TMI Tax Updates - e-Newsletter
November 26, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. INGREDIENTS FOR ACCESS TO BUSINESS PREMISES BY PROPER OFFICERS

   By: Dr. Sanjiv Agarwal

2. Differential Tax Amount Post-GST Not Reimbursed to Contractors

   By: Bimal jain

3. RECENT SUPREME COURT JUDGMENT ON ‘POWER OF ATTORNEY’

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Centre releases Rs. 17,000 crore of GST compensation to States/UTs

2. Finance Minister Smt. Nirmala Sitharaman chairs Pre-Budget consultation with Finance Ministers of States

3. India-Gulf Cooperation Council (GCC) decide to pursue resumption of Free Trade Agreement (FTA) Negotiations

Notifications

Money Laundering

1. S.O. 5475 (E) - dated 24-11-2022 - PMLA

Powers of director to impose fine in Prevention of Money-Laundering - Appointment of Principal Additional Director General (Audit)/ Additional Director General (Audit)], Central Board of Indirect Taxes and Customs, as the Director.

SEBI

2. SEBI/LAD-NRO/GN/2022/108 - dated 24-11-2022 - SEBI

Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/DoP/P/CIR/2022/162 - dated 25-11-2022

Extension of timelines for implementation of SEBI circulars SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/137 and SEBI/HO/MIRSD/ DoP/P/CIR/2022/119

2. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 - dated 25-11-2022

Timelines for transfer of dividend and redemption proceeds to unitholders

3. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/159 - dated 24-11-2022

Reporting of trades in non-convertible securities under SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021

GST - States

4. Trade Circular No. 13 T of 2022 - dated 24-11-2022

Clarification on refund related issues

5. 8/2022-TNGST - dated 2-9-2022

Mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B and statement in FORM GSTR-1

6. 9/2022-TNGST - dated 2-9-2022

Clarification on various issue pertaining to GST

7. 10/2022 - TNGST - dated 2-9-2022

Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification

DGFT

8. Trade Notice No. 21/2022-23 - dated 25-11-2022

One-time relaxation for submission of hard copy of applications for claiming assistance under the erstwhile 'Transport and Marketing Assistance (TMA) for Specified Agriculture Products' Scheme (foreclosed by Department of Commerce w.e.f. 31.03.2021)

9. 38/2015-2020 - dated 25-11-2022

Fixation of new Standard Input Output Norms (SION) at E-136 for export of wheat flour (Atta), deletion of SION E-110, amendment in Appendix 4J and insertion of new para 4.05 (iii) under Handbook of Procedures 2015-20

10. 37/2015-2020 - dated 25-11-2022

Modification in Standard Input Output Norms (SION) of Textiles (Product Code 'J') : Amendment in SION J-222

Highlights / Catch Notes

GST

• Hearing Aid Parts Under Tariff 9021 90 10 Not Tax Exempt, Subject to 18% GST.

  Case-Laws - AAAR : Classification of goods - rate of tax - parts and accessories suitable for use solely with the hearing aids - the parts and accessories of hearing aids falling under tariff item 9021 90 10 are not entitled for exemption - chargeable to tax at the rate of 18% of GST - AAAR
  Visit to Get Source

  ---

• Appeal Filed Over Unanswered Taxability Question; Lower Authority's Rejection u/s 98(2) Deemed Non-Appealable.

  Case-Laws - AAAR : Appeal against the question which was not answered by the AAR - The question of taxability having been rejected by the lower Authority albeit incorrectly, without any ruling, the matter is not appealable as per the law. - The statute is unambigiously clear that an order passed under Section 98(2) rejecting an application cannot be appealed before us. The fact that only a ruling pronounced in an order issued under Section 98(4) is appealable before us justifies our stand that 'modifying' does not include answering the unanswered question. - AAAR
  Visit to Get Source

  ---

Income Tax

• Court Upholds Reopening of Assessment u/s 147; Sufficient Evidence of Transactions with Mridul Securities Found.

  Case-Laws - HC : Reopening of assessment u/s 147 - allegation that entity Mridul Securities is involved in providing accommodation entries and the Assessee is the beneficiary of the specified alleged transaction - In light of the information which forms the basis of the initiation of the inquiry and in view of the fact that the transactions with Mridul Securities are admitted by the Petitioners, we do not find any case for interfering in the writ proceedings. - HC
  Visit to Get Source

  ---

• Section 263 Revision Proceedings Upheld Due to AO's Omission on Penny Stock Transaction Scrutiny in Assessment Order.

  Case-Laws - AT : Revision u/s 263 - penny stock transactions - In the instant case, there were three specific reasons for which the scrutiny was carried out but there is not a whisper by the AO in the assessment order about any of the issues even the one relating to suspicious transactions in penny stock companies. - Revision proceedings sustained - AT
  Visit to Get Source

  ---

• Deduction u/s 40(b) allowed for partners' remuneration from undisclosed income; no revenue loss found.

  Case-Laws - AT : Claim of deduction u/s 40(b) from undisclosed income surrendered during survey - Salary / Remunaration of partners - the tax rate specified u/s. 115BBE for assessment year 2016-2017 is at 30% (same as the normal rate) and the partners of the assessee after considering the remuneration have discharged tax liability more or less at the same rate of 30%. Thus, we are of the view that there is no loss to the revenue - Claim allowed - AT
  Visit to Get Source

  ---

• High Court Rules: Concrete Reasons Required for Reopening Assessments u/s 147 of Income Tax Act.

  Case-Laws - HC : Reopening of assessment u/s 147 - Reasons to believe - AO was not having any reason to believe for initiating re-assessment - There cannot be any re-assessment for a reason to suspect and re-assessment is only to be done if the AO has reasons to believe that the Assessee has escaped assessment - HC
  Visit to Get Source

  ---

• Taxpayer Challenges Reopening of Assessment u/s 147 Due to Errors in Mentioning Transactions with Nyssa Corporation Ltd.

  Case-Laws - AT : Reopening of assessment u/s 147 - penny stock Purchases - There is not even whisper in the reasons recorded about dealing in shares of Nyssa Corporation Ltd. or the Assessee had taken any accommodation entry on this script. AO is referring to altogether different script which has not been under taken by the Assessee at all. - AT
  Visit to Get Source

  ---

• UPS and Printers Depreciation Rate Increased to 60% as Part of Computer Systems, Not Office Equipment.

  Case-Laws - AT : Depreciation claimed on UPS - @ 60% OR 15% - UPS and printer are integral part of computer and computer software and are eligible for higher depreciation of 60%, but not normal depreciation of 15% as applicable to office equipment. - AT
  Visit to Get Source

  ---

• Taxpayer Successfully Explains Cash Deposit Source; AO and CIT(A) Faulted for Unfounded Assumptions in Assessment.

  Case-Laws - AT : Unexplained cash Deposits in bank account - AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors. In our view, the Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. - AT
  Visit to Get Source

  ---

• CIT Revises Assessment u/s 263 Due to Unexplored Transactions u/s 68; Revision Order Upheld.

  Case-Laws - AT : Revision u/s 263 by CIT - Addition u/s 68 - the transaction has never been examined by the assessing officer. No enquiry has been conducted relating to the alleged sum. - where only few cases are selected for scrutiny such type of scrutiny proceedings as has been carried out by the assessing officer are erroneous so far as they are prejudicial to the interest of the revenue wherein the important aspects and the crucial financial transactions having sufficient volume in terms of value remained to be examined by the AO. - Revision order sustained - AT
  Visit to Get Source

  ---

• No Need to Differentiate Between Rent and CAM Charges for TDS u/s 194I if Paid Separately.

  Case-Laws - AT : TDS u/s 194I - CAM charges paid - There is no reason to distinguish between the nature of two payments made by the lessee to the lessor if lessor keeps rent to himself and the CAM charges are paid further by the lessor unless there is composite rent, inclusive of the CAM. Which is not the case, as admittedly they are paid under different clauses of the agreement and by separate invoices. - AT
  Visit to Get Source

  ---

• Interest Adjustment on Delayed Receivables Reversed; No Interest Due for Debt-Free Company with Significant Reserves.

  Case-Laws - AT : TP Adjustment - delayed receivables from AE - re-characterizing the delay in receipt of receivables as unsecured loan, the AO computed interest by applying rate of 4.33% on the basis of 6 months LIBOR with a mark-up of 400 basis point - it is clear that the assessee is more or less a debt free company, whereas, it has substantial reserve and surplus. Thus we hold that no adjustment on account of interest on outstanding receivables can be made in the facts of the present appeal. - AT
  Visit to Get Source

  ---

• Assessee Denied Section 11 Tax Exemption for Prior Years Without Section 12A Registration.

  Case-Laws - AT : Exemption u/s. 11 - prior assessment years which are pending before the AO - when there is no registration u/s. 12A of the Act for the year under consideration, the assessee is not entitled to claim benefit of exemption u/s. 11 of the Act - AT
  Visit to Get Source

  ---

Customs

• Court Orders Review of Betel Nut Cargo Release Application u/s 110-A, Customs Act; Decision Pending on Merits.

  Case-Laws - HC : Provisional release of imported cargo of betel nut product - detention-cum-demurrage waiver certificate - Respondents are directed to consider the application of the Petitioner for provisional release under Section 110-A of the Customs Act and the same shall be disposed of by the Adjudicating Authority on merits and in accordance with law - HC
  Visit to Get Source

  ---

• Social Welfare Surcharge Computation: No SWS Charged When Basic Customs Duty is Nil or Paid with MEIS Scrips.

  Case-Laws - HC : Levy of Social Welfare Surcharge (SWS) where basic Customs duty (BCD) is Nil - Or duty paid/debited by using the Merchandise Export from India Scheme (MEIS) Scrips - If the SWS is payable at 10% on BCD but where the BCD is Nil, SWS shall also be computed Nil. - HC
  Visit to Get Source

  ---

• Penalty Reduced for IEC Code Misuse; Fine Cut from Rs. 12 Lakhs to Rs. 50,000 u/s 112(a).

  Case-Laws - AT : Levy of penalty of IEC code holder and middleman - Allowing third party to use its IEC code - Bonafide Belief - Misdeclaration of imported goods by third party - There is no active role played by these appellants save and except facilitating the use of IEC code by another for some monetary consideration - the penalty of Rs. 12 lakhs u/s 112(a) is reduced to Rs.50,000/- - AT
  Visit to Get Source

  ---

• Custodians Appointed Before June 26, 2002, Exempt from Charges Per Circulars 27/2004-Cus and 13/2009-Cus.

  Case-Laws - AT : Exemption from Establishment Charges from the Custodians - there is dispute that all the four respondents have been appointed/ notified as ‘Custodians’ well before the 26.06.2002 and as per circular No. 27/2004- Cus dated 06.04.2004 and 13/2009-Cus. dated 23.03.2009, recovery of establishment charges/ cost recovery charges stands exempted/waived. - AT
  Visit to Get Source

  ---

• Appeal on Non-Imposition of Antidumping Duty u/s 9C of Tariff Act; Tribunal's Jurisdiction Challenged.

  Case-Laws - AT : Non-Levy of antidumping duty (ADD) - Maintainability of appeal before the Tribunal - section 9C of the Tariff Act provides for an appeal to the Tribunal if the Central Government takes a decision not to impose anti-dumping duty, even though the designated authority had made a recommendation in its final findings for imposition of anti-dumping duty. - AT
  Visit to Get Source

  ---

• India's Decision Against Anti-Dumping Duty Criticized for Failing to Protect Domestic Industry from Unfair Trade Practices.

  Case-Laws - AT : Non-Levy of antidumping duty (ADD) - injury to domestic industry - Recommendation made by the designated authority - articles exported by the exporters or producers to India at less than its normal value - the decision taken by the Central Government not to impose anti-dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty, cannot be sustained - AT
  Visit to Get Source

  ---

Service Tax

• High Court Rules Against Amending Original Form in SVLDRS Scheme Dispute Over Rejected Application Modification.

  Case-Laws - HC : SVLDRS - rectification / modification in the order to reject the application - In any event the details which have been referred to in the remarks column of rectified Form No. SVLDRS-3 were already available with Respondent Nos.3 and 4 before they issued original Form-3 where a positive statement was made that after consideration of relevant material, the designated committee has determined that a sum of Rs.52,58,583/- was payable by Petitioner - Respondents cannot go back and rectify original Form No.SVLDRS-3 issued on 28th November 2019 - HC
  Visit to Get Source

  ---

• Abatement Benefits Under Notifications 15/2004-ST & 01/2006-ST Don't Require Raw Material Purchase Proof Alignment.

  Case-Laws - AT : Benefit of abatement - N/N.15/2004- ST - Value of purchased material - Notification No. 15/2004-ST or for that matter 01/2006-ST, does not require proof of purchase of raw material to the extent of the abatement. In these circumstances denying the benefit of these notifications, for the reason that the quantum of purchase shown profit and loss account does not match invoices produced by the appellant is improper and incorrect. - AT
  Visit to Get Source

  ---

Central Excise

• High Court Affirms KMCL's Right to CENVAT Credit for Power Plant Capital Goods, Despite Selling Surplus Power to NINL.

  Case-Laws - HC : CENVAT Credit - capital goods used in the factory (Power Plant of KMCL) meant for another company/assessee (NINL) for manufacture of final products which are different and distinct - the power generated in the CPP of KMCL is used in the manufacture of the excisable goods by KMCL - the mere fact that the surplus power may have been sold to NINL would not disentitle KMCL to the benefit of CENVAT Credit on capital goods. - HC
  Visit to Get Source

  ---

• Appellant Eligible for GST Credit Refund Under CGST Act Section 142(3); Unjust Enrichment Bar & Limitation Waived.

  Case-Laws - AT : Refund of accumulated Credit - transition to GST regime - the appellant is entitled to refund under the provisions of Section 142(3) of CGST Act, which provides that assessee can file refund claim on or after the appointed day, for refund of any amount of credit of duty, etc. paid under the existing law (Central Excise/Service Tax), subject to clearing the bar of unjust enrichment. Further, the bar of limitation has been waived under Section 142 (3). - AT
  Visit to Get Source

  ---

• Appellant Wins Excise Duty Refund Claim: Notifications Effective from Online Publication Date, Not Sale Date.

  Case-Laws - AT : Refund claim of excess Central Excise duty paid - Effective date of notification - the Notification were not offered for sale by the Directorate of Publicity and were put on the CBEC website on the next date around 11:45 hours on 13.11.2014 in respect of Notification No. 22/2014 –CE dated 12.12.2014 and on the late evening of 02.12.2014 in respect of Notification No. 24/2012-CE dated 02.12.2014. Therefore, both the Notification will be effective from its publication and refund on this ground is admissible to the Appellant. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (11) TMI 1123
  Maintainability of petition - availability of alternative remedy of appeal - cancellation of registration of petitioner - crux of the grievance is non-communication of the order of cancellation of registration within the period of limitation prescribed for preferring an appeal whereby depriving the petitioner of availing the remedy of appeal - HELD THAT:- In the present case, it is clear from the return that the respondents adhered to the provision of Section 169 of the GST Act as regards communication of the show cause notice as well as order of cancellation of registration and, therefore, no fault can be found with the Revenue - Pertinently, the return of respondents further reveals that the show cause notice in question was sent on the mobile bearing number as mentioned on the portal belonging to petitioner and e-mail address of erstwhile consultant. Therefore, it is clear as day light that the appeal preferred by petitioner u/S. 107 of GST Act was hopelessly time barred and since there is no further enabling provision in the hands of appellate authority to extend the period of limitation, this Court in its writ jurisdiction cannot tinker with the statutory provision u/S. 107 of GST Act, which does not bestow any discretionary power on the appellate authority to extend the period of limitation. Petition dismissed.

  ---

• 2022 (11) TMI 1122
  Maintainability of petition - Petition has been filed beyond the statutory period of limitation for filing appeal - violation of principles of natural justice - HELD THAT:- The pre-assesment notice in DRC-01 has been issued on 25.05.2022 and the order proceeds on the basis of the petitioner s reply filed on 08.02.2022 in response to a verification of the petitioner s return in Form ASMT 10. Admittedly, the petitioner has not responded to notice dated 25.05.2022. Be that as it may, it was incumbent upon the authority under Section 74 of the Goods and Services Tax Act, 2017 to have heard the petitioner in person, prior to passing of the impugned order. That apart, the impugned order rejects the explanation tendered by the petitioner vide reply dated 08.02.2022 by way of a cryptic one liner stating dealer reply was verified and not accepted so far - the confirmation of proposals in the manner as aforesaid, leaves me in no doubt that the impugned order is liable to be set aside. Petition allowed.

  ---

• 2022 (11) TMI 1121
  Reimbursement of differential tax amount arising out of change 2 in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 1st July, 2017 - difficulty faced by the contractors due to change in the regime regarding works contract under GST - HELD THAT:- The Government has now come out with a revised guidelines in this respect in supersession of the guidelines issued vide Finance Department letter dated 7th December, 2017. He has filed Additional Counter Affidavit of Opposite Party-authority in similar cases annexing the revised guidelines relating to works contract under GST issued by the Government of Odisha, Finance Department vide Office memorandum No. FIN-CTI-TAX-0045-2017/38535/F Dated 10th December, 2018. The Petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10th December, 2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably within a period of three months from the date of receipt of the certified copy of this order. The writ petition is disposed off.

  ---

• 2022 (11) TMI 1120
  Seeking release of goods and conveyance - grievance of the petitioner is that despite the willingness of the petitioner to comply with the provisions of Section 129 (1)(c), the 1st respondent is refusing to accept the bank guarantee and release the goods, pending adjudication of the notice - HELD THAT:- If the petitioner complies with the provision of Section 129 (1)(c), there is no reason for the 1st respondent to refuse the release of the goods and the conveyance, pending finalisation of the proceedings issued under Section 129. This writ petition is disposed of directing the 1st respondent to release the goods and conveyance in question on the petitioner complying with the conditions prescribed in Section 129(1)(c) of the CGST/SGST Act without any further delay.

  ---

• 2022 (11) TMI 1119
  Classification of goods - rate of tax - parts and accessories suitable for use solely with the hearing aids - exemption by virtue of Sl.No 142 of 2/2017 CT (Rate) dated 28-06-2017 as amended from time to time - HELD THAT:- Although the Appellant had sought for a ruling on the classification of parts and accessories of hearing aids, we find that they have not disputed the ruling given by the lower Authority that the parts and accessories of hearing aids are classifiable under HSN 9021 90 10. They are particularly aggrieved with the ruling that the parts and accessories of hearing aids are not exempted under Sl.No 142 of the exemption notification but are chargeable to tax at 18% under residual entry Sl.No 453 of Schedule III of Rate Notification No 1/2017 CT (Rate) dated 28-6-2017. Applicable rate of tax - parts and accessories of hearing aids - HELD THAT:- Once an item is classified under a particular sub-heading or tariff item in accordance with the Customs Tariff Act 1975, the rate of GST applicable would be arrived at on the basis of notifications issued under GST law. In the GST Acts, Section 9 (1) of the CGST/KGST Act and Section 5(1) of the IGST Act, creates a charge for the levy of GST on intra-state and inter-state supplies respectively, at the rates which are notified by the Government on the recommendations of the GST Council. Accordingly, the rate of GST applicable to the goods classified under the Customs Tariff Act has been notified vide Notification No 01/2017 Central Tax (Rate) dated 28-06-2017 (for intra-state supplies) and Notification No 01/2017 Integrated Tax (Rate) dated 28-06-2017 (for inter-state supplies). The scope of the entry Sl.No 142 of exemption notification is confined only to hearing aids under heading 9021 and does not include parts and accessories of hearing aids falling under tariff item 9021 90 10. We therefore, dismiss the argument of the Appellant that entry Sl.No 142 of exemption notification which specifies the goods at four-digit heading level should be read to include all sub-heading and tariff item level goods i.e parts and accessories of hearing aids. Parts and accessories of hearing aids are neither covered in the scope of entry Sl.No 221 of Schedule II at 12% tax nor are they covered under the exemption entry Sl.No 142 of Notification No 02/2017 Central-Tax (Rate) - the parts and accessories of hearing aids are not covered within the scope of exemption entry Sl.No 142 and hence are not exempted. The impugned goods are also not covered within the scope of entry Sl.No 221 of Schedule II of the rate notification. Which entry of the rate notification will parts and accessories of hearing aids be covered? - HELD THAT:- Since the parts and accessories of hearing aids falling under tariff item 9021 90 10 are not specifically mentioned in any of the entries of the exemption notification No 02/2017 Central Tax (Rate) and are also not specifically mentioned in either Schedule I, II, IV, V and VI of the rate Notification No 01/2017 Central Tax (Rate), they will get covered under entry Sl.No 453 of Schedule III of Notification No 01/2017 Central Tax (Rate) as this is a residuary entry which covers goods under any chapter which are not specified under any of the other rate Schedules. The very purpose of a residuary entry in Schedule III is to cover goods which are not specified in any of the other Schedules - the description of goods in entry Sl.No 221 of Schedule II / 255A of Schedule I does not include within its scope parts and accessories of hearing aids - the parts and accessories of hearing aids falling under tariff item 9021 90 10 are not entitled for exemption under entry Sl.No 142 of Notification No 02/2017 Central Tax (Rate) but are chargeable to tax at the rate of 18% in terms of entry Sl.No 453 of Schedule III of Notification No 01/2017 Central Tax (Rate).

  ---

• 2022 (11) TMI 1118
  Taxability - transaction of providing space on its web portal for advertisements provided by a foreign entity ie Lenzing Singapore Pte Ltd - place of supply of services - correct classification of the services provided - rate of tax - HELD THAT:- Clause (e) of Section 97(2) covers within its scope the determination of place of supply if such determination is linked with the liability to pay tax and in such cases the Authority has the jurisdiction to pass a ruling on the issue of place of supply. The lower Authority was incorrect in not passing a ruling on the question of taxability of the transaction of selling advertising space on its web portal to a foreign entity. Whether we are within our powers to decide the question of taxability on merits and pass an original ruling on the same when the lower Authority has failed to pass any ruling on the said question? - HELD THAT:- It is therefore evident from the provisions of the statute that the Appellate Authority can pass an original ruling only when the matter is referred to them under Section 98(5). Where a ruling has been pronounced by the lower Authority an appeal by the aggrieved party lies before us and we, under the appeal proceedings, can pass such order as we think fit, either confirming or modifying the ruling. In the instant case, there is no ruling pronounced by the lower Authority on the question of taxability. In the absence of a ruling, there is nothing for this Authority to confirm or modify. We can only go so much as to say whether the lower Authority was correct in not giving a ruling on the question of taxability which we have already held as being incorrect. The statute is unambigiously clear that an order passed under Section 98(2) rejecting an application cannot be appealed before us. The fact that only a ruling pronounced in an order issued under Section 98(4) is appealable before us justifies our stand that modifying does not include answering the unanswered question. We therefore, do not agree with this argument put forth by the Appellant - The Appellant has also made out a case that the powers of this Authority includes remand even if the said power has not been explicitly stated in Section 101(1) of the CGST Act. Case remanded to the Advance Ruling Authority for a fresh consideration.

  ---

• Income Tax

• 2022 (11) TMI 1138
  Reopening of assessment u/s 147 - accommodation entries entry transactions - entity Mridul Securities is involved in providing accommodation entries and the Assessee is the beneficiary of the specified alleged transaction - HELD THAT:- As Petitioner contends that it has duly purchased the said 32,000 shares from Mridul Securities but there are no relevant or contemporaneous documents evidencing the said purchase, i.e. bank statement etc., placed on record in this petition. As regards the disclosure, if any, of the purchase of the shares, in its earlier ROI, it was clarified by the learned counsel for the Petitioner that since the shares were bought in the same financial year, it is only the transaction with respect to sale of shares which is reported in the ROI. Thus, it is only the sale of shares which is documented by the Assessee in its ROI. SCN and impugned order states that the entity Mridul Securities is involved in providing accommodation entries and the Assessee is the beneficiary of the specified alleged transaction, in respect whereof, information has been received by the AO and the said transaction is not disputed by the Petitioner. In light of the information which forms the basis of the initiation of the inquiry and in view of the fact that the transactions with Mridul Securities are admitted by the Petitioners, we do not find any case for interfering in the writ proceedings. This Court finds that the Petitioners have not brought on record anything to suggest that the reassessment proceedings are being undertaken in an arbitrary manner. With respect to the contention raised on the issue of limitation and the arguments of learned counsel for the Petitioners that the notice has been issued beyond limitation has already been rejected by this Court in Touchstone case [ 2022 (9) TMI 892 - DELHI HIGH COURT] The Supreme Court in Commissioner of Income Tax v. Chabildas and Anr. [ 2013 (8) TMI 458 - SUPREME COURT] has held that as the Act of 1961 provides an able machinery for assessment/reassessment of tax, the Assessee is not permitted to abandon with the machinery and invoke writ jurisdiction of the High Court under Article 226 of the Constitution of India. This Court is of the view that the present cases do not fall under the exceptional ground on which a writ jurisdiction of the High Court can be invoked. WP dismissed.

  ---

• 2022 (11) TMI 1137
  Reopening of assessment u/s 147 - Accommodation entries received - HELD THAT:- The Petitioner has not brought on record any relevant or contemporaneous documents evidencing the said purchase, i.e. bank statement etc., placed on record in this petition. As regards the disclosure, if any, of the purchase of the shares, in its earlier ROI, it was clarified by the learned counsel for the Petitioner that since the shares were bought in the same financial year, it is only the transaction with respect to sale of shares which is reported in the ROI. Thus, it is only the sale of shares which is documented by the Assessee in its ROI. SCN and impugned order states that the entity Mridul Securities is involved in providing accommodation entries and the Assessee is the beneficiary of the specified alleged transaction, in respect whereof, information has been received by the AO and the said transaction is not disputed by the Petitioner. In light of the information which forms the basis of the initiation of the inquiry and in view of the fact the petitioner has not placed on record documents to establish genuineness of the transactions with Mridul Securities, we do not find any case for interfering in the writ proceedings. This Court finds that the Petitioner has not brought on record anything to suggest that the reassessment proceedings are being undertaken in an arbitrary manner. With respect to the contention raised on the issue of limitation and the arguments of learned counsel for the Petitioner that the notice has been issued beyond limitation has already been rejected by this Court in Touchstone case [ 2022 (9) TMI 892 - DELHI HIGH COURT ] in the present case, the response of the Petitioner has been considered before passing the impugned order under Section 148A(d) of the Act by the AO. There is another curious fact that Anu Gupta, who is related to the present petitioner has also transacted for the identical shares in the same AY for the same account. Supreme Court in Commissioner of Income Tax v. Chabildas and Anr. [ 2013 (8) TMI 458 - SUPREME COURT] has held that as the Act of 1961 provides an able machinery for assessment/reassessment of tax, the Assessee is not permitted to abandon with the machinery and invoke writ jurisdiction of the High Court under Article 226 of the Constitution of India. This Court is of the view that the present case do not fall under the exceptional ground on which a writ jurisdiction of the High Court can be invoked.

  ---

• 2022 (11) TMI 1136
  Revision u/s 263 - penny stock transactions - short term capital loss alleging the same to be from purchase and sale of following six penny stock companies - as per CIT AO has not carried out any examination nor has conducted any enquiry relevant to the said transactions giving rise to the short term capital loss - AO examined the transactions or not? - HELD THAT:- Assessee s case was selected for scrutiny for three reasons of which one was Suspicious sale transaction in shares and exempt long terms capital gains shown in return (penny stock tab in ITS) . Now referring to the notice issued 142(1) placed it is noticed that certain details were called for to which the assessee filed replies. Except for the reply given on 03/03/2017, wherein it is stated by the assessee that complete details of short term capital loss of shares scrip-wise as well as mutual fund and date-wise have been filed in the record and the assessee company has no dealing in any shares in short term capital gain or long term capital gain which are suspicious. Apart from this, there is no other detail filed by the assessee company. Also there is no enquiry specifically raised by the assessee company about the alleged penny stock companies nor there is any discussion in the body of the assessment order. One of the reasons for selection of scrutiny was suspicious transaction of dealing in penny stock companies by the assessee. Various details are available on the income tax portal for the assistance of the Assessing Officer for examining the dubious and sham transactions. Neither any effort seems to have been made by the Assessing Officer to call for the relevant details of all these so called penny stock company which have been dealt in by the assessee company nor any financial details of these companies have been called for nor has any discussion been made. Had there been any information called for by the Assessing Officer in the note sheet, the same would have been made available on record and in the absence of the same, it is presumed that no enquiry was conducted by the AO on this issue. If the assessee s case is selected for scrutiny for specific reasons, then the Assessing Officer has to put in extra efforts and make deeper enquiry on such reasons and merely taking submission by the assessee will not serve the purpose AO miserably failed to carry out any enquiry specifically referring to the transactions of short term capital loss from sale of equity shares of alleged penny stock companies referred above and to this extent, we fail to find any merit in the contention of assessee. No prejudice caused to the revenue, even if the short term capital loss is added back to the income of the assessee - No merit for the reason that carrying out the enquiry with relation to the transactions of short term capital loss will not end up only with regard to the said claim of AO during the course of examination of the sale consideration, purchases and sale, the parties who have sold such shares to the assessee may come across many other information which may be directly related to the assessee or may provide some credible information which the revenue authorities may use in case of other assessee s which can further help in collecting tax from other assessee s also. In our humble understanding, if the case is selected for scrutiny for specific reasons, then while framing the assessment order, AO needs to discuss those particular reasons and should summarize the details called with regard to the issue, the information provided by the assessee and its final finding as to whether any addition is required to be made or not. In the instant case, there were three specific reasons for which the scrutiny was carried out but there is not a whisper by the AO in the assessment order about any of the issues even the one relating to suspicious transactions in penny stock companies. We find merit in the order of the ld. Pr. CIT passed u/s 263 of the Act and dismiss all the grounds raised in this appeal of the assessee.

  ---

• 2022 (11) TMI 1135
  Penalty u/s 271(1)(c) - concealment of income or furnishing of inaccurate particulars of income - Disallowance of deduction u/s 80P - AO disallowed the interest by taking a view that as per provisions of Section 80P(2), the interest income earned from cooperative society is not eligible for deduction - HELD THAT:- We find that the AO while passing the assessment order, made disallowance of deduction under section 80P(2) and also added interest income earned from nationalised banks. Interest income earned from nationalised banks was not disclosed by the assessee in its return of income. Assessee could not substantiate the fact that the interest income was offered for taxation in the computation of income. Thus, it was a clear case of concealment of particulars of income, thus, the penalty qua such interest income of Rs. 524,223/- is upheld. So far as the other addition/disallowance Assessee has disclosed such interest income in return of income and addition was made due to change of opinion. Thus, there was no concealment on the part of Assessing Officer in claiming such deduction. Thus, the penalty qua such addition is deleted. This appeal of assessee is partly allowed.

  ---

• 2022 (11) TMI 1134
  Reopening of assessment u/s 147 - reason to believe - change of opinion - Deduction of interest expenditure u/s. 57 - Deduction as claimed to have been borne exclusively for earning of interest income on the investment with a partnership firm in which the assessee as a partner was in receipt of interest income @12% - HELD THAT:- AO while framing the original assessment had found the assessee s claim for deduction of interest expenditure u/s 57 in order, and had not drawn any adverse inferences as regards the same - On the basis of the aforesaid facts, of the considered view that reopening of the concluded assessment of the assessee which was earlier framed by the A.O u/s.143(3) on the basis of a change of opinion can by no means be held to be justified. The aforesaid view is fortified by the judgment in the case of CIT Vs. Kelvinator of India [ 2002 (4) TMI 37 - DELHI HIGH COURT] We concur with the claim of the AR that the A.O had exceeded his jurisdiction and reopened the concluded assessment in the case of the assessee merely on the basis of change of opinion u/s.147 of the Act, which is not permissible in the eyes of law. A.O had exceeded his jurisdiction and reopened the concluded assessment in the case of the assessee merely on the basis of change of opinion u/s.147 which is not permissible in the eyes of law. Thus, on the basis of my aforesaid observations quash the reassessment framed by the A.O vide order passed u/s.144 r.w.s. 147 for want of valid assumption of jurisdiction on his part. Appeal of the assessee is allowed.

  ---

• 2022 (11) TMI 1133
  Validity of section 148/147 proceedings - Addition u/s 41(1) cessation of liability by way of waiver of loan amount and short term capital gains - HELD THAT:- We find no merit in the Revenue s instant arguments once there is no finding of fact at all; either recorded by the AO or CIT(A), that any of the assessee s expenditure or liabilities claimed as revenue items in earlier assessment years, have undergone cessation or remission as the case may be, in the relevant previous year. We, thus, reject Revenue s contentions both on validity of reopening as well as on merits so far as this first and foremost issue of section 41(1) addition is concerned. The factual position would hardly be any different regarding the later issue of alleged short term capital gains addition wherein the CIT(A) has noted the AO s section 154 computation itself has correctly started the computation of income from the computation of income as per order u/ s 154 - ACIT, Circle-2, has erroneously considered the amount of STCG as per original return while making computation in the order u/s 143(3) r.w.s.147. Therefore, the same is directed to be deleted.

  ---

• 2022 (11) TMI 1132
  Deduction u/s 80P - profit from the business as regards non-members was not admissible u/s 80P(2)(b) - statement recorded u/s 131 from a Mantri of the assessee co-operative society, wherein as clearly admitted the milk was procured from its members as well as non-members - statement is not recorded from any third party - assessee is also not produced any details about the purchase of milk from non-members - HELD THAT:- Clause b of Section 80P(2) talks about a Co-operative Society to be a primary society engaged in supplying of milk and other goods raised or grown by its members to, a federal co-operative society engaged in the same business or a Government or local authority or a Government company. Thus, the provision clearly prescribes about the procurement of the goods from the Members of the society and not from the non- Members. As submitted by the D.R. the statement recorded from Shri Karsanbhai S. Bharwad who is the Mantri of the assessee cooperative society and not a third person. Therefore, the case laws relied by the assessee is clearly distinguishable and not applicable to the present facts of the case. The grounds of appeal raised by the assessee are devoid of any merits and against the provisions of Section 80P(2)(b). Therefore, the finding of the lower authorities does not require any interference and appeal filed by the assessee is hereby dismissed.

  ---

• 2022 (11) TMI 1131
  Addition of compensation in the shape of annuity treating it as interest/reward - exemption income arising equities payment to land owners whose land has been acquired - Rehabilitation and Resettlement Award for affected families by Collector - Right to fair compensation and transparency in land acquisition, rehabilitation and resettlement - As submitted that the annuity scheme under which the assessee received the money is part of the compensation against the land acquired and is exempt u/s 10(37) - HELD THAT:- As it becomes obvious with preparation of Rehabilitation And Resettlement Scheme u/s 16 of R R Act is the foundation upon which after necessary enquiries the land acquisition award is passed by the Collector u/s 23 of R R Act. Then sub-clause (b) of Section 23 specifically provides that rehabilitation and resettlement award as determined u/s 31 is part of the land acquisition award passed by the Collector u/s 23. Rehabilitation and resettlement award u/s 31 sub-clause (j) specifically refers to the particulars of annuity provided to the land owners. The Second Schedule to the R R Act relevant to Section 31(1), 38(1) and 105(3) of the R7 r Act, provides elements of R R Entitlements and at item no 4 there is choice of annuity or employement and the Schedule also fixes the minimum royalty to be paid. Section 51 of R R provides for establishment of land acquisition, rehabilitation and resettlement authority for disposal of the disputes arising out of acquisition, compensation, rehabilitation and resettlement. Section 69 provides that in determination of amount of compensation to be awarded for land acquired including the rehabilitation and resettlement entitlement, the authority shall take into consideration whether the Collector has followed the parameters set out u/s 26 of section 30. The form of award is mentioned in section 70 of the R R Act which refers to section 28. Thus, the award for the purpose of R R Act not only includes the market value of the land but also rehabilitation and resettlement entitlements allowed to the land holders arising out the social impact assessment and study of the prospective acquisition of the land. Therefore, for the purpose of the section 96 of the R R Act, not only a monetary compensation of the land and interest upon it but the quantifiable monetary benefits arising out of rehabilitation and resettlement entitlements of the land owners, shall be part of the Award under the R R Act and no income tax can be levied on such payments. The findings of the ld Tax Authorities below are held to be erroneous as they have failed to examine the issue in correct context to the law arising out of R R Act. Grounds are decided in favour of the assessee.

  ---

• 2022 (11) TMI 1130
  Revision u/s 263 by CIT - Assessee claim of transaction pertaining to the shares and the resultant gain/profit/loss is not verifiable - HELD THAT:- The gain or loss is attributed/allocated to different clients who had made trade in equity through the assessee with the main broker of Bombay. Thus non speculative loss as well as speculative profit were allocated and belonging to different clients/customers. The assessee has no right to have profit or loss on this equity trading account for the year under consideration. AO vide notice requested the assessee to furnish the source of investment with proper evidences. In the absence of any evidence why the same should not be added as the total income of the assessee as unexplained investment u/s. 69 and also requested to submit all the details mentioned in the trading statement provided by the assessee. The assessee responded stating that the total payments to the main broker was of Rs. 1,76,83,099/-. In the same account there is total receipt of Rs. 1,20,75,801/-. Thus the net payment was of Rs. 56,07,298/- for which the assessee was sending confirmatory contra accounts duly signed by the clients, their full address and Pan Number details and further the summery list shown clients name address Pan Number Aadhar Card Copy etc. As seen from the revision order that the Ld. PCIT after perusal of the material available on record and found that the issues pointed out in the show cause needs verification. PCIT held that the assessee s claim with regard to the transaction pertaining to the shares and the resultant gain/profit/loss is not verifiable. During the course of original assessment proceedings, the assessee failed to furnish the said details and evidences. That s why the assessee himself offered 8% of difference amount of bank credits and debits as presumptive income and entire amount was required to be treated as unexplained income and added to the total income of the assessee. Therefore invoking Explanation 2(a) of Section 263(1) PCIT set aside the assessment order passed by the Assessing Officer as erroneous and prejudicial to the interest of revenue. PCIT pointed out the issues mentioned in the show cause notice needs verification but it is seen from the Paper Book that all the details were filed by the assessee before the AO during the assessment proceedings and after detailed enquiry and verification of records, the assessing officer completed the assessment order. PCIT has not demonstrated in his order how the order passed by the AO as erroneous order. The Assessing Officer has adopted one of the courses permissible in law, if it has resulted in loss of revenue, the same cannot be treated as an erroneous order which requires revision u/s. 263 - Therefore in our considered view, the invocation of Revision proceedings u/s. 263 itself unjustifiable, against the provisions of law and therefore, the same is hereby quashed. Appeal of assessee allowed.

  ---

• 2022 (11) TMI 1129
  Scope of limited scrutiny - Conversion of Partenrship into LLP - Securities premium reserve which stood transferred by the erstwhile company to the assessee-LLP upon conversion as a taxable profit - whether the said addition could have been made in a limited scrutiny, which has been selected by a notice u/s 143(2) for examination of investment in unlisted equities, low income and high loans/advances/investments and low income and high investments without converting the same into unlimited scrutiny - HELD THAT:- A.R relied on the decision wherein issue decided in favour of assessee - As in the subsequent decision in the case of ITO Vs. M/S Godhuli Dealcom LLP [ 2022 (6) TMI 1276 - ITAT KOLKATA] the coordinate bench has taken a view which is against the assessee but in that decision the earlier decision as cited above was neither noticed nor referred. Under the present facts we are guided by the decision of the coordinate bench in the case of M/S Royal Calcutta Turf Club Vs DCIT [ 2017 (11) TMI 1200 - ITAT KOLKATA] wherein it has been held that where there are two conflicting decisions, then in that scenario the earlier has to be followed as in the latter decision the earlier one was neither noticed nor referred. Even the ratio laid down by the Hon ble Supreme Court in the case of Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] is applicable in this case. Decided in favour of assessee.

  ---

• 2022 (11) TMI 1128
  Revision us 263 by CIT - claim of depreciation which includes foreign exchange loss on long term foreign currency loan capitalized in respect of additions made towards plant and machinery - HELD THAT:- We note that AO has called for all the details by issuing notice u/s. 142 (1) (reproduced above) to which assessee had made detailed submissions explaining its case. Even before the CIT, assessee has submitted in detail, explaining about the difference in treatment of the foreign exchange fluctuation loss of long term foreign currency loss in the books of accounts and in the computation of income under the Act, as narrated above. We have perused the treatment of forex loss as per the books of account which has been added to the cost of fixed assets and also the treatment of the forex loss as per the provisions of section 43A of the Act, based on actual repayment of loan which has been added to the cost of fixed assets. From the above factual matrix of the issue raised by the PCIT, we find that he has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 - We observe that in the course of proceedings u/s 263 before the PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon ble Courts. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit Loss account of the assessee, perusal of provisions of section 43A of the Act and order of coordinate bench of ITAT Kolkata in assessee s own case reveals the correct state of its affairs in respect of the issue raised in the impugned revisionary proceedings for which both, ld. PCIT and the CIT, DR could not bring any material on record to controvert the verifiable factual position. Accordingly, on the issues raised by the PCIT in the revisionary proceedings, no action u/s 263 is justifiable which in our considered view cannot be sustained under the facts and circumstances of the present case and judicial precedents dealt herein above. We, therefore, quash the impugned order u/s 263 of the Act and allow the grounds raised by the assessee.

  ---

• 2022 (11) TMI 1127
  Claim of deduction u/s 40(b) from undisclosed income surrendered - Salary / Remunaration of partners - Additional income declared during the course of survey - HELD THAT:- It is clear that the rate itself stated by the A.O. during the course of survey is in respect of valuation report obtained by the prospective buyers and not from the assessee. Therefore, for all practical purposes, same is likely to be inflated for obtaining loans from financial institution and could not be construed to be price of the units accruing to the assessee. As further to be noticed that the survey u/s. 133A was conducted on 22.12.2015 and the assessment year under consideration, i.e., A.Y. 2016-2017, was not complete. The manner of computation by the assessee in arriving at the additional income of Rs. 2 crore as per the sworn statement demonstrate that it is directly relatable to the construction of flats, and hence, deem to accrue as part of the consideration of sale of flats and thus the income is to be treated as income from business of the assessee. The surrendered income disclosed by the assessee are part of the business activities and as mentioned earlier no other activities were carried on by the assessee, nor has the Revenue brought on record any contrary material for the aforesaid conclusion. Revenue has not found any money during the course of survey. Further, the tax rate specified u/s. 115BBE for assessment year 2016-2017 is at 30% (same as the normal rate) and the partners of the assessee after considering the remuneration have discharged tax liability more or less at the same rate of 30%. Thus, we are of the view that there is no loss to the revenue. It is clear that the partners have paid average tax at 30%.The observation of the A.O. that the impugned assessment order that individual partners have set off their various expenses against remuneration so received. Thus, the straightway 30% tax liability on Rs. 1.2 crore in the hand of assessee firm has been shifted and minimized by splitting the same remuneration to the partner is factually incorrect. Allowability of remuneration in the hands of the partners - There is no dispute as regards the entitlement of the remuneration by the partners, since the A.O. had allowed the remuneration as per section 40(b)(v) of the I.T. Act to the extent of Rs. 11,54,770. The dispute is with regard to whether the assessee is entitled to remuneration as per section 40(b)(v) on the additional income offered. Since we have already held that the additional income offered by the assessee is to be considered as business income, as a natural corollary, the remuneration u/s. 40(b)(v) has to be computed considering the entire business income declared by the assessee. Thus additional income offered as part of the business income, the assessee would be entitled to deduction as per the provisions of section 40(b)(v). Disallowance of ad hoc basis, a sum being 20% of the URD purchases - HELD THAT:- Undisputedly, the URD purchases are only 2% of the total purchases. Considering the nature of the assessee s business, i.e., the construction of flats and commercial buildings, undoubtedly, the assessee has to make purchases, such as jelly, stones and bricks etc. We are of the view that the ad hoc disallowance at the rate of 20% of the URD purchases is highly excessive. The assessee itself before the first appellate authority stated that the disallowance at 20% is excessive and should be reduced to 10% of the URD purchases. Accordingly, we limit the disallowance of URD purchases to 10% of Rs. 16,59,344. Hence, we sustain an addition of Rs. 1,65,934 and delete the balance.

  ---

• 2022 (11) TMI 1126
  Validity of order u/s 143 (1) - Disallowance of late payment of provident fund and employees scheme insurance u/s 36 (1) (va) which are not paid before the due date prescribed Under the respective act - HELD THAT:- Now the issue squarely covered against the assessee by the decision of the Honourable Supreme Court in case of Checkmate Services (P.) Ltd . [ 2022 (10) TMI 617 - SUPREME COURT] The decisions relied upon by the learned authorized representative of coordinate bench in Kalpesh Synthetics Pvt Ltd [ 2022 (5) TMI 461 - ITAT MUMBAI] and host of other decisions are no longer valid as the claim of the reduction of the assessee becomes an error apparent from the return of income filed and therefore correctly adjusted u/s 143 (1) of the act. Appeal filed by the assessee is dismissed

  ---

• 2022 (11) TMI 1117
  Reopening of assessment u/s 147 - Reasons to believe - whether the AO was having any reason to believe that the Assessee had escaped assessment? - HELD THAT:- As in the case Sheetal Dushyant Chaturvedi [ 2021 (9) TMI 833 - SC ORDER] appeal filed by the department was dismissed against the order of High Court who held that where reasons supplied by Assessing Officer for reopening Assessee assessment only referred to a need to verify documents and reasons supplied by assessing officer did not show that income has escaped assessment. There cannot be any re-assessment for a reason to suspect and re-assessment is only to be done if the AO has reasons to believe that the Assessee has escaped assessment. Without going into the other argument of the petitioner and merits of the case; the instant appeal requires to be dismissed on the sole ground that the Assessing Officer was not having any reason to believe for initiating re-assessment which is clear from the recorded reason to believe itself. Tribunal has not committed any error in applying the judgment passed in the case of Dinesh Kurmar Sah [ 2018 (5) TMI 1176 - GUJARAT HIGH COURT] .Consequently, the question of law framed in this case is answered against the department.

  ---

• 2022 (11) TMI 1116
  Unexplained cash credit u/s 68 - unexplained expenditure towards registration fee and stamp duty u/s 69C - On source of huge investment the submission filed by the assessee was not found satisfactory and the assessing officer made the addition - HELD THAT:- We find that the source of the said investment in property is loan taken from ICICI Bank and the same is verifiable from paper book page showing an offer letter issued by ICICI Bank sanctioning loan - Further the repayment schedule and shows the property value - Various other documents including loan confirmation certificate and deed of conveyance are sufficient enough to prove that the source of investment in property is loan taken from ICICI Bank and, therefore, on merits also the addition made by the assessing officer u/s 68 and u/s 69C of the Act do not stand. We, therefore, fail to find any infirmity in the order of the ld. CIT(A) and thus Ground Nos. 1, 2 3 of the revenue are dismissed. Violation of Rule 46A of the Rules - HELD THAT:- It is not discernible from the records nor referred to by the ld. D/R as to what were the documents filed by the assessee before the assessing officer and what new documents were filed before the ld. CIT(A) and without being able to lay our hands on these specific documents, we fail to find any merit in this ground raised by the revenue. Also the facts of the case as discernible from the records and the paper book filed by the assessee, there is sufficient force in the contention of the assessee explaining the source of investment in property and since the factual aspects have been examined by us, we fail to find any merit in this ground of the revenue and hence dismiss the same.

  ---

• 2022 (11) TMI 1115
  Deduction u/s 54 - assessee is not eligible for the impugned deduction since she had purchased the house property in issue which falls beyond the prescribed time of one year before her sale deed - HELD THAT:- A perusal of the assessee s undisputed purchase agreement re-investment document dated 14.12.2011 makes it clear that only 10% of the total purchase price had to be paid by the said date followed by a detailed payment schedule of 10% and 4% each on 11 various occasions, 5% on completion of brick work thereof and 4% each on four occasions and the remaining 5% at the time of occupation of the house property; respectively. There was a further stipulation in the agreement therein that possession had to be given to the purchaser/assessee only after she had complied with the foregoing detailed payment schedule. The assessee s bank statement which prima-facie suggests that the specified payment schedule had very well travelled beyond clinching date of 26.02.2013 i.e. one year before the sale deed executed by her on 27.02.2013 - Thus lower authorities have erred in law and on facts in disallowing the assessee s section 54 deduction claim - Decided in favour of assessee.

  ---

• 2022 (11) TMI 1114
  Reopening of assessment u/s 147 - penny stock Purchases - assessee has taken accommodation entry of LTCG by selling shares of Naresh Manakchand Jain at the Stock Exchange and proceeds from sale of such shares was booked as long term capital gain - HELD THAT:- First of all, the Assessee has not undertaken any transaction of purchase sale and shares of Naresh Manakchand Jain nor has declared any long term capital gain. The Assessee had undertaken transaction in the script of Nyssa Corporation Ltd. in which it has incurred loss of Rs.7,36,47,328/- and has shown sale of Rs. 1,19,60,611/- as against the purchase value of Rs. 8,55,63939/-. As stated above, the Assessee has neither set-off this net long term capital loss against any income during the year nor has adjusted this loss to be carry forwarded to subsequent years. There was no tax benefit as such to the Assessee from this transaction as has been falsely tried to be implicated by the AO. Thus, there is no co-relation between the material discussed in the reasons recorded and the material on record as well as the addition made in the assessment order. If the Assessment has been completed u/s 143(3) after detail scrutiny and enquiry on a particular issue, then re-opening u/s 147 on same very issue cannot be made without any tangible material coming on record having live link nexus with the income escaping assessment. The entire substratum and premise of the AO was wrong and the material and information as discussed in the reasons recorded have no link with assessee and has nothing to do with the any transaction undertaken by the Assessee. This shows complete lack of application of mind by the AO. There is not even whisper in the reasons recorded about dealing in shares of Nyssa Corporation Ltd. or the Assessee had taken any accommodation entry on this script. AO is referring to altogether different script which has not been under taken by the Assessee at all. Now, with the clarification by the DR from the records, it is seen that there are no other reasons recorded and AO has wrongly assumed Jurisdiction on a wrong assumption of facts. Accordingly, the aforesaid observation and finding of the CIT (A) is correct and the same is affirmed and we hold that the reasons recorded by the AO are not in accordance with the law and therefore the entire proceedings u/s has rightly been quashed by the Ld. CIT (A). - Revenue Appeal is dismissed.

  ---

• 2022 (11) TMI 1113
  Addition in respect of royalty payment - assessee company has made royalty payme on the basis of agreement which permits the assessee exclusive right to manufacture and sale of products in India using a licensed technology - AO disallowed 25% of royalty payment on the ground that said royalty has been paid towards technical information provided by the foreign company in respect of manufacturing methods of products and license granted to the assessee to manufacture and sell the products is in nature of capital expenditure, which gives enduring benefit to the assessee - HELD THAT:- We are of the considered view that there is no error in reasons given by the ld. CIT(A) to delete addition made towards disallowance of royalty payment and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the Revenue for both assessment years. Excess depreciation claimed on UPS - @ 60% OR 15% - AO has disallowed excess depreciation claimed on UPS @ 60% on the ground that the UPS and printers are in the nature of office equipment which are eligible for depreciation @ 15% and cannot be treated as computer and computer software to claim higher depreciation of 60% - HELD THAT:- We find that the issue of depreciation on UPS and printer as part of computer and computer software is decided in the case of M/s. Brakes India Limited vs DCIT [ 2017 (4) TMI 511 - MADRAS HIGH COURT] where it has been held that UPS and printer are integral part of computer and computer software and are eligible for higher depreciation of 60%, but not normal depreciation of 15% as applicable to office equipment. CIT(A) by following the decision of Hon ble Madras High Court in the above case has rightly deleted additions made towards excess depreciation claimed on UPS and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the Revenue for the assessment year 2011-12. Disallowance of expenditure in relation to exempt income u/s. 14A r.w.r. 8D - HELD THAT:- Hon ble Jurisdictional High Court of Madras in the case of M/s. Redington India Ltd. [ 2017 (1) TMI 318 - MADRAS HIGH COURT] has considered an identical issue and held that when there is no exempt income in relevant assessment year, there cannot be a disallowance of expenditure u/s. 14A in relation to any assumed income. In this case, the counsel for the assessee stated that for both the assessment years, the assessee has not earned any exempt income and the same has been accepted by the ld. DR present for the Revenue.There is no error in the reasons given by the Ld. CIT(A) to delete additions made towards disallowance of expenditure u/s. 14A r.w.r. 8D because in both assessment years the assessee did not earned any dividend income which was exempt income u/s. 10(34) of the Act and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue for both the assessment years. Appeals filed by the Revenue are dismissed.

  ---

• 2022 (11) TMI 1112
  Unexplained cash Deposits in bank account - availability of cash as a source for deposit into the bank account - HELD THAT:- If the deposit of money in the bank account is preceded by withdrawal of money from the very same bank account, then the source of funds is prima facie demonstrated or explained by the Assessee. In the case of S.R.Ventakaratnam [ 1980 (8) TMI 73 - KARNATAKA HIGH COURT] has held that once the Assessee discloses the source as having come from the withdrawals made on a given date from a given bank, it was not open to the revenue to examine as to what the Assessee did with that money and cannot chose to disbelieve the plea of the Assessee merely on the surmise that it would not be probable for the Assessee to keep the money unutilized. The decision of the Hon ble Karnataka High Court supports the plea of the assessee. It is seen that the cash deposits in the bank account are preceded by withdrawal from the very same bank account. The ratio laid down in the aforesaid judgment will apply to the facts of the present case. If the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors. In our view, the Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. I therefore delete the addition made in this regard. Consequently, the appeal of the Assessee is allowed.

  ---

• 2022 (11) TMI 1111
  Revision u/s 263 - LTCG or business income - two portfolios of investment - difference between investment and trading in accordance with CBDT Circular No. 06/2016 since the transactions in shares and derivatives shown in different DMAT accounts were settled through single bill - HELD THAT:- Admittedly, it is a fact on record that assessee has maintained two separate and distinct DMAT accounts for his two portfolios of investment and trading in shares for past several years. Also, assessee has transacted in the two portfolios in distinct manner from the respective DMAT accounts and has accordingly maintained his books of account based on which respective income has been reported in the return of income. As demonstrated evidently that there is no change in the material facts and circumstances as well as the applicable law in the year under consideration when compared with the preceding years, more particularly four assessment years from 2011-12 to 2014-15 wherein in the reassessment proceedings u/s. 147 the returned income has been accepted as the assessed income without any reclassification of income. In assessee s own case for the same four assessment years had quashed the order passed u/s. 263 on the same issue raised by the CIT in respect of reclassification of income from capital gains to business income. Reclassification of capital gains into profit and gains of business done by the department. We do not find any reason to interfere with the findings given by the CIT(A) and, therefore, uphold his order. Accordingly, grounds taken by the revenue are dismissed.

  ---

• 2022 (11) TMI 1110
  Revision u/s 263 by CIT - deduction u/s. 80G for the donations made by the assessee to nine different charitable trusts - HELD THAT:- The requisite documents desired by the CIT in the revisionary proceeding for justifying the claim of deduction made by the assessee u/s. 80G in the form of donation receipts and approvals issued by the department to the donees u/s. 80G(5)(vi) are on record. Validity of approval granted to the three trusts out of four as noted by CIT in his show cause notice is covered by the circular issued by CBDT vide circular no. 7/2010 referred above. In respect of one other trust, certificate of approval has been issued for perpetuity, unless otherwise withdrawn. All these details in respect of donations made by the assessee are duly reported in the return form and the AO has called for necessary details and has examined the veracity of claim of deduction made by the assessee. Deduction of tax at source on the commission paid by the assessee to two of its managing/whole time directors which is directed to be disallowed u/s. 40(a)(ia) - Counsel has evidently demonstrated that the said payment forms part of the salary of the two directors which has been subjected to TDS u/s. 192 - We also note that issue relating to compliance of section 197 of the Companies Act, 2013 though not formed part of the show cause notice issued by the Pr. CIT, has been evidently demonstrated to be complied with, by the assessee as noted above. All the evidence in respect of TDS done on the amount of commission paid to the two directors and as reported in Form 16 as well as in quarterly TDS statement filed by the assessee, are on record which factually demonstrates that commission paid has been subjected to required TDS which is contrary to the observations made by the Pr. CIT. Double claim of depreciation by the assessee on the fixed assets of its SEZ unit at Falta - Assessee has factually demonstrated that no such double claim much less the original claim of depreciation has been made by the assessee in computing the eligible profits of the SEZ unit for making a claim of deduction u/s. 10A of the Act. Details of this computation have already been noted above. Also important to note that the monetary eligible limit for the assessee for claiming deduction u/s. 10A was of Rs.23.57 Cr. but against this, it had restricted the deduction of Rs.7.50 Cr. only, owing to its planned capital expenditure in future. We note that all these working details were furnished in the course of assessment proceedings filed with e-portal and were also placed before the Pr. CIT in the revisionary proceeding. We find that the three issues in the present case are purely on facts which are verifiable from the records of the assessee. Examination and verification of the same as placed in the paper book also reveals the correct state of its affairs in respect of the issues raised in the impugned revisionary proceedings for which both, ld. PCIT and the ld. CIT, DR could not bring any material on record to controvert the verifiable factual position. Accordingly, on the three issues raised by the PCIT in the revisionary proceedings, no action u/s 263 of the Act is justifiable - Decided in favour of assessee.

  ---

• 2022 (11) TMI 1109
  Revision u/s 263 by CIT - Addition u/s 68 - HELD THAT:- We find that the transactions referred to by the CIT in the impugned order has never been examined by the assessing officer. No enquiry has been conducted relating to the alleged sum. It is also surprising to note that even when the tax audit report was available with the assessing officer and it was specifically mentioned that loans or advances have been taken by the assessee from M/s. DGIAPL, AO failed to take any action. It could have been a situation that the assessing officer after examining the transactions, ledger account and other relevant details have come to a conclusion that they are not in the nature of loans or advances. But this action of carrying out necessary exercise is completely missing at the end of the assessing officer and in the given scenario where only few cases are selected for scrutiny such type of scrutiny proceedings as has been carried out by the assessing officer are erroneous so far as they are prejudicial to the interest of the revenue wherein the important aspects and the crucial financial transactions having sufficient volume in terms of value remained to be examined by the AO. We fail to find any infirmity in the finding of the CIT holding the assessment order as erroneous and prejudicial to the interest of the revenue. Thus, the finding of the CIT in the order passed u/s 263 of the Act, is confirmed and grounds of appeal raised by the assessee are dismissed.

  ---

• 2022 (11) TMI 1108
  Income under the head income from other sources - HELD THAT:- Although, the assessee has reported a sum under the head income from other sources , but no details have been furnished to prove source and nature of income except stating that it should be considered as income derived from non-export activities. In absence of any specific details, it is difficult to accept the contentions of the assessee that it should be derived from business activity. There is no error in the reasons given by the authorities below to assess a sum under the head income from other sources and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the assessee. Unrealized sale proceeds from profits as well as from the total turnover - HELD THAT:- We find that the Hon ble Madras High Court in [ 2014 (1) TMI 1588 - MADRAS HIGH COURT ], has considered the issue of allowing unrealized sale proceeds from profit or total turnover, and after considering relevant submissions held that the assessee could not furnish necessary evidences before the AO to prove that the RBI has permitted extension of time for remitting sale proceeds in foreign currency in India in order to allow the assessee to get the benefit. We are of the considered view that there is no error in the reasons given by the CIT(A) to sustain the additions made by the AO and thus, we reject the ground taken by the assessee. Non-exclusion of unrealized sale proceeds from export turnover as well as total turnover - HELD THAT:- The issue of exclusion of expenditure including foreign currency loss or unrealized sale proceeds from export turnover and also from total turnover, is no longer res integra . In the case of HCL Technologies Ltd.. [ 2018 (5) TMI 357 - SUPREME COURT] had considered an identical issue and held that expenses incurred in foreign currency, excluded from total turnover also needs to be excluded from total turnover. In the case of CIT v. Abad Fisheries [ 2002 (8) TMI 95 - KERALA HIGH COURT] held that unrealized sale proceeds have to be excluded from export turnover as well as total turnover. Therefore, considering the facts and circumstances of the case and also by following the decision of the Hon ble Supreme Court in the case of HCL Technologies Ltd.(supra), we direct the AO to re-compute deduction u/s.10A of the Act, by excluding unrealized sale proceeds from export turnover as well as total turnover. Depreciation on STP assets - non-furnishing of sufficient evidences - AO has disallowed depreciation on STP assets on the ground that the assessee could not file supporting invoices for new assets acquired and installed during the Financial Year relevant to the assessment year 2001-02 - HELD THAT:- Even before us, the assessee could not explain with necessary evidences, the differential figures of depreciation claim in the P L A/c and in the statement of total income, computation of income for STPI Units non- STPI Units. Since, the assessee could not file necessary invoices in support of additions to fixed assets and also basis for adopting different figures of depreciation for computing income from STPI Units non-STPI Units, we are of the considered view that the issue needs further verification from the AO and hence, we set aside the issue to the file of the AO and direct the AO to re-examine the issue in light of various averments made by the assessee and also taken into account computation of depreciation for STPI Units non-STPI Units. Depreciation on Intellectual Property Rights - HELD THAT:- We are of the considered view that there is no error in the reasons given by the CIT(A) to delete the additions made towards depreciation on IPRs and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue. Deduction u/s 10A - Quantification of Export Turn over - HELD THAT:- On the basis of subsequent development, the Ld.CIT(A) has re-computed total turnover by excluding unrealized sale proceeds by following the decision of the Hon ble Kerala High Court in the case of Abad Fisheries [ 2002 (8) TMI 95 - KERALA HIGH COURT ] because said findings are further fortified by the decision of the Hon ble Supreme Court in the case of HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT ] where it has been held that any expenditure excluded from export turnover needs to be excluded from total turnover also. Therefore we are of the considered view that there is no error in relief allowed by the Ld.CIT(A) in re-computing deduction u/s.10A and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Unrealized sale proceeds from total turnover - HELD THAT:- We find that this issue is covered in favour of the assessee by the decision of in the case of HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] where it has been clearly held that expenditure excluded from export turnover, also needs to be excluded from total turnover. Therefore, by respectfully following the decision in the case of HCL Technologies Ltd. (supra), we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to exclude unrealized sale proceeds from total turnover and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue.

  ---

• 2022 (11) TMI 1107
  Validity of assessment framed by ITO - Assessment framed u/s 144 - as argued order has been passed in violation of instruction of CBDT by the ACIT, Circle-1(1), Jalpaiguri which is not a metro city and therefore the same may kindly be quashed - HELD THAT:- Undisputed facts are that the assessee is a non corporate assessee and has declared total income of Rs. 10.02,340/- during the year. We observe that the notice u/s 143(2) of the Act was issued by ITO, Ward-1(1), Jalpaiguri to the assesse whereas the assessment was framed by the Assistant Commissioner of Income Tax, circle-1(1), Jalpaiguri. Instruction No. 1/2011 in the case of non-corporate assessee in non-metro cities, the ITR filed upto Rs. 15 lacs has to be assessed by ITO and therefore in the instant case the assessment is framed in violation of above instruction by the Board. The case of the assessee is squarely covered in the case of Hirak Sarkar [ 2021 (8) TMI 700 - ITAT KOLKATA] - Thus we quash the assessment order passed on the ground of lack of jurisdiction. Accordingly the appeal of the assessee is allowed.

  ---

• 2022 (11) TMI 1106
  TDS u/s 194I - CAM charges paid by the appellant company considering the common area maintenance charges as part of the rental activity covered u/s 194I and treated the appellant company as assessee in default within the meaning of section 201(1) for short deduction of TDS on CAM Charges - HELD THAT:- When the definition of rent as Explanation of section 194-I is seen it is the payment made for the use of certain immovable properties like land or building (including factory building) or land appurtenant to a building ( including factory building) or movable properties like machinery or plant or equipment or furniture or fittings, is considered to be rent. Thus, what is important is the use of these immovable properties or those things appurtenant or fittings with the building that is essential to make a payment fall in definition of rent for purpose of Explanation to Section 194-I. The common area maintenance for which the CAM charges are paid are not for the use of immovable or immovable properties included in the definition of rent above as the rent becomes payable for getting exclusive interest of user of aforesaid properties. The word use here would mean use exclusively by the lessee. The rent as such is consideration for contract of tenancy or lease, where lessee gets beneficial interest of user of demised property to the exclusion of others, including the Landlord/lessor. The common areas have access to and can be used not only by co-tenants but the landlord/lessor too or even other visitors without any right of exclusion by the assessee. Any payment for it s maintenance cannot be said to be consideration for any beneficial interest to exclusion of others. Merely because a single agreement is executed between lessor and lessee creating liability on lessee for both rent and CAM charges does not discard the distinguishing nature of the two payments. As for the Rent and Eviction Laws the two may have no difference but under the Act , they are different head of expenditures of the lessee. The rent is on account of use of the property given into a exclusive possession of the lessee for the running of business but the CAM charges are for maintenance of the common areas, used or not used by the lessee. There is no reason to distinguish between the nature of two payments made by the lessee to the lessor if lessor keeps rent to himself and the CAM charges are paid further by the lessor unless there is composite rent, inclusive of the CAM. Which is not the case, as admittedly they are paid under different clauses of the agreement and by separate invoices. In Sunil Kumar Gupta [ 2016 (9) TMI 1198 - PUNJAB AND HARYANA HIGH COURT ] the judgment of Hon ble Punjab and Haryana High Court, relied by Ld. AO, Hon ble High Court was considering the question about computing the annual value of the property and in those circumstances observed that the maintenance charges must be included as part of the rent for the purpose of computing the annual value of the property and the wide ambit of the term rent in Section 22 and 23 of the Act was discussed - In the case before us as for the purpose of deduction of tax at source the term rent has to be understood in terms of explanation to Section 194-I which as discussed above makes a distinction between rent for the use of the property by the lessee and expenses of CAM. The appeal of assessee is allowed.

  ---

• 2022 (11) TMI 1105
  Suppression of closing stock - AO is of the opinion that such non saleable area should have been assigned some valuation of its own and hence rejected the books of books of accounts u/s 145(3) - HELD THAT:- Approach of the CIT(A) is neither erroneous nor contrary to any of the provision of law. The non saleable area are necessary requirements for a real estate projects, without such facilities/compositions the smooth operation cannot be conducted. As per the certificate of architect, tax audit reports details of stock the computation of income and the assessment order in the previous year prior to the year under consideration that the assessee has duly demonstrated the consistency in its accounting practice and its acceptance by the AO as well. CIT(A) has considered all the above facts and came to a just decision in deleting the addition which requires no interference at our hands. Accordingly, the Ground No. 1 of the Revenue is dismissed. Disallowance u/s 37 - assessee had debited license renewal fee in its expenses which was disallowed by the A.O by working out the rightful license of the said area in respect of Iris Project - HELD THAT:- Assessee had merely claimed as its expense, while other half expense had been received as reimbursement from M/s Weldon Technologies Park Development. CIT(A) has also arrived to the conclusion to delve the addition by going through the breakup of direct expenses containing group Misc. work(OE) with copy of the ledger account license renewal fee along with the bank statement showing the credit reimbursement received.The said finding of the fact with cogent evidence and the decision made thereupon by the CIT(A) requires no interference and we are of the view that the order of the CIT(A) in deleting the above disallowance made u/s 37 by the A.O. requires no interference. Ground of the revenue is dismissed. Scope of limited scrutiny - AO moved further to verify closing stocks of the assessee company along with other expense heads debited in the revenue account and ultimately made addition/disallowances which are not part of the reasons mentioned in the limited scrutiny - HELD THAT:- If a case is taken for limited scrutiny by the A.O., he cannot exceed the jurisdiction beyond the one which he has carved out himself in the notice issued for limited scrutiny. In the present case, AO has travelled beyond his jurisdiction and made addition on the issues which are not part of the reasons for limited scrutiny. Therefore, both the A.O. and Ld. CIT(A) has committed an error in making the addition/disallowance and sustaining the same which requires to be set aside. Accordingly, the Additional Ground mentioned in the C.O. filed by the assessee is allowed, the addition sustained by the Ld. CIT(A) is hereby deleted.

  ---

• 2022 (11) TMI 1104
  TP Adjustment - Foreign exchange fluctuation gain - treated as operating income while computing the operating profit margin - recourse to Safe Harbour Rules - HELD THAT:- As firstly Safe Harbour Rules can be applied only at the option of the assessee and not otherwise. In any case of the matter, in the facts of the present appeal, TPO has made adjustment without taking recourse to Safe Harbour Rules. That being the case, contention of CIT(DR) cannot be accepted. Before us, assessee has furnished a working to demonstrate that, in case, foreign exchange fluctuation gain is treated as operating income, assessee s margin would be 7.88%, which will come within the range of + 3% of average operating profit margin of comparables worked out at 9.91%. AO is directed to verify the working and delete the addition. TP adjustment on account of delayed receivables from AE - assessee received remittances after expiry of credit period - re-characterizing the delay in receipt of receivables as unsecured loan, the AO computed interest by applying rate of 4.33% on the basis of 6 months LIBOR with a mark-up of 400 basis points - HELD THAT:- We agree with CIT (DR) that there may be instances where the AE is benefited due to delay in remitting the outstanding receivables, however, it depends upon the facts of each case. In the present case, admittedly, the assessee has very negligible interest liability. On perusal of materials placed before us, it is observed that the only borrowing made by the assessee is loan availed for purchasing vehicle. There is no dispute that the assessee had utilized the loan for the purpose of which it was availed and paying interest on that. Further, on perusal of the documents placed before us, it is observed that in the year under consideration, the assessee has paid interest of small amount - Thus, from the aforesaid facts it is clear that the assessee is more or less a debt free company, whereas, it has substantial reserve and surplus. Thus we hold that no adjustment on account of interest on outstanding receivables can be made in the facts of the present appeal. Accordingly, we delete the adjustment.

  ---

• 2022 (11) TMI 1103
  Exemption u/s. 11 - Exemption denied treating the assessee as AOP instead of charitable trust - CIT granted registration u/s. 12A - applicability of proviso to sub-section (2) of section 12A - HELD THAT:- Registration granted u/s. 12A of the Act in response to the application dated 19-02-2009, is not application to the year under consideration i.e. A.Y. 2008-09. Applicability of proviso to sub-section (2) of section 12A - Admittedly the said proviso was introduced in Finance Act, 2014 w.e.f. F.Y. 2014-15 (A.Y. 2015-16). Since, the assessment year under consideration is A.Y. 2008- 09, the CIT(A) held the said proviso is not applicable on the facts on hand. Recording the separate finding on the same, but however, we agree with the findings of the CIT(A) which were reproduced here-in-above. Therefore, we do not find any infirmity in the order of CIT(A) regarding the non-applicability of proviso to sub-section (2) of section 12A of the Act. Benefit of getting exemption u/s. 11 should be extended to the prior assessment years which are pending before the AO - CIT(A) answered the same by holding that no assessment for the year under consideration was pending before the AO as it was already completed on 28-12-2010. As discussed above that the CIT-IV, Pune granted registration in pursuance to the order of Tribunal on 26-03-2013 relevant to the assessment year i.e. A.Y. 2009-10, but not applicable to the year under consideration. Therefore, when there is no registration u/s. 12A of the Act for the year under consideration, the assessee is not entitled to claim benefit of exemption u/s. 11 of the Act. Therefore, find no infirmity in the order of CIT(A) in confirming the order of AO in denying the exemption u/s. 11 of the Act in the absence of registration u/s. 12A of the Act. Thus, the grounds raised by the assessee fails and are dismissed.

  ---

• 2022 (11) TMI 1102
  Gain on sale of land - nature of land sold - capital asset u/s 2(14) - HELD THAT:- We find that before the lower authorities, the objection of the assessee was regarding the applicability of provisions of capital gain as the sale of land in question was claimed to be an agricultural land. Also seen from the records that the AO has not carried out any inquiry to verify the claim of the assessee that the land in question was not capital asset on the ground that the population of the town was less than ten thousand and also as per the Notification issued by Government of India, the land was beyond the municipal limit. These issues require examination at the end of the AO. It is evident from the records that the AO had not carried out any inquiry to verify the correctness of the contention that the land in question would not fall within the purview of capital asset. We therefore, set aside the impugned order and restore the issue to the file of AO to decide it afresh. Needless to say that the AO would afford adequate opportunity to the assessee to prove his claim that the immovable properties that were sold by him during the year under consideration did not fall within the definition of capital asset as provided u/s 2(14) of the Act. Thus, grounds raised by the assessee are allowed for statistical purposes.

  ---

• Customs

• 2022 (11) TMI 1101
  Provisional release of imported cargo of betel nut product - detention-cum-demurrage waiver certificate in terms of Handling of Cargo in Customs Area Regulation, 2009 and Sea Cargo Manifest and Transhipment Regulations, 2018 - HELD THAT:- A series of orders of this Court have been made including Hon ble Division Bench of this Court in UNION OF INDIA, THE COMMISSIONER OF CUSTOMS, TUTICORIN, THE ASSISTANT COMMISSIONER OF CUSTOMS (SIIB) , TUTICORIN VERSUS M/S. BLACK GOLD TECHNOLOGIES [ 2020 (10) TMI 597 - MADRAS HIGH COURT ], wherein, this Court after taking into consideration the judgment of the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES [ 2020 (10) TMI 597 - MADRAS HIGH COURT ] has held In the considered opinion of this Court, in the light of the non taking of stand by the appellants/responds as to the applicability of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 and in the light of the stand taken in the Writ Petitions, it cannot be concluded as a restricted item, for which, provisional release is not prohibited. It is also to be pointed out at this juncture that the third appellant/third respondent in compliance of the order passed in the Writ Petitions has also ordered the provisional release, subject to various conditions. Considering the submissions of the learned counsel on either sides and also taking into consideration the judgments of the Apex Court as well as the earlier judgments of this Court, the Respondents are directed to consider the application of the Petitioner for provisional release under Section 110-A of the Customs Act and the same shall be disposed of by the Adjudicating Authority on merits and in accordance with law, within a period of one (1) week from the date of receipt of a copy of this order. This Writ Petition is disposed of.

  ---

• 2022 (11) TMI 1100
  Seeking grant of Bail - goods did not reach Customs Bonded (Public) Warehouse and the same were clandestinely removed from the Bonded Warehouse to Domestic Tariff Area - fraudulent evasion - only allegation against the applicant is that after being taken out of the warehouse at Mumbai for being transported to a particular warehouse, the goods were transported to another warehouse - Sections 135(1)(a) and 135(1)(b) of the Customs Act - HELD THAT:- What prima facie appears at this stage is that certain goods were imported by M/s Saaz Tradings and the goods were stored at a warehouse at Dadri; that the bond for a sum equal to three times to stamp duty, as provided in Section 59 (1) (b) of the Custom Act was submitted by the importer company; that the goods were taken out for being transported to another warehouse at Raigarh after requisite documentation; that the allegation is that instead of transporting the goods to Raigarh, the goods were transported to Delhi from where the same have been recovered; that the bond executed by the importer still continues to remain in force as provided under Section 59 (4) of the Customs Act; and the customs duty payable by the company stands secured by the bond executed by the importer company and till date, a notice demanding Customs duty has not been issued to the importer. Let the applicant Mohammad Jahas be released on bail, under Sections 135(1)(a) and 135(1) (b) r/w Section 135 (1) (i) and 135 (1) (ii) of Customs Act, 1962 on furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court below, subject to the conditions imposed - application allowed.

  ---

• 2022 (11) TMI 1099
  Levy of Social Welfare Surcharge (SWS) where basic Customs duty (BCD) is Nil - Or duty paid/debited by using the Merchandise Export from India Scheme (MEIS) Scrips - The proper officer notionally assessed SWS at 10% of the BCD - HELD THAT:- The fact that the goods imported under the concerned Bill of Entry has been cleared with Nil BCD is not disputed. - If the SWS is payable at 10% on BCD but where the BCD is Nil, SWS shall also be computed Nil. Respondents are directed to re-credit the refund of Notional Social Welfare Surcharge in the duty credit scrips in the goods imported by petitioner within 8 weeks from the date of receipt of copy of this order - Petition disposed off.

  ---

• 2022 (11) TMI 1098
  Levy of penalty of IEC code holder and middleman - Allowing third party to use its IEC code - Bonafide Belief - Misdeclaration of imported goods by third party - readymade garments - it is alleged that the seized ladies readymade garments were being imported by resorting to mis- declaration under the guise of disposable cups as declared in the bills of lading - Confiscation - consolidated penalty under Section 112(a) read with Section 114AA of Customs Act - HELD THAT:- Sh. Amit Nagi on advice of Sh. Ravinder Puri allowed the use of his IEC code for import to be made by Sh. Rajan Arora. It is further evident that both these appellants believed Sh. Rajan Arora in good faith that he wants to use the IEC code of M/s Dev International for import of crockery/ glasses/ disposable glasses. Further, it is evident that both these appellant were not aware about the actual goods being imported by Sh. Rajan Arora in connivance with Sh. Ramesh Wadhera. It is further apparent that such misuse of IEC of M/s Dev International could not have been done without the active connivance of the CHA M/s Jai Impex - there has been no interrogation with the CHA for facilitating import by Sh. Rajan Arora by using the IEC code of Sh. Amit Nagi, without proper authorisation. There is no active role played by these appellants save and except facilitating the use of IEC code of M/s Dev International by another for some monetary consideration - the penalty of Rs. 12 lakhs on Sh. Amit Nagi under Section 112(a) is reduced to Rs.50,000/- - appeal allowed in part.

  ---

• 2022 (11) TMI 1097
  Exemption from Establishment Charges as per Para 5 (b) and 5(C) of Circular No. 16/2013-Customs dated 10.04.2013 - period from 2010-11 to May 2014 - respondents were appointed as Custodian by the Commissioner of Customs, Ahmedabad - landing places - whether the Respondents are required to pay establishment charges? - HELD THAT:- On going through the regulation of HCCAR, 2009, it is found from said regulations that Customs Cargo Service providers, which were hitherto termed and notified as custodians before issuing of Notification No. 26/2009-Cus (N.T.) dated 17.03.2009 for notifying the HCCAR, 2009, were required to pay the cost of the officers posted there by the Commissioner of Customs on cost recovery charges unless specifically exempted by an order of the Ministry of Finance, Government of India. Circular No. 13/2009-CUS dated 23.03.2009 issued by the Central Board of Excise and Customs, Ministry of Finance Government of India, in clear terms clarifies that payment of cost recovery charges in respect of ports and airport has been exempted for three categories of custodians specified in Circular No. 27/2004- Cus. dated 06.04.2004 - thus, government has exempted the Custodians notified before 26.06.2002 from the payment of cost recovery charges .Therefore, the Commissioner (Appeals) is legally correct in extending the benefit of waiver of establishment charges in this matter. There was no requirement of any application for claiming exemption in this matter. In the present matter there is dispute that all the four respondents have been appointed/ notified as Custodians well before the 26.06.2002 and as per circular No. 27/2004- Cus dated 06.04.2004 and 13/2009-Cus. dated 23.03.2009, recovery of establishment charges/ cost recovery charges stands exempted/waived. Appeal of Revenue dismissed.

  ---

• 2022 (11) TMI 1096
  Non-Levy of antidumping duty (ADD) - injury to domestic industry - Recommendation made by the designated authority - articles exported by the exporters or producers to India at less than its normal value - violation of principles of natural justice - contention advanced on behalf of the respondents is that the appeals are not maintainable under section 9C of the Tariff Act and that the exercise of power by the Central Government under section 9A of the Tariff Act read with rule 18 of the 1995 Anti-Dumping Rules is legislative in nature and so neither the principles of natural justice are required to be complied with nor a reasoned order is required to be passed. Maintainability of appeal - whether an appeal would lie to the Tribunal in a case where the decision of the Central Government not to impose any anti-dumping duty is conveyed through an office memorandum, despite a positive recommendation made by the designated authority in the final findings for imposing antidumping duty? HELD THAT:- The expression in respect of is of wide connotation than the word in , making an order of determination as regards the existence, degree and effect of any subsidy or dumping amenable to an appeal to the Tribunal under section 9C of the Tariff Act - It would be seen that prior to 01.08.2019, an appeal would lie to the Tribunal under section 9C of the Tariff Act against the order of determination regarding the existence, degree and effect of any subsidy or dumping in relation to import any article. There is, therefore, no difference in the meaning of the expression in respect of or regarding , and an order of determination concerning the existence, degree and effect of any subsidy or dumping would give a cause for filing an appeal before the Tribunal. The designated authority performs functions under the Tariff Act on behalf of the Central Government and not as an independent authority. Section 9(C) of the Tariff Act does not restrict the right of appeal to specific category of orders, except that the orders should determine the existence, degree and effect of subsidy or dumping in relation to imports of articles in India. The provisions of section 9(C) of the Tariff Act conferring right to appeal have to be read in a manner that it effectuates the legislative purpose in a reasonable, practical and liberal manner since it is remedial and the right to appeal should not be restricted or denied unless such a construction is unavoidable. The right to appeal should not be denied, unless the Statute so specifically states nor should it be read so as to frustrate the purpose of providing an appellate remedy in relation to orders determining existence, degree and effect of any subsidy or dumping of articles imported into India as the expression in respect of is of wide connotation - It is true that right of appeal is a statutory right, as has also been contended by the learned counsel for the respondents, but as discussed above, section 9C of the Tariff Act provides for an appeal to the Tribunal if the Central Government takes a decision not to impose anti-dumping duty, even though the designated authority had made a recommendation in its final findings for imposition of anti-dumping duty. It is, therefore, not possible to accept the contention of the learned counsel for the respondents that an appeal would not lie to the Tribunal under section 9C of the Tariff Act against the decision of the Central Government, contained in the office memorandum, not to impose anti-dumping duty. Is the determination by the Central Government legislative in character or quasi-judicial in nature? - HELD THAT:- Even if it is assumed that the Central Government exercises legislative powers when it imposes anti-dumping duty or has taken a decision not to impose anti-dumping under section 9A of the Tariff Act, it would still be a piece of conditional legislation falling under the third category of conditional legislations. This is for the reason that in the scheme of the Tariff Act and the 1995 Anti-Dumping Rules, the Central Government has necessarily to examine all the relevant factors prescribed in the Tariff Act and the Rules for coming to a conclusion whether anti-dumping duty has to be levied or not. It cannot be that it is only the designated authority that is required to follow the procedure prescribed under the Tariff Act and the Rules framed thereunder for making a recommendation to the Central Government, for while taking a decision on the recommendation made by the designated authority in the final findings the Central Government would have to examine whether the designated authority has objectively considered all the relevant factors on the basis of the evidence led by the parties - There is a clear lis between the domestic industry on the one hand and the foreign exporter and importers on the other hand since the domestic industry desires anti-dumping duty to be imposed for which purpose investigation is carried out by the designated authority, but the foreign exporters and importers resist the imposition of anti-dumping duty. For exercise of such power, a detail procedure has been provided in the Tariff Act, the 1995 Anti Dumping Rules or the 1997 Safeguard Rules. The Rajasthan High Court in JK. INDUSTRIES LTD. VERSUS UNION OF INDIA [ 2005 (4) TMI 76 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR ] also held that the nature of delegated legislation as contemplated under section 9A of the Tariff Act squarely falls in the third category of conditional legislative function pointed out by the Supreme Court in K. Sabanayagam [ 1997 (11) TMI 520 - SUPREME COURT ], as a result of which the excise has to be undertaken not on a subjective satisfaction of the delegatee but objectively on facts. While examining the validity of notifications issued by the Food (Health) Authority under section 7(iv) of the Prevention of Food Adulteration Act, 1954 by which the manufacture, sale, storage and distribution of pan masala and gutka were banned for different periods, the Supreme Court, after referring to its earlier decision in K. Sabanayagam, emphasized that in the third category of conditional legislation, the satisfaction of the delegatee must necessarily be based on objective consideration, irrespective of whether the exercise of such power is judicial or quasi-judicial in nature. The authority has to objectively consider the relevant factual data pressed into service by one side, which can be rebutted by the other side adversely affected. While the exercise of the legislative function of framing Rules is not appealable before the Tribunal, the second function of making a determination is expressly made appealable under section 9C of the Tariff Act. The function of making a determination in individual cases by applying the broad legislative framework and policy already set out in the Statute is not at all legislative in character, but clearly a quasi-judicial function requiring the Central Government to follow the principles of natural justice by affording an opportunity to the party likely to be adversely. Principles of Natural Justice and Reasoned Order - HELD THAT:- In Jubilant Ingrevia Limited [ 2021 (11) TMI 200 - CESTAT NEW DELHI ] a similar office memorandum was issued conveying the decision of the Central Government not to impose anti-dumping duty. The Tribunal observed that though a discretion is vested with the Central Government to accept or not accept the final findings of the designated authority, but such a discretion has to be exercised in a judicious manner by a reasoned order in accordance with the principles of natural justice, more particularly because an appeal would lie to the Tribunal against the determination made by the Central Government. In view of the judgments of the Supreme Court in K. Sabanayagam, [ 1997 (11) TMI 520 - SUPREME COURT ], and the decision of the Tribunal in Jubilant Ingrevia Limited, [ 2021 (11) TMI 200 - CESTAT NEW DELHI ] it has to be held that reasons have to be recorded by the Central Government when it proceeds to form an opinion not to impose any anti-dumping duty despite a positive recommendation made by the designated authority in the final findings for imposition of anti-dumping duty. If the Central Government forms a prima facie opinion that the final findings of the designated authority recommending imposition of anti-dumping duty are not required to be accepted then tentative reasons have to be recorded and conveyed to the domestic industry so as to give an opportunity to the domestic industry to submit a representation. Though the Tariff Act and the 1995 Anti-Dumping Rules or the 1997 Safeguard Rules do not provide for such an opportunity to be provided to the domestic industry, but the principles of natural justice would require such an opportunity to be provided. Non communication of the decision of the Central Government on the recommendation made by the designated authority - HELD THAT:- Section 9A of the Tariff Act provides that where any article is exported by an exporter or producer from any country or territory to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose anti-dumping duty not exceeding the margin of dumping in relation to such article - In the present case, it is not in dispute that the final findings of the designed authority were published on 12.05.2021. In all the appeals except twelve appeals, reference of which is given in the first paragraph of this order, an office memorandum was issued by the notifying that the Central Government, after examining the recommendation, had decided not to impose anti-dumping duty. In twelve appeals, the appellants have stated that such an office memorandum was not issued. Learned counsel appearing for the Central Government has also not stated or placed such an office memorandum. Thus, the decision taken by the Central Government not to impose anti-dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty, cannot be sustained and the matter would have to be remitted to the Central Government for taking a fresh decision on the recommendation made by the designated authority. Anti-Dumping Appeals are disposed off.

  ---

• Insolvency & Bankruptcy

• 2022 (11) TMI 1125
  Maintainability of application preferred by the Appellant/Greater Noida Industrial Development Authority - application dismissed on the ground that Noida has not taken any action for seven long months when it is their case that the RP had not taken any decision over the Claim Application filed by them and that the CoC had already approved the Plan and only subsequent to the approval, G. Noida has approached the Adjudicating Authority belatedly on 06.10.2020, whereas the CIRP had been initiated way back on 30.01.2020. HELD THAT:- There was an email which was sent by the Resolution Professional on 06.02.2020 informing the Appellant that they had been treated as an Operational Creditor and to send their claim in Form- B and calculate their interest after the date of Admission of the CRP. There are no reasons given regarding the delay by G. Noida in filing the Claim Application as a Financial Creditor . On perusal of New Okhla Industrial Development Authority Vs. Anand Sonbhadra and New Okhla Industrial Development Authority Vs. Manish Gupta Anr. [ 2022 (5) TMI 875 - SUPREME COURT ], it is clear that the amount due to Noida be treated as an Operational Debt and therefore the Noida is an Operational Creditor and not a Financial Creditor . This issue has since attained finality. Noida did not exercise its right in filing its Claim on time and has belatedly challenged the rejection after the approval of the Resolution Plan. On a query from the Bench, as to whether any provision was made in the Resolution Plan for the dues of Noida, the Counsel for the SRA submitted that the outstanding amount is reflected in the Books of Accounts of the Corporate Debtor and shown in the Information Memorandum and were dealt with as per the provisions of the Code. It is also significant to mention that the cancellation Notice sent by Noida is dated 07.06.2019 which is subsequent to the commencement of the CIRP date 31.05.2019. In the instant case, there are no material irregularity in the approval of the provisions of the Resolution Plan and hence find no legal or substantial grounds to interfere with the decision of the CoC. Appeal dismissed.

  ---

• 2022 (11) TMI 1095
  Validity of Guarantee Agreement - contravention of Section 185 186 of the Companies Act, 2013 - HELD THAT:- It is very much clear that the fresh guarantee executed on 06.05.2017 between the Bank and the Corporate Debtor of Rs.3007.85 lakh is still existing and Corporate Debtor is liable to that extent to repay the same together with interest as stipulated in the loan documents and so executed between the parties - It is clearly written that the Guarantor has agreed to indemnify the bank against all loss and repay and satisfy the bank on demand, the general balance due from the borrower. It is also very much clear that the second Deed of Guarantee executed on 06.05.2017 is not in continuation of earlier deed of guarantee dated 28.06.2013 as elaborately explained in para 74 of the impugned order - As far as the issue of contravention of provision of Section 185 of the Act prevailing as on that date (pre -07.05.2018 amendment to the Act) is concerned, it is very much clear that this is the provision which the company has to comply internally and if they fail to comply the necessary punishment is available in the same section i.e. Section 185, both monetary penalty and /or imprisonment. As far as bank is concerned, they have been provided time to time the Board Resolution showing the approval of the Board. Hence, if there is any irregularity then for that the Members of the Board are responsible. If the official of the bank have committed some irregularity, then it is the Bank who has to prosecute these officers against the provisions laid down under the law applicable to them. There are no inconformity in the impugned order and constraint to uphold the impugned order - appeal disposed off.

  ---

• Service Tax

• 2022 (11) TMI 1094
  SVLDRS - rectification / modification in the order to reject the application -Sabka Vishwas (Legacy Dispute Resolution) Scheme - rejection on the ground that Petitioner did not pay this amount of Rs.8,41,497/- within 30 days of issuance of rectified Form No.SVLDRS-3 or within the extended period of 30th June 2020 - HELD THAT:- Revenue must be augmented and tax be collected without getting into other issues. - The Petitioner is willing to pay tax but, is facing the brunt of illegal rejection. Hence, not allowing Petitioner to avail the benefit under the scheme appears bad-in-law. The Petitioner having made payment, even if, there was a delay for which reasons are mentioned in the Petition, Respondent Nos. 3 and 4 should have accepted the amount and issued Form No.SVLDRS-4. Section 128 the designated committee can modify its order only to correct an arithmetical error or clerical error which is apparent on the face of record. The remarks in the rectified Form No.SVLDRS-3, as mentioned above, by any stretch of imagination, can not be called an arithmetical or clerical error that was apparent on the face of record. On this ground also rectified Form No. SVLDRS-3 has to be set aside. In any event the details which have been referred to in the remarks column of rectified Form No. SVLDRS-3 were already available with Respondent Nos.3 and 4 before they issued original Form-3 where a positive statement was made that after consideration of relevant material, the designated committee has determined that a sum of Rs.52,58,583/- was payable by Petitioner - Respondents cannot go back and rectify original Form No.SVLDRS-3 issued on 28th November 2019. Petitioner is directed to issue Form No.SVLDRS-4 within two weeks of this order being uploaded accepting the amount of Rs.52,58,583 as paid in full and final settlement on 28th November 2019 pursuant to original Form No.SVLDRS-3. Petition disposed off.

  ---

• 2022 (11) TMI 1093
  Levy of service tax - services provided by the foreign based consignment agent/ distributor appellant - reverse charge mechanism - Section 66A of the Finance Act, 1994 - HELD THAT:- Appellant are engaged in exporting of fruits and foreign based consignment agent/ distributer perform various function for Appellant in foreign countries. The general scheme of levy of service tax is that service tax is leviable on the value of taxable services from the service providers within the territory of India. Section 66A of the Act embodies an exception to this general scheme. It is an independent charging provision which provides for levy of service tax in India on services provided or to be provided by a person located outside India and received by a person located in India. Section 66A lays down that such services (specified in clause (105) of Section 65 of the Act) shall be treated as having been provided in India by the recipient. This deeming provision of Section 66A makes the Indian recipient liable to pay service tax on the services provided by the foreign service provider. This exception to the general scheme of levy of service tax is also called reverse charge mechanism . In the instant case, it has also been contended by the assessee that the services provided by Foreign Agents do not fall within the scope of definition of C F Agent Service and classified under Business Auxiliary Service and services of a commission agent in relation to agricultural produce were exempt under Notification No. 13/2003-ST dated 20.06.2003. But what appears from the impugned order is that this aspect was also not properly examined by the learned Commissioner. This is another reason for de novo adjudication of the case. This matter needs to be remanded for denovo adjudication on all the issues - Appeal allowed by way of remand.

  ---

• 2022 (11) TMI 1092
  Benefit of abatement - N/N.15/2004- ST - Value of purchased material - benefit denied on the ground that the appellant has failed to produce any evidence of purchase of material in respect of which deduction has been claimed under Notification No. 15/2004-ST or 1/2006- ST - period 2005-06 and 2007-08 - HELD THAT:- The appellant has purchased of some raw materials however exact quantum of the same may not be ascertainable. Notification No. 15/2004-ST or for that matter 01/2006-ST, does not require proof of purchase of raw material to the extent of the abatement. In these circumstances denying the benefit of these notifications, for the reason that the quantum of purchase shown profit and loss account does not match invoices produced by the appellant is improper and incorrect. The appellants are entitled to benefit of abatement under Notification No 15/2004- ST or 01/2006-ST as the case may be - The appeal is allowed by way of remand to the original Adjudicating Authority for the purpose of recalculation of the demand.

  ---

• Central Excise

• 2022 (11) TMI 1124
  Interest on delayed refund - time limitation - whether there exists any liability of the revenue to pay interest under Section 11BB of the Act and whether it commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made? - Section 11BB of the Central Excise Act 1944 - HELD THAT:- The present controversy is squarely covered by the judgment of the Supreme Court in Ranbaxy Laboratories Ltd [ 2011 (10) TMI 16 - SUPREME COURT] . The language of Section 11BB is plain and unambiguous. It casts a duty on the respondents to pay the interest on delayed refunds, if refund is not made within three months from the date of receipt of application under Sub Section 1 of the relevant Section. Indisputably, the said application was filed by the petitioner on 3.9.2014 (Annexure P-2). There are no merit in the singular objection raised by learned counsel for the respondents that upon passing the order of refund, the competent authority became functus officio - the Statute makes it obligatory for the respondents to pay the interest on delayed payment and, therefore, if respondents have chosen to undertake an exercise partially by only refunding the amount without interest, they cannot wriggle out from their statutory responsibility to pay the interest. The respondents shall now determine the amount of interest payable to the petitioner under Section 11BB of the Act in the light of Section 11BB of the Act as interpreted by the Supreme Court in Ranbaxy Laboratories Ltd and after calculating the amount of interest shall pay the same to the petitioner within eight weeks from the date of communication of this order - petition allowed.

  ---

• 2022 (11) TMI 1091
  CENVAT Credit - capital goods used in the factory (Power Plant of KMCL) meant for another company/assessee (NINL) for manufacture of final products which are different and distinct - Department contended that the CC Rules specifically mentioned that capital goods and inputs for the purposes of the said Rules should be used in or in relation to the manufacture of final products within the factory of production - HELD THAT:- The definition of Factory does not preclude the possibility of there being two or more premises which can be segregated by public road, canal or railway line. How the two premises are to be considered to be part of the same factory by the Commissioner of the Central Excise has been set out in the above instructions of the CBEC. It only shows that as long as the two portions are integrally connected and inter-linked with the manufacturing process of excisable goods, it can be considered to be part of the same factory premises. In other words, merely because the Coke Oven Plant and the CPP may have been in two separate locations would not result in there being considered to be not part of the same factory premises. An important factor which has to be taken note of in this context is that an agreement was executed between the Government of Odisha and KMCL on 28th June, 2000 where under a land to an extent of 249.45 acres on which both the Coke Oven Plant as well as the CPP Plant were located had subsequently been transferred to KMCL. Selling of 75% of the power to NINL - HELD THAT:- There is indeed no restriction under the CENVAT Scheme that after captive use of power, the surplus power cannot be sold to any other party. The only restriction is that the capital goods are not to be exclusively used for manufacture of exempted products . It is nobody s case that the final manufactured products of KMCL or that of NINL are exempted products . In this context, it should be noticed that power/ electricity is not a final product. It is generated in the CPP of KMCL and is used in the manufacture of excisable goods in the Coke Oven Plant. In COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, JAIPUR VERSUS SHREE CEMENT LIMITED [ 2018 (9) TMI 822 - RAJASTHAN HIGH COURT ], a similar question arose. There, one factory manufactured duplex board and the other paper. They were separately registered with the Central Excise Department. The question that arose was whether the excess electricity cleared by the Assessee in favour of its sister concern units would make it ineligible for CENVAT Credit. The Court answered the question in the negative. It was held that electricity generated by the CPP was being used for the sister concern which was part of the company itself and, therefore, would still constitute captive consumption of electricity. In other words, the Assessee was held to be eligible for the CENVAT Credit. Thus, the power generated in the CPP of KMCL is used in the manufacture of the excisable goods by KMCL - the mere fact that the surplus power may have been sold to NINL would not disentitle KMCL to the benefit of CENVAT Credit on capital goods. Appeal dismissed.

  ---

• 2022 (11) TMI 1090
  Refund of accumulated Credit - transition to GST regime - whether under Transitory Provisions Section 142(3) of CGST Act, refund is not available of the amount of credit, which has been transited to GST Regime under the provisions of the erstwhile Central Excise Act? - principles of natural justice - HELD THAT:- Admittedly, Save and Except taking forward of the credit balance as on 30.06.2017, the appellant have not commenced production or manufacturing activities nor cleared any taxable goods on or after 1.7.2017. Further, debit by the appellant in the electronic ledger (DRC-3) amounts to reversal of credit transferred to GST regime - the appellant is entitled to refund under the provisions of Section 142(3) of CGST Act, which provides that assessee can file refund claim on or after the appointed day, for refund of any amount of credit of duty, etc. paid under the existing law (Central Excise/Service Tax), subject to clearing the bar of unjust enrichment. Further, the bar of limitation has been waived under Section 142 (3). In the facts of the present case, the appellant is entitled to refund in terms of Section 142(3) read with Section 54 read with Section 49(6) of the CGST Act - in the facts of the present case as the credit has been accumulated due to clearance of excisable goods, during the Excise Law Regime for export, the bar of unjust enrichment is not attracted. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (11) TMI 1089
  CENVAT Credit - capital goods or structural items of general use? - S.S. Welding Tube - Steel - Tubes - Alloy Steel Pipe - Prime HR Steel Coil - M.S.Wire - M.S.Slate - S.S. Welded tube - H.R. Steel pipe - Link Outer etc. - appellant is manufacturer of sugar molasses or not - HELD THAT:- Although while rejecting the claim, a finding has been recorded by the authorities below that these parts were used for structural purposes but no evidence for arriving at such a finding has been discussed or produced anywhere by the department. The only case made out by the department is that the items in issue are not covered by the definition of capital goods in terms of Rule 2(a) ibid and are generally used for structures providing support to the capital goods which are excluded from the definition of capital goods. Apart from this bald allegation, no cogent evidence has been put forth by the department to show that these parts have been used for structural purpose and therefore in the absence of any evidence to the contrary, the claim made by the appellant cannot be denied. Hon ble High Court of Judicature at Madras in the matter of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT] has held that M.S. Rod, sheet, M.S. Channel/Plate/flat etc used for erection/fabrication of structural support for various machines like crusher, kiln, hooper etc. without which such structural machinery could not be erected and would not function, are eligible for Cenvat Credit. Undoubtedly, as demonstrated by learned counsel, the parts in issue herein have been used for smooth and efficient functioning of the machinery which has been used for manufacturing Sugar and Molasses and therefore there is no reason not to allow the credit in issue to the Appellants. The appellants are entitled for Cenvat credit of the items in issue - Appeal allowed - decided in favor of appellant.

  ---

• 2022 (11) TMI 1088
  CENVAT Credit - inputs used in the manufacture of prefabricated structure - input services used in Construction of Building, Erection Commissioning Installation (Erection of Electric Tower From GEB to their factory premises) Architect Services, Real Estate Agent - denial of credit on the ground of no nexus with manufacture of finished goods - period February 2008 to June 2009 - HELD THAT:- This appeal pertains to the period February 2008 to June 2009, the adjudicating authority decided the matter on the basis of old theory of law that services are related to the immovable properties hence Cenvat credit is not admissible. We find that subsequently, the various high courts and tribunals have given decisions in various judgments cited by the learned counsel for the appellant on this issue. The entire finding of the adjudicating authority is based on old theory of law and subsequently, much water was flown on the issue. We are of the view that the adjudicating authority needs to give a fresh look in the entire case in the light of the various judgements given subsequent to the passing of the impugned order. The adjudication authority in respect of most of the services denied the credit on the ground that there is no nexus between the services with the manufacturing activity of appellant and clearance of the goods or for their business activity. We find that all the services per se are prima facie input services held in various judgments, however, the admissibility of Cenvat credit on these services can be decided on the basis that whether the services were used for the purpose specified in the definition of input service. Appeal allowed by way of remand.

  ---

• 2022 (11) TMI 1087
  Refund claim of excess Central Excise duty paid - rejection of refund claim on the ground that the effective date as per the sub-section 5 of Section 5A of the Central Excise Act, 1994 would be the day of issue of Notification, irrespective of the facts that whether it was published and offered for sale by the Director of Publicity and Public Relations of the CBEC, or not - principles of unjust enrichment - HELD THAT:- The background of the refund claim is that the appellant though paid excess duty but the rate of duty was revised downward by notification. Only due to the reason that system was not updated, the duty was paid on the higher rate, the appellant though shown the higher duty in the invoices, subsequently, the excess paid duty was adjusted and the same was given reduction in the subsequent updated payment recovered from buyers of the goods. To this effect, the appellant filed refund claim on the ground that the differential duty on account of enhancement rate was not payable by them due to late receipts of the Notification which should come into force from the date of its publication and offer for sale. Relevant provisions is made under sub-section (5) of Section 5A of Central Excise Act, 1994. From the said provision it is absolutely clear that any Notification issued under sub-section (1) or sub-section (2A) come into force on the date when it is published and offered for sale on the date of issue - it is undisputed fact in the present matter that the Notification were not offered for sale by the Directorate of Publicity and were put on the CBEC website on the next date around 11:45 hours on 13.11.2014 in respect of Notification No. 22/2014 CE dated 12.12.2014 and on the late evening of 02.12.2014 in respect of Notification No. 24/2012-CE dated 02.12.2014. Therefore, both the Notification will be effective from its publication and refund on this ground is admissible to the Appellant. Principles of unjust enrichment - HELD THAT:- The ld. Commissioner (Appeals) in impugned order as regard the issue of unjust enrichment held that once the issue on merits is decided against the appellant there is no requirement of going into the aspect of unjust enrichment - Thus this issue has not been considered. Since in the present matter issue of unjust enrichment not properly considered by the Ld. Commissioner (Appeals), the matter needs to be remanded to the adjudicating authority for passing a fresh order only in respect of unjust enrichment - appeal allowed by way of remand.

  ---

• Indian Laws

• 2022 (11) TMI 1086
  Appointment of arbitrator - Novation of share purchase agreement - Non-existence of arbitration clause no longer existed so as to resolve the dispute between the parties through arbitration - Tripartite Agreement - HELD THAT:- The High Court was not right in dismissing the petition under Section 11(6) of the Act of 1996 filed by the appellant herein by giving a finding on novation of the Share Purchase Agreement between the parties as the said aspect would have a bearing on the merits of the controversy between the parties. Therefore, it must be left to the Arbitrator to decide on the said issue also. Hence, the impugned judgment and order passed by the High Court has to be set aside. Application allowed.

  ---

• 2022 (11) TMI 1085
  Dishonor of Cheque - existence of legally enforceable debt or not - vicarious liability of Directors - rebuttal of presumption or not - directors were incharge of or responsible for the conduct of business of the accused company in the year 2020 or not - Section 138 and 141 of NI Act, 1881 - HELD THAT:- The settled position of law is that the signatory of a cheque which is dishonoured, is responsible for the act and will be covered under sub-section (2) of Section 141. Therefore, no special averments would be necessary to make him liable. A perusal of the complaint in the present case, however, reveals that specific averments have even been made against the petitioners i.e. accused no. 4 and 5 and their specific role has been highlighted by the complainant bank/respondent. In the case at hand, firstly, neither the signatures of the petitioners on the cheques nor the liability for which the cheques were issued has been denied. In such a case, the presumption under Section 139 of NI Act, 1881 would certainly arise in favour of the holder of the cheque i.e., the respondent bank/complainant - Three-judge bench of Hon ble Supreme Court in M/S. KALAMANI TEX ANR VERSUS P. BALASUBRAMANIAN [ 2021 (2) TMI 505 - SUPREME COURT ] held that if the signatures on the cheque are admitted, presumption under Section 139 NI Act, 1881 would be attracted. The primary dispute in the present case pertains to the question as to whether the cheques issued by the petitioners on behalf of the accused company on 23.12.2016 were undated or not, and whether the signatories to the cheques i.e. the petitioners were a part of the accused company at the time of commission of offence or not - this Court is of the opinion that the issue as to whether the petitioners had resigned before the presentation of cheques or not is a disputed question of facts and has to be decided on the basis of relevant documents and evidence to be produced at the stage of trial. This is not a case involving a resignation of a director which can be simply verified by this Court by perusing Form 32 issued by Registrar of Companies. The petitioners herein were admittedly the employees in the holding company of accused no. 1 and were its authorised signatories at the time when the credit facility was obtained from the respondent bank. It is also not the case of petitioners that they had informed the respondent about their resignations, rather, they had merely asked the accused company to do the same. Nothing is placed on record to show that the respondent bank was informed by the accused company about the resignations of the authorised signatories to cheques issued to it, before the same were presented for encashment - if the plea of petitioners is accepted that since they were not a part of the accused company at the time when cheques signed by them were dishonoured, it would in fact, amount to snatching away the right of respondent bank to examine the signatories of the cheques before the learned Trial Court. In such a situation, it would be prudent and appropriate to permit the respondent bank to lead evidence in support of its claim, and dropping the proceedings against both the signatories of the cheques, at the very initial stage, would amount to throttling the trial. Petition dismissed.

  ---

• 2022 (11) TMI 1084
  Dishonor of Cheque - harasement by non-payment of rent - Grant of benefit of probation - section 138 of Negotiable Instruments, Act, 1881 - HELD THAT:- It emerges that the petitioner who is the original complainant under Section 138 of NI Act, 1888 is only aggrieved by the fact that instead of upholding the order on sentence, also while upholding the order on conviction, the Appellate Court had shown undue leniency in the present case and the benefit of probation could not have been extended to respondent no 2 as he had harassed him by non-payment of rent. Release of respondent no. 2 on probation - HELD THAT:- There is no bar in extending the said benefit in a case under section 138 of Negotiable Instruments, Act, 1881. There is no reason in the present case to deny the benefit of Section 4 of the Probation of Offenders Act, 1958 or Section 360 Cr.P.C. to the respondent no. 2. The learned Appellate Court did not commit error in holding that respondent no. 2 had no criminal antecedents. The conduct of the respondent no. 2 in the present case was duly taken into consideration by the learned Appellate Court and accordingly conditions were imposed for availing the benefit of probation. As per the impugned order, respondent no. 2 was directed to pay compensation to the petitioner to a sum of Rs. 80,000/-. which has been duly paid. The period of probation as per impugned judgment dated 14.03.2018 has already been undergone by respondent no. 2 and during the said period, no report had been submitted by Probation Officer to show that there was any violation of the conditions which were imposed upon respondent no. 2 by the Appellate Court - there is no infirmity or perversity in the findings of the learned Appellate Court while extending the benefit of probation to respondent no. 2, and thus, need no interference. Petition dismissed.

  ---

• 2022 (11) TMI 1083
  Dishonor of Cheque - failure to file a cheque return memo before the trial Court - whether on the basis of cheque return memo the summoning order cannot be passed? - HELD THAT:- The section 138 of the NI Act does not mandate any particular form of cheque return memo which is nothing but a mere information given by the Banker of the due holder of a cheque that the cheque has been returned as unpaid. If the cheque return memo is not bearing any official stamp of the bank, it does not render the cheque return memo as invalid or illegal. The cheque return memo is not a document which is not required to be covered under section 4 of the Bankers Book (Evidence) Act, 1891. If there is any infirmity in the cheque return memo, it does not render entire trial under section 138 of the NI Act as nullity. The perusal of the alleged cheque return memo which is under challenge reflects that the cheque bearing no. 000192 dated 15.04.2019 amounting to Rs.47,53,519/- could not be encashed due to the account blocked . If it is presumed that there is any irregularity or illegality in the format of the said cheque return memo then it can be addressed during the course of trial. The petitioner has not disputed the issuance of cheque under his signature and the dishonour of the cheque by the concerned Banker. There is no infirmity or illegality in the impugned order. The concerned Court has not committed any illegality while relying on the said cheque return memo dated 04.07.2019 before issuance of the summons against the accused no. 1 to 3 which also includes the petitioner as accused no. 2. The decision delivered by the Himachal Pradesh High Court does not provide any help to the petitioner. Petition dismissed.

  ---

• 2022 (11) TMI 1082
  Dishonor of Cheque - rebuttal of presumption - preponderance of probabilities - contention raised by the accused before the trial court was that the company was under liquidation and therefore, the criminal prosecution would not attract - section 138 of NI Act - HELD THAT:- The power of revision available to this Court is not wide enough to appreciate or re-appreciate the evidence to have a contra finding. It is the settled law that power of revision available to this Court under Section 401 of Cr.P.C. r/w. Section 397 is not wide and exhaustive to re-appreciate the evidence to have a contra finding - In decision of SANJAYSINH RAMRAO CHAVAN VERSUS DATTATRAY GULABRAO PHALKE AND OTHERS [ 2015 (1) TMI 1332 - SUPREME COURT ], the Apex Court held that the High Court in exercise of revisional jurisdiction shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. The trial court as well as the appellate court found that the complainant discharged his initial burden in proving the transaction led to execution of Ext. P1 cheque and thereby, twin statutory presumptions embodied under Sections 118 and 139 of the NI Act would go in favour of the complainant. Law regarding presumptions is also settled as well - the law is clear on the point that when the complainant discharges the initial burden to prove the transaction led to execution of the cheque, the presumption under Sections 118 and 139 of the N.I. Act would come into play. No doubt, these presumptions are rebuttable and it is the duty of the accused to rebut the presumptions and the standard of proof of rebuttal is nothing but preponderance of probabilities. Thus, it has to be held that conviction as well as the sentence imposed by the trial court as well as the appellate court do not require any interference and therefore, this revision must fail - this revision petition fails and it is, accordingly, dismissed.

  ---