non-cooperation of the Opposite Parties - prayer for free and fair marketing from all premises including specified areas (MNCs, private hospitals, West Bengal Fair Price Shop etc.) and others (non-specified premises) - HELD THAT:- The Commission has perused certain emails sent by the Informant to several entities including some Opposite Parties and is of the view that these emails appear to have been sent for the purpose of soliciting business for his product and do not reveal existence of any agreement or arrangement as envisaged under the provisions of Section 3(4) of the Act. The Commission is of the considered view that in absence of any apparent anti-competitive conduct, the decision of purchase or sale of a product and quantity thereof is driven by the commercial considerations of the market players. Therefore, it may not be desirable for the Commission to intervene in such cases where anti-competitive behaviour is not discernible. The Commission observes that no such agreement has been shown to exist between the Opposite Parties that may be held to be anti-competitive in terms of the provisions of Section 3(4) of the Act. Accordingly, the Commission is of the view that there does not appear to be contravention of Section 3(4) read with Section 3(1) of the Act and the matter be closed under Section 26(2) of the Act forthwith. Consequently, no case for grant of reliefs as sought under Section 33 of the Act arises.

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• 2024 (11) TMI 935
  Contravention of provisions of Section 3 and 4 of the Competition Act, 2002 - forcible transfer of entity from one form/type of organization structure to another - HELD THAT:- The primary grievance of the Informant appears to be emanating from a circular/letter No. NABL/ANCMT/2023/01/22-03 dated 22.03.2023, issued by NABL, directing its accredited CABs which are under proprietorship form to align with any of the following forms of entity by 30.12.2023 i.e., One Person Company, Limited Liability Partnership, Company, Society/Trust, Government. It is stated that most of the CABs are micro and small enterprises in India as it is easier to establish these labs under sole proprietorship firms and migrating these labs under any other forms will pose many challenges and it may not be economically viable for the small and medium entrepreneur to survive. This has been alleged by the Informant to be violative of Section 4(2)(c) of the Act. The Commission, vide order dated 22.08.2023 passed under Section 26(2) of the Act in Case No. 12 of 2023, had inter-alia, held that there was no reason to intervene with the impugned circular, as the same was mandating a structure which a laboratory had to follow if it wished to seek accreditation services from NABL. Accordingly, there is no reason for the Commission to re-examine the contents of the impugned circular from the competition perspective in the instant matter. With regards to alleged violation under Section 3 of the Act, the Commission notes that the Informant has neither referred to any particular agreement nor provided any document which could suggest existence of anti-competitive agreement in the matter. The Commission is of the prima facie view that no case is made out against NABL in respect of either Section 3 or 4 of the Act. Accordingly, the Information filed is directed to be closed forthwith under Section 26(2) of the Act. Consequently, no case for grant of reliefs as sought under Section 33 of the Act arises.

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• 2024 (11) TMI 934
  Contravention of provisions of Section 3 and 4 of the Competition Act, 2002 - unilateral changes in allotment of housekeeping staff and increase in Monthly Maintenance Charges - abuse of dominant position - whether the Opposite Parties fall in the category of enterprise ? - HELD THAT:- In the present matter, since Opposite Parties are undertaking commercial activities, they squarely fall under the ambit of enterprise in terms of Section 2(h) of the Act. Thereafter, an appropriate relevant market, as per Section 2(r) of the Act which comprises of relevant product market and relevant geographic market, is required to be delineated. The next step is to assess the dominance of Opposite Party in the relevant market so delineated, in terms of the factors enumerated under Section 19(4) of the Act. Once the dominance of Opposite Party is established, the final step is to analyze the allegations pertaining to abuse of dominance in terms of provisions of Section 4 of the Act. With regard to the relevant geographic market, the Commission has taken into consideration the location of the project, which is in Kannamangala, Taluka-Devanahalli, Bengaluru, Karnataka. This location falls within the Bangalore Metropolitan Region. It may be noted that the conditions of competition within the Bangalore Metropolitan Region on account of level of development, cost of real estate, connectivity to state capital, transport facilities, regulatory authorities, local/municipal laws etc. can be distinguished from other neighbouring areas. In view of the same, the Commission is of the view that the relevant geographic market in the instant matter be considered as Bangalore Metropolitan Region . The Commission is of the prima facie view that the relevant market in the present case would be the market for provision of services for development and sale of apartment to cater to the needs of senior citizens in Bangalore Metropolitan Region. The Commission is of the opinion that there exists no prima facie case and the Information filed is directed to be closed forthwith under Section 26(2) of the Act. Consequently, no case for grant of reliefs as sought under Section 33 of the Act arises and the same is also rejected.

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• 2024 (11) TMI 933
  Contravention of provisions of the Competition Act by chess associations leading to suspension of a member for organizing an unauthorized tournament - primary grievance of the Informant in the present matter is that he was suspended from playing chess, arbitering and organizing tournaments as he organized an allegedly unauthorized friendly match on 19.08.2018 at Kamaraj Somasundari school at Arumuganeri between Tiruchendur and Thoothukudi chess teams - HELD THAT:- The Commission, upon consideration of the Information, notes that the case appears to be in the nature of disciplinary proceedings initiated by the Opposite Parties against the Informant in the capacity of his being the Joint Secretary of TDCA and organizing an allegedly unauthorized inter-taluk chess tournament, which was not in accordance with the regulations issued by TDCA and TNSCA. Prima facie, this does not appear to raise any competition concern under the provisions of the Competition Act, 2002. The Commission notes that no case of contravention of provisions of the Act warranting an investigation into the matter is made out and the matter is directed to be closed forthwith under Section 26(2) of the Act. Consequently, there is no case for grant of interim relief under Section 33 of the Act. The Secretary is directed to communicate to the Informant, accordingly.

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• 2024 (11) TMI 932
  Seeking interim relief in terms of the provisions contained in Section 33 of the Competition Act, 2002 - contravention of the provisions of Section 4 of the Act - HELD THAT:- One of the fundamental principles for granting interim relief is the requirement for a clear nexus between the relief sought and the issues under investigation or in dispute. The Commission in the instant matter has directed investigation on select issues as against varied allegations made by the three Informants. Therefore, the relief sought must correspond to the issues outlined for the investigation. A plain reading of the interim relief prayers when juxtaposed with the issues on which investigation has been directed, reveals that there are various interim relief prayers in respect of which there is no corresponding direction for investigation viz. interim relief prayer relating to collection of data, UI/UX interface, etc. Therefore, no relief can be granted in respect of the same. While it is essential to ensure a level playing field and protect competition within the app store market, any measures taken should be proportionate and carefully crafted to minimize unintended consequences and preserve the overall integrity and functionality of the platform ecosystem. Based on the foregoing, the Commission is of the view that the Informants have not been able to demonstrate a case in their favour for grant of interim relief for complete restraint on Google from collection of its fee. The Commission is further of the view that the Informants have also failed to meet the necessary criteria for grant of interim relief as propounded by the Hon ble Supreme Court. The Informants have not been able to project any higher level of prima facie case warranting a positive direction as sought for by the Informants at the interim stage. The Informant has also not been able to demonstrate as to how the impugned conduct would result in irreparable harm that cannot be remedied through monetary compensation. The Commission is also not persuaded that balance of convenience lies in favour of the Informants. The Commission is of the considered opinion that no case whatsoever has been made out by the Informants which warrants grant of interim relief. Resultantly, the applications stand dismissed.

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• 2024 (11) TMI 931
  Contravention of provisions of Section 3 of the Competition Act, 2002 - Cartelization in a tender process - HELD THAT:- The Commission observes that the documents, prima-facie, do not substantiate the allegations of collusion/cartelisation in the facts and circumstances of the present case, as raised by the Informant. The Commission notes that the material furnished by the Informant does not prima-facie, point to bid rigging or collusive bidding in contravention of provisions of Section 3(3)(d) read with Section 3(1) of the Act by the Opposite Parties. The Commission notes that no case of contravention of provisions of Sections 3 of the Act warranting an investigation into the matter is made out and the matter is directed to be closed forthwith under Section 26(2) of the Act.

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• Insolvency & Bankruptcy

• 2024 (11) TMI 930
  Rejection of appeal - challenge to acceptance of certain additional documents, together with a rejoinder affidavit filed by the respondent - HELD THAT:- Since the proceedings are pending before the NCLAT, we are not inclined to entertain the appeal, at this stage, particularly in the absence of a substantial question of law. The appeal is accordingly dismissed.

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• 2024 (11) TMI 929
  Challenge to Impugned Order - directions has been issued to the IBBI to conduct detailed inspection regards the conduct of Liquidator and the records, pertaining to the Corporate Debtor in order to find out the irregularities in the process - cause of action - prior to passing of the order, no opportunity of explaining or defending himself was provided - violation of principles of natural justice - HELD THAT:- The appellate proceedings under Section 61, of I B Code cannot be resorted to by the Liquidator, for the purposes of the challenging direction issued to the IBBI to enquire into the conduct of the appellant regards his functioning as a liquidator, because that will be absolutely an in-house proceeding of the registering body of the liquidator to justify as to whether at all, the based on the set of allegations, if proved, he is required to continue as a Liquidator or not. In fact, at this stage, there is nothing apparently adverse against the Appellant, which could call for invocation of an Appellate Jurisdiction particularly when it is only an enquiry and upon which the decision on the same is yet to be taken. As of now there is no specific cause of action for the Appellant, to invoke the Appellate Jurisdiction under Section 61, of I B Code. The Appeal lacks merit and the same is accordingly dismissed.

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• 2024 (11) TMI 928
  Challenge to order filed by the Resolution Professional (RP) - HELD THAT:- It is clear that Resolution Plan which was submitted by the Appellant was approved on 07.11.2020 by the CoC. It was the Excise Taxation Officer, Officer-Cum-Assessing Authority filed its Application before the Adjudicating Authority for accepting its claim which was allowed by the Adjudicating Authority. However, the said Orders was reversed by this Appellate Tribunal, against which, Civil Appeal No. 7514 7515/2022 was filed. The Order of the Hon ble Supreme Court in [ 2024 (1) TMI 1382 - SC ORDER ] has been brought on record by the Appellant. It is clear that under the Order passed by the Hon ble Supreme Court in the Appeal filed by Excise Taxation Officer, Officer-Cum-Assessing Authority, the process was to be completed within 90 days and for taking steps in pursuance of the Order of the Hon ble Supreme Court dated 22.01.2024 [ 2024 (1) TMI 1382 - SC ORDER ], I.A. was filed by the RP. Adjudicating Authority by the Impugned Order has allowed the Application in terms of Prayer (c) but has not issued any direction as to what process, RP has to conduct. The expression used is conduct the ongoing Corporate Insolvency Resolution Process for M/s. Mastana Foods Private Limited . The ends of justice be served in disposing the Appeal permitting the RP to place an agenda before the CoC with regard to necessary steps which are required to be taken in the CIRP of the Corporate Debtor in pursuance of the directions of the Hon ble Supreme Court dated 22.01.2024 in Civil Appeal No. 7514 7515/2022. It is the CoC which is in overall control of the entire CIRP Process to take such steps as required by law. There are no reason to keep this Appeal pending any further and dispose of the Appeal with liberty to the RP to place appropriate agenda before the CoC, who may take decision and complete the process of CIRP as directed by the Hon ble Supreme Court. Appeal disposed off.

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• PMLA

• 2024 (11) TMI 927
  Seeking grant of regular bail - Money Laundering - proceeds of crime - financial irregularities - involvement in paper sale transaction without conducting any actual business transactions which resulted in false inflation of financials - Section 45 of PMLA - HELD THAT:- Apart from the statements of the witnesses recorded under Section 50 of PMLA, the data manifesting relationship of stock, turn over and borrowings by SBFL reflects that SBFL started taking loans from different banks with the help of inflated turn over and fictitious closing stocks. The fact that the stock worth Rs.3035.52 crores was declared as obsolete/damaged by pest without suitably accounting for the same, prima facie, reflects mala fide intention. There appears to be sufficient material on record, which reflects that the petitioner was knowingly involved in the process and also appears to be the beneficiary of the proceeds of the crime. In the facts and circumstances, there do not appear to be reasonable grounds for believing that petitioner is not guilty of offence as provided under Section 45 of PMLA. Considering the evidence on record, serious nature of economic offence whereby the public funds to the tune of Rs.3035.52 crores have been siphoned off, and the fact that application preferred on behalf of co-accused Tarun Kumar stands rejected by the Hon ble Apex Court, this Court is of the considered opinion that the petitioner is not entitled to bail. Application is accordingly dismissed.

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• Service Tax

• 2024 (11) TMI 926
  Valuation of accommodation provided by the appellant to CISF personnel -Short payment of service tax - appellant was availing security service from Central Industrial Security Force (CISF) for which they were paying service tax on the reverse charge mechanism on security service on net value paid to the CISF - case of the department is that intrinsic value of the house rent in respect of accommodation provided to the CISF personnel should be added in the gross value of security service HELD THAT:- Issue is no longer res-integra as relying on Bharat Coking Coal Ltd [ 2021 (9) TMI 23 - CESTAT KOLKATA] and NTPC LTD VERSUS COMMISSIONER OF C. E-BHARUCH [ 2024 (10) TMI 1130 - CESTAT AHMEDABAD] - Hence the intrinsic value of the rent for the accommodation provided by the appellant to the service provider M/s CISF is not includible in the gross value of security service, therefore, demand thereon is not sustainable. Hence, the impugned order is set aside. Appeal is allowed.

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• 2024 (11) TMI 925
  Liability to pay service tax - services provided to a foreign entity - as argued turnover undertaken within the domestic market was less than the threshold limit, therefore, they were not required to pay any Service Tax - Adjudicating authority dropped part of the demand and confirmed the Service Tax demand along with interest and penalty - HELD THAT:- As in case of Business Auxiliary Services / Business Support Services they would fall under the category of 3(1)(iii). As per the provisions under Rule 3(1)(iii)of the Export of Services Rules 2005, so long as the services are provided to an entity situated abroad, the same would be exempted from payment of Excise Duty, provided the consideration is received in convertible foreign exchange. The clarification given by the Board Circular echoes the same view. In the present case, both the facts as to whether the service has been rendered to a foreign entity or not and as to whether the appellant has received the proceeds in convertible foreign exchange or not, are not under dispute. Therefore, we find force in the Appellant s arguments that no Service Tax is required to be paid. Accordingly, we set aside the confirmed demand given the Table A above. Demand in respect of Erection, Commissioning and Installation Services - As observed Appellant s turnover during the period 2008-09 to 2011-12 was much below the threshold limit. Hence no Service Tax is required to be paid by them for the period 2008-09 to 2011-12. In respect of Erection, Commissioning and Installation Services taken up during the period 2012-13, the Appellant is required to pay the Service Tax. It is found from the records that the Appellant has already paid Rs.1,44,381/- along with interest of Rs.18,172/- on 26.08.2013, which is more than the Service Tax payable if the threshold exemption of Rs.10,00,000 is considered for the period 2012-13. Therefore, we hold that the Appellant has already paid Service Tax where it is payable. Accordingly, we set aside the confirmed demand of Rs.2,75,420/- on merits. Invoking extended period of limitation - We find that the Appellant has declared of their foreign exchange earnings in the Balance Sheet. They are also assessed under Service Tax registration and have been filing ST-3 Returns. The Department has not made out any specific case of suppression on the part of the Appellant. Therefore, the confirmed demand in respect of the extended period is set aside on account of time bar also.

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• 2024 (11) TMI 924
  Valuation of taxable services for charging service tax - Benefit of partial reverse charge and cum-tax value - Eligibility for threshold exemption - HELD THAT:- From the plain reading of the sub section (2) (3) it is evident that gross amount received for the taxable service by the service provider is inclusive of the service tax payable. Emphasis is on the phrase payable used in the sub section (2). The use of word payable raises the presumption in the favour of appellant. No agreement has been relied upon in the present case the demand has been made on the basis of the third party information received from the income tax department As demand need to be recomputed by treating the gross amount received by the appellant as inclusive of service tax payable in terms of Section 67 (2) of the Finance Act, 1994. As regards the impugned order whereby the benefit on threshold exemption has been sought to be denied. We do not find anything on record to show that the said exemption under Notification No.33/2012 was available to the Appellant. Appeal is partly allowed to the extent that the taxable value should be computed treating the amounts received from the service recipient to be cum-tax price as per the Section 67(2) of the Finance Act, 1994. Original Authority should re-compute the demand after allowing the said benefit.

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• 2024 (11) TMI 923
  Dismissal of appeal as time barred - Time limitation for filing appeal during the Covid 19 outbreak - Non depicting correct value of the services provided in their ST-3 returns filed - information received from Income Tax Department - HELD THAT:- The appeal has been filed before the first Appellate Authority beyond the period of limitation as per the order of Hon ble Supreme Court dated 10.01.2022 where the period of limitation have been stated as Ninety days from 01.03.2022 the said decision of Hon ble Supreme Court was consequence of the COVID-19 outbreak. In the said decision taking note of the pandemic conditions, Hon ble Supreme Court has directed that for period of pandemic, the limitation filed for filing the appeal shall be 90 days from 01.03.2022. As this decision was made in exceptional circumstances, it was setting the period of limitation in absolute terms without any power to the authorities to further condone the delay. Or more appropriately said the Hon ble Supreme Court had condoned the delay in filing the appeals during the period of pandemic by setting the time limit for filing the appeals within 90 days from the 01.03.2022. Thus the impugned order rightly observed that the appeal was filed before the Commissioner (Appeals) beyond the prescribed period of limitation and he was not having the powers to condone the delay as per the order of Hon ble Apex Court prescribing the period of limitation of 90 days from 01.03.2022. As observed that the total amount of disputed service tax in the present appeal is only Rs.1,41,610/-. In terms of second proviso to Section 35B(1) as the amount involved is less than Rs.2 lakhs, thus find that this appeal need not be admitted for consideration as no substantial question of law is involved in relation to rate of duty etc., is involved.

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• 2024 (11) TMI 922
  Classification of services rendered - services rendered by the respondent to their parent company situated in USA is an intermediary service or export services - HELD THAT:- The basic requirement to be an intermediary is that there should be at least three parties; an intermediary is someone who arranges or facilitates the supply of goods or services or securities between two or more persons. There is main supply and the role of the intermediary is to arrange or facilitate another supply between two or more other persons and, does not himself provide the main supply. The present case is more or less similar to the Illustration 4 of the said Circular dated 20.09.2021 which says A is a manufacturer and supplier of computers based in USA and supplies its goods all over the world. As a part of this supply, A is also required to provide customer care service to its customers to address their queries and complains related to the said supply of computers. A decides to outsource the task of providing customer care services to a BPO firm, B . B provides customer care service to A by interacting with the customers of A and addressing / processing their queries / complains. B charges A for this service. B is involved in supply of main service customer care service to A , and therefore, B is not an intermediary. No merit in the appeal filed by the Revenue.

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• 2024 (11) TMI 921
  Demand of Service Tax and penalties - appellant and SAIL appellant has been appointed as the authorized dealer for sale of GP Coils/GP Sheets - whether the activity carried on by the appellant falls under the business auxiliary service as defined in Section 65 (19) of the Finance Act? - whether the appellant can be called Commission Agent rendering business auxiliary service? HELD THAT:- The goods are purchased from SAIL for which the appellant pays to SAIL on its own account as an owner of the said goods. The appellant is also registered with VAT/Sales Tax during the relevant period and has been paying VAT/Sales Tax. The Transaction between SAIL and the appellant dealer was on principal to principal basis and the discount of 1.5% was an incentive for lifting the specified quantity of 300 MTs per month. We also find that this issue has been examined by the Tribunal in various cases relied upon by the appellant cited (Supra). We also find that recently the Tribunal of Mumbai, in the case of My Car (Pune) Pvt. Ltd. [ 2023 (6) TMI 995 - CESTAT MUMBAI ] held that Department does not dispute that there was such agreements, scheme between the appellant in the car manufacturers and the account of the appellant only reflect the actual discount allowed to them. Department s argument is that the said discount/commission is in view of services rendered by the appellant by way of popularisation of the sales and consumption of the products by the end customer. We find it difficult to accept the conclusion arrived at in the impugned order that all the discounts/commission/incentives given by the manufacturer for the various types of targets achieved in terms of the number of vehicles sold under a particular model/category, consistent achievement of targets by each quarter, exchange bonus etc., are to be treated as compensation for the services rendered by the appellants by way of popularization of sales and purchase of the cars of the manufacturer. The element of sales promotion or marketing services is involved only when the appellants provide some service to the end customer in sale of the cars. If the discounts/commission/incentives are given in terms of the specific schemes or an agreement entered by the manufacturer of car with the appellants, then such transaction cannot be overstretched to categorize it as service for the purpose of charging service tax. Also assessed respondent is the authorized dealer of car manufactured by MUL and are getting certain incentives in respect of sale target set out by the manufacturer. These targets are as per the circular issued by MUL. Hence these cannot be treated as business auxiliary service. In respect of sales/target incentive, the Revenue wants to tax this activity under the category of business auxiliary service. We have gone through the circular issued by MUL which provides certain incentives in respect of cars sold by the assessee-respondent. These incentives are in the form of trade discount. In these circumstances, we find no infirmity in the adjudication order whereby the adjudicating authority dropped the demand.

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• Central Excise

• 2024 (11) TMI 920
  Clandestine removal - unbranded biris - appellant submitted that they were carrying job work for Samar Biri Factory and the unbranded biri is not full manufactured condition - Non-compliance with N/N. 214/86-CE. - HELD THAT:- The factual documentary evidence prove that the Samsuddin Ahmed was undertaking the job work of semi-finished Biri making which was not in a fully manufactured and marketable condition. Hence, the same cannot be treated as finished goods for demanding the Excise Duty. Further, as per the verification report given by the Assistant Commissioner, Siliguri, Samar Biri factory has for the receipt of semifinished biris and has carried out certain more work and have paid the applicable excise duty and the same have been cleared from their end. Therefore, there are no justification in the seizure, confiscation and imposition of Redemption Fine on 297 bangs of unbranded biris. Thus, non following of the procedure under Notification No. 214/86-CE on its own cannot be the ground for demanding the duty from the appellant particularly when it is getting clarified that the principal has paid the Excise Duty at his end. However the appellant and principal should have been followed the procedure and given proper intimation to the respective jurisdiction which has not been done in this case. For such procedural lapse, the appellant is required to be imposed penalty. Accordingly, taking over all view of the factual details of the case, the penalty imposed on Samsuddin Ahmed modified to Rs. 10,000/- and Rs. 25,000/- on Samar Biri Factory. Appeal disposed off.

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• 2024 (11) TMI 919
  CENVAT Credit - input services - service tax paid on GTA services which were utilized for movement of manufactured goods from the factory to the customer s premises for delivery of the goods at customer s place - HELD THAT:- It is undisputed fact that the appellant is under contract for delivery of the goods on FOR destination at the customer s premises and the goods remained in the ownership of the appellant till the goods reached customer s premises and that the sale takes place at the customer s premises and the property or ownership of the goods is transferred to the customer at the customer s premises. It is settled law that cenvat credit of service tax paid on transportation of goods till the place of removal is admissible to a manufacturer. Now it is to be decided in the present case as to whether customer s premises is place of removal. It is noted that in the case of Roofit Industries Ltd. [ 2015 (4) TMI 857 - SUPREME COURT ], Hon ble Supreme Court has held that the charges which are to be added for arriving at the value of the excisable goods will have to be put up to the stage of the transfer of the ownership of the goods from the manufacturer to the buyer. In para 13 of the said order, it was observed that in that case the sale of goods did not take place at the factory gate of the assessee, but at the place of the buyer on the delivery of the goods. In the present case the fact on record is that the ownership of the goods remained with the appellant till such time the goods were delivered at the buyer s premises. Therefore, in the present case the place of removal is buyer s premises. It is settled law that input service credit is admissible upto the place of removal. Therefore, in the present case the appellant was eligible for the said cenvat credit. The impugned order is set aside - appeal allowed.

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• Indian Laws

• 2024 (11) TMI 918
  Seeking quashing of the Criminal Complaint - time limitation - it is contended that the subject complaint is time barred and filed beyond the stipulated time period provided under Section 142(b) of the NI Act - when did the limitation commence for filing the complaint and whether the time spent in pursuing the first complaint filed before the court in Gurugram could be excluded? - HELD THAT:- The primary accused being the company on whose behalf the subject cheques were issued, concededly, was served with a demand notice through email on 11.03.2022 itself. There is no averment from either side that the said email bounced back. The other two accused are the Directors in the accused company. A plain reading of Section 141 NI Act reveals that there is no requirement of serving each Director separately. The notice envisaged under Section 138 NI Act is required to be given to the drawer of the cheque i.e. the accused company in the present case to make good the sum payable under the cheque. A company being a juristic entity is run by living persons who are in charge of its affairs and who guide the actions of that Company and that if such juristic entity is guilty, those who were so responsible for its affairs and who guided actions of such juristic entity must be held responsible and ought to be proceeded against. Curiously in the present case, while the accused persons are claiming that the service of demand notice on the accused company be considered as service on its Directors as well, the complainant is contending otherwise - this Court has no hesitation to hold that the service of demand notice to the accused company on 11.03.2022 is effective service on petitioner No.2 as well - there is no dispute that petitioner No.3 was also served on 11.03.2022 itself through email. Once it is held that service of demand notice on the company would be considered as a service on the other petitioners, the next issue as to what would be the starting period of limitation for filing complaint is simple calculation. Indisputably, the said complaint was not accompanied with any application for condonation of delay. In reply of the petitioners application seeking discharge, the complainant for the first time mentioned the factum of filing of complaint in court at Gurugram and its withdrawal. The said reply was filed on 31.03.2023. However, on date of taking cognizance on 02.08.2022, no such material was available before the trial court. The complaint being filed on 28.04.2022 without offering any explanation of delay or seeking its condonation was filed beyond the period of limitation and not maintainable. The criminal complaint is quashed and the order taking cognizance is set aside - Petition allowed.

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