Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 24, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
GST
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Rejection of petitioner’s application for revocation of cancellation of registration - obtaining ITC fraudulently - There has been no violation of the principles of natural justice in the proceedings conducted by the authorities. On the contrary, the petitioner had been granted adequate opportunity by the respondent authorities. The impugned orders are well reasoned - HC
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Jurisdiction of GST officers - Validity of proceedings initiated under Section 149 of the CGST Act, 2017 - proceedings are wholly without jurisdiction and without the authority of law or not - supply of goods to the job worker - inter-state supply or intra-state supply? - Notices and orders quashed for want of jurisdiction - HC
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Cancellation of GST registration - blocking of ITC to all the customers of the petitioners - This Court is not going into the allegations as mentioned in the show cause notice. However, as the SCN has been issued and the petitioners have responded to the said SCN, the second respondent is directed to conclude the adjudication expeditiously - HC
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Classification of service - job work of converting raw material into Antraquinone derivatives - the service would be classified under SAC 9988 ; and it will attract GST @ 12% [CGST 6% + SGST 6%]. - AAR
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Levy of GST - Supply - The amount deposited by the applicant (75%) in escrow account against bank guarantee pending outcome of the further challenge against Arbitral Award or dissatisfaction against DAB decision, is not liable to GST under the provisions of CGST Act, 2017 - AAR
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Liability of pay GST - lease renewal amount - premium on lease renewal - The applicant is liable to pay GST under Reverse Charge Mechanism (RCM) for lease renewal amount payable to SMC - The applicant is liable to pay GST under forward charge in respect of collection made from shareholders/shop owners, for making payment of lease and lease premium - AAR
Income Tax
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Validity of Reopening of assessment u/s 147 - When the primary facts necessary for assessment are fully and truly disclosed, the AO is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the AO, who has decided to reopen assessment, is not competent to reopen assessment proceedings. - HC
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Nature of loss - Loss on sale of loans - the loan portfolios, concerning forty-five thousand (45,000) borrowers, had been sold to Shriram, and therefore, the difference between the figures [the difference between the value of the financial receivables and consideration received from Shriram] was sought to be claimed by the respondent/assessee as ‘loss’ on revenue account - HC
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Addition u/s. 56(2)(viib) - premium on issue of equity share - CIT(A), while allowing the appeal of the assessee, is not expected to come to a conclusion based on abstract position of law. No inquiry has been shown to be made towards the basis for determination of projected figures assumed while applying DCF Method. The report of the valuer is also based on disclaimer. - CIT(A) has not acted in the manner ordained in law - Matter restored back - AT
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TDS u/s 194C on concession fee - Addition u/s 40(a)(ia) in respect of the year end provisions - Methodology adopted for estimation of turnover / profits and subsequently creating the year-end provision and reversing the same in next financial year, remains the same in all subsequent years. - disallowance is not required to be made under section 40(a)(ia) - AT
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Restriction on deduction of expenditure u/s 37(1) - compensation paid for breach of contract - enalty has been paid by the assessee on account of breach of contract which cannot be equated with the offence, or something prohibited by law. - Further, the amount of damage crystallized in the year under consideration as evident from the various letters written by NHAL - Thus, it cannot be said that such damages are prior period expenses. - Claim allowed - AT
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Non deduction of TDS on rental payments - Assessee in Default u/s 201(1) / 201(1A) - Bonafide Belief - The assessee has already suffered disallowance u/s 40(a)(ia). But, nevertheless, the details as furnished before lower authorities are sufficient to make a reasonable conclusion that the assessee was not liable for TDS on these payments. - No penalty - AT
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Computation of LTCG - extinguishment of the owner’s rights in the property - Transfer u/s 2(47) - year of assessment - claim of exemption u/s. 54 - the owner’s right to property ger extinguished on the date of registration of sale deed i.e., 19.07.2007 and the assessment of capital gain can only be made in assessment year 2008-09 and not in this assessment year 2006-07. - AT
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Validity of assessment u/s 143(3) instead of Assessment u/s 153C - There may be a case where situation and condition of section 153C is satisfied, in that case the AO has to proceed only u/s 153C. But in the present case, the AO has conducted scrutiny under CASS and the search-information has been made use as additional or ancillary information - This ground of assessee dismissed - AT
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Levy of penalty u/s. 271(1)(c) - income surrendered while filling the return of income in response to notice u/s. 153A - This act of the assessee cannot be considered with that of the case where the amount added in the finalizing the assessment by the assessing officer and the assessee has not willingly not disclosed. - The charge of providing concealment of income or furnishing of inaccurate particular of income which was done with deliberate, willful or mala fide intention is not seen in this case. - No penalty - AT
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Addition u/s u/s 43CA - Difference in the sale value and stamp duty value - in the present case in hand as noted difference between the declared sale value and the value decided by the DVO is less than 10% [i.e, 4.35%], no addition is warranted. - AT
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Exemption u/s 11 - the registration was granted by the ld. CIT(E) on 18-05-2023 and the assessment proceedings got concluded, much before that, on 17-12-2019. - As such, the assessment year under consideration, namely, 2012-13, is not covered by the express mandate of the registration. - the assessee cannot claim the benefit of exemption u/s. 11 for the year under consideration in any manner. - AT
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Penalty u/s 271(1)(c) - There is no prima facie satisfaction which has been recorded by the AO for initiation of penalty proceedings which can be discerned from reading of the assessment order. - Addition has been made, merely, on a presumptive basis which is not sufficient for acquiring jurisdiction as contemplated by the provisions of section 271(1B) - AT
Customs
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Dismissal of appeal - appeals have not been filed by a person authorized under Rule 3 of Customs Appeal Rules, 1982 - Appeal filed by CHA - procedural lapse or not - This deficiency should have been pointed out by the Commissioner (Appeals) to the appellant and the same could have been corrected. This cannot be a ground for rejection of appeal itself. - AT
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Continuance of proceedings under Customs Act - Effect of Initiation of CIRP proceedings and Approval of Resolution plan - abatement of the revenue appeal - the appeal abates once the IRP is appointed and/or Resolution plan approved - all the appeals filed by the Revenue abates as per Rule 22 of CESTAT (Procedure) Rules, 1982. - AT
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Denial of request for conversion of free shipping bills to drawback shipping bills - No document has been examined and drawback claim has been rejected without any observations. - The appellant is entitled for conversion of free shipping bills to drawback shipping bills subject to verification of the documents, which were available at the time of export. - AT
IBC
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Provision of IBC are overriding the provisions of SARFAESI or not - Recovery from the Personal Guarantor of a corporate debtor - The securitisation proceedings against personal guarantors of corporate debtors can continue under the SARFAESI. Therefore, initiation of a Section 94 (IBC 2016) proceedings by a Partner of an LLP in his capacity as a guarantor, cannot be averted to the proceedings initiated by the Bank against the petitioner, but in his capacity as a guarantor, under the Act, 2002. - HC
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CIRP Proceedings - Outstand Tax Dues claimed before the liquidator - Petitioner challenged the Validity of assessment order - On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication proceedings - Writ petition dismissed - HC
VAT
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Disciplinary proceedings against formerly Appellate Deputy Commissioner - If the order passed by the quasi judicial authority is taken as a foundation for bringing the quasi judicial authority under disciplinary proceedings, no quasi judicial authority can discharge his functions without fear. - Even wrong interpretation of law or wrong appreciation of facts cannot be the reason to issue charge memo against the authority exercising quasi judicial powers - HC
Case Laws:
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GST
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2023 (11) TMI 876
Rejection of petitioner s application for revocation of cancellation of registration - obtaining ITC fraudulently which is ultimately passed on to other third entities - violation of principles of natural justice - HELD THAT:- On a plain reading of section 29 of the Act, it is evident that there is a apparent difference between section 29 (1) and section 29 (2) of the Act. Both the sections operate in different fields. The power to cancel retrospectively is provided under section 29 (2) of the Act. The intention of the Legislature is that in certain circumstances, the authorities have the power to retrospectively cancel the registration of any person which has been obtained by fraud, willful misstatement or suppression of facts. Entries which have been obtained on the basis of fraudulent registration and to allow accumulation of tax credit in favour of third parties would defeat the object and purpose of the Act - the Legislature had contemplated retrospective cancellation of registrations which have been obtained to fraudulently avail ITC not only by the taxpayer whose registration is sought to be cancelled but also other entities which wrongfully seek to avail ITC. There has been no violation of the principles of natural justice in the proceedings conducted by the authorities. On the contrary, the petitioner had been granted adequate opportunity by the respondent authorities. The impugned orders are well reasoned - No cogent evidence has been relied on by the petitioner to warrant any interference with the impugned orders. There has also been no contravention of any law nor any procedural impropriety which warrants any interference. Petition dismissed.
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2023 (11) TMI 875
Cancellation of GSTIN registration of the petitioner - cancellation on the presumption that the petitioner has not commenced any business - HELD THAT:- This Court is of the considered view that looking at any aspect it appears that the petitioner had only made genuine transactions and the error had been committed only on the part of the auditor who had filed GSTR-10 returns after knowing about the cancellation of GSTIN registration of the petitioner. Hence, the impugned order is liable to the set aside and the GSTIN registration No.33AQRPD0201D1ZO standing in the name of M/s.Selvi Transport is directed to be restored. Considering the submission made by the learned Additional Government Pleader, the petitioner is directed to file an application for restoration of GSTIN registration within a period of one week from the date of receipt of a copy of this order and the respondent shall revoke the cancellation of GSTIN registration No.33AQRPD0201D1ZO within a period of two weeks thereafter. Petition disposed off.
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2023 (11) TMI 874
Jurisdiction of GST officers - Validity of proceedings initiated under Section 149 of the CGST Act, 2017 - proceedings are wholly without jurisdiction and without the authority of law or not - supply of goods to the job worker - inter-state supply or intra-state supply? - HELD THAT:- From construction of Section 7,8 and 10, it would be evident that to determine whether the supply is inter-state supply or intra-state supply, it would depend on the place of supply and not delivery of the goods. In case, where the supply is made on the direction of a 3rd party, then place of the principal or the 3rd party shall be the place of supply as per Section 10(1)(b) of the IGST Act. In the present case, the delivery of goods was destined to M/s.Carbomix Polymers (India) Pvt.Limited, Kannur, Kerala, on instructions by MRF Limited to whom the goods were sold and invoice was issued in the name of MRF Limited. - the supply of goods in the present case was inter-state supply and not intra-state supply and the same would attract the tax under the IGST Act. In the present case, Ext.P1 invoice issued by the petitioner describes the buyer/principal as the customer and the job worker as the consignee and it is in compliance of job work procedure contemplated under Section 143 of the Act read with Ext.P12 circular - the supply being intra-state supply, the said supply would be governed under the IGST Act and Rules made thereunder and not under the CGST/KSGST Act and Rules. In the present case, the place of supply is in the state of Tamil Nadu but the delivery of the goods is within the State of Kerala i.e, from Ernakulam to kannur. The goods of the petitioner were not intercepted for non-generation of KER-1 and was not part of Ext.P4 notice. The only allegation was that the petitioner had charged IGST instead of CGST and SGST. Even otherwise, this was time when the transition from the Kerala VAT tax regim to CGST/SGST tax regim was taking place, and the E-way bill system was being introduced and therefore, for not generating the KER-1 declaration, when the goods were accompanied with the other required documents such as invoices etc., itself would not be sufficent that the supply was in violation of the provisions of the Act and Rules. As the respondents did not have the jurisdiction and they assumed the jurisdiction which was not vested in them for issuing Ext.P4 notice and Ext.P8 order, it is found that the whole proceedings are without jurisdiction and therefore, the argument of learned Government Pleader that the petitioner has approached this Court at the stage of issuing show cause notice and the writ petition should not be entertained, does not require much consideration. Petition allowed.
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2023 (11) TMI 873
GST Refund Claim - denial on the premise that the appellant has not replied to the SCN - time limitation - HELD THAT:- When the matter was taken up for hearing, the learned standing counsel appearing for the respondents produced a copy of the notification No.53/2023-CENTRAL TAX dated 02.11.2023 issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, New Delhi, wherein, time is granted to file an appeal against the order in Form GST APL-01 in accordance with sub section (1) of section 107 of the Central Goods and Services Tax Act, 2017, on or before 31st day of January 2024, to the taxable persons, who could not file the same within the time stipulated. In reply, the learned counsel appearing for the appellant sought liberty to the appellant to approach the appellate authority for filing necessary appeal. Thus, liberty is granted to the appellant to approach the appellant authority, if so advised - appeal disposed off.
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2023 (11) TMI 872
Cancellation of GST registration - blocking of ITC to all the customers of the petitioners - violation of fundamental right of doing business guaranteed under Article 19 (1) (g) of Constitution of India - no discrepancy in the claim of the input tax raised by the petitioners for the Financial Year 2017-2018 and 2021- 2022 - HELD THAT:- This Court is not going into the allegations as mentioned in Ext.P1 show cause notice. However, as the show cause notice has been issued and the petitioners have responded to the said show cause notice, the second respondent is directed to conclude the adjudication of Ext.P1 show cause notice issued to the petitioners expeditiously, in accordance with law and petitioners should be afforded opportunity for giving evidence in support of their claim. The second respondent should make endeavour to finalise the adjudication proceedings of Ext. P1 show cause notice expeditiously, preferably, within a period of two months and communicate the orders to the petitioners. The writ petition is finally disposed of.
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2023 (11) TMI 871
Classification of service - job work of converting raw material into Antraquinone derivatives - Whether the service in question falls within the entry Sr. No. 26 of notification No. 11/2017-CT (Rate) dated 28.6.2017, as amended vide notification No. 20/2017-CT (Rate) dated 30.9.2019 SAC 9988 (id) attract GST @ 12% or otherwise? - HELD THAT:- The description of the heading 9988 is manufacturing services on physical inputs (goods) owned by others. Job work as defined under section 2(68) of the CGST Act, 2017, means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly. The applicant has stated that they are engaged in converting the inputs Nitroantraquinone (HSN 2909); (ii) Monon methyl Amine (HSN 2921) (iii) Bromine (HSN 2801) supplied by the principal into Antraquinone derivatives (HSN 2914). A conjoint reading of notification No. 11/2017-CT (Rate) dated 28.6.2017, as amended, together with circular No. 126/45/2019-GST dated 22.1 1.2019, clearly depicts that there is a clear demarcation between scope of the entries at item (id) and item (iv) in so far as heading 9988 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 is concerned. While entry (id), ibid covers job work services as defined in section 2(68) of CGST Act, 2017, in respect of treatment or processing undertaken by a person on goods belonging to another registered person, the entry (iv) on the other hand while excluding the services covered by entry (id), covers only such services which are carried out on physical inputs/goods which are owned by persons other than those registered under the CGST Act. To summarize, therefore, Sr. No. 26(id) (residual entry | covers job work where inputs are sent by registered person, while Sr. No. 26(iv) covers manufacturing services (processing) wherein inputs (goods) are sent by an unregistered person. The service in question falls within the ambit of entry Sr. No. 26(id) of notification No. 11/2017-CT (Rate) dated 28.6.2017, as amended vide notification No. 20/2017-CT (Rale) dated 30.9.2019 and is classifiable under SAC 9988 and will attract GST @ 12%.
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2023 (11) TMI 870
Levy of GST - supply involved in terms of section 7 of the CGST Act, 2017 or not - amount deposited by the applicant (75%) in escrow account against bank guarantee pending outcome of the further challenge against Arbitral Award or dissatisfaction against DAB decision - time of supply'when tax on such DAB/arbitral award is payable to Government exchequer - eligibility to claim Input Tax Credit (ITC) - scope of 'consideration' as defined under section 2(31) of the CGST Act, 2017 - HELD THAT:- Consideration in relation to supply/goods, as defined in the Act, includes payment made or to be made, in money or otherwise, in respect of/response to, for and the inducement of the supply, whether by the recipient or by any other person. It shall not include any subsidy given by the Central/State Government. Consideration further also includes monetary value of any act/forbearance, whether by the recipient or by any other person. What is significant is however, the proviso to the definition which states that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply. Though the amount ie 75% paid into an escrow account is towards the dispute pertaining to the supply, what brings this particular transaction out of the scope of the consideration is the fact is that it is not paid to the contractor [supplier] but is deposited in an escrow account; that it cannot be withdrawn from the account without the explicit approval of the applicant; that the amount can be withdrawn only subject to the condition that the supplier) [contractor] provides a BG for the said amount - the applicant, though he has deposited the amount in an escrow account, also does not term this as a consideration for the supply since he is agitating his ease, feeling aggrieved by the decision rendered against him. In view of the foregoing, it is held to be outside the scope of 'consideration' as defined under section 2(31) of the CGST Act, 2017. Supply or not - HELD THAT:- The moment the Supplier [contractor] finally succeeds in the dispute/the applicant accepts the adverse decision, this ruling would be rendered infructuous. This finding is in operation only for a limited period when the supplier [contractor] has not succeeded in the litigation/the applicant has not accepted an adverse decision the supplier uses the amount lying in the escrow account subject to his furnishing a BG. It also goes without saying that the department reserves every right to recover any interest due on such amount for the delay in payment of GST, if any, on account of the non acceptance of adverse decision of the DAB/Tribunal. The amount deposited by the applicant (75%) in escrow account against bank guarantee pending outcome of the further challenge against Arbitral Award or dissatisfaction against DAB decision, is not liable to GST under the provisions of CGST Act, 2017.
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2023 (11) TMI 869
Liability of pay GST - lease renewal amount payable to SMC - premium on lease renewal amount payable to SMC - Reverse Charge Mechanism u/s 9(3) or 9(4) of CGST Act - collection made from shareholders/shop owners for making payment of lease and lease premium amounts be considered as supply or not - applicability of GST under forward charge - effect of circular no. 101/20/2019-GST dated 30.4.2019 - reimbursement of lease and lease premium amount get ITC of the GST charged by the applicant. Whether the applicant is liable to pay tax under Reverse Charge Mechanism [RCM] u/s 9(3) or 9(4) on lease renewal, payable to SMC? - HELD THAT:- Section 9(3) of the CGST Act, 2017 empowers the Government to issue notification, on the recommendations of the GST Council, specifying categories of supply of goods or services or both wherein tax shall be paid on RCM basis by the recipient,. Section 9(4), ibid, on the other hand, empowers Government to issue a notification to specify a class of registered persons who shall in respect of supply of specified categories of goods or services or both received from an unregistered supplier , pay tax on RCM basis - Hence, lease of land is to be treated as a supply of services chargeable to GST. In terms of Sr. No. 5 of notification No. 13/2017-CT(Rate) dated 28.6.2017, as amended, the applicant, [who as a recipient falls within the ambit of a business entity , in terms of the definition of business as per 2(17), ibid], becomes liable to discharge GST under RCM in terms of section 9(3) of the CGST Act, 2017 in respect of the services supplied by SMC, [a local authority in terms of Section 2(69), ibid]. Whether they are liable to pay GST under Reverse Charge Mechanism u/s 9(3) or 9(4) for premium on lease renewal amount payable to SMC? - whether circular No. 101/20/2019-GS 1 did 30.4.2019 grants them exemption from payment of GST? - HELD THAT:- In terms of Schedule II of GST Act, 2017, the activity i.e. lease of plot and payment of one time lease premium/salami/premium on lease renewal and annual premium paid by the applicant is a supply and is covered under Section 7(1) of CGST Act, 2017 - In this case the service provider is not State Government Industrial Development Corporation or Undertakings or any other entity having 50% or more ownership of Central Government, State Government, Union Territory but a local authority i.e. Surat Municipal Corporation. Further, the said Notification or GST Act, 2017, does not define the industrial or financial business area . For considering any area as industrial or financial business area, it is necessary that the area must be declared as industrial or financial business area by the state government by notification. In the instant matter, no such Notification declaring the area consisting of Sural Municipal Corporation proposed to be leased out to the applicant, as industrial/financial business area, is on record. Therefore, the area cannot be treated as industrial or financial business area in absence of any evidence in support. Thus, the benefits of Sr. no. 41 of not. No. 12/2017-CT(Rate), as amended is not available to the applicant. Thus, One-time premium/salami/premium on lease renewal and annual lease premium paid by the applicant to the AUDA for leasing of Surat Textile Market is covered under supply of service in terms of Section 7(1) of CGST Act, 2017. Accordingly, the said One-time premium/salami/ premium on lease renewal and annual lease premium paid by the applicant to Surat Municipal Corporation are taxable under GST in terms of the Notification No. 11/2017-CT (Rate) dated 28.06.2017. Whether the applicant is liable to pay GST under RCM under Section 9(3) of CGST Act, 2017? - HELD THAT:- In terms of Sr. No. 5 of notification No. 13/2017-CT(Rate) dated 28.6.2017, as amended, the applicant, [who as a recipient falls within the ambit of a business entity , in terms of the definition of business as per 2(17), ibid], becomes liable to discharge GST under RCM in terms of section 9(3) of the CGST Act, 2017 in respect of the services supplied by SMC, [a local authority in terms of Section 2(69), ibid]. Whether collection made from shareholders/shop owners for making payment of lease and lease premium amounts be considered as supply and whether GST under forward charge is applicable on it? - HELD THAT:- The collection made from shareholders/shop owners, who are members of the cooperative society, by the applicant, for making payment of lease and lease premium, is a supply under section 7 of the CGST Act, 2017 and would be leviable to GST under forward charge. Whether the collection made from shareholders/shop owners by the applicant if held leviable to GST, then can the applicant s shareholder/shop owners who are reimbursing the lease and premium on lease renewal be eligible for ITC of the GST charged by the applicant? - HELD THAT:- A conjoint reading of the sections 95(a) and (c), 97 and 103 of the CGST Act, 2017, depicts that advance ruling means a decision by the AAR to an applicant on matters or on questions specified under 97(2) ibid in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; that an applicant, means any person registered or desirous of obtaining registration under this Act; that such an applicant, may make an application in the prescribed form with appropriate fee, stating the question on which the said ruling is sought. The questions on which the ruling is sought is however, restricted to the 7 [seven] issues listed in section 97(2), ibid. Further, in terms of section 103, such a ruling shall be binding only on the applicant and on the concerned officer or the jurisdictional officer, in respect of the applicant - The applicant is not the person who intends to avail the ITC and that the ruling is sought on behalf of their members and shareholders who are distinct persons. This being the factual matrix, It is found that the applicant has no locus standi in seeking a ruling in the facts of the present case on this question to be precise.
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Income Tax
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2023 (11) TMI 868
Validity of Reopening of assessment u/s 147 - allowability of Deductions u/s 32AC questioned - reasons to believe or suspect - HELD THAT:- There is not even a hint in the reasons to reopen, that there has been a failure to truly and fully disclose. The reason itself indicates that everything has been disclosed because it reads on perusal of the records it was observed that the assessee was allowed the deduction u/s 32AC. The assessee contended that for the purpose of calculation of allowance - it was seen that the addition to fixed assets in Note 11 of the annual account for the relevant period - the allowance of deduction was not in order. During the course of assessment proceedings, Petitioner was told to provide detailed break-up of various plants and machinery installed and commissioned pursuant to Section 32AC duly weighted by its Chartered Accountant. Petitioner provided the details vide letter dated 5th July 2015. Vide letter dated 7th October 2016, Petitioner also forwarded the details, which were called for during the hearing held on 22nd September 2016, of installation date item-wise in respect of the plant. In the order disposing the objections, there is no denial of the fact that these materials were made available or these details were called for during the assessment proceedings. The only explanation is that these have not been discussed in the assessment order. In Aroni Commercials Ltd [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] case this Court has held that once a query is raised during the assessment proceedings and assessee has replied to it, it follows that the query raised was the subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. It is also settled law that change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Revenue as submitted that an audit query was raised and there was misapplication of provision of Section 32AC of the Act. However, the Assessing Officer himself has replied to the audit objection raised denying that there was any escapement of income. In fact, in the letter dated 4th March 2021 a copy whereof is annexed to the Petition it is stated audit objection/observation is not acceptable to the Department When the primary facts necessary for assessment are fully and truly disclosed, the AO is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the AO, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it is not open to reopen the assessment based on the very same material with a view to take another view. See Ananta Landmark Pvt. Ltd. [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] Decided in favour of assessee.
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2023 (11) TMI 867
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - HELD THAT:- The record shows, and something that is not in dispute, is that the Assessing officer (AO) had not indicated, with clarity, the ground on which penalty had been levied i.e., on account of concealment of income or furnishing inaccurate particulars. Thus, according to the Tribunal, this issue already stood covered against the appellant/revenue in several judgments. No substantial question of law.
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2023 (11) TMI 866
Addition u/s 69 - cash paid by assessee for purchasing 50% of the 10% share held by deceased partner in a firm - addition was made based on two documents which were recovered in a search action carried out at the premises of the aforementioned partnership firm - Tribunal stated that the incriminating document which constituted a receipt in full discharge of the claim qua the subject property and the receipt for payment qua the very same property could not have been used against the respondent/assessee, i.e., the partner - Whether documents found at the business premises could not have been used against the respondent/assessee, i.e., the partner? - HELD THAT:- Tribunal notes that as per the valuation report, the worth of the subject property was Rs. 2.10 crores as on 10.08.2011. Thus according to the Tribunal, it was incomprehensible as to why anyone would pay Rs. 12.75 crores in cash for a property which is worth Rs. 2.10 crores. Given the aforesaid position, apart from other legal aspects which have been touched upon by the Tribunal, we are of the view that no interference is called for. The factual circumstances which have been brought to the fore by the Tribunal do not persuade us to interfere with the order. As regards the other legal aspects which have been adverted to in the impugned order as to whether a document found at the business premises of the partnership firm could not be used against the partners is an aspect, that we need not touch upon in this case. No substantial question of law.
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2023 (11) TMI 865
Nature of loss - Loss on sale of loans - whether the loss incurred was on capital or revenue account? - as per revenue right to receive money is a capital right as the assessee is not in the business of trading of loan portfolio - ITAT deleted the addition - HELD THAT:- Tribunal, in its order for the AY in issue i.e., 2010-11, has extensively extracted its decision in [ 2016 (8) TMI 1202 - ITAT DELHI] AY 2004-05, which had concluded that the assessee s right to receive money from its debtors, on account of financing of assets, accrued to the assessee in the ordinary course of business and was not in the nature of capital receipt. The record shows that for the AY in issue i.e., 2010-11, the respondent/assessee had entered into an agreement with Shriram for the sale of financial receivables, having an aggregate book value of Rs. 10,11,71,94,000/-, for a consideration amounting to Rs. 9,08,29,87,000/-. As noticed above, the loan portfolio was sold to Shriram. The record shows that there is no dispute concerning the fact that the loan portfolios, concerning forty-five thousand (45,000) borrowers, had been sold to Shriram, and therefore, the difference between the figures [the difference between the value of the financial receivables and consideration received from Shriram] was sought to be claimed by the respondent/assessee as loss on revenue account - proposed question no. B does not arise from the orders passed by the statutory authorities. Whether the liability had, in fact, crystallized in the period in issue ? - Tribunal, after examining the assignment agreement executed between the respondent/assessee and Shriram, has returned a categorical finding of fact that the liability indeed arose in the period in issue, as indicated in paragraph 38 of the Tribunal s order extracted hereinabove. Appellant has not proposed any question of law to the effect that this finding is perverse. Therefore, on this score as well, we are not inclined to entertain the appeal, and the appeal is, accordingly, closed.
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2023 (11) TMI 864
Exemption u/s 11 - Intimation u/s. 143(1) - exemption u/s. 12A has been denied - Form 10B was filed belatedly - CIT(A) accepted the alternate contention of the assessee that the assessee is entitled to the benefit of other deductions when its income is being assessed as an AOP - HELD THAT:- A perusal of the order of the ld. CIT(A) clearly shows that the ld. CIT(A) has proceeded to give a direction to the AO to consider the alternate claim of the assessee in respect of the assessment of the income of the assessee u/s. 57 of the Act. This, admittedly, has not been challenged by the revenue. Thus, the fact that the ld. CIT(A) himself has felt that the intimation u/s. 143(1) is to be modified itself shows that the intimation issued by the AO is erroneous per se. This being so, admittedly the adjustments as has been done by the AO is not something that can be done in an intimation u/s. 143(1) of the Act. Consequently, the intimation issued u/s. 143(1) of the Act stands quashed. Entitlement to benefit of deduction u/s. 10(23C)(iiiad) - Even otherwise, when the benefit of deduction u/s. 12A of the Act was being denied, it was incumbent upon the AO to grant the assessee the benefit of deduction u/s. 10(23C)(iiiad) of the Act, especially because an AO is not just an Assessing Authority, he is not only a tax collector but he is a tax assessor and if any benefit is due to the assessee, it is incumbent upon the authority to grant such benefit as permissible under the law. Appeal filed by the assessee stands allowed.
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2023 (11) TMI 863
Addition u/s. 56(2)(viib) - premium on issue of equity share received by the assessee-company in excess of fair market value - authenticity of the projected figures and the genuineness of the valuation arrived questioned - AO In the absence of any rational basis for adopting the projected figures, the Assessing Officer discarded the FMV reported by the assessee and determined the FMV per share at Rs. 17.18 per share on the basis of NAV recognized in Rule 11UA - assessee contends that the Revenue is not entitled to question the projections determined on a reasonable basis as such projections are in the nature of estimations which may naturally vary with the actual figures reported in the subsequent years - CIT(A) deleted addition HELD THAT:- The issue is essentially factual in nature and its determination depends on the factual matrix of a given case. On perusal of the first appellate order, it is noticed that CIT(A) has adjudicated the issue in favour of the assessee based on the valuation report and on the basis of certain judicial pronouncements in an abstract manner. CIT(A) has not dealt with the factual objections of the Assessing Officer that the projections/cash flow assumed in the valuation report are without any demonstrable basis of reasonable nature. The CIT(A) has simply proceeded to return its findings on an abstract law. No doubt, the valuation is not an exact science and therefore cannot be done with arithmetic precision. However, in the same vain, the AO is entitled to scrutinise the basis of projections which resulted in such hefty valuations, more so, in the absence any significant earning capabilities in the past. CIT(A) is not expected to come to a conclusion based on abstract position of law. No inquiry has been shown to be made towards the basis for determination of projected figures assumed while applying DCF Method. The report of the valuer is also based on disclaimer. The valuer has determined the projected cash flow solely on the basis of estimations provided by the assessee. The basis for arriving at such estimations anticipated have not bee vouched by the expert valuer. CIT(A) has not examined such important factual ingredient and has also not examined as to why an investor will pay such a high premium merely on the basis of some application made by the assessee for obtaining license. The cash flow at the disposal of the assessee in the financial year when application for license has been made do not appear to support the ensuing business module of the company. While it is true that the projected figures are in the realm of estimations and thus a comparison of such estimations with actual figures would not be just and proper but however in the same token, the Assessing Officer is entitled to seek reasons for such wide variance to see the quality of the estimations used for determining FMV of shares under DCF Method else the whole process will be reduced to a farce exercise. The CIT(A) was expected to enquire into the factual aspects before adjudicating the issue. We, thus, without expressing our opinion on the propriety of the FMV determined by the assessee or by the AO, are of the opinion that the CIT(A) has not acted in the manner ordained in law. We thus set aside the order of the CIT(A) and restore the matter back to his file for re-determination of the issue afresh in accordance with law after giving proper opportunity to the assessee. Appeal of the Revenue is allowed for statistical purposes.
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2023 (11) TMI 862
Disallowance u/s 14A r.w.r. 8D - assessee has not shown suo moto disallowance for earning exempt income - HELD THAT:- As assessee has given complete details of expenses incurred by assessee for earning taxable income. The total turnover of the assessee for the year under consideration is Rs. 127.39 crore and total administrative expenses is Rs. 79.58 lakhs only. Surprisingly, the AO determined the disallowance u/s 14A of Rs. 2.70 crore, which is not in consonance with the proviso attached with Rule 8D(2). The disallowance of section 14A cannot swallow the entire expenses administrative or otherwise which were incurred for earning taxable income. AR in his submission categorically contended that total administrative expenses claimed by the assessee apart from disallowance related to exempt income is only 0.62% of their total turnover. Assessee while referring such administrative expenses submitted that the director s remunerations claimed during the year is only Rs. 18.00 lakhs and some percentage of directors remuneration/salary may be disallowed. We find merit in such submission of ld. AR of the assessee, therefore, we direct that apart from suo moto disallowance being 1.00 % of dividend income, direct expenses and 25% of director s remuneration would be sufficient to meet the end of justice, so far is disallowance under Rule 8D is concern. AO is directed accordingly. In view of the aforesaid factual and legal discussion, the ground no.1 and 2 of appeal are partly allowed. Disallowance u/s 80G for the want of registration certificate - HELD THAT:- Before ld. CIT(A), the assessee filed copy of receipt of donations as well as receipt of donation to both the trusts containing registration under section 80G along with their PAN. We find that copy of certificate under section 80G of both the trusts is placed on record along with the copy of receipt to both the trusts. We further find that the assessee claimed 50% deduction of donation to such trusts. CIT(A) on his satisfaction granted deduction under section 80G on verification of facts. In our view, the order of ld. CIT(A) is based on verification of facts, which does not require interference at out end. Decided against revenue.
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2023 (11) TMI 861
Assessment order passed by AO without quoting DIN - generation of DIN subsequently - HELD THAT:- As keeping in view observations of Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] and in terms of paragraph 4 of the circular No. 19/2019 dated 14.08.2019, we hold that the impugned AO order is invalid and shall be deemed to have never been passed. Accordingly, we quash the impugned AO order. Further, the issue that a simultaneous DIN number was generated and communicated have been considered by Co-ordinate Bench of the Tribunal in the case of Abhimanyu Chaturvedi [ 2023 (8) TMI 378 - ITAT DELHI] when considered establish that DIN was not generated prior to uploading the document in ITBA. It is also established that the DIN was not quoted before it was physically signed by the Ld. AO. The generation of DIN subsequently and generation of intimation to be sent to assessee are of no consequence for the purpose of assessment and raising the demand. Appeal filed by the assessee is allowed.
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2023 (11) TMI 860
Addition u/s 69A - difference in the stock found during the survey vis-a-vis recorded in the books of accounts - Excess stock of 22Kr Gold and Polki Jewellery studded 22kt gold jewellery of 14kt and 18kt and gold jewellery of 14kt and 18kt studded with diamonds - HELD THAT:- Total weight of items of 22KT Gold jewellery and 22KT Gold Polki jewellery was 36,943 gms and as per the estimated value, the difference was of merely 113.50 gms. which is 0.32%. While weighing more than 34,000 gms of jewellery, the difference of 113 gms. could be considered as an error and no adverse inference cannot be drawn on this issue. With regard to inter-mixing of gold jewellery of 18KT and 14KT, from the table above, we find that the combined weight of the jewellery was 77,962 gms. and the difference was 453 gms. which is 0.58%, hence, the difference of 453 gms. could be considered as an estimation error and no adverse inference cannot be drawn on this issue. With regard to the difference in the weight of diamond in studded jewellery items of 18KT and 14 KT gold jewellery, the excess diamond has been determined at 723 carats. From examination of the valuation report prepared by the authorized valuer at the time of the survey, we find that the diamonds have never been separated from the gold jwellery. The weight has been extracted from the gross weight. The total jewellery as per books was 72,962 gms. In the absence of specific findings and tags describing the weight of the jewellery in terms of gold and diamond separately, the weight stated in the valuation report can be considered as near estimations but not absolute weight. Under these factual circumstances, it is clear from the record that the weight of the diamond has not been arrived at fittingly. Hence as been excess diamonds determined at one showroom of 14KT and shortage determined at the another showroom and keeping in view the fact that the diamonds have not been separately weighed, we hold that no addition is called for on this ground. Appeal of the assessee is allowed.
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2023 (11) TMI 859
Deduction u/s 80IA - cargo handling facility which includes storage, loading and unloading - Airport facility - claim denied as it is not a company registered in India or owned by consortium of such companies - whether the cargo handling facility which includes storage, loading and unloading is an infrastructure facility for the purpose of Section 80-IA? - HELD THAT:- AO has fallen in error in considering Airport as a facility standing in isolation and giving a very restrictive interpretation to the scope of developing, operating and maintaining Airport. Airport is a facility for transportation of passengers or cargo or both at the same time. The passengers may also travel along with their baggage and cargo may be accompanied by people handling that cargo. Thus the facilities of Airport is not restrict to the fixed structure or equipment connected with the Aircrafts maintenance, their running, flying or landing alone. The functionality of the Airport arise from all the facilities which bring utility or add utility to the premises, convenience to passengers, crew, ground staff. Facilities like cargo handling, ground handling, announcement crew, security, check-in counter, baggage management facility, the Airport crew, airlines crew, aircraft crew facility etc. collectively and independently use the premises, the fixed structures, the equipments etc. The developing, operating and maintaining Airport, therefore, encompasses all these activities which are incidental or supplemental to the transportation of passengers or cargo or both together. These facilities of various kind may be provided by one company or different companies but in any way they operate in consortium and having interdependence. Learned AO has fallen in error in observing that different companies have developed the running of Bangalore Airport and the assessee is merely providing utility services beyond the scope of Airport for the purpose of Section 80-IA. Thus ground handling and cargo handling services provided by the assessee are covered within the meaning of Explanation referred to Section 80-IA and assessee is entitled to claim the benefit of same. There was no substance in the allegation of Ld. AO that the basic condition provided in Section 80IA(iv)(i)(b) is not fulfilled. This was also the view in the case of M/s. Menzies Aviation [ 2021 (2) TMI 36 - KARNATAKA HIGH COURT] as duly appreciated by ld. CIT(A). CIT(A) has duly appreciated the fact that Ld. AO had fallen in error in applying provision of Section 80IA(iii) with regard to allegation of the assessee company being a mere reconstitution and reconstruction of unincorporated JV by taking into consideration that the said provision is not applicable to the assessee company claiming benefit by way of infrastructural facility of the nature of Airport. CIT(A) has also duly appreciated the fact that assessee is company incorporated India and owns the infrastructural facility and Ld. AO has fallen in error in alleging violation of the condition of Section 80IA(iv)(i)(a). As relied by Ld. Sr. Counsel in the case of M/s. PSA Sical Terminals ( 2012 (12) TMI 1240 - ITAT CHENNAI ), laying down that there is distinction between the company and the share holders, as in the case of that assessee also the company equity was subscribed by three companies and the Tribunal had considered the fact that being a registered company independently holding the assets was entitled to benefit u/s 80IA. This also takes care of the allegation of the ld. AO that earlier joint venture was not taking the benefit of Section 80IA as that was for the reason that the earlier joint venture was not company incorporated Indian and was merely an Association of person which was not entitled for reduction u/s 80IA. Decided against the appellant Revenue. TDS u/s 194C on concession fee - Addition u/s 40(a)(ia) in respect of the year end provisions - We are of the view that the credit contemplated in sub-section (2) of section 194C is one that enables the person who has carried out the work to make a claim for the sum. The provision as made by assessee did not as such create a debt in favour of BIAL as the concession fee did not arise out of any contract performed by BIAL but was more in the form of royalty with uncertainty of actual amount due and therefore no income can be said to have accrued or arisen to BIAL. Methodology adopted for estimation of turnover / profits and subsequently creating the year-end provision and reversing the same in next financial year, remains the same in all subsequent years. Thus, given the fact that in AY 2014-15 the Department has now accepted that the disallowance is not required to be made under section 40(a)(ia) in respect of the year end provisions for concession fee, same sustains the claim of assessee. The reliance as placed by Ld. Sr. Counsel on the decision of Toyota Kirloskar Motor (P.) Ltd. [ 2021 (4) TMI 276 - KARNATAKA HIGH COURT] also supports the case of assessee as therein year end provisions were made for expenses on estimate basis in respect of which bills were yet to be submitted. The provisions were reversed upon receipt of invoice and expenses were booked as per the invoices and taxes were deducted there from. The Hon ble High Court referred to the principle laid down in CIT v. Shoorji Vallabhdas Co. [ 1962 (3) TMI 6 - SUPREME COURT] that if income does not result at all, there cannot be a levy of tax even though a book entry is made. Thus ground is determined against the appellant Revenue.
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2023 (11) TMI 858
Restriction on deduction of expenditure u/s 37(1) - compensation paid for breach of contract - disallowing the damage charges paid to NHAL treating the same as in contravention of law - Prior Period expenditure - Also AO found that such damage charges were pertaining to the earlier year, therefore the same cannot be allowed as deduction on this count as well, being prior period expenses - HELD THAT:- Penalty has been paid by the assessee on account of breach of contract which cannot be equated with the offence, or something prohibited by law. As such, the assessee could not meet the deadline to fulfill the criteria laid down by the contractee being the NHAL and therefore the damages were levied by NHAL. The Hon ble Gujarat High Court in the case of PCIT vs. Mazda Ltd. [ 2017 (9) TMI 1038 - GUJARAT HIGH COURT] has held that the deduction on account of liquidated damages cannot be disallowed under the provision of section 37(1). The amount of damage crystallized in the year under consideration as evident from the various letters written by NHAL - Thus, it cannot be said that such damages are prior period expenses. Assessee is entitled to the damages incurred by it as a deduction. As such, we do not find any infirmity in the order of the Ld. CIT(A). Hence the ground of appeal of the revenue is hereby dismissed. Disallowance of deduction u/s 80-IA(7) - assessee submitted that there was no deduction claimed by the assessee - HELD THAT:- DR appearing on behalf of the Revenue could not controvert the findings of the Ld. CIT(A). Accordingly, we concur with the finding of the Ld. CIT(A), on the reasoning that once no deduction has been claimed by the assessee u/s 80-IA of the Act, the question of making any disallowance does not arise . Hence, the ground of appeal of the revenue is hereby dismissed.
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2023 (11) TMI 857
Validity of Final assessment order u/s 144C passed in pursuant to the direction of DRP - period of limitation - upward adjustment to total income of Appellant in respect of international transaction of provision of Marketing Support Services ( MSS ) - TPO rejected the bench marking analysis adopted by the assessee by applying TNMM method and also rejected the comparable companies considered by the assessee - HELD THAT:- The statute has mandated that the ld. A.O. shall pass the assessment order within one month from the end of the month in which the ld. DRP directions is received. This provision is mandatory which has placed strict adherence to the ld. A.O. to pass the assessment order even without providing any further opportunity of being heard to the assessee which further implies strict compliance of the said provision. The bench had sought for clarification from the ld. counsels as to the date of receipt of ld. DRP's direction by the ld. A.O. and the ld. AR had submitted the proof of receipt which is found to be on 31.01.2022. From the above observation, it is observed that the ld. A.O. has passed the assessment order beyond the time period prescribed under the provisions of the Act. We, therefore, are inclined to hold the assessment order to be time barred and thereby holding it to be void-ab-initio
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2023 (11) TMI 856
TDS u/s 194I - Assessee in Default u/s 201(1) / 201(1A) - non deduction of TDS on rental payments - HELD THAT:- As assessee has furnished the complete details of rental payment i.e., Godown Location, address of the Godown, name PAN of landlord and payment made to each of them. We find that the payment to each of these parties is less than threshold limit of Rs. 1.80 Lacs and therefore, the assessee was not liable for TDS on these payments considering the provisions of Sec.194I. Keeping in mind the nature of assessee s business, the assessee may be temporality hiring the godown and may not be successful in furnishing adequate documentary evidences to the satisfaction of lower authorities. For that lapse, the assessee has already suffered disallowance u/s 40(a)(ia). But, nevertheless, the details as furnished before lower authorities are sufficient to make a reasonable conclusion that the assessee was not liable for TDS on these payments. Accordingly, the assessee could not be treated as assessee-in-default u/s 201(1) / 201(1A) of the Act particularly when all the payees are having PAN. Decided in favour of assessee.
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2023 (11) TMI 855
Computation of LTCG - Transfer u/s 2(47) - year of assessment - extinguishment of the owner s rights in the property - claim of exemption u/s. 54 - handing over of vacant possession of the property - HELD THAT:- Legal position settled by the Hon ble Supreme Court in the case of Seshasayee Steels (P) Ltd.[ 2019 (12) TMI 702 - SUPREME COURT] following the decision of Balbir Singh Maini, [ 2017 (10) TMI 323 - SUPREME COURT] held that the transfer will complete in regard to property rights whenever owners rights have been extinguished. In the present case before us, the rights get extinguished on 19.07.2007 and not on the date of Agreement to sale i.e., 04.02.2006. As the issue is squarely covered by the decision of Hon ble Supreme Court in the case of Seshasayee Steels (P) Ltd., supra, and the fact in the present case is that the owner s right to property ger extinguished on the date of registration of sale deed i.e., 19.07.2007 and the assessment of capital gain can only be made in assessment year 2008-09 and not in this assessment year 2006-07. We quash the assessment on this sole issue. This issue of assessee s appeal is allowed.
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2023 (11) TMI 854
Reopening of assessment u/s 147 - Reasons to believe - allegation of escapement of income as assessee has not shown any capital gain from the sale of immovable property in his Return of Income - HELD THAT:- Whereas it can be seen from the original Return of Income filed by the assessee assessee declared his salary income and computation of capital loss and working of cost inflation index as on 01-04-1981. So without verifying the original Return of Income, the Ld. A.O. has recorded the reasons that the assessee has not shown any income from capital gain which is an incorrect statement and non-application of mind by the Assessing Officer while recording the reasons for reopening the assessment for the Assessment Year 2008-09. Also as seen from Para 3 of the assessment order, A.O. himself admits that the Return of Income filed by the assessee wherein the computation of capital loss offered by the assessee. This is self-contradictory to the reasons recorded by the A.O. It is thereafter, the Ld. A.O. referred the matter to DVO to ascertain the Fair Market Value of the immovable property as on 01-04-1981. Thus when the reasons recorded itself is found to be incorrect and there is no failure on the part of the assessee in disclosing the capital gain. Therefore invocation of section 147 and issuance of notice u/s. 148 of the Act by the A.O. are without authority of law and cannot be sustained. Assumption of jurisdiction u/s. 147 of the act is without authority of law and the same is not sustainable. Decided in favour of assessee.
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2023 (11) TMI 853
Denial of tax credits - Salary not taxable in India - Residential status of an assessee - assessee was not able to obtain Tax Residency Certificate from the department of Treasury, USA, certifying that the assessee was taxed in U.S . - assessee has filed an application for admission of additional documents and Tax Residency Certificates - HELD THAT:- In our view, the law is fairly settled that a party who had failed to produce the evidences despite his best efforts at the assessment / appellate stage and such evidence are necessary for just and fair disposal of the proceedings, then those documents are required to be admitted. The above said principle has been duly incorporated in Rule 29 of the ITAT Rules. Having admitted the documents filed by the assessee which are in the nature of additional documents which show that the assessee was tax resident in USA during the relevant assessment year. Accordingly, we remand back the matter to the file of Assessing Officer with a direction to consider the Tax Residence Certificate and decide the issue afresh and pass a reasoned speaking order after affording of opportunities of hearing to the assessee in accordance with law. Appeal of assessee is allowed for statistical purposes.
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2023 (11) TMI 852
Penalty u/s. 271(1)(c) - Defective notice u/s 274 - Difference in charge for levying penalty in SCN and as per impugned penalty order - whether to levy penalty on concealment of Income or furnishing of inaccurate particulars of Income ? - as per assessee AO levied penalty for furnishing inaccurate particulars of income whereas in the notice issued section 274 Appellant was asked to show cause why penalty should not be levied for concealing particulars of income - HELD THAT:- It is clear that while the Assessment Order records satisfaction of the AO that the Appellant has furnished inaccurate particulars of income, the notice issued under Section 274 of the Act state that the Appellant has been charged with concealment of particulars of income. However, while passing the penalty order, penalty has been levied on the Appellant for furnishing inaccurate particulars of income. Penalty notices put the Appellant to notice about the charge of concealment of particulars of income whereas in the impugned penalty order penalty under Section 271(1)(c) of the Act has been levied for furnishing inaccurate particulars of income. Thus, the Appellant has not been informed about the charge/grounds on which penalty under Section 271(1)(c) of the Act is sought to be levied through statutory notice issued under Section 274 of the Act and therefore, the test laid down by the Hon ble Bombay High Court in the case of Mohd. Farhan A Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] is not satisfied. Since, in the present case the penalty proceedings were initiated under one limb of Section 271(1)(c) for furnishing inaccurate particulars of income whereas the penalty has been levied after finding the Appellant guilty under the other limb of Section 271(1)(c) for furnishing inaccurate particulars of income, the penalty order levying penalty u/s 271(1)(c) of the Act cannot be sustained - Decided in favour of assessee.
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2023 (11) TMI 851
Addition u/s 56(2)(viib) - share premium received from non-resident - projections in the valuation were not found to be relist by AO - AO held that assessee was not entitled to use discounted cash flow method at the time of first issue of shares for the purposes of section 56 and valuation report recommended the valuation of shares at Rs. 250.19 per share when it issued 57,910 shares. But the assessee used this valuation report for entire number of shares - HELD THAT:- Tribunal in M/S CLEARVIEW HEALTHCARE PVT. LTD. VERSUS ITO, WARD 6 (2) , NEW DELHI [ 2020 (1) TMI 1022 - ITAT DELHI ] has concluded addition made by Assessing Officer on account of alleged excess share premium is unjustified when those very shares are sold in next financial year at much higher amount after proper due diligence, that to a non resident buyer and further there is no case of unaccounted money being brought in garb of stated share premium, hence, addition made u/s 56(2)(vii) of the Act is hereby deleted. Upon careful consideration, we find that the order of the Ld. CIT(A) was an ex-parte order. Moreover, the case law now referred was not put up before the authorities below. Hence, in the interest of justice, we remit this issue to the file of the Assessing Officer. The Assessing Officer shall examine the issue afresh in the light of our observation hereinabove duly verifying the factual veracity of the assessee s submission. Appeal of the assessee stands allowed for statistical purposes.
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2023 (11) TMI 850
Validity of assessment u/s 143(3) instead of Assessment u/s 153C - Addition u/s 68 - Bogus LTCG - Penny stock purchases - HELD THAT:- There may be a case where situation and condition of section 153C is satisfied, in that case the AO has to proceed only u/s 153C. But in the present case, the AO has conducted scrutiny under CASS and the search-information has been made use as additional or ancillary information, we do not feel that the present case has the situation or condition which warrants application of section 153C. In that view of matter, we are of the considered view that the AO is very much justified in framing assessment u/s 143(3). Therefore, there is no worth in the ground of assessee. The same is hereby dismissed. Bogus LTCG - Question raised by AO nowhere suggests that the assessee s name figured in search material was shown to assessee. Moreover, mere showing of material to a lady-assessee does not serve effective purpose. Therefore, the AO must supply the material or information required by assessee. Taking into account these aspects, we are of the considered view that there is a need on the part of assessee to submit purchase-bill or other evidence of purchase and the AO has to rectify his contradictory finding after taking into account assessee s submission.There has to be a finding on source and mode of investment. There is also a necessity to verify the status of 1,300 shares sold in AY 2014-15. Furthermore, there is a strong necessity on the part of AO to supply search-material to assessee. Thereafter, the AO would take a fresh call on the issue. Therefore, this ground is fit for remitting back to the file of AO and we do so. Appeal of assessee is partly allowed for statistical purpose.
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2023 (11) TMI 849
Levy of penalty u/s. 271(1)(c) - income surrendered while filling the return of income in response to notice u/s. 153A - addition of short term capital gain voluntarily surrendered for taxation in the assessment proceedings by filing revised computation of income - HELD THAT:- As relying on Kirit Dahyabhai Patel case [ 2015 (1) TMI 201 - GUJARAT HIGH COURT] assessee has surrendered the income while filling the return of income in response to notice u/s. 153A of the Act and even on the small addition made in the assessment proceeding was also pursuant to the revised computation of income filed by the assessee in the assessment proceeding for which the ld. AO did not find any fault and the nature of income added are short term capital gain of minor amount, small amount of rent and interest income on deposit. The assessee has surrendered all these amount for tax by revising the computation of income in the assessment proceeding. This act of the assessee cannot be considered with that of the case where the amount added in the finalizing the assessment by the assessing officer and the assessee has not willingly not disclosed. Thus, the charge of providing concealment of income or furnishing of inaccurate particular of income which was done with deliberate, willful or mala fide intention is not seen in this case. As such the same was not shown due bona-fide error which the assessee corrected voluntarily in the assessment proceedings by filling the revised computation of income. Therefore, in this facts and circumstances, it cannot be held that the assessee has concealed his income and liable to penalty under section 271(1)(c) - we also find support and guidance from the judgment of Gujarat State Electricity Corporation Ltd [ 2022 (10) TMI 1052 - GUJARAT HIGH COURT] wherein held that in no penalty can be imposed where the assessee made bona fide mistake and corrected the same on realization of mistake. We find that the assessee under the bona fide belief not offered income on short term capital gain which has been corrected in the assessment proceeding by filling the revised computation of income and the same is not disputed further. Thus, there was no will full attempt of the assessee to conceal his income. Penalty deleted - Decided in favour of assessee.
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2023 (11) TMI 848
Addition u/s u/s 43CA - Difference in the sale value and stamp duty value - Addition made without awaiting the report of DVO - scope of proviso to subsection (1) of section 43CA - tolerance limit band - HELD THAT:- We note that the Finance Act 2018 has inserted a proviso to subsection (1) of section 43CA which provides 5% tolerance limit if there is variation between declared sale consideration vis-a-vis stamp duty value, and in such an event then, no addition is warranted. Similar proviso was inserted by the Finance Act 2018 to sub-section (1) of section 50C of the Act. The said tolerance limit band was enhanced from 5% to 10% by the Finance Act 2020 w.e.f. 01/4/2021. As decided in Pune Tribunal in the case of Radhika Sales Corporation [ 2018 (11) TMI 1788 - ITAT PUNE] wherein the Tribunal held that if the difference in the value declared by the assessee and the value determined by the DVO is less than 10%, then no addition may be made. As taking into consideration the Pune Tribunal s decision in the case of Radhika Sales Corporation [ 2018 (11) TMI 1788 - ITAT PUNE] and case of Maria Fernandes Cheryle [ 2021 (1) TMI 620 - ITAT MUMBAI] we are of the opinion that the proviso explaining the tolerance limit has to be read retrospectively. Therefore, in the present case in hand as noted difference between the declared sale value i.e. Rs. 9,50,00,000/- and the value decided by the DVO is Rs. 9,91,25,000/- which difference being less than 10% [i.e, 4.35%], no addition is warranted. However, we note that the AO has not passed the consequential rectification order after the DVO had submitted his report dated 21.02.2019. Therefore, we deem it fit to set aside the impugned order and restore the matter back to the file of AO for limited purpose of verification of the facts stated and if assessee s claim as discussed is found to be correct, then, no addition is warranted. Appeal of the assessee is allowed for statistical purposes.
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2023 (11) TMI 847
Unsecured loan received - addition made on doubting the lenders, creditworthiness and genuineness of the transaction and the identity of the lenders - HELD THAT:- The assessee had received the amount from the lenders through the banking channels and the assessee has also produced audited financial statement of M/s Blush Equity P. Ltd. and audited financial statement of and M/s Glaxo Buildcon Pvt. Ltd. which shows that the lenders were having sufficient funds for advancing the loan to the assessee. Apart from the same, both the lenders have issued confirmation of the loan given to the assessee and also provided PAN ITR details. As assessee had repaid the above said loans (bank statements in support of repayment of the loan produced ), we find no reason for the authorities to doubt the lenders, creditworthiness and genuineness of the transaction and the identity of the lenders. Therefore, the above addition made by the A.O. which was confirmed by the CIT(A) is hereby deleted. Decided in fvour of assessee. Unexplained Sundry creditors - Assessee argued violation of principles of natural justice without considering the submission of the assessee - HELD THAT:- It is the specific case of the assessee is that the A.O. and the CIT (A) have recorded incorrect facts and violated the principles of natural justice without considering the submissions of the assessee and also not considered the documents produced by the assessee in support of the contentions of the assessee, we remand the issue involved to the file of the A.O. with a direction to consider all the documents and the submissions made by the assessee and decide the issue afresh. Bogus salary paid to employees - HELD THAT:- Assessee has provided the Adhar cards of the employees for the purpose of proving the identity and also details of the salary paid to the employees showing the names, post, amount on the signature of the receipt of the salary together with the confirmation and considering the quantum of the amount involved, we delete the disallowance made by the A.O. being the amount of salary which has confirmed by the CIT(A), accordingly we allow Ground of the assessee. Disallowance being 1/10 th of the various expense - HELD THAT:- Since, the assessee had not provided any details or any satisfactory evidence with regard to the genuineness of the expenses and considering the nature of the expenses claimed and also the nature of business of the Assessee, in our opinion, the CIT(A) rightly restricted the disallowance to 1/10 th of the expenses claimed under the said head which is reasonable as well. Accordingly, we dismiss the Ground of the assessee.
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2023 (11) TMI 846
Unexplained cash deposits - sale proceedings given over and above registered value by the assessee - HELD THAT:- We find that the ld. CIT(A) in his order relied on the order of Jagtar Singh [ 2010 (12) TMI 1355 - PUNJAB AND HARYANA HIGH COURT] as observed that the cash deposit has no relevance with the assessee s payment over and above the registered price. So, the amount duly negated and has no relevance with assessee. We find that there is no such evidence was found for assessee related payment the cash Rs. 48.5 on and above the registered value. The ld. DR was unable to take any divergent view against submission of assessee - Assessee appeal allowed.
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2023 (11) TMI 845
Revision u/s 263 - Excess depreciation on the tipper (goods vehicle) which are used for delivery of stone to the party - PCIT supposed to allow the claim @ 15% as against 30% allowed by AO - HELD THAT:- The assessee is running the business since long. The assessee claimed the depreciation in two blocks; i) @ 15% and another @ 30%. On that basis the assessment was completed in earlier years and the depreciation was duly accepted by the ld. AO. The balance and the chart of depreciation was duly submitted before the ld. AO during assessment proceeding. The assessee also in revisional proceeding explained before the PCIT about the variation of rate of depreciation in two blocks. The rate of depreciation was duly supported by the Income Tax Rule 1962 and also it is duly covered in the case of Bharat Carriers Ltd. [ 2022 (5) TMI 1599 - ITAT CUTTACK] So, there is no ambiguity for accepting the depreciation @ 30% for tipper which used in the assessee s business for hiring for transporting the goods. We find that the assessment order is not at all erroneous and prejudicial to the interest of revenue. Assessee appeal allowed.
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2023 (11) TMI 844
Exemption u/s 11 denied - assessee was not granted registration u/s. 12A - Assessee urging that the matter be restored to the lower authorities for the reason that the assessee was granted registration by means of an order passed u/s. 12AA, which would apply to the year under consideration as well - HELD THAT:- Assessee had not furnished any return prior to notice u/s. 148. The solitary return was filed after the notice on 24-04-2019. The consequential assessment was completed u/s 147 of the Act on 17-12-2019 determining total income equal to the amount of income returned, which attained finality without any challenge thereto. The benefit of proviso can be granted only when the assessment proceedings are pending on the date of grant of registration by the ld. CIT(E). We are confronted with a situation in which the registration was granted by the ld. CIT(E) on 18-05-2023 and the assessment proceedings got concluded, much before that, on 17-12-2019.As such, the assessment year under consideration, namely, 2012-13, is not covered by the express mandate of the registration. Notwithstanding that, no benefit of exemption u/s. 11 was ever claimed in the return and, as such, there was no question of granting or denying such benefit also. In this view of the matter, the assessee cannot claim the benefit of exemption u/s. 11 for the year under consideration in any manner. Penalty u/s. 271(1)(c) - non filing the return of income within the stipulated time - shift of operations of the society from one city/station to another - Assessee furnished the return pursuant to notice u/s. 148 and the income declared was assessed as the total income - HELD THAT:- The main object of the assessee, consisting of surgeons across the country, is to attain higher Oral Maxillofacial surgical standards and to promote research in Oral and Maxillofacial surgery. The assessee was set up several years ago having and continuing to have its registered office in Pune. It, being an all India body of surgeons, keeps moving its area of operations and the relevant records on a certain frequency from one city to another. For the A.Y. 2012-13 to 2013-14, the operations of the society were in Mangalore and the audit was conducted by Mr. K. Santha Kumar, Chartered Accountant, Thrissur. Thus, for the year under consideration and the next year, the operations and the records were kept in Mangalore. From the A.Y. 2014-15, there was a shift of operations and the records from Thrissur to Faridabad, which continued up to the A.Y. 2018-19. Again, its operations came back to Pune with effect from the A.Y. 2019-20. It was during such earlier years, when the operations and records were outside Pune, that the concerned persons at the relevant stations got the accounts audited, but could not co-ordinate qua the filing the returns either because of misunderstanding or ignorance When the operations came back to Pune in the year 2018, the trustees realised that though the accounts were got audited for the earlier years, but neither the registration was sought nor the returns were filed for such earlier assessment years. Immediately, they swung into action and applied for registration u/s. 12AA on 07-10-2018 and also furnished the income-tax return for the A.Y. 2019-20. This shows that because of the regular shifting of the operations of the assessee-trust from one station to another and the resultant confusion about the correct person responsible for filing return, i.e. whether from the station where the operations were going on and records were kept or the registered office in Pune, the returns could not be filed for any of the assessment years prior to the A.Y. 2019-20. This constitutes a reasonable cause for which the return for the year under consideration could not be filed within the time prescribed u/s. 153 of the Act. We are satisfied that this being a reasonable cause, brings the case out of the purview of Explanation 3. If this Explanation fails to apply and we come back to examine the case within the terms of Explanation 1, the sequitur is that no penalty can be imposed in the absence of any addition or disallowance in the determination of total income by the AO. We, therefore, order to delete the penalty.
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2023 (11) TMI 843
Estimation of commission income at 0.60% on accommodation entries - no evidence was furnished to justify the fact that the assessee was indeed carrying on any business - No details of persons from whom monies were received and no details of persons to whom payments were made were furnished by the assessee. Accordingly, the ld. AO concluded that the entire transactions reflected in the said bank statement are mere transactions carried out by the assessee in the capacity of an entry operator - HELD THAT:- As the assessee was not able to buttress his arguments by filing cogent documentary evidences even to prove that it is engaged in some business activity and that the credits and debits in the aforesaid bank account are business transactions. In these facts and circumstances, we do not deem it fit to interfere in the order of the ld. CIT(A) upholding the estimation of commission income @ 0.60% on total bank transactions. Accordingly, the addition made by the ld. AO is hereby upheld. Addition to income of TDS u/s 194A on interest income earned - Since no interest income was shown by the assessee in the return of income, this sum was added to total income by the AO while completing the assessment - Even before us, we find that no evidence has been filed by the assessee or by his authorized representative to justify the fact as to whether this interest income has been included in the total turnover. In any case, it is not in dispute that the amounts received from the aforesaid four parties represent interest income only which needs to be assessed separately under the head Income from other sources . Once the receipt represents interest income which has been subjected to deduction of tax at source u/s 194A of the Act by the payers, then it cannot be part of total alleged business receipts as stated by the assessee and the said interest income is to be taxed separately under the head income from other sources which has been rightly done by the lower authorities. Hence, we do not find any infirmity in the action of the lower authorities in this regard. Accordingly, the addition is hereby upheld. Disallowance of excess depreciation - We have already held that the assessee is not carrying on any business. Accordingly, it would not be entitled for depreciation u/s 32 of the Act. In any case, this issue does not arise out of the impugned order of the ld. CIT(A) before us. Hence, ground No. 9 raised by the assessee is dismissed. Assessee had disclosed a sum as returned income under the head Income from business. - Since we have already held that no business is carried on by the assessee and it has been merely providing accommodation entries to various parties to earn commission income thereon, thus, business income voluntarily offered to tax by the assessee should not be brought to tax. Hence, we hold that this sum of Income from business. is available to the assessee for telescoping benefit and the same would be telescoped with the aforesaid additions confirmed hereinabove. AO is hereby directed to give credit of Rs 1,48,380/- while determining the income of the assessee.
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2023 (11) TMI 842
Penalty u/s 271(1)(c) - non-recording of satisfaction in the assessment order for initiation of penalty - income of the assessee was assessed at 1% as presumed that the assessee has done the business of providing accommodation entries by bogus bills of sale and purchase - HELD THAT:- As noted that the AO has rejected the books of accounts as the assessee failed to produce the same for verification and thereafter, a presumption has been drawn that the assessee has provided accommodation entries by way of bogus bills of purchase and sales and thereafter, on the declared turnover of Rs 10 crores, the AO has estimated income at the rate of 1% of the gross receipts and after giving credit for income declared in the return of income, has made an addition and it has been stated that the penalty proceedings u/s 271(1)(C) are being initiated separately for furnishing inaccurate particulars of income. We therefore find that there is no prima facie satisfaction which has been recorded by the AO for initiation of penalty proceedings which can be discerned from reading of the assessment order. There is no direction for initiation of penalty proceedings and merely addition has been made to the returned income on a presumptive basis which is not sufficient for acquiring jurisdiction as contemplated by the provisions of section 271(1B) of the Act. Appeal of the assessee is allowed.
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2023 (11) TMI 822
Validity of assessment u/s 153A - addition on account of incriminating material and other income to compute total income - addition of notional income from house property - HELD THAT:- It is stated by DR before us that those immovable properties are disclosed in the balance sheet of the assessee and the assessee before the lower authorities never disclosed such balance sheet and therefore, unearthing balance sheet of the assessee, during the course of search itself is the incriminating evidence. Thus, there is reference of material found during the course of search, which suggests that the income of the assessee is required to be adjusted upwardly. It is the case of the revenue that assessee did file return of income for earlier years as well as for this year, prior to search and these properties or the balance sheet were not disclosed by the assessee for earlier years. The assessee does not deny these facts that balance sheet was found during the course of search and it was earlier not disclosed to the LD AO prior to search. As in the present case there is an incriminating material in the form of balance sheet where certain properties are stated l to be owned by assessee with respect to the addition made by the AO of notional income from house property u/s 22 of The Income Tax Act, the addition deserves to be upheld holding that assumption of jurisdiction u/s 153A is valid. Accordingly, ground number 1 of the appeal of the assessee is dismissed. Income from House property - Notional income u/s 22 - standard rent or rateable value should be taken to arrive at the annual let out value of the property - AO has considered 5% of the cost of acquisition of the property by which the property can be expected to be let out - HELD THAT:- There is no whisper from the side of the assessee that whether 5% rate of return, which is expected to be annual value for the property maintenance also, is excessive or unreasonable. CIT-A has given the decision of Radha Devi Dalamia [ 1980 (3) TMI 62 - ALLAHABAD HIGH COURT] wherein the 7% of the investment was considered to be the fair and just return of income on such investment. Also relied on the decision of [ 1996 (4) TMI 145 - ITAT AHMEDABAD-C] wherein 8% return on such cost was also held to be the annual value of a property for taxation under the head income from house property. Therefore, we do not find any infirmity in the order of the learned lower authorities in assuming 5% of the cost of the investment as the annual value of the property which can be taxed under section 23 (1) of the act under the head income from house property. Deduction of Municipal taxes, there is no requirement for reducing the income of the assessee where the learned assessing officer has estimated the percentage of the cost of the equity as rate of return on the investment. In fact, the deduction of municipal taxes is inbuilt in the taxability of 5% estimated by AO. Granting deduction of 30 % we find that such deduction is available u/s 24 (a) of the Act. This deduction is unqualified and assessee is eligible for the same. No reasons are shown to us why assessee is same. We direct the LD AO to grant deduction of 30% of annual value to the assessee in terms of provision of section 24 (a) of the Act. Vacancy allowance, the facts are clear that those properties are not let out during the whole of the year and therefore there is no question of granting any vacancy allowance to the assessee. This is the mandate of the decision of honorable Punjab and Haryana High Court [ 2016 (12) TMI 1298 - PUNJAB AND HARYANA HIGH COURT] . The SLP filed by the assessee against that decision has also been dismissed [ 2017 (4) TMI 671 - SC ORDER] In view of that precedent, we do not find any merit in the claim of the assessee for allowability of vacancy allowance. Change of jurisdiction - claim of the assessee that the original jurisdiction is with The Income Tax Officer Ward 10 (3) 4) Mumbai and no order was passed u/s 127 to transfer the case to the Deputy Commissioner of income tax, Central Circle-5 (2) Mumbai - The fact as stated by the learned CIT-A clearly shows that principal Commissioner of income tax-15 Mumbai passed an order u/s 127 of the act on 14/12/2016 and the case of the assessee was centralized with the Deputy Commissioner of income tax, Central Circle-5 (2), Mumbai. Therefore it is not the case that there was no order passed by the learned principal Commissioner of income tax. By the order under section 127, the jurisdiction over appellant was transferred from Mumbai to another assessing officer in Mumbai. As per the provisions of section 127 (3) of the act, there is no requirement of giving any opportunity of being heard before the transfer of jurisdiction within the same city. Further, it is merely an administrative order and there is no prejudice caused to the assessee if the assessee is assessed in the same city. We find that the several judicial precedents cited by the learned authorized representative does not have any bearing on the issue before us. None of the cases cited shows that the transfer is within the same city, locality or place, which has been quashed. Provisions of section 127 (3) of the act clearly provides that when there is a transfer of case in the same city, locality or place, it does not require an opportunity of hearing to the assessee. Invalid assessment as the order is passed without issue of notice u/s 143 (2) - It is not the case of the assessee that no notice under section 143 (2) has been issued. Perusal of all these decisions shows that the notice is required to be issued under section 143 (2) of the act prior to making the assessment. In this particular assessment, the learned assessing officer has issued notice under section 143 (2) of the act which has been served on the assessee and this fact has not been denied. On change of jurisdiction by a statutory order, there is no provision of law that search new incumbent should also issue a new notice u/s 143(2) of the Act and that too within the permitted time. In view of this ground of the appeal of the assessee is dismissed. Addition u/s 68 - exemption from LTCG u/s 10 (38) denied - HELD THAT:- Honourable Supreme Court in case of Abhisar Buildwell private limited [ 2023 (4) TMI 1056 - SUPREME COURT] has held that in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the Assessing Officer would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the Assessing Officer including the income declared in the returns. Therefore, in the present case before us, there can be an addition on the basis of the incriminating material which has been made by the learned assessing officer on account of income from house property and further addition on account of the income u/s 68 as well as u/s 10 (38) of the act. Even otherwise, when it is not denied by the assessee that the balance sheet was not disclosed to the revenue from which the assets were found, income of which is chargeable to tax under the head income from house property, even the addition of the capital gain claimed as exempt under section 10 (38) could also have been added by the learned assessing officer as it is other income. Denial of exemption under section 10 (38) - Onus to prove - Our reason for referring it is that what should be onus on the assessee. Firstly assessee in her family as stated to have received Rs 37 crores of exempt capital gain in a non-descript listed company operated by the accommodation entry provider, who has confessed that he has provided accommodations entries to the beneficiaries, including assessee, Confirmed by SEBI in adjudication order for same time in which assessee has sold these shares. In our view, a wanderer who does not know anything about the shares, did not attend any meetings of the companies, even do not know the nature of the business of the company, company is not found at the place where notices issued u/s 133 (6), invest Rs 1 Cr in 2012 and earns Rs. 10 crores in 2015- 16 [ her family earns whopping Rs 37 Crores] is really a fantastic story. This needs to be rejected at threshold itself not only because preponderance of probability is against the assessee but also the facts found form Vipul Bhatt [ documentary evidences i.e. various annexure] proves that story is fake. In present times, whopping gain earned by a wanderer who does not have any knowledge about the company earns Rs 10 Crores [in whole family Rs 37 Crores] is more surprising than winning in a horse race, Especially when the accommodation entry provider also says that, it is an arranged gain in the hands of family members of the assessee. An interesting aspect emerges of the contract notes submitted by the assessee for the sale of shares, it is apparent that moment assessee orders for the sale of shares, at the same time, those shares offloaded and sold. Thus, the order time and trade time are almost same or with a difference of split seconds. This is unusual when it happens in one-company shares, on the same date and in multiple trades on a single day where the trading is thin. SEBI order is relevant in case of 89 entities passed in this case for such synchronized trading. In view of this, even if we ignore the original statement given by the accommodation entry provider and his retraction later on, those evidences still remain which needs to be examined, now, independently to ascertain whether the amount of loan taken by the assessee and the amount of long-term capital gain earned by the assessee is genuine or non genuine. We set-aside ground number 2 and 4 of the appeal back to the file of the learned assessing officer with a direction to the assessee to show the genuineness of the trade and unsecured loan with respect to the documents found as stated in the statement of various parties, exit entry providers details, Demat agencies and the cash trail found. It is also the duty of the assessee to produce before the AO of her chartered accountant (who statement is not retracted), Ms. Rukhsana who is stated to have been involved in transferring the cash for the long-term capital gain and conversion of loan entries, for further examination.
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Customs
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2023 (11) TMI 841
Dismissal of appeal - appeals have not been filed by a person authorized under Rule 3 of Customs Appeal Rules, 1982 - procedural lapse or not - HELD THAT:- It is seen that Custom House Agent cannot file appeal under his signature and authorization. Such signature or authorization can be made only if the importer is not in India at the material time and the Custom House Agent or any other person duly authorized for filing appeal in terms of Rule 3 of Customs Appeal Rules, 1982. This deficiency should have been pointed out by the Commissioner (Appeals) to the appellant and the same could have been corrected. This cannot be a ground for rejection of appeal itself. In the interest of justice, the impugned order set aside and matter remanded back to the Commissioner (Appeals) to treat this as a defect and offer an opportunity to the appellant to correct the same in terms of Rule 3 of the Custom Appeals Rules, 1982 - appeal allowed b way of remand.
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2023 (11) TMI 840
Change of classification of the goods imported by the appellant - Import of various items which are undisputedly used in manufacture of motor vehicles - to be classified under various chapters like 73, 83, 84, 85 and 96, or classified under the heading 8708? - HELD THAT:- Tribunal in the case of SUZUKI MOROTS GUJARAT PRIVATE LIMITED VERSUS C.C. -AHMEDABAD [ 2022 (6) TMI 1089 - CESTAT AHMEDABAD] has held that The lower authorities have not examined the legal aspects properly to come to conclusion for correct classification of the goods in question. Hence in our considered view the matter needs to be remitted back to the Commissioner (Appeals). It is noticed that the said order takes note of the HSN Explanatory notes part (III) which lays down the criteria for classification of parts and accessories. A perusal of the impugned order shows that the impugned order does not take notice of this explanatory note. The criteria laid down by the impugned order does not correspond to the criteria laid down in the HSN Explanatory note. The matter is remanded to the Adjudicating Authority for fresh adjudication - appeal allowed by way of remand.
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2023 (11) TMI 839
Levy of penalty on the customs broker under Regulation 14 read with Regulation 18 of the Customs Broker Licensing Regulations 2013/2018 - ineligible drawback claimed - proof of mala fide and wilful misrepresentation by the customs broker or not - HELD THAT:- The impugned order though is an independent order issued in terms of the Customs House Licensing Regulations 2013/2018, the offence remains the same that ineligible drawback claimed by the exporter ADPL. In the impugned order, the enquiry officer in his report found that It is seen from the facts of the case that the customs broker has informed the exporter about the non-availability of drawback and exporters have on their own violation opted to go for drawback under Section 75. As such, there is nothing forthcoming in the show-cause notice or the Order-in-Original that the customs broker has imparted any wrong information to the exporter. In fact, the allegation was that while they have given right caution to the exporter, they have not intimated the Department when the exporter chose to do the other way. There are no specific case of failure to exercise due diligence in imparting information to their client. Hence, the charge of failure to comply with Regulation 10(e) cannot be held against the Customs Broker . The Commissioner in the impugned order based on the findings of the inquiry officer held that I concur with the enquiry officer that the allegation of violations of Regulation 10(e) as unsustainable since the said provision requires due diligence in imparting to the customer. In this case, the exporter was aware of the provisions and carried out the claim of drawback on their own violation and it is not coming out that the customs broker has advised wrongly. The Tribunal vide its Final Order had clearly held that since the exporter had challenged the eligible claim of drawback before the revisionary authority the matter was sub-judice and it also observed that the department had failed to prove that there is a mala fide and wilful misrepresentation by the customs broker and accordingly penalty was set aside on the set of facts of ineligible drawback claimed by the exporter. Considering all these facts and taking into account the unblemished record of the customs broker as held by the Commissioner, the penalty imposed upon the appellant is set aside - The appeal is allowed.
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2023 (11) TMI 838
Levy of Redemption fine while ordering re-export of the imported Titanium Powder - restricted goods or prohibited goods - HELD THAT:- What the original authority has missed is the application addressed to the DGFT, though belatedly, which only shows the bona fides of the appellant. When pointed out as to the requirement of licence, the appellant appears to have immediately made an application and there are no disputes that the said application is still pending with the DGFT and no order has yet been made on the said application. The interests of justice would demand that the matter be remanded to the file of the adjudicating authority awaiting the response from the DGFT on the application made by the appellant and then, pass an appropriate speaking order based on any such communication from the DGFT on the application for import authorization of the restricted items made by the appellant - Appeal allowed by way of remand.
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2023 (11) TMI 837
Continuance of proceedings under Customs Act - Effect of Initiation of CIRP proceedings and Approval of Resolution plan - abatement of the revenue appeal - whether the respondents are entitled to continue with the Appeals and claim relief after Order of NCLT approving the resolution plan has been passed? - HELD THAT:- The Mumbai Bench of this Tribunal in the case of M/S. ALOK INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR AND COMMISSIONER OF CEN. EXCISE, MUMBAI CENTRAL [ 2022 (10) TMI 801 - CESTAT MUMBAI] analysed in detail Rule 22 of CESTAT (Procedure) Rules, 1982 and observed that aforesaid Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for continuation of the proceeding. Needless to mention, as observed by the Hon ble Supreme Court and High Courts in a catena of cases that the Tribunal is a creature of the statute; it cannot travel beyond the express powers vested under the Statute or Rules framed under the statute while deciding a statutory Appeal filed before it against the Orders of the prescribed statutory authorities mentioned under the statute. The corollary, any order passed by the Tribunal beyond the vested powers under the statute would be non-est in law. There are complete agreement with the view consistently expressed by this Tribunal in a series of cases that the appeal abates once the IRP is appointed and/or Resolution plan approved - all the appeals filed by the Revenue abates as per Rule 22 of CESTAT (Procedure) Rules, 1982.
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2023 (11) TMI 836
Demand of duty foregone on the capital goods imported by the appellant - obtaining nine EPCG Authorizations for import of capital goods - failure to fulfil the export obligations - HELD THAT:- It is seen that the adjudicating authority has confirmed the duty demand in respect of 8 Licences only for the reason that the appellant has not furnished the EODC. However, to establish that the appellant has fulfilled their export obligations, the Ld. Counsel has furnished all the EODCs (in respect of 8 Licences) - this is a fit case to remand to the adjudicating authority, who shall verify the EODCs furnished by the appellant and re-consider the matter afresh. Further, the appellant shall also be given reasonable opportunity of personal hearing and to furnish evidence. The matter is remanded to the adjudicating authority, who is directed to examine the EODCs furnished by the appellant and pass a speaking order within three months from the date of receipt of this order. The impugned order is set aside - Appeal allowed by way of remand.
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2023 (11) TMI 835
Denial of request for conversion of free shipping bills to drawback shipping bills - denial on the ground of non-declaration of entitlement of drawback on the shipping bill - HELD THAT:- Section 149 of the Customs Act, 1962, deals with the situation and clearly permits the amendment of shipping bill on the basis of documentary evidence which was in existence at the time of export of goods. Admittedly, there is no examination of documents is placed on record by adjudicating authority while considering the claim for conversion of free shipping bills to drawback shipping bills. Admittedly, in this case, no document has been examined and drawback claim has been rejected without any observations. Therefore, we set aside the impugned order and hold that in terms of Section 149 of the Customs Act, 1962, the appellant is entitled for conversion of free shipping bills to drawback shipping bills subject to verification of the documents, which were available at the time of export. Matter remanded back to the adjudicating authority to examine the documents and thereafter to allow the conversion of free shipping bills to drawback shipping bills by keeping all others issues open - appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2023 (11) TMI 834
Provision of IBC are overriding the provisions of SARFAESI or not - Recovery from the Personal Guarantor of a corporate debtor - Seeking to declare that the provisions of the Insolvency and Bankruptcy Code, 2016 shall have overriding effect over the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- When an application is filed under Section 94, an interim moratorium shall commence on the date of the application in respect to all the debts and shall cease to have effect on the date of admission of such application. Once an application for Insolvency Resolution Process is admitted, Section 101 will come into play and a moratorium will commence in relation to all the debts and shall cease to have effect at the end of the period of 180 days beginning with the date of admission of the application or on the date the adjudicating authority passes an order on the repayment plan under Section 114, whichever is earlier. Section 101 provides that during the moratorium period, any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed. For an interim or final moratorium under Section 96 to come into force, the application filed by the debtor should be complete in all respects and without any procedural defects. In the case of the petitioner herein, the petitioner has only uploaded Ext.P4 application, which by itself cannot be treated as filing of an application as contemplated by Section 96. Unless there is any repugnancy between the provisions of the IBC 2016 and the provisions of the Act, 2002, there is no question of IBC 2016 overriding the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in totality - the petitioner is not entitled to urge the overriding effect of IBC 2016 based on the facts of the case for yet another reason. As far as the proceedings under the Act, 2002 initiated by the Bank, the petitioner has been proceeded against in his capacity as guarantor to the financial advance by the LLP. The securitisation proceedings against personal guarantors of corporate debtors can continue under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Therefore, initiation of a Section 94 (IBC 2016) proceedings by a Partner of an LLP in his capacity as a guarantor, cannot be averted to the proceedings initiated by the Bank against the petitioner, but in his capacity as a guarantor, under the Act, 2002. Petition dismissed.
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2023 (11) TMI 833
CIRP Proceedings - Outstand Tax Dues claimed before the liquidator - Petitioner challenged the Validity of assessment order - Official Liquidator was not heard while finalising the assessment - bar under Section 14 of the IBC - HELD THAT:- From perusal of Section 14 of the IBC and several Judgments of the other High Courts as well as the Supreme Court, it is well settled that Section 14 of the IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes. On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication proceedings. On perusal of the impugned orders Exhibits P-7 to P- 10, it is evident that the petitioner was issued notice to which reply was filed and after hearing, these orders in Exhibits P-7 to P-10 has been finalised. There are no substance in the submissions of the Learned Counsel for the petitioner that: since the Official Liquidator was not heard, the order has become bad. It is the petitioner who was issued notice - petition dismissed.
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2023 (11) TMI 832
Prayer for clarification of the judgment dated 11.09.2023 - Rejection of Section 7 application - HELD THAT:- The order dated 11.09.2023 does not preclude the Adjudicating Authority to consider the prayer of the Corporate Debtor if it is ready to pay the entire debt along with the interest to the Operational Creditor. It is open for the Adjudicating Authority to consider any such offer and if the entire debt is liquidated there may not be any necessity to admit Section 7 application. The Appellant submits that this application for clarification is not maintainable. The application is filed under Rule 11 of the NCLAT Rules, 2016, the application for clarification of the judgment can very well be entertained in exercise of power under Rule 11 and the submission of the Appellant that application is not maintainable cannot be accepted. Application disposed off.
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2023 (11) TMI 831
Prayer for condonation of 103 days refiling delay - delay on the ground of change of the counsel on record - HELD THAT:- The earlier order dated 22.02.2023 passed in Appeal No.39 of 2021 was for deferring the hearing to 20.03.2023. There was no decision taken by the Adjudicating Authority regarding claim of the Respondent in the said order on merits - It is satisfying that the said order cannot be reason to say that the Adjudicating Authority could not have passed order on 10.05.2023. The order dated 10.05.2023 is not a review or modification of the earlier order as contended by learned counsel for the Appellant. Thus, there is no error in the order dated 10.05.2023 passed by the Adjudicating Authority issuing directions. Learned counsel for the Respondent submits that the order has not yet been complied by the Liquidator in which the Adjudicating Authority has granted two weeks time to the Liquidator to take appropriate steps - the time granted to the Liquidator extended for further period of two weeks from today to comply with the order of the Adjudicating Authority. Appeal dismissed.
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2023 (11) TMI 830
Initiation of CIRP against the Corporate Debtor - default on the part of the Corporate Debtor or not - no reply to demand notice - existence of pre-existing dispute or not - HELD THAT:- It is clear that the Adjudicating Authority gave all possible opportunities to the Corporate Debtor to present his case but the Corporate Debtor miserably failed to do so. Therefore, the allegations on this account by the Appellant herein are not sustainable - the notice under section 8 (1) of Code was duly served by the Respondent No. 1 upon Corporate Debtor on 23.07.2021 and the Corporate Debtor did not reply to the demand notice. It is observed that the Operational Creditor raised 44 invoices for the supply of Tire Cord Fabric to the Corporate Debtor, during 2018-2019 arising out of work order dated 06.04.2018, which remained unpaid by the Corporate Debtor - It is noted that through E-mail dated 03.06.2020, the Corporator Debtor admitted the sum of Rs.10.18 Crore due and payable to Respondent No. 1 and also that through an E-mail dated 19.06.2020, the Corporate Debtor gave payment plan to the Respondent No. 1 which also failed. It is significant to observe that there is no record to show any pre-existing dispute - it is clear that there was established debts and defaults and the Adjudicating Authority passed the Impugned Order after analysing all facts and considering provisions of the Code and therefore we do not find any error in the Impugned Order. Appeal dismissed.
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2023 (11) TMI 829
Condonation of delay of 15 days in filing of the present appeal - sufficient cause for delay present or not - Section 61(1), (2) and proviso to Section 61(2) of the Code - HELD THAT:- The above provisions have four parts (1) any person aggrieved by the order of the Adjudicating Authority shall have a right of an appeal to the Appellate Tribunal (2) time prescribed for filing such an appeal is 30 days (3) the period of 30 days is further extended to another 15 days but with a rider that the Applicant has to assign a sufficient cause, to the satisfaction of the Appellate Authority, for not filing the appeal within the period of 30 days and (4) the period of 15 days cannot further be extended. In the case of NATIONAL SPOT EXCHANGE LIMITED VERSUS MR. ANIL KOHLI, RESOLUTION PROFESSIONAL FOR DUNAR FOODS LIMITED [ 2021 (9) TMI 1156 - SUPREME COURT] the Hon ble Supreme Court has categorically held that the Appellate Tribunal has no jurisdiction to condone the delay beyond the period of 15 days. Since, the Code is complete in itself and there are various timelines provided for the completion of CIRP and also Liquidation Process, therefore, the legislature has also prescribed the period of only 30 days in Section 61(2) of the code to file an appeal in terms of Section 61(1). The Legislature did not provide jurisdiction to the Tribunal to extend the period to any extent by condoning the delay of any period in terms of Section 5 of the Act, 1963, in case it is satisfied that there is a sufficient cause with the Appellant for not filing the appeal within the time prescribed rather in proviso to Section 61(2) a period of only 15 days is provided, enabling the Appellant to file the appeal within that period by making out a sufficient cause for not filing the appeal within the prescribed 30 days and sufficient cause has to be to the satisfaction of the Appellate Authority. It is required to find out whether the reason given by the Appellant for filing the appeal i.e on 45th day, knowing fully well that if the appeal is filed on 46th days then there would be no chance of even getting an order for condonation of delay, has given a reason that the Appeal has been filed belatedly on account of non-availability of the Applicant for the signing purpose as he was stated to be suffering from health-related issues - here the Appellant has been totally casual not only in filing the appeal but also filing the application for condonation of delay, may be because the appeal filed within the period of 15th day is also considered a matter of right. There are no other alternative but to hold that the reason given in the application for seeking condonation of delay is not a sufficient reason as it was not beyond the control of the Appellant because this Court is not satisfied with it that the signatory authority could not even sign the appeal within the period of 30 days and in the extended period of 15 days as well - the present application is found to be totally bereft of reason and denuded of merit and the same is hereby dismissed. Application dismissed.
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2023 (11) TMI 828
Condonation of delay in filing appeal - sufficient cause for delay present or not - whether the delay of 46th day can be condoned by the Appellate Tribunal? - HELD THAT:- It is well settled that if the appeal is not filed within the period of limitation prescribed and a delay has occurred a right would vest in the other side and for the purposes of condonation of delay a plausible excuse much less sufficient cause has to be made which may satisfy the conscious of the Appellate Authority. In the present case, however, the appellant has given the reason that the appeal within 30 days (prescribed period) could not be filed and also till the last day of extended period (15th day) could not be filed i.e. after considering the entire period of 45 days, because the appellant was in consultation with its Counsel and internal management with respect to the impugned order and its ramifications. The issue is as to whether both the things that is consultation with the Counsel and internal management was within the control of the appellant or beyond it. The appellant has made a totally unbelievable and lame excuse for the purposes of seeking condonation of delay which does not inspire confidence at all and shall not fall within the definition of a cause much less sufficient. Thus, looking from any angle, it is not a case in which interference is called for the purposes of condonation of delay and therefore, the application is hereby dismissed though without any order as to costs. Application dismissed.
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Service Tax
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2023 (11) TMI 827
Time Limitation - suppression of facts or not - Invocation of Section 80 for setting aside the penalties in regard to the demand of Service Tax for the normal period - demand of short-paid Service Tax along with interest and penalties - HELD THAT:- On perusal of the Show Cause Notice in Paragraph 6, it is merely stated that though the Department requested for furnishing particulars of income earned under the Banking and Financial Services, the appellant had not furnished the same. This cannot be a ground for alleging suppression. Moreover, the Department has issued a Show Cause Notice for the earlier period. Being so, the Show Cause Notice issued invoking extended period for the subsequent period cannot sustain. There is no positive act of suppression brought forth and established by the Department to establish intent to evade payment of Service Tax - the Show Cause Notice is therefore time-barred. Invocation of Section 80 for setting aside the penalties in regard to the demand of Service Tax for the normal period - HELD THAT:- From the facts and evidences narrated as above, we find that the issue is wholly interpretational in nature and the appellant who is engaged in manufacture was under bona fide belief that their activity of Bill Discounts given to suppliers of spare parts could not amount to activity under Banking and Financial Services - the appellant has given plausible explanation for non-payment of Service Tax during the disputed period. The penalties imposed therefore requires to be set aside. The impugned order is modified to the extent of setting aside the demand for the extended period and confirming the demand for the normal period. The penalties imposed for the normal period are also set aside - Appeal allowed in part.
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Central Excise
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2023 (11) TMI 826
CENVAT Credit - freight charges incurred for outward transportation of their finished products from the factory to the place of dealers and buyers - place of removal - period January 2007 to February 2008 - HELD THAT:- The issues stands covered in the appellant s own case [ 2022 (5) TMI 904 - CESTAT CHENNAI] . The Tribunal has analysed the definition of input service prior to 1/4/2008 and after held that We make it clear that we have set aside the orders of the Tribunal as well as the Adjudicating Authority with regard to disallowance of Cenvat credit in respect of GTA services. The demand cannot sustain and requires to be set aside - the impugned order is set aside - Appeal allowed.
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2023 (11) TMI 825
Non-payment of service tax - rent received as per the agreement for renting of the Fit Outs - HELD THAT:- It has to be noted that the demand for the consideration received on Fit Outs is made under the category of renting of immovable property service . Fit Outs cannot be considered as an immovable property. Further, it is also stated by the appellant that they have discharged applicable Sales Tax / VAT on the consideration received for renting out the said Fit Outs, holding the same as transfer of right to use the goods (deemed sale). The very same issue was considered by the Tribunal in the case of M/s. Ascendas IT Park (Chennai) Ltd. [ 2018 (1) TMI 827 - CESTAT CHENNAI ], where it was held that From the facts explained, it is seen that these are movable items (chairs, tables and other items) which are handed over to the tenants for use by them. The appellant has paid VAT on the consideration received in the said transaction for transfer of right to use the goods. Payment of VAT is not disputed by the department. VAT and Service Tax being exclusive, further demand of service tax on the very same consideration received for transfer or right to use of goods cannot sustain. The demand cannot sustain and requires to be set aside. In the result, the impugned orders are set aside - Appeal allowed.
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2023 (11) TMI 824
Classification of goods - edible oil (palmolein) - classifiable under subheading 15119090 or not - inordinate delay in drawal of samples - HELD THAT:- The learned Commissioner (A) following the principle of law laid in the RUCHI SOYA INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS, MANGALORE [ 2005 (8) TMI 228 - CESTAT, BANGALORE ] has observed that since there was inordinate delay in drawal of samples and receiving the test reports, the carotene level of vegetable oils reduces with passage of time, hence, the test reports of the Customs Revenue Laboratory cannot be relied and accordingly, he has confirmed acceptance of the test report of the goods at the load port by the adjudicating authority. Accordingly, he has upheld the order of the adjudicating authority. There are no discrepancy in the said reasoning of the learned Commissioner (A) - Revenue s appeals are being devoid of merit, accordingly dismissed.
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CST, VAT & Sales Tax
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2023 (11) TMI 823
Disciplinary proceedings against formerly Appellate Deputy Commissioner - Entitlement to challenge the charge memo - petitioner submitted that the petitioner is a quasi judicial appellate authority exercising powers conferred under Section 51 of the Tamil Nadu Value Added Tax Act and Rules and hence, the order passed by the petitioner cannot be subjected to Tamil Nadu Government Servants' Conduct Rules 1973 - HELD THAT:- If the order passed by the quasi judicial authority is taken as a foundation for bringing the quasi judicial authority under disciplinary proceedings, no quasi judicial authority can discharge his functions without fear. While exercising the quasi judicial power, the authority concerned should have the independency to decide the issue within his power. Even wrong interpretation of law or wrong appreciation of facts cannot be the reason to issue charge memo against the authority exercising quasi judicial powers and the impugned proceedings can be challenged only by way of preferring an appeal. The charge memo issued by the first respondent is completely without jurisdiction and authority. Further the respondents have also failed to properly appreciate the impact of Tax Deducted at Source (TDS) and have chosen to come to arrive at a short conclusion that 25% of the admitted tax has not been paid by the appellant. Since the short sighted charge memo issued by the respondents directly infringes upon the right of the petitioner and his authority as a quasi judicial officer. Hence, the impugned proceedings is liable to be set aside. The proceedings passed by the first respondent is quashed and the respondents are directed to give all consequential and attendant benefits, if any, to the petitioner - Petition allowed.
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