Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 28, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Notifications
Highlights / Catch Notes
GST
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Refund of GST (amount paid twice) - tax paid in respect of arecanuts that were being transported without a valid E-Way Bill - Undisputedly, the tax penalty and fine quantified in GST MOV-10 dated 28.02.2022, cannot be collected twice over. The respondent authorities are, thus, required to refund the same. - Application permitted to be filed manually - HC
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Seeking review of assessment order - Input Tax Credit - Even though statutory notices were issued to the appellant, she did not respond - When a show cause notice is not contested, the resultant order passed assumes the nature of an agreed order and a rectification application will not lie to correct a factual mistake therein. - HC
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Validity of SCN - In the present case, the petitioner has not been deprived from availing the input tax credit as of now, but the show cause notice has been issued granting opportunity. So, at this stage, it cannot be said that as a consequence of not submitting Form GST ITC-02 electronically, the petitioner has been deprived of the claim of input tax credit. - Petitioner to approach GST authorities - Writ petition dismissed - HC
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Exemption from GST - activity of affiliation - Entry 66 to Notification No.12/2017 (as amended) is confined only to services relating to admission to, or conduct of examination by educational institution and not to services relating to affiliation of constituent colleges. - HC
Income Tax
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Nature of expenses - Taking computers and vehicles taken on lease - deduction of payment of principal amount as revenue expenditure - financial lease or operational lease - Revenue or capital expenditure - AO directed to verify the details and decide the issue afresh - AT
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Addition made by CIT(A) on a new source - CIT(A) power to make an enhancement /addition upon an issue which does not arise from the order of assessment - There is no force in the contention of Ld. DR that in any case the tax authorities were examining the source of investment in property, be that by way of investment or repayment of loans and that there was no change in the source of addition. - AT
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Computation of capital gain - Disallowance of Brokerage Payment paid in respect of sale of land - It was decided by the parties that complete payment would be paid within 3 years and thus thereafter the registered sale deed got executed on 22-06-2023 which is registered before the Registering Authority and thus the brokerage was paid by the assessee on completion of the job. - Thus no justification in the orders of the lower authorities to make disallowance as it is a mutual agreement between the purchaser and broker to get the deal done. - AT
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Revision u/s 263 enlarging scope of limited scrutiny - PCIT want to enlarge the scope of limited scrutiny for which power is not available with the PCIT u/s. 263 of the Act, - AT
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Accrual of Income in India - Dependent Agent - PE in India or not? - DR has not brought on any material to show that RGA Services has utilized its assets or assumed any risk in this line of reinsurance business. Merely because its whole functions are depend on the services which will be utilized by the Foreign principal does not make it as an dependent agent. - AT
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Denial of Set off brought forward losses by applying provisions of section 79 - Change in share holding pattern between both the shareholders - the view expressed by the tax authorities that the change in individual shareholding of the shareholders would also attract provision of section 79 is not correct - set off allowed - AT
Customs
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Valuation - Rejection of Transaction value - Demand of differential Customs Duty - the reasons given for rejecting the transition value, is against the provisions of Section 14 of the Customs Act read with Rule 8 of the Valuation rules. - So far rejection of transaction value is concerned, it is held that for the excess lumps the same were to be charged at 10% ad-valorem, and not 15% ad-valorem. - AT
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Levy of penalty - delay of 5-6 days in filing of EGM from the date of sailing of the ships - the Appellant has raised various procedural and practical issues and challenges faced, including difficulty of filing the EGM in ICE GATE, but still has not given consideration for the same. - No penalty - AT
IBC
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Approval of Resolution Plan - extinguishment of security interest and the guarantees - Resolution Plan in question has consciously dealt with securities and personal guarantees given to the Financial Creditors including the dissenting Financial Creditors and the said clauses of the Resolution Plan do not contravene any provisions of Section 30, sub-section (2) as well as CIRP Regulations, 2016. The view of the Adjudicating Authority that Resolution Plan is contrary to provisions of Section 30, sub-section (2) is unsustainable and deserved to be set-aside. - Plan approved - AT
Case Laws:
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GST
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2023 (11) TMI 1063
Suspension of registration of petitioner - no opinion recorded as stipulated under Rule 21A (2) of the CGST Rules, 2017 - principles of natural justice - HELD THAT:- As the petitioner has already submitted his reply to the show cause notice dated 12.10.2023, it would serve no purpose to keep the petition pending and therefore, the petition is disposed of with a direction to the respondent no.3, Assistant Commissioner/Superintendent Range-34, Division Hapaur, Commissionerate Noida to complete the proceedings instituted through show cause notice dated 12.10.2023 within three weeks from today and till the proceedings under Section 29 of CGST Act, 2017 are completed by the respondent no.3, the suspension of the registration of the petitioner as noted in the order dated 12.10.2023 shall remain stayed. Petition disposed off.
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2023 (11) TMI 1062
Levy of IGST - supplies received from its holding company - secondment of employees - Reverse Charge Mechanism - HELD THAT:- Prima facie, salaries paid to employees, even though seconded by a foreign affiliate, in terms of the employment agreements with the respective employees, absent anything more, cannot be considered as payment for manpower services supplied by the foreign affiliate. List on 10.01.2024 - In the meanwhile, the proceedings pursuant to the impugned SCNs are stayed.
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2023 (11) TMI 1061
Refund of GST (amount paid twice) - tax paid in respect of arecanuts that were being transported without a valid E-Way Bill - HELD THAT:- The petitioner s grievance arises on account of his inability to file an application for refund online. It is stated that there is no option available in the portal for the petitioner to apply for a refund online - Undisputedly, the tax penalty and fine quantified in GST MOV-10 dated 28.02.2022, cannot be collected twice over. The respondent authorities are, thus, required to refund the same. It is considered apposite to dispose of the petition by permitting the petitioner to make an application for refund manually to Respondent No. 3 - petition disposed off.
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2023 (11) TMI 1060
Principles of natural justice - cancellation of GST registration of petitioner - cancellation without issuance of any SCN or without affording the petitioner, any opportunity to be heard - HELD THAT:- According to the petitioner, it did not receive the SCN. However, even if the respondent s contention is accepted that a SCN, a copy of which is handed over, was, issued to the petitioner, the same would be of little assistance to the respondent because the SCN does not mention any time or date for personal hearing. Thus, the petitioner was not afforded a hearing to contest the SCN. The impugned order cancelling the petitioner s registration is void as it has been passed in violation of the principles of natural justice - the impugned order is not informed by reason. It does not set out any ground for cancelling the petitioner s GST registration. Thus, said order cannot be sustained. It is considered apposite to direct that the petitioner s GST registration be restored forthwith. The petitioner shall also comply with the statutory provisions by filing the returns in accordance with law. Petition disposed off.
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2023 (11) TMI 1059
Seeking grant of bail - invocation of Section 438 of the Code of Criminal Procedure at the stage of summons - HELD THAT:- Admittedly, no steps were taken by the Department under Section 69 of the Central Goods and Services Tax Act, 2017, though the petitioner had been appearing over a period of time. The Honourable Supreme Court in THE STATE OF GUJARAT ETC. VERSUS CHOODAMANI PARMESHWARAN IYER ANR. ETC. [ 2023 (7) TMI 1008 - SUPREME COURT] held that at the stage of summons the person summoned cannot invoke Section 438 of the Code of Criminal Procedure. The Criminal Petition is disposed off.
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2023 (11) TMI 1058
Seeking review of assessment order - Input Tax Credit - Even though statutory notices were issued to the appellant, she did not respond - violation of principles of natural justice - HELD THAT:- What is sought by the appellant, in effect, is the review of the said assessment order. The appellant made no case for rectification. The rectification under section 161 of the GST Act is permissible only when there are errors apparent on the face of the record, in a situation where the show cause notice was contested, which is not the case here. When a show cause notice is not contested, the resultant order passed assumes the nature of an agreed order and a rectification application will not lie to correct a factual mistake therein. There are no merit in the appeal - appeal dismissed.
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2023 (11) TMI 1057
Validity of SCN - petitioner did not avail the opportunity of hearing - petitioner claimed ITC, but did not file GST-ITC 02 electronically as per Section 18 of CGST Act and Rule 41 of the CGST Rules 2017 - HELD THAT:- The question, if electronically filing in GST-ITC 02 could not be because of some technical error, non-availability on GST portal of such Form at the relevant point of time, is a question, which can be duly considered and decided if such plea is taken in the objections pursuant to the show cause notice, by the competent authority. Even if it could not be filed electronically for the reason as mentioned in the letter of the petitioner and also of TDN and manual filing could have been done or the petitioner could have waited for some period for availability of GST-ITC 02 Form on the portal, is also a question, which can be considered and decided by the competent authority. By the show cause notice, the petitioner has been afforded opportunity to file objections and also to file evidence - there are no reason at this stage of the issuance of show cause notice, particularly, when there is no challenge to the jurisdiction of the authority issuing the show cause notice, as also in the absence of any argument challenging the notice on such grounds, on which the judicial review may be open against the show cause notice, to entertain the writ petition. In SPECIAL DIRECTOR VERSUS MOHD. GHULAM GHOUSE [ 2004 (1) TMI 378 - SUPREME COURT] the Hon ble Apex Court deprecated the practice of High Courts entertaining writ petitions questioning the legality of show cause notices stalling enquiries as proposed and retarding investigative process. The Hon ble Apex Court held that unless the High Court is satisfied that the show cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, the writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. In the present case, APGST Act is also a complete code and consequently, the petitioner should respond to the show cause notice raising all such objections, as may be raised before the authority issuing the show cause notice and in case any adverse order is passed and the petitioner feels aggrieved, the petitioner may then have recourse to the appropriate proceedings. In M/S TIKONA INFINET PRIVATE LIMITED VERSUS STATE OF U.P. AND ANOTHER [ 2023 (8) TMI 46 - ALLAHABAD HIGH COURT] there was admitted position with respect to the non-availability of the Form GST ITC 02 in GST portal for the entire period of 30 days from the registration of the separate business of the entity therein and even on the date of filing of the writ petition. In the present case, such a position is not admitted, which the petitioner would be required to state and establish before the authority. In the present case, the petitioner has not been deprived from availing the input tax credit as of now, but the show cause notice has been issued granting opportunity. So, at this stage, it cannot be said that as a consequence of not submitting Form GST ITC-02 electronically, the petitioner has been deprived of the claim of input tax credit. The petitioner has the opportunity and on such opportunity on verification of such fact, the authority has yet to consider the petitioner s claim of input tax credit. Thus, the petitioner should approach the authority which has issued the show cause notice and file the objections with evidence, and if so desire, to avail the opportunity of personal hearing with due intimation to the authority concerned - petition dismissed.
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2023 (11) TMI 1056
Exemption from GST - activities carried by DISCOMS against recovery of charges from consumers under State Electricity Act - guarantee provided by State Government to state owned companies against guarantee commission - HELD THAT:- The petitioner was neither collecting nor depositing GST, in respect of the services in question, prior to the issuance of the impugned circular. However, notwithstanding that paragraph No. 4 of the circular was quashed by the Gujarat High Court, the petitioner has continued to collect GST from its consumers and deposit the same with the GST authorities. Resultantly, the consumers are now burdened with the liability to pay GST in respect of services, which according to the petitioner are exempt from the levy of GST - it is found difficult to accept that the petitioner could collect any GST from its consumers after paragraph 4 of the impugned circular had been set aside. It is considered apposite to defer the consideration of the present petition - List on 08.01.2024.
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2023 (11) TMI 1055
Seeking grant of Regular Bail - involvement in utilizing bogus Input Tax Credit (ITC) through fake documents - mala fide intention of not paying taxes - HELD THAT:- From the record it is apparent that the petitioner is in custody since 20.09.2022 i.e for the last more than one year. All the offences are triable by the Court of Magistrate and the conclusion of the trial may take quite a long time. Thus, the fact as to whether the FIR in the present case is maintainable or not, shall be adjudicated by the Trial Court during the course of trial. The petitioner is ordered to be released on bail subject to his furnishing bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Chief Judicial Magistrate - Petition allowed.
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2023 (11) TMI 1054
Validity of assessment order - against Ext.P1 assessment order, the petitioner has filed Ext.P2 appeal and Ext.P3 stay application - HELD THAT:- No decision has been taken on the stay application. Learned counsel also submitted that the appeal is on time. Learned counsel further submitted that pending consideration of the appeal and stay application, Ext.P4 demand notice has been issued. Considering the aforesaid facts, the present writ petition is disposed of with a direction to the 2 nd respondent to consider and pass orders on Ext.P3 stay application of the petitioner in accordance with law, within a period of one month. For a period of one month, Ext.P4 notice shall not be given effect.
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2023 (11) TMI 1053
Exemption from GST - activity of affiliation - two colleges affiliated to Bharathiyar University, Coimbatore - whether the services provided by it to its constituent colleges such as the petitioners viz., self-financing and Management Colleges, were exempted from GST vide Entry 66 of Notification No.12/2017-CT (Rate) dated 28.06.2017, or not - HELD THAT:- There is no ambiguity in the language in Entry b (iv) to Entry 66 to Notification No.12/2017 CT (Rate) dated 28.06.2017 as amended by Notification No.2/2018-CT dated 25.01.2018. Entry b (iv) to Entry 66 to Notification No.12/2017 CT (Rate) dated 28.06.2017 as amended by Notification No.2/2018-CT dated 25.01.2018 is applicable only for services relating to examination or conduct of examination by petitioner colleges in W.P.No.11038 of 2022 W.P.No.5967 of 2023 and not to work relating to affiliation. The Hon ble Supreme Court has repeatedly held that the operation of the notification has to be judged not by the object which the rule making authority had in mind but the express words it has employed effectuate the legislative intent. In UNION OF INDIA VERSUS WOOD PAPERS LTD. [ 1990 (4) TMI 55 - SUPREME COURT] , the Hon ble Supreme Court held that at the stage of applicability, the Notification has to be construed strictly and the ambit should not be widened or extended. It further held that only once that stage is crossed, the notification should be construed liberally that is other technicalities and procedural compliances should not come in the way of extending the benefit. The service of admission or conduct of examination cannot be equated on par with service provided to the petitioners in W.P.No.11038 of 2022 and W.P.No.5967 of 2023 by Bharathiar University. Similarly, service provided by the respective Universities are also exempted. By no stretch of imagination, there is any scope for drawing an inference that service provided by the Bharathiyar University or Pondicherry University or the Tamil Nadu Dr.MGR Medical University to their constituent colleges can be construed be exempted under Entry 9 to Notification No.12/2017-CT (Rate) dated 28.06.2017. It is therefore held that Entry (b) (iv) to Entry 66 to Notification No.12/2017 CT (Rate) dated 28.06.2017 as amended by Notification No.2/2018-CT dated 25.01.2018 is confined only to services relating to admission to, or conduct of examination by educational institution and not to services relating to affiliation of constituent colleges. Petition dismissed.
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2023 (11) TMI 1052
Seeking grant of bail - avalling and passing on of ineligible ITC on the strength of fake invoices issued without actual supply of goods - HELD THAT:- In the present matter, the tax liability above bailable offence of 5 Cr. is Rs. 38,81,443, the entities who supplied articles to the applicant are active on GST Portal but not verified by the department, there is no chance of accused fleeing from the country nor he is a habitual offender and applicant is no more required for custodial interrogation when the custodial interrogation of applicant was not sought by the department and applicant was sent to judicial custody directly on 14.10.2023, the offence falls within preview of Section 41 A CrPC having punishment of 5 years but no notice u/s 41 A CrPC has been given, therefore, in view of the abovesaid facts and circumstances, the present applicant Iftikar Malik is admitted to bail, on furnishing personal bond in the sum of Rs. 1,00,000/- with two sureties of like amount and subject to the satisfaction of Ld. MM/Ld. Link MM/Ld. Duty MM with the conditions imposed. Bail application disposed off.
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Income Tax
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2023 (11) TMI 1064
Accrual of income - income from sale of land - Deemed profit on transfer of WIP (i.e. land measuring 47.01 bigha) - assessee company is the only registered owner of the land which has been sold during the year and as per the statutory provisions of law, it is only the assessee company which is liable to show the said transaction in its books of accounts and compute the tax liability accordingly. Merely by entering into the private arrangement by virtue of agreement, substantive provisions of law cannot be forfeited - HELD THAT:- As decided in assessee own case [ 2021 (12) TMI 926 - ITAT DELHI ] appellant has reiterated that it has not sold any part of the land admeasuring 47.01 bighas which continued to be shown as WIP in the books of the appellant till the AY 2012-13. AO has evidently failed to bring on record any evidence in support of his contention that the appellant had actually sold land of 3600 sq. yards and received the consideration - Further, the AO has again made addition in the Assessment Year 2013-14 as mentioned above by considering the said land of 47.01 bighas as the stock held by the appellant. On the other hand, M/s Parsvnath Developers Ltd. has [confirmed that these sales are reflected in its books of account. In view of all the above facts, I find no material basis for the estimated addition made by the AO. Decided against revenue.
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2023 (11) TMI 1051
Assessment u/s 153A - incriminating documents or materials found and seized at the time of search or not? - As decided by HC [ 2022 (11) TMI 628 - DELHI HIGH COURT] where the assessment has attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made u/s 153A as the cases of the Respondents were of non-abated assessment. HELD THAT:- In view of the decision of this Court in the case of Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell P.Ltd. 2023 [ 2023 (4) TMI 1056 - SUPREME COURT ] wherein held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments - no case is made out for interference. SLP dismissed.
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2023 (11) TMI 1050
Nature of expenses - Taking computers and vehicles taken on lease - deduction of payment of principal amount as revenue expenditure - disallowing the principal portion of lease rentals paid towards vehicles and computers while computing the business income and treating the same as capital expenditure - registered ownership, insurance and usage of the leased assets are with whom? - HELD THAT:- We find the assessee in the instant case has paid lease rentals for certain assets i.e. vehicles and computers which were taken on lease and claimed the same as a revenue expenditure while computing the income under the head profit and gains from business or profession. AO held that the registered ownership, insurance and usage of the leased assets are with the assessee. Further, the assessee itself has reclassified the computers and vehicles from leased assets to owned assets as per the audited financial statement. He therefore, disallowed the lease rent claimed by the assessee and treated the same as capital expenditure. We find in appeal, CIT (A) NFAC held that the assessee is the owner of the leased vehicles and computers for the year under consideration. According to him, the registered ownership, insurance and usage of leased assets are with assessee. Therefore, the transaction was in nature of finance lease and not operating lease since the assessee has reclassified the leased assets to owned assets in its financial statement as well and is the real owner of the assets. CIT (A) NFAC however, directed the AO to allow interest portion of such lease rentals and allow depreciation on the leased assets after due verification. It is the submission of assessee that merely because the assessee is registered as owner under the Motor Vehicles Act cannot be treated as the legal owner as per the provisions of u/s 2(30) of Motor Vehicle Act 1988 and the same is a deeming provision that creates a legal fiction of ownership in favour of lessee only for the purpose of Motor Vehicles Act. It is also his submission that a perusal of the lease agreement, shows that the lessor is Orix and the assessee is merely the registered owner of the vehicle. We had directed the assessee to file the complete set of lease agreement along with the schedules there to so that the correct facts can be ascertained. Although the assessee has filed the lease agreements, however, the schedules are not enclosed. Since the assessee has not filed the schedules to the lease agreement despite the direction of the Bench and also has not filed the relevant documents pertaining to the purchase of leased assets in subsequent A.Ys, therefore, we are left with no option but to remand back the matter to the file of the AO with a direction to the assessee to file all the lease agreements along with the schedules before the AO. AO is directed to examine the lease agreements afresh and find out as to whether the leased assets are financial lease or operational lease. After ascertaining the above, AO is directed to apply the judgment of ICDS Ltd vs. CIT [ 2013 (1) TMI 344 - SUPREME COURT ] and decide the issue as per fact and law after affording reasonable opportunity of being heard to the assessee. We hold and direct accordingly. The appeal filed by the assessee is accordingly allowed for statistical purposes.
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2023 (11) TMI 1049
Addition made by CIT(A) on a new source - CIT(A) power to make an enhancement /addition upon an issue which does not arise from the order of assessment - Addition by the AO of undisclosed source of investment u/s 69 changed by CIT(A) to the addition u/s 68 - Addition of cash deposit in bank account used for repayment of the loan taken for purchase of property - As alleged initial addition was made under scrutiny assessment for the reason that the AO had examined large investment in property as compared to the total income and which was matter of dispute before the CIT(A) in the first round of litigation, wherein the Tribunal had directed to admit the additional evidence of the assessee and to decide the issue and that the ld.CIT(A) finding a new source of addition by making allegation that when an amount was returned to loan creditor there was cash deposit HED THAT:- CIT(A) being satisfied with the additional evidences filed establishing the genuine sources of investment in the hands of the assessee for purchase of property, travelled beyond the mandate of the Tribunal in the first round of litigation - CIT(A) was directed to adjudicate the appeal afresh after admitting the additional evidences of the assessee. Thus, the question restored to the files of the ld.CIT(A) was to examine if the additions made by the AO completing the assessment u/s 144 of the Act was not justified in the light of the evidences available with the assessee. Consequent to the filing of evidences, if the CIT(A) intended to examine the issue further, then, at one hand same was beyond mandate of Tribunal order restoring issue to CIT(A) and otherwise that certainly required putting the assessee to notice. However, CIT(A) failed to put the assessee on notice and questioned the source of cash deposits in the Axis Bank account and considered the same as unexplained cash credits in the books of account for the year under consideration. Thus, addition made by Ld. CIT(A) on a new source, in the form of source of sum credited in book of account is not sustainable. There is no force in the contention of Ld. DR that in any case the tax authorities were examining the source of investment in property, be that by way of investment or repayment of loans and that there was no change in the source of addition. We are of considered view that in the present case examining the investment in property from known source or disclosed income was a different exercise done by AO from the exercise done by CIT(A) in examining source of cash deposits in bank account . In former the issue was to examine the source as existed on the date of investment made and in later the issue was to examine the source on the date the sum was credited in the Books of Accounts. So for all reasons discussed above the assessee was supposed to be put to notice which CIT(A) failed. Assessee appeal allowed.
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2023 (11) TMI 1048
Computation of capital gain - Disallowance of Brokerage Payment paid in respect of sale of land - addition made on the ground that none of the person to whom brokerage payment had been claimed to have been made had signed at any place in the registered sale document or initial sale agreement - HELD THAT:- From the record, it is noted that the assessee had submitted the copy of ID Proof i.e. Aadhar Card showing name and address of the above 05 persons. It is also noted that the assessee had submitted the payment voucher and signed receipt of brokerage payment. The Bench feels that there is no requirement of getting signature or putting the name of signature of the broker which is not part and parcel of the agreement and it is nowhere indicated in the registry about the name of the broker. We also find that the assessee had entered into agreement of land on 25-03-2023 but claimed payment of brokerage on 22-06-2015. To this effect, the Bench noted arguments of the ld. AR of the assessee wherein he prayed that the brokerage is paid only after complete receipt of sales consideration or after the date of registry. In this case, it is noted that the sale agreement was entered on 25-03- 2013 (PB No. 43-47) on receipt of payment advance of Rs. 5.00 lacs. However it was decided by the parties that complete payment would be paid within 3 years and thus thereafter the registered sale deed got executed on 22-06-2023 which is registered before the Registering Authority and thus the brokerage was paid by the assessee on completion of the job. Thus no justification in the orders of the lower authorities to make disallowance as it is a mutual agreement between the purchaser and broker to get the deal done. It is also noteworthy to mention from the affidavit of the assessee Shri Ashok Singh that he had paid brokerage in cash to the above mentioned five persons. Hence, taking into consideration the facts and circumstances of the case, the brokerage amount is allowed.
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2023 (11) TMI 1047
Unexplained investment u/s. 69B - evidence gathered during the course of search and post-search investigation coupled with statements recorded from Directors of the seller company shows that the appellant company had paid additional consideration on or before the registration of the property - HELD THAT:- As observations of the AO in light of date of sale deed executed by the parties and subsequent statement of Director of vendor company cannot proceed on the premises of justifying the Revenue s attempt in asking for source for the additional consideration paid. It is common in many cases that property has been registered by accepting part consideration and remaining consideration has been paid in installments, after the date of registration and it all depending upon the arrangements between the parties and other issues like disputes, if any on the properties. It is an exceptional case whereby dispute relating to the subject property is resolved only after registration of the documents including the payment of additional consideration. Therefore, from the combined reading of all the answers given in the sworn statement of the Director of the appellant company, it is abundantly clear that said additional consideration has been paid and being accounted in the assessment year 2013-14. Shortfall for the source for payment of additional consideration is already offered for taxation in the assessment year 2013-14, in the hands, Director of the appellant company. Therefore, in our considered view, the reasons given by the Assessing Officer to allege that the arguments of the appellant with regard to substantiate payment to the vendor company, in light of affidavit and confirmation letter from the Director of the vendor company is an afterthought is devoid of merits and thus, rejected. AO has made additions solely on the basis of statement of Directors of the seller company, but fact remains that said statement cannot be relied upon for the simple reason of non-furnishing of the full version before passing of the re-assessment order. There is no iota of any evidence with regard to details of payments, even though he had admitted that additional consideration of Rs. 12 crores has been received for sale of property. The offer of the additional consideration received by the seller in the income tax returns filed for the assessment year 2008-09, by virtue of provisions governing computation of capital gains would not alter the recognition of payments by the appellant during the assessment year 2013-14 in the hands of appellant company, especially when amounts were paid to resolve dispute, which was pending after the execution of sale deed and also stated on oath in the statement which should be considered as sacrosanct. Reporting of additional consideration by the seller either as capital gains or as other income because of the search conducted in the month of March 2012 in the assessment year 2008-09, so as to justify and to link the additional consideration to the sale deed executed for several reasons to come out from the rigors of the Income Tax Act. Presumption of disputed sum being paid during the assessment year under consideration is wholly unjustified especially in view of the settlement of dispute in the subsequent assessment years. Assessing Officer should not have read the statement recorder in isolation and combined reading of the statement and facts emerging there from would establish the fact that the transactions is completed only in the assessment year 2013-14 and the appellant has established the source for balance consideration - CIT(A), without appreciating relevant facts simply sustained additions made by the AO. Thus, we set aside the order passed by the ld. CIT(A) and direct the Assessing Officer to delete additions made towards additional consideration paid for purchase of property as unexplained investment u/s. 69B of the Act. Decided in favour of assessee.
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2023 (11) TMI 1046
Revision u/s 263 enlarging scope of limited scrutiny - assessee case was selected for scrutiny assessment under limited scrutiny category - as per CIT assessee has paid rent of shop and godown but not deducted TDS u/s. 194I, assessee has claimed payment of interest in the profit loss account and deducted TDS u/s. 194A of the Act and hence, due to short deduction or no deduction of TDS, 30% of these expenses need to be disallowed by invoking the provisions of section 40(a)(ia) and there is delayed remittance of employees contribution of EPF - assessee s case was selected for limited scrutiny under CASS for High value cash withdrawals during the year reported and Large value cash deposit during demonetization period. HELD THAT:- Assessee s case was selected for scrutiny for verification of high value cash withdrawals and large value of cash deposits made during demonetization period. Apart from this, the AO was not authorized to look into any other issue. Even though on merits, the assessee has a case on each of the proposed disallowance by PCIT in his revision order passed u/s. 263 of the Act. Thus PCIT want to enlarge the scope of limited scrutiny for which power is not available with the PCIT u/s. 263 of the Act, for the reasons stated in Co-ordinate Bench decision in the case of Duckwoo Autoind Pvt [ 2023 (1) TMI 361 - ITAT CHENNAI ] Appeal filed by the assessee is allowed.
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2023 (11) TMI 1045
Accrual of Income in India - Dependent Agent - PE in India or not? - Taxation of global income - reinsurance business - assumption of risk - business connection in India as per the provisions of section 9(1)(1) - whether assessee earning income from India on a regular and continuous basis? - assessee is a company incorporated in Ireland - as a part of RGA Group and undertakes reinsurance business with insurers globally including India HELD THAT:- DR harping on the functions performed by the RGA Services which may be integral part of the reinsurance business wherein the reinsurer may analyse various functions before or after taking reinsurance business which may include claim support, actuarial services, administration and other support services and settlement services which may be part and parcel of the whole insurance business. DR is of the view that the RGA Services not only provides services but also shares the assets and risk which were not being considering in the TP analyses. We are finding it difficult on this line of argument that the main functions of a reinsurance business is assuming the risk which the main insurer transfers. The whole object of assuming risk is the main business of the reinsurer. From the record we observe that RGA Services offers all sorts of functions and services relating to execution of the reinsurances processes without assuming any risk. Even the tax authorities including Ld. DR has not brought on record any material to show that RGA Services has assumed any risk or invested any assets in executing the reinsurance functions. RGA Services does not have any license from IRDAI to undertake reinsurance business or even to act as a reinsurance broker. It shows that RGA Services can never be allowed to function as a reinsurer or broker in India. It could only offer various functions in the line of reinsurance business. What is relevant to be an agent is the agent should be in a position to replace the principle in executing any contract and should be having the similar level playing role or rights in execution of such contracts, the issue of dependent or independent is different aspect of analysis. First, the other person is eligible to function as an agent or not as a broker, in the given case RGA Services does not have any recognition in India to conclude any contract in line of reinsurance. Therefore, it can never be allowed to act as an agent in India, not even assume or conclude contract on behalf of the principal i.e., the assessee. DR has not brought on any material to show that RGA Services has utilized its assets or assumed any risk in this line of reinsurance business. Merely because its whole functions are depend on the services which will be utilized by the Foreign principal does not make it as an dependent agent. RGA Services have performed various function in line of reinsurance business. However, has not taken any risk or invested any assets other than executing the various functions in line of reinsurance of which they were properly compensated by the assessee and transfer pricing assessment has accepted that position. RGA Services is not capable to act as an agent considering the fact they do not have the licence to function as a reinsurance or broker from the IRDAI and also the reinsurance agreements were signed outside India. The provisions of DAPE does not apply to the present case. The various arguments made by the Ld. DR fails in this case, considering the fact that nowhere it is brought on record to show that RGA Services has invested any assets or assumed any risk. Therefore, we are inclined to reject the various submissions made by Ld. DR and allow the grounds raised by the assessee.
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2023 (11) TMI 1044
Unexplained investment u/s. 69 - addition was made on the basis of seized material found during the course of search action on the assessee - loose sheet, inter-alia, contain Balance Sheet - As per AO assessee has not furnished the details of creditors, such as names, addresses, PANs, I.T. particulars, confirmation letters of the creditors, mode of receipt of the amounts, creditworthiness of the creditors in respect of the credit nor the basis for capital balance - CIT(A) deleted addition - HELD THAT:- As on the date of search, certain loose sheets were found which contained date wise Balance Sheet of the assessee. The assessee has not maintained any regular books of accounts and dealing as a trader of foreign currency. The loose sheet, inter-alia, contain Balance Sheet as on 03-05-2016. However, Balance Sheet as on 11-05-2016 i.e., a day prior to date of search was also available on record which has totally been ignored by Ld. AO. It could be seen that the Balance Sheet is prepared day wise considering the transaction of the each of the day. Therefore, the most relevant Balance Sheet, in our considered opinion, would be the Balance Sheet as available on latest date i.e., on 11-05-2016. CIT-DR has argued that there is not substantial difference in the Balance Sheet. Even if the said argument is accepted, we find that AO is only accepting a part of the Balance Sheet and putting onus on assessee to substantiate the other part of the Balance Sheet. The liability side of the Balance Sheet contains the capital account of the assessee and details of sundry creditors which constitute source of sundry debtors, stock and cash in hand. A presumption would arise that the documents belong to the assessee and the entries made therein are correct and true. Therefore, the assessee could not be obligated to substantiate only one part of the Balance Sheet while accepting the other part of the Balance Sheet which is favorable to the department. The approach of Ld. AO, in this regard, is clearly erroneous and the same could not be held to be justified. We concur with the aforesaid adjudication of Ld. CIT(A) in the impugned order. Considering the Balance Sheet as a whole, the impugned addition is not sustainable in law. Also we find that the adjudication of CIT(A) is based on appreciation of correct factual matrix. The latest Balance Sheet as seized by the department has been compared with the Balance Sheet prepared till the date of search and discrepancy in the capital account has already been added to the income of the assessee. The estimated income for post search period has also been added. Therefore, whatever addition was required to be made, has already been made in the impugned order. Nothing more is required to be added. Decided against revenue.
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2023 (11) TMI 1043
Addition towards cash found and seized during the course of search - assessee explained that it is out of past savings from salary income - CIT(A) deleted the addition - HELD THAT:- The assessee being a highly paid employee, the possibility of keeping cash to the extent of Rs. 1,32,340/- out of his declared income cannot be ruled out. Therefore, we cannot find fault with reasons given by the ld. CIT(A) to delete additions made towards cash found to the extent of Rs. 1,32,340/-. As regards balance amount As per the explanation furnished by the assessee, Smt. Padmavathamma kept a sum of Rs. 5 lakhs with the appellant for safe keeping of the money as she was proceeding to USA. This fact has been confirmed by Smt. Padmavathamma, through e-mail. AO never disputed these facts. Therefore, once the Assessing Officer not disputed the fact that a sum of Rs. 5 lakhs belongs to Smt. Padmavathamma and she had admitted to have given cash to the appellant, the AO ought to have verified the admission of third party by exercising power provided under the Act. Since, the AO does not believed the claim of the assessee, in our considered view, he cannot make addition only on the basis of admission in the statement recorded u/s. 132(4) of the Act and therefore, we are of the considered view there is no error in the reasons given by the ld. CIT(A) to delete additions made towards cash found and seized during the course of search. Unexplained jewellery u/s 69B - assessee has declared jewellery in wealth tax returns filed for relevant assessment years and there is an excess jewellery - HELD THAT:- As in the present case, no such exercise was carried out by the Department. Further, during the course of assessment proceedings, the assessee has filed details of jewellery belongs to his wife and other family members and also reconciled jewellery found during the course of search with wealth tax returns filed by his wife Smt. B. Kusuma kala, for assessment year 2012-13. As per the details filed by the assessee, the family members of the appellant including his married daughter and un-married daughter are having jewellery within the limit specified by the CBDT for the purpose of seizure during the course of search. Further, if you consider the jewellery owned by other family members, then there is no excess jewellery as quantified by the Department during the course of search. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards unexplained investment in jewellery - Thus, we are inclined to uphold the findings of the ld. CIT(A) and reject grounds taken by the revenue. Undisclosed income on the basis of statement recorded u/s. 132(4) - HELD THAT:- It is a well established principle of law from the decision of Kashmira Singh [ 1952 (3) TMI 37 - SUPREME COURT] where it has been clearly held that, the admission should not be the foundation of assessment, instead, independent evidence should form the basis of assessment, while admission supplements it. The CBDT has very clearly emphasized the need to focus on gathering evidences during the course of search/survey, rather than obtaining admission. Also in the case of Pullangode Rubber Produce Co Ltd vs State of Kerala [ 1971 (9) TMI 64 - SUPREME COURT] held that although admission is an extremely important piece of evidence, but it cannot be said that it is conclusive. Thus admission in a statement u/s. 132(4) of the Act, cannot be taken as conclusive evidences unless said admission is supported by evidence. In the present case, from the statement recorded from the assessee, we find that the Department has taken a confession statement from the assessee towards undisclosed income, without there being any material found during the course of search, which satisfies undisclosed income in any kind of asset or investment. CIT(A), after considering relevant submissions of the assessee and also taking note of various facts has rightly deleted additions made by the Assessing Officer towards undisclosed income, on the basis of admission in the statement recorded u/s. 132(4) of the Act. Thus, we are inclined to uphold the findings of the ld. CIT(A) and reject grounds taken by the revenue. Validity of assessment order passed by AO u/s. 143(3) r.w.s. 153(1)(b) - HELD THAT:- It was the categorical findings of the ld. CIT(A) that, although the Assessing Officer referred to notice u/s. 153A in Para 3 of assessment order, but no such notice was issued to the assessee as per assessment records. It was further observed that, the AO inadvertently mentioned in the assessment order that notice u/s. 153A of the Act was issued instead of notice u/s. 142(1) of the Act. In our considered view, the observation of the AO in para 3 of assessment order appears to be typographical error in so far as the pre-assessment notice issued for taking up the case for scrutiny assessment. Therefore, we are of the considered view that, when the substantive issue of assessment is subject matter of search operation conducted u/s. 132 of the Act and also the impugned assessment year is the year of search, which falls outside the scope of provisions of section 153A /153C of the Act, in our considered view, the question of issue of notice u/s. 153A of the Act does not arise. Thus when the assessment records clearly shows that no such notice was issued u/s. 153A, then mere reference to section in the assessment order does not nullify the whole assessment proceedings. Therefore, we are of the considered view that, there is no merit in the ground taken by the assessee challenging the validity of assessment order.
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2023 (11) TMI 1042
Disallowance of brought forward losses adjusted against the income - Change in shareholding of the company - AO relied upon the assessment order pertaining to the AY 2012-13, wherein addition u/s 79 of the Act was made and carry forward losses were disallowed - assessee filled appeal against that order for AY 2012-13 - HELD THAT:- As both the authorities below decided the issue qua brought forward losses, on the basis of assessment order passed for the AY 2012-13, which has been reversed by the Hon ble Coordinate bench of the Tribunal [ 2023 (7) TMI 1325 - ITAT MUMBAI] for A.Y. 2012-13, 2014-15 allowed the brought forward losses and the Hon ble Bench has allowed set off of brought forward losses by holding that change in individual shareholding of the shareholders would also not attract the provisions of section 79 of the Act and therefore will not be applicable in the facts of the present case. Hence respectfully following the said decision above we are inclined to allow the claim of the Assessee qua setting off of the brought forward losses, consequently the same is allowed.
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2023 (11) TMI 1041
Unexplained cash credits - undisclosed sources u/s 68 - as per DR only a few persons provided fund to the assessee company in the form of share application money and unsecured loans and most of them stated that their source of investment is from sale of shares - CIT(A) gave a clear findings that the AO has not made out any case as to how once the details and submission have been furnished by the assessee and even after enquiries made by the AO, when no adverse remark was made how there could be a justification of making addition u/s 68 - HELD THAT:- CIT(A) while granting relief to the assessee has relied on the various judgments of Hon'ble Supreme Court and jurisdictional Delhi High court which supports the conclusion drawn by the ld first appellate authority. CIT(A) also considered the allegation made in the tax evasion petition and noted that the despite the information of TEP the AO has not brought any adverse material on record, no addition can be made on general apprehensions or surmises. CIT(A) finally relying on the proposition rendered in the case of CIT Vs. Lovely Exports [ 2008 (1) TMI 575 - SC ORDER] concluded that no adverse finding other than baseless observation given by the AO and also that this is not a case relating to entry operators and the ld CIT(A) has recorded categorical finding that all the parties are regularly assessed to tax and intimation have also sent to various AO to take necessary follow up action. CIT(A) finally concluded the details in the remand report as well as various documents filed by the assessee have clearly established that the onus cast upon the appellant with regard to establishing identity, capacity and creditworthiness of contributor/ investor of share application amount has been discharged. Thus, we are unable to see any ambiguity, perverse to any valid finding recorded by the ld CIT(A) that the onus discharged by the appellant with regard to share application amount and no specific adverse information or evidence has been brought on record by the AO to justify the addition u/s 68 of the Act. Accordingly, we hold that the findings of the ld CIT(A) are quite correct and justified based on sustainable self-speaking documentary evidence which requires no interference by this bench. Accordingly, ground No. 1 of the revenue is dismissed. Unsecured loan unexplained credit from undisclosed source u/s 68 - CIT(A) deleted the addition by observing that the evidence and circumstances under which the unsecured loan have been taken and the AO did not controvert the various evidence of facts brought on record, there is no justification to sustain the addition made by the AO u/s 68 - HELD THAT:- It is pertinent to mention that on being asked by the bench the ld Sr. DR did not controvert the factual position noted by the ld CIT(A) that the amount of Rs. 31 lakhs was repaid during the same financial period to the respective loan creditor i.e. M/s. Abhinav Leasing and Finance Ltd. Thus we are unable to see any valid reason to interfere with the findings arrived and recorded by the ld CIT(A) and thus we uphold the same. Estimation of business income - CIT(A) restricting the estimated business income as below the returned income - HELD THAT:- As returned income of assessee was Rs. 1,92,270/- and the AO estimated business income from operations Rs. 2,31,200/- above the returned income by considering the net profit @10% on the total turnover/ receipt of the assessee. It is well accepted principle of tax jurisprudence that the returned income cannot be reduced by allowing claims or deduction to the AO. From the relevant part of the first appellate order we note that the ld CIT(A) despite noting that the assessee could not establish that the expenses have been properly vouched and restricted the addition from Rs. 2,31,200/- to Rs. 1 lakhs only without mentioning the valid justified reason and basis therefore, the findings of ld CIT(A) in this regard being un-sustainable are reversed restoring the addition made by the AO. Decided in favour of revenue.
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Customs
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2023 (11) TMI 1040
Appointment of Arbitrator to adjudicate the dispute between the petitioner and the respondents - clause 26 of the e-bidding-cum-e-auction bidding process - Auction of unclaimed imported consignments on behalf of Customs department - HELD THAT:- Prima facie, the respondents are governed by the terms of Handling of Cargo in Customs Areas Regulations, 2009. In terms of Section 48 of the Customs Act, 1962, if any goods are brought into India from a place outside India and are not cleared for home consumption or warehoused or transhipped within thirty days from the date of the unloading thereof at a customs station or within such further time as the proper officer may allow or if the title to any imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer be sold by the person having the custody thereof. Thus, the first respondent has power to sell the uncleared goods. The procedure for disposal of unclaimed/uncleared goods/cargo under Section 48 of the Customs Act has been clarified by the Commissioner of Customs, Chennai by Public Notification bearing F.No.S.Misc.28/2018-UCC dated 10.12.2018 - Therefore, it is not open for the first respondent to say that the first respondent is not governed by the arbitration clause although it is foisted on the first respondent by virtue of the status of the first respondent as the Container Freight Station under the Customs Act, 1962. Petition disposed off.
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2023 (11) TMI 1039
Valuation of imported goods - undervaluation - Urea - Ammonia - Influence on import price due to the alleged relationship or not - relationship between OMIFCO (the exporter of the goods situated outside India) and KRIBHCO (importer in India/Appellant), exists or not - demand of differential duty with penalty - HELD THAT:- The issue is no longer res integra and the same has been adjudicated by the Coordinate Bench in the Appellant s own case INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED, KRISHAK BHARTI COOPERATIVE LIMITED VERSUS C.C. -KANDLA AND C.C (PRV.) , JAMNAGAR VERSUS INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED [ 2023 (1) TMI 155 - CESTAT AHMEDABAD] where it was held that The alleged relationship between the Appellants/ GOI and OMIFCO has not influenced the price of the imported goods. The impugned order set aside - appeal allowed.
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2023 (11) TMI 1038
Recovery of outstanding government dues - present respondent company has undergone the proceedings under insolvency and bankruptcy code - company has been taken over by some other company - HELD THAT:- It can be seen that all the government dues stand extinguished as per the resolution approved by the NCLT vide order dated 01.07.2022, therefore, there is no purpose even to proceed with the present appeals by the department. Accordingly, in our view, the Revenue s appeals became infructuous. The appeals are dismissed as infructuous.
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2023 (11) TMI 1037
Valuation - Rejection of Transaction value - Demand of differential Customs Duty - finalisation of assessment of shipping bill - whether the price adopted for finalisation at the rate of US$101.43 PDMT, instead of the contract value of the export goods is justified? HELD THAT:- The transaction value have been rejected mainly on the basis of some confusion arising from the BRC, which referred to 4 shipping bills for the total quantity of 30,000 WMT. Accordingly, there was difference noted by the Customs Officer with regard to the quantity exported. According to the said invoice No. 355/2009 10 dated 14.01.2010, total quantity exported was only 25,924 WMT. It is found that there is no basis except assumption and presumption for drawing adverse inference on this account - further there is no evidence that the Appellant have received anything extra, higher than the invoice amount, which is supported by the BRC - the reasons given for rejecting the transition value, is against the provisions of Section 14 of the Customs Act read with Rule 8 of the Valuation rules. So far rejection of transaction value is concerned, it is held that for the excess lumps the same were to be charged at 10% ad-valorem, and not 15% ad-valorem. The Court below is directed to re-calculate the duty payable in terms of this Order - Appeal allowed.
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2023 (11) TMI 1036
Absolute Confiscation with an option to re-export the goods within 45 days - levy of penalty - import of 42.410 MTs of goods declared as UBC aluminium - permission from the Ministry of Environment and Forests not obtained - HELD THAT:- From the grounds of appeal, It is seen that appellant is not denying that the goods in question were plastic waste only. They have not made any submission to the effect that they have obtained any permission to import the same. In fact they have made a request that since the goods in question cannot be re-exported, they should be allowed to destroy the material under such conditions and restrictions as may be imposed by the Customs Authorities in consultation with the Pollution Control laws as applicable in India. This request from their side shows that they were fully aware that the goods in question were plastic materials only, but still they had declared the same as UBC aluminum while filing their Bill of Entry. There are no reason to interfere with the said order passed by the Commissioner (Appeals) - appeal dismissed.
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2023 (11) TMI 1035
Levy of penalty - delay of 5-6 days in filing of EGM from the date of sailing of the ships - Delay in issue of issue / uploading of Sailing Reports by the Customs officers - reasonable cause for delay or not - Non-fulfilment of condition specified under Section 41 of the Customs Act 1962 - HELD THAT:- It is seen from the Order-in-Original and Order-in-Appeal that the Appellant has properly canvassed before both the authorities that the initial issue of Sailing Reports manually was delayed and subsequent delay in uploading the same in EDI system by the Department has resulted in the delay in filing of EGM by the Appellant. Both the authorities have not given any consideration nor have they brought in any other evidence to suggest that the Appellants submissions were not true. Much bigger issue was before the Chennai Tribunal in the case of Hyundai Merchant Marine India Pvt Ltd., Vs CC, EGM Cell. The Tribunal vide Final Order No. 41691-41697/2021 has noted that Section 41 was amended w.e.f. 01.08.2019. Prior to this date only the person in charge of a conveyance was liable to fulfil the condition. It is held that prior to this date since the words or any other person as may be specified by the Central Government by Notification was added only on 01.08.2019. Therefore the Shipping Line or agent or any other person cannot be made liable for nonfiling of the EGM on time prior to this date. In the present case, 4 shipping bills pertain to the period January 2019 to 13.06.2019. Therefore, in these 4 cases as per the said case law decided by Chennai Tribunal no penalty can be imposed. The Appellant has raised various procedural and practical issues and challenges faced, including difficulty of filing the EGM in ICE GATE, but still has not given consideration for the same. The delay of 5-6 days in filing the EGM by the Appellant has been properly explained by him - The impugned order set aside - appeal allowed.
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Insolvency & Bankruptcy
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2023 (11) TMI 1034
Approval of Resolution Plan - Plan providing for extinguishment of security interest and the guarantees of the Financial Creditors including dissenting Financial Creditors - payment, proposed to the dissenting Financial Creditors in the Resolution Plan - contrary to the provision of Section 30, sub-section (2) and the CIRP Regulations or not. Whether Resolution Plan providing for extinguishment of security interest and the guarantees of the Financial Creditors including dissenting Financial Creditors is contrary to the provision of Section 30, sub-section (2) and the CIRP Regulations? - HELD THAT:- The present is a case where CoC deliberated over the issue and on such deliberation and inputs, the Successful Resolution Applicant submitted revised Resolution Plan and the Resolution Plan dealt with security interest and the personal guarantee also - Resolution Plan in question has consciously dealt with securities and personal guarantees given to the Financial Creditors including the dissenting Financial Creditors and the said clauses of the Resolution Plan do not contravene any provisions of Section 30, sub-section (2) as well as CIRP Regulations, 2016. The view of the Adjudicating Authority that Resolution Plan is contrary to provisions of Section 30, sub-section (2) is unsustainable and deserved to be set-aside. Whether the payment, which have been proposed to the dissenting Financial Creditors in the Resolution Plan, is contrary to the provisions of Section 30, sub-section (2) and CIRP Regulations? - HELD THAT:- According to the scheme of the IBC, the payment to which a Financial Creditor, who does not vote in favour of the Resolution Plan is entitled for payment in accordance with sub-section (1) of Section 53, in the event of liquidation of the Corporate Debtor and further dissenting Financial Creditor has to be paid in priority to the Financial Creditors who vote in favour of such Resolution Plan. The submission advanced on behalf of learned Counsel for Respondent Nos.1 and 2 that dissenting Financial Creditors are entitled to upfront payment is not in line with the statutory scheme as contained in the IBC and the CIRP Regulations. There is no provision which can be pointed out, which requires Successful Resolution Applicant to make upfront payment to the dissenting Financial Creditors - The Successful Resolution Applicant having himself come out to make entire payment to the dissenting Financial Creditor within 90 days, it is opined that there can be no question of any contravention of provisions of IBC as well as CIRP Regulations with regard to payment to dissenting Financial Creditors. In the present case, it not the case of Respondent Nos.1 and 2 that they are not receiving the payment, which they could have been entitled under Section 53, sub-section (1). What have been contended is that payment to them is not in priority as compared to the payment to assenting Financial Creditors - it is found that payment as provided in Resolution Plan is in accordance with the priority to the dissenting Financial Creditors, hence, there are no substance in the above submission. The order impugned passed by the Adjudicating Authority is unsustainable and deserves to be set aside and the Application filed by RP deserves to be allowed - Application allowed.
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PMLA
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2023 (11) TMI 1033
Money Laundering - interpretation of statute - Certainty of the Special Designated Court to try the scheduled offence - provisions of Section 44(1)(c) of PMLA, 2002 - language of the statute mandatorily direct that the transfer of the case under the schedule offence to the Special Court is automatic or not - HELD THAT:- A conjoint reading of Section 44(1)(a), Section 44(1)(c) along with Explanations (i) to the Section 44(1) makes it abundantly clear that the legislative intention was that one and same Court would try both the offences and the Special Designated Court being vested with the Sessions power for dealing with offences under PMLA would try such offence. Further the subject matter of transactions being same along with the factual foundation and the outcome in trial of the Scheduled offence having an impact in respect of the offences relating to money laundering, a harmonious construction of the provisions would lead to one and only conclusion that the Special Designated Court for trying offences under PMLA would be the Court which would try the Scheduled offences in the factual circumstances of the present case. As such the order dated March 24, 2021 passed by the learned Metropolitan Magistrate, 4th Court, Calcutta, do not call for any interference and the said order is hereby affirmed. Application disposed off.
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Central Excise
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2023 (11) TMI 1032
Classification of goods - Chick drinker and Auto feeder manufactured by the appellant - classifiable under CETH 84361000 of Central Excise Tariff Act, 1985 as claimed by the appellant or whether to be classified under CETH 39269099 as held by the department? - it was held by Tribunal that the impugned goods merit classification under CETH 84361000, as adopted by the appellant. HELD THAT:- There are no merit in the appeal - appeal dismissed.
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2023 (11) TMI 1031
Recovery of credit of tax paid on input services - manufacturer of ball bearings - common use in undertaking of manufacturing activity as well as rendering of exempted service - Non-reversal in the manner prescribed in rule 6 of CENVAT Credit Rules, 2004 - mechanism to be adopted for neutralization owing to operation of rule 6(2) of CENVAT Credit Rules, 2004 - HELD THAT:- The issue lies in the narrow compass of applicability of rule 6(3) of CENVAT Credit Rules, 2004 insofar as the period prior to specific exclusion of trading activity is concerned. From the very beginning, eligibility for availment of CENVAT credit of tax paid on input service was set out to exclude such as used for undertaking exempt service which incorporates both taxable service subject to exemption and services on which no tax is leviable thereon. Though, trading came to be acknowledged within the framework of CENVAT Credit Rules, 2004 specifically with effect from April 2011, the Explanation incorporating such specifies had to be clarificatory in consequence; such services as are beyond the purview of Finance Act, 1994 such as has been held by the Tribunal, in M/S. ORION APPLIANCES LTD. VERSUS CST AHMEDABAD [ 2010 (5) TMI 85 - CESTAT, AHMEDABAD] , lies within exclusive powers of the State Government and is in conformity by the second limb of the definition. Accordingly, trading activity was always to be treated as having been exempt service within the meaning of rule 2(e) CENVAT Credit Rules, 2004. Consequently, credit availed thereof is to be disallowed to such extent insofar as input services were deployed in common on the activity of manufacturing of, as well as trading in, ball bearings. Mechanism to be adopted for neutralization owing to operation of rule 6(2) of CENVAT Credit Rules, 2004 - HELD THAT:- Rule 6(3) of CENVAT Credit Rules, 2004 affords neutralization authorized by law as is evident from the commencement with non obstante qualification. Even within the scheme of such reversal, alternatives are provided with the option of discharging payment through CENVAT credit account by such percentage of value of exempted service as is prescribed or by proportionate reversal. The appellant herein had undertaken proportionate reversal which is not in question and the only issue in contention is the correctness of proportion. While the impugned order has taken the value of manufacturing and value of trading as the factors for such delineation, it is the claim of the appellant that adoption of value of traded goods would distort the principle underlying CENVAT credit scheme. As the appellant had reversed the credit, and rule 14 of CENVAT Credit Rules, 2004 would come into play only when the reversal prescribed in rule 6(3) of CENVAT Credit Rules, 2004 had not been complied with by assessee, we see no reason for further proceedings except insofar as notice under rule 14 of CENVAT Credit Rules, 2004 and penalty under rule 15 CENVAT Credit Rules, 2004 is to be confined to non-adherence to the terms as set out. Appeal disposed off.
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2023 (11) TMI 1030
Principles of natural justice - order passed without participation of noticee - manufacturing of goods taking place or not - plant and machinery belonging to appellant or not - premises for carrying out impugned manufacturing activity are or were in his possession or not - relevancy on statements placed - corroborative evidences or not - HELD THAT:- The impugned order was passed without the participation of the noticee except to the limited extent of filing reply to the show cause notice. Undoubtedly, the appellant had been placed on notice of the dates of hearing despite which there is demonstrated non-participation by the appellant. The seizure had not been effected by the central excise officers. We also take note that, other than the statements of the appellant herein and few others, no effort had been made by the central excise authorities to link procurement of raw materials and channelizing of the finished product with the appellant herein. In the absence of such corroborative evidence, statements which may have, otherwise, supported circumstantial evidence are of no relevance. Furthermore, the statements themselves had not been subject to the test of section 9D of Central Excise Act, 1944 for deployment towards the findings in the proceedings. The evidence on which the duty liability, and penalties, have been fastened on the appellant herein, has not been established even by preponderance of probability owing to non-establishment of relevancy of statements, as set out in section 19 of Central Excise Act, 1944, the matter requires fresh appreciation - Appeal allowed by way of remand.
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2023 (11) TMI 1029
Clandestine removal without entering in the production records - mild steel (MS) ingots - Penalties under rule 26 of Central Excise Rules, 2000 and section 11AC of Central Excise Act, 1944 - recovery of differential duty under section 11A of Central Excise Act, 1944 along with interest thereon under section 11AB of Central Excise Act, 1944 - between September 2003 and July 2009. The case of the central excise authorities, in a nutshell, is that raw materials procured from the open market was utilized to enable unreported production which is evidenced by inflated consumption of electricity during the reported heat cycles preferring to take cover under inefficient performance per cycle. HELD THAT:- From an analysis of the facts, it would appear that correlation of certain factors concerned with production do not suffice for establishing the extent of evasion, if any; at best, these aspects may corroborate the allegation of clandestine removal of evasion of duties of central excise. Doubtlessly, evidencing of clandestine removal must rest upon preponderance of probability as direct evidence is rarely possible, but interferences must indicate both probability and preponderance. Normally, it should happen that goods that have reached the market are traced to the assessee through a backward trail or raw materials that originated from a source be traced through forward trail to assessee. Ideally, both should converge but, for the purpose of ordering clandestine removal, one or the other would suffice; that is the true spirit of preponderance of probability - In the present instance, there are no whiff of the former whereas of the latter, there is free floating evidence of procurement of sponge iron and BP sets by the assessee; nonetheless, the trail of investigation for linking delivery of alleged procurement of these raw materials and consumables at the premises of the assessee rests solely upon certain statements. Unless those statements are tested for acceptability, connecting of dots will hardly reveal the hidden picture. The witnesses relied upon by the central excise authorities are not acceptable evidence in the absence of cross-examination that was denied. The impugned order fails on that ground but, as the request for cross-examination had been rejected deliberately, availability or amenability to production for cross-examination is not in question. The impugned order set aside - matter remanded back to the original authority for fresh determination on the facts and evidences limiting reliance to such statements that have crossed the hurdle of relevancy prescribed in section 9D of Central Excise Act, 1944 - appeal allowed by way of remand.
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2023 (11) TMI 1028
Recovery of CENVAT Credit alongwith interest and penalty - procurement of items of iron and steel which were used for fabrication and erection and installation of plant - HELD THAT:- The issue of eligibility of products of iron and steel used for, or in relation to, manufacture of capital goods or for fixing of capital goods came to be excluded from availment of credit only with effect from 7th July 2009 and the present dispute pertains to the period prior to 19th August 2008. The original decision of the Tribunal in re Vandana Global Ltd [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] , confirming the retrospective application of the amendment, has since been discarded by the Hon'ble High Court of Chhattisgarh. Accordingly, the first appellate authority was correct in determining the eligibility for CENVAT credit on products of iron and steel. The decision of the Hon'ble Supreme Court in re Saraswati Sugar Mills [ 2011 (8) TMI 4 - SUPREME COURT] , cited by Learned Authorised Representative, would not apply to the facts relating to availment of CENVAT credit. Cenvat Credit on Dumpers used to provide services as annual maintenance contract for windmills - HELD THAT:- The original authority was not correct in determining the ineligibility for CENVAT credit on dumpers and supplies relating to. The sole ground for denial of credit on annual maintenance contract service is that these are not used directly in manufacture of excisable goods and that windmills themselves are not finished products liable to duties of central excise. There are no merit in the appeal of Revenue which is dismissed.
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2023 (11) TMI 1027
Classification of manufactured goods - Badam Milk Drink Ready to Drink - to be classified under 0401 11 as flavoured milk or under CETH 2202 9030? - HELD THAT:- It is found that with the introduction of 8-digit Classification Code, there is a specific entry for beverages containing milk, which was not there in the earlier Central Excise Tariff. Further Tarriff item 0401.11 flavoured milk whether sweetened or not put up in unit containers ordinarily is not anymore present under Chapter 04 after the introduction of 8 digit classification code. With the introduction of the 8 digit, since there is a specific classification for the impugned item under Chapter sub-heading 2202 9030 the same has to be classified under this specific heading in view of Rule 3(a) of the General Rules for the Interpretation of Central Excise Tariff, which says that a specific heading should be preferred for a generic heading. In this case, we find that the impugned item i.e. Badam Milk Drink Ready to Drink is containing flavourings namely badam powder, cardamom, saffron, Maltodextrin and garnished with badam flakes. Further it is found that this item has also undergone the process of homogenization and pasteurization and UHT treatment to increase the shelf life of the product. Such items, which are having a longer shelf life because of the above processes are not akin to normal pasteurized, homogenized and toned milk. It is found that the Board, while issuing Section 11C Notification No. 17/2008-CE (NT) has classified flavoured milk of animal origin under chapter sub-heading 2202 9030. We find that the Notification is issued after the introduction of 8-digit classification code and after the full alignment of Central Excise Tariff with HSN. This buttresses the contention of the Department that the impugned item is classifiable under the chapter sub-heading 2202 9030. The Department contended that the product/item is classifiable under 2202 9030 and in support they cited the case-law of ERCMPU (MILMA) VERSUS COMMISSIONER OF CENTRAL EXCISE, COCHIN [ 2013 (5) TMI 1066 - CESTAT BANGALORE] . The case-law of NESTLE INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE (LTU) , DELHI [ 2017 (3) TMI 1636 - CESTAT NEW DELHI] cited by the appellant is distinguishable on facts as the issue involved is classification between Chapter heading 0404 and 1904 of mix and not beverage and the case is based on the Central Excise Tariff that existed before 2005 i.e. before alignment of the Central Excise Tariff with the HSN. Thus, following the ratio of the decision in Ernakulam Regional Co-operative Milk Producers Union Ltd. of this Tribunal, there are no reason to interfere with the impugned order - the appeal filed by the appellant is unsustainable and is rejected.
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2023 (11) TMI 1026
Area Based Exemption - Recovery of excess refund sanctioned to the assessee in the initial month where the Cenvat credit was not fully utilized - Utilization of CENVAT Credit in the subsequent period - HELD THAT:- During the hearing, it is informed by the Ld.D.R. that this bench has decided similar issue in the case of M/S OZONE PHARMACEUTICALS AND M/S OZONE AYURVEDICS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, GUWAHATI [ 2023 (9) TMI 1371 - CESTAT KOLKATA] , wherein the appeal filed by the Appellant was allowed - It was held in the said case that the refund claim of the appellants for the subsequent period, could not be rejected on the ground that the appellant has taken excess refund for the period prior to 22.12.2002, therefore, no demand is sustainable against the appellant as demanded in view of the letter dated 03.06.2003 by the Deputy Commissioner and the refund for the period August, 2006 to October, 2006 were not required to be appropriated. The demand confirmed in the impugned order is not sustainable and is set aside - appeal allowed.
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2023 (11) TMI 1025
Project Import - Mega Power Project - international competitive bidding - exemption under notification 6/2006 dated 01.03.2006 - HELD THAT:- The Respondent supplied components/parts/accessories to the Coal Handling plant for Barh Super Thermal Power Project. The Respondent vide their letter dated 27.11.2010 submitted a certificate issued by the Joint Secretary, Ministry of Power, to the effect that the project was a mega power project. The Project Authority Certificate dated 05.02.2007 categorically states that supply of goods under the contract to be made to the power project in India were under the procedure of international competitive bidding. The name of the Respondent was included as sub-contractor in the contract document of M/s DVC, who were responsible for completion of the mega power project. The Respondent has satisfied all the conditions required to avail the exemption as provided under Notification 6/2006 dated 01.03.2006 - the allegation of the department that the Respondent would be eligible for the exemption under Notification 6/2006 dated 01.03.2006, only if they are registered under Project Import Regulations 1986. Registration under Project Import is required only when they import the goods. In this case the Respondent has supplied goods manufactured by them domestically, for which exemption is specifically provided under notification 6/2006 dated 01.03.2006. Since, the Respondent has satisfied all the conditions required to avail the exemption under notification 6/2006 dated 01.03.2006, it is found that no infirmity in the order-in-original passed by the adjudicating authority, dropping the proceedings. Appeal filed by Revenue dismissed.
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CST, VAT & Sales Tax
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2023 (11) TMI 1024
Rectification application - Levy of penalty - wrong route adopted by the drivers - if the distance has been wrongly reflected, why it cannot be corrected to absolve the appellant of the penalty imposed upon it vide the impugned order? - HELD THAT:- It is not the case of the respondents that the drivers were not carrying the invoices/bills when the vehicles were intercepted by the competent authority. Once the drivers had accepted that there was a mistake in calculating the distance, the very reason for imposing the penalty does not survive. Non reporting of goods before the ICC, Talwandi Sabo cannot be made a ground to impose the aforesaid penalty. It is held that the appellant- assessee is not liable to pay the penalty, as imposed by the respondent- department. Hence, the present appeal is allowed
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Indian Laws
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2023 (11) TMI 1023
Suit for recovery along with an interest at the rate of 12% per annum from the date of the suit till the date of the decree and thereafter, at the same rate till the date of its realisation - liable to pay the dues of Sheela Venugopal from the estate inherited by them - HELD THAT:- In the instant case, the court did not take up the risk of doing the job of comparative analysis of the disputed signature by itself. Instead they were sent to expert analysis and hence there is no harm in recording the finding of the expert as the first step. But accepting the findings of the expert is the second part of the exercise. Usually, there can not be any reason to disregard the opinion of the expert, unless there is any patent defect or irregularity is seen to be present in the analysis or established so by the defendants. The first defendant has opted to give a selective acceptance to the part of the report which states that the signature of the first defendant in Ex.P3 did not tally with his admitted signatures - the defendants did not establish anything adverse to the acceptance of the expert's report. The promissory note does not contain any other particulars as to the rate of interest. So it has to be presumed that the loan transaction did not have any term as to interest. If the promissory note is a created one, nothing could have prevented the plaintiff from filling up the rate of interest and particulars of witnesses as per her whims - Since the executant of the promissory note is no more, the plaintiff can prove the genuineness of the promissory note only by proving the ancillary facts attached to it. As stated already, the first defendant did not deny their acquaintance with the plaintiff. As per the contention of the plaintiff, the loan amount has been given to Sheela Venugopal on several occasions and it was not an one-time payment. After the demise of Sheela Venugopal, the 1st defendant initiated some negotiations with the plaintiff and even according to the 1st defendant, it was some good intention of purchasing peace, but the plaintiff demanded huge sum and hence it did not fructify. Even though the suit promissory note has been executed for Rs. 2.50 crores, from the legal notice sent by the plaintiff and her oral evidence, she has made it clear that the remaining due was only Rs. 2,18,50,000/-. In such case, the legal enforcement of the suit promissory note can be limited to a sum of Rs. 2,18,50,000/-. though Sheela Venugopal had executed the promissory note for Rs. 2.50 crores - the promissory note did not contain any terms for interest, and hence, the plaintiff is not entitled to claim any interest. In view of the above stated reasons, the plaintiff is entitled to get a decree for recovery of a sum of Rs. 2,18,50,000/-only, from the defendants as against the assets inherited by them from the deceased Sheela Venugopal. Hence, issue No. 5 is thus answered. The suit is partly decreed with cost and the plaintiff is entitled to get a decree for recovery of a sum of Rs. 2,18,50,000/- only from the defendants to be payable from the assets of the deceased Sheela Venugopal and to that extent to which the defendants are jointly and severally liable to pay as inherited by them.
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