TMI Tax Updates - e-Newsletter
November 29, 2024

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise

Articles

1. TYPES OF CUSTOMS DUTY IN INDIA

   By: DR.MARIAPPAN GOVINDARAJAN

2. Is the Government Waging War on the Gaming Industry with Direct Taxes?

   By: Aratrik Banerjee

3. Date of online filing of appeal be considered as date of filing GST appeal for the purpose of limitation

   By: Bimal jain

4. Documents Required to Register a Pvt. Ltd. Company in India

   By: Ishita Ramani

5. State GST Department not empowered to initiate proceedings when Central GST Department has already initiated the proceedings on same subject matter

   By: Bimal jain

News

1. Shri Piyush Goyal launches CII's Ease of Doing Business and Regulatory Affairs Portal

2. Curtains drawn on the 43rd edition of India International Trade Fair

3. Supervision amidst Emerging Risks (Opening remarks by Shri Swaminathan J, Deputy Governor, Reserve Bank of India - November 22, 2024 - at the High-level Policy Conference of Central Banks from the Global South held in Mumbai)

4. RBI: Navigating 90 Years of Legacy, Regulation, and Aspiration (Opening remarks delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India - November 22, 2024 - at the “High-Level Policy Conference of Central Banks in the Global South” organised by the Reserve Bank of India as a part of commemoration of its 90th year at Mumbai, India)

5. Commerce and Industry Minister’s meeting with H.E. Sophie Primas, Minister Delegate of France for Trade and French Nationals Abroad

6. 18th NCB International Conference and Exhibition on Cement, Concrete and Building Materials inaugurated by Secretary DPIIT

7. India, France collectively can expand agricultural and food processing for world's food security using innovative sustainable practices: Shri Piyush Goyal

Notifications

GST

1. 29/2024 - dated 27-11-2024 - CGST

Extension of due date for filing of return in FORM GSTR-3B for the month of October, 2024 for the persons registered in the state of Manipur

2. 28/2024 - dated 27-11-2024 - CGST

Appointment of Adjudicating Authorities u/n CGST Act and IGST Act.

GST - States

3. EXN-F(10)-22/2023 - dated 4-11-2024 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (second Amendment) Rules, 2024

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/TPD/P/CIR/2024/167 - dated 28-11-2024

Business Continuity for Interoperable Segments of Stock Exchanges

GST - States

2. Trade Circular No. 30T of 2024 - dated 25-11-2024

Clarifying the issues regarding implementation of provisions of sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017

3. JC(HQ)-5/AR-2/GST/2024/ADM-8/B-168 - dated 25-11-2024

Corrigendum to Trade Circular No. 30T of 2024 issued by the MGST.

4. Trade Circular No. 31T of 2024 - dated 25-11-2024

Clarification of various doubts related to Section 128A of the CGST Act, 2017

5. CCT/26-4/2024-25/G/3467 - dated 1-11-2024

Clarification of various doubts related to Section 128A of the CGST Act, 2017

Highlights / Catch Notes

GST

• Extension of GSTR-3B filing deadline till 30th Nov 2024 for Manipur taxpayers due to exceptional circumstances.

  Notifications : The Central Board of Indirect Taxes and Customs has extended the due date for filing GSTR-3B returns for October 2024 till 30th November 2024 for registered persons having principal place of business in Manipur. This notification is effective from 20th November 2024 and issued u/s 39(6) of the Central Goods and Services Tax Act, 2017 on the recommendation of the GST Council. It provides relief to taxpayers in Manipur by extending the GSTR-3B filing deadline for October 2024.
  Visit to Get Source

  ---

• Rules on administrative setup of GST appellate tribunals across India.

  Notifications : Notification amends earlier notification regarding constitution of Principal and State Benches of Goods and Services Tax Appellate Tribunal (GSTAT). Changes location of certain State Benches and notifies districts under their jurisdiction. Also notifies sitting/circuit locations for some State Benches along with districts under their jurisdiction. Covers all states/union territories, providing district-wise demarcation of areas under each Bench's purview. Enables proper administrative division for efficient functioning of GSTAT across the country.
  Visit to Get Source

  ---

• Amended tax notification empowers Additional/Joint Commissioners to decide on notices from intelligence wing.

  Notifications : This notification amends Table V of Notification No. 02/2017-Central Tax, specifying the powers of Additional/Joint Commissioners of Central Tax to pass orders or decisions regarding notices issued by Directorate General of GST Intelligence officers under various sections of CGST Act, 2017 like 67, 73, 74, 76, 122, 125, 127, 129 and 130. It lists 23 Principal/Commissioners across India authorized to exercise these powers throughout the country. The notification comes into effect from December 1, 2024.
  Visit to Get Source

  ---

Income Tax

• Govt exempts income tax on asset transfer between NLC India Ltd & NLC India Renewables Ltd under restructuring plan.

  Notifications : Central Government notification u/s 47(viiaf) of Income Tax Act, 1961 regarding transfer of capital asset from NLC India Limited (transferor public sector company) to NLC India Renewables Ltd (transferee public sector company) pursuant to an approved plan, treating such transfer as not regarded as transfer for income tax purposes. The notification is effective from date of publication in Official Gazette.
  Visit to Get Source

  ---

• Forms for appeals against withdrawal of tax exemptions for funds to be filed electronically.

  Notifications : This notification from the Director General of Income Tax (Systems) specifies that Forms 42, 43, and 44 prescribed in Appendix-II of the Income Tax Rules 1962 shall be furnished electronically and verified as per sub-rule (1) of Rule 131. Form 42 pertains to appeals against refusal or withdrawal of recognition from a provident fund, Form 43 relates to appeals against refusal or withdrawal of approval from a superannuation fund, and Form 44 concerns appeals against refusal or withdrawal of approval from a gratuity fund. The notification comes into effect from 22.11.2024.
  Visit to Get Source

  ---

• Cooperative societies' delayed audit report filing excused due to reasonable cause, penalty set aside.

  Case-Laws - HC : The assessees, being cooperative societies, had no control over the timely completion of audits by statutory auditors as mandated u/s 44AB of the Income Tax Act. The delay in submitting audit reports was not attributable to the assessees' conduct. The audit reports were made available before the Assessing Authority during assessment proceedings, causing no prejudice to the Department. The assessees demonstrated reasonable cause for the belated filing of audit reports before the Assessing Authority. As per Section 273B, when reasonable cause is established, no penalty u/s 271B can be imposed. Therefore, the High Court set aside the Tribunal's orders confirming the penalty u/s 271B on the assessees, allowing their appeals.
  Visit to Get Source

  ---

• Unexplained income assessment challenged; statutory appeals allowed to proceed without prejudice.

  Case-Laws - HC : Writ application challenging validity of assessment u/s 153C. Unexplained income to be taxed u/s 69A. Appellants instituted statutory appeals before Commissioner of Income Tax (Appeals), raising necessary grounds including jurisdiction aspect. Writ appeals dismissed as appellants impermissibly riding two horses. Observations in previous order not to impede adjudication of appeals as per law. Contention regarding addition of unexplained income u/s 69A to appellants' income found meritorious. Assessing authority to consider unexplained income u/s 69A afresh in accordance with law during de novo assessment, without being bound by previous direction.
  Visit to Get Source

  ---

• Property rental income rightly assessed as 'income from house property', not 'business income' despite sale of some units.

  Case-Laws - HC : Rental income from leased properties consistently assessed as income from house property in prior and subsequent years. Sale of some properties in relevant years incidental to core activity of letting out properties, cannot change nature of income to business income. Income from sale of properties assessable as capital gains, not business income. Appellate Tribunal lacked jurisdiction to entertain belated rectification applications filed by Revenue beyond statutory six-month period. Allowing such applications after earlier dismissal of appeals citing low tax effect, either amounted to impermissible review or exceeded rectification powers, rendering Tribunal's orders void ab initio. Decided against Revenue.
  Visit to Get Source

  ---

• Court Invalidates Tax Assessment Order for Breaching Natural Justice, Lacking Mandatory Notice and Hearing.

  Case-Laws - HC : The High Court held that the faceless assessment order was invalid as it violated the principles of natural justice and the provisions of Section 144B of the Income Tax Act. The petitioner was not issued a show cause notice-cum-draft assessment order, which is a mandatory requirement u/s 144B retrospectively effective from April 1, 2021. The court emphasized that the principles of natural justice are statutorily recognized, and any non-adherence to the mandatory statutory provisions and these principles would render the assessment order patently illegal. An order entailing civil consequences and causing prejudice must be passed in strict adherence to natural justice principles, i.e., after issuing a show cause notice and granting an opportunity for a hearing. An order passed in breach of natural justice is vitiated, non-est, and a nullity. Consequently, the impugned assessment order, being passed without issuing a show cause notice and granting a hearing opportunity, was manifestly illegal and a nullity. The court quashed the order, allowing the petition, so that appropriate procedure under the Income Tax Act can be followed, and a valid assessment order passed.
  Visit to Get Source

  ---

• Court Rules on AOP Income Assessment for Co-owners & Denies Depreciation Claim on Plinth Rental Income.

  Case-Laws - HC : Two key issues: 1) Assessment of rental income received by co-owners as income of an Association of Persons (AOP), and 2) Treatment of income from letting out a plinth as income from house property. Regarding the first issue, the court held that the rental income should be assessed as AOP income as the co-owners jointly received rent, maintained a single account, and raised loans collectively. The court relied on the Supreme Court's decision in ITO vs Ch. Atchaiah, which allowed assessing AOP income even if members were previously assessed individually. On the second issue, the court ruled that a plinth cannot be treated as a building for the purpose of Section 26 of the Act. A plinth is merely the floor level above the ground, and construction on it does not qualify as a building. Therefore, income from letting out a plinth cannot be considered income from house property, and depreciation cannot be allowed on it.
  Visit to Get Source

  ---

• High Court Rules in Favor of Assessee: No Evidence of Tax Evasion in Yarn and Copper Wire Consumption Case.

  Case-Laws - HC : Assessee showed higher wastage of 13.04% on consumption of worsted yarn compared to 8.66% in previous year. AO made addition for excessive shortage and scrap value of discarded cables. Held: Trading account and stock found satisfactory by tax authorities. Wastage percentage varied from 13.64% to 16.43% in earlier years, decreased to 8.66% for 3 months in 1982-83, but remained consistent at 13.04% in 1983-84. No objection raised by Excise Authorities on stock maintained. AO accepted trading account, no dispute on quantity of cotton consumed. AO cannot make addition without reasoning and fresh computation when accounts accepted u/s 145(1). Addition on account of excessive shortage not sustainable. Addition of profit u/s 41(2) on sale of copper wire: AO made addition based on assumptions and presumptions despite assessee's explanations and no evidence of tax evasion found during factory visit. HC held Tribunal erred in assessing additions made by AO. Reference answered in favor of assessee against revenue.
  Visit to Get Source

  ---

• Trust's Fundraising Program Wins Exemption: Tribunal Rules No Business Activity in Charity Event Surplus Use.

  Case-Laws - AT : The assessee trust's fund-raising program, "Adbhut Hungama," involving the sale of donation coupons and a mega lucky draw, was considered a business activity by the CIT(E), leading to the denial of registration u/s 12AB. However, the surplus from this program was utilized for purchasing medical equipment and establishing medical facilities in Gujarat and Rajasthan. The Tribunal held that the one-time fund-raising program cannot be considered an organized business activity akin to selling lottery tickets, and there was no violation of Section 12AB(4). Relying on the Gujarat High Court's decision in United Way of Baroda, the Tribunal ruled that such activities do not amount to "trade," "commerce," or "business" u/s 2(15) proviso. The purpose and dominant object of the institution's activities are material in determining whether they constitute business. The Tribunal set aside the CIT(E)'s order and directed the granting of exemption u/s 12AB. Additionally, the Tribunal clarified that Section 13 provisions can only be invoked during assessment, not at the registration stage u/s 12A, citing the Gujarat High Court's decision in Bayath Kutchhi Dasha Oswal Jain Mahajan Trust.
  Visit to Get Source

  ---

• Tribunal Overturns Tax Additions Due to Misapplied Provisions in Property Sale Transaction for AY 2013-14.

  Case-Laws - AT : The assessee entered into an agreement for sale and made substantial payment for a property in the assessment year (AY) 2013-14. The Assessing Officer (AO) was not convinced with the different versions of sources provided by the assessee for the purchase and made an addition u/s 69 in AY 2014-15. The Commissioner of Income Tax (Appeals) [CIT(A)] rightly decided that the transaction pertained to AY 2013-14 and advised the AO to reopen the assessment for AY 2013-14. However, the advice given by the CIT(A) has only advisory value and cannot be treated as a direction. The CIT(A) erroneously invoked Section 56(2)(vii)(b)(ii), which was amended effective from AY 2014-15, for the transaction pertaining to AY 2013-14. As per the ruling in M. Syamala Rao's case, the CIT(A) cannot invoke provisions amended with effect from a subsequent assessment year on transactions pertaining to a previous assessment year. Consequently, the additions made by the CIT(A) by invoking Section 56(2)(vii)(b)(ii) were deleted by the Income Tax Appellate Tribunal (ITAT).
  Visit to Get Source

  ---

• Denying registration to trust promoting public welfare activities like donations, education, empowerment is improper.

  Case-Laws - AT : The trust's objects were not solely for the benefit of alumni and faculty members of the university, but also for the general public through activities like food donation, blood donation, women empowerment, English learning, ecological awareness, and establishing a library for underprivileged children. The provisions of Section 13 should not be invoked at the time of granting registration u/s 12AA. The order denying registration u/s 12AB was set aside, and the Commissioner of Income Tax (Exemptions) was directed to grant final registration u/s 12AB.
  Visit to Get Source

  ---

• Exemption and Depreciation Claims Upheld, Bad Debt Additions Reassessed, Business Expenses Allowed in Tax Dispute.

  Case-Laws - AT : The assessee claimed exemption u/s 10(23G), and the disallowance u/s 14 concerning exempt income was disputed. It was held that the assessee had sufficient interest-free funds for making investments, aligning with the ratios in Reliance Utilities & Power Ltd. and HDFC Bank cases, presuming investments were made from interest-free funds. The South Indian Bank Ltd. case supported this presumption. Regarding depreciation on leased assets, the assessee's claim was upheld, consistent with the Tribunal's earlier decision, as there were no new lease transactions. On the addition u/s 41(4) for written-back bad debts, the issue was restored to the Assessing Officer, following the Tribunal's view in the preceding assessment year. The claim for bad and doubtful debts u/s 36(2) was allowed, as the debt represented money lent in the ordinary course of banking/money-lending business, adhering to the TRF Limited and Khyati Realtors Pvt. Ltd. cases. The business loss claim and sales promotion expenses were allowed, following the rule of consistency from earlier years. The disallowance of club membership fees was rejected, aligning with the United Glass Manufacturing Co. Ltd. case, treating it as a business expenditure.
  Visit to Get Source

  ---

• Trust's Income Taxed at Normal Rate Without 12AA Registration; Interest Levies u/ss 234A-D Discussed.

  Case-Laws - AT : The appellant trust claimed to be formed for public charitable activities and registered under the Rajasthan Public Trust Act 1959, regularly filing its income tax returns since 1970. However, it lacked registration u/s 12AA. The issue pertained to the taxability of the trust's income at the maximum marginal rate or normal rate, and the levy of interest u/ss 234A, B, C & D. The decision in Gurjar Pushkarana Vidyotejak Mandal held that if a trust is ineligible for exemption u/ss 11 or 12 due to Section 13(1)(b), its income cannot be taxed at the maximum marginal rate but at rates specified for an AOP u/s 164(2). If Sections 13(1)(c) or 13(1)(d) are attracted, the relevant income must be taxed at the maximum marginal rate. Section 164(2) stipulates that if income is not exempt u/s 11 due to violation of Section 13(1)(c) or 13(1)(d), the relevant income shall be taxed at the maximum marginal rate, not the entire income. Since the appellant trust lacked registration u/s 12AA, its entire declared income shall be taxable at normal tax rates as per the proviso to Section 164(2), applicable to.
  Visit to Get Source

  ---

• Payments Over Limit Allowed if Business Need Proven; TDS Credit Restrictions Overturned for Event Management Expenses.

  Case-Laws - AT : Disallowance u/s 40A(3) for payments exceeding the prescribed limit should be examined considering the business exigencies. If the expenses are necessary for running the business and the revenue has no doubt about the payee's identity and transaction genuineness, disallowance is not required. In the given case, the excess payment may be necessary for the event management business, so the addition made by the AO and sustained by the CIT(A) cannot be sustained. Deduction claimed u/s VI-A in returns filed in response to notice u/s 153A/B/C is allowed, as the decision in CIT vs. Sun Engineering Works is not applicable to such returns. The CIT(A)'s findings on this issue cannot be sustained. The Assessing Officer should calculate the refund of TDS to the appellant as per the Income Tax Act provisions. The CIT(A)'s view of restricting TDS credit to the appellant's name and business income assessed is not upheld.
  Visit to Get Source

  ---

• ITAT Upholds Project Completion Method, Allows Reassessment of Disallowed Expenses; GST vs. Income Tax Discrepancies Justified.

  Case-Laws - AT : The assessee was entitled to follow the 'project completion method' consistently for recognizing revenue, as it had not achieved the minimum threshold for applying the 'percentage completion method'. The commission/brokerage expenses were allowable in the year incurred, and differences between sales shown in GST returns and Income Tax Returns were justified due to different statutory requirements. The ITAT remanded the issues of disallowance of architect and professional fees, and disallowance u/s 40(a)(ia) for transportation charges, to the Assessing Officer for fresh adjudication after providing reasonable opportunity to the assessee to substantiate claims with relevant documents. The ITAT's decision upheld the assessee's consistent accounting method, allowed commission/brokerage expenses, and directed reconsideration of specific disallowances, ensuring fair adjudication based on substantive evidence and legal principles.
  Visit to Get Source

  ---

Customs

• New Inland Container Depot in Dhanakya, Rajasthan authorized for import/export cargo ops.

  Notifications : This notification amends the previous Notification No. 12/97-Customs (N.T.) dated 2nd April 1997 by inserting a new entry in the table for the State of Rajasthan. The new entry at serial number (vi) under column (3) allows for the unloading of imported goods and loading of export goods or any class of such goods at the Inland Container Depot located in Dhanakya, Rajasthan, as specified in the corresponding entry in column (4). This amendment expands the list of authorized Inland Container Depots in Rajasthan for facilitating import and export trade operations.
  Visit to Get Source

  ---

• Tribunal Reclassifies 'BAYLAN' Water Meters, Eliminates Customs Duty, Aligns with Indian Standards and ISO Parameters.

  Case-Laws - AT : The case pertains to the classification of 'BAYLAN' branded water meters for customs duty purposes. The key points are: The water meters were initially classified under Tariff Item No. 9028 20 00, attracting 7.5% customs duty. However, the appellant contended they should be classified under Tariff Item No. 9026 10 10, subject to 'nil' duty rate. The tribunal examined the Indian Standards (IS 2401:1973 and ISO 4064) parameters for water meters and found the appellant's products met these requirements. Based on the factual details and documentary evidence clearly indicating the goods were water meters, the tribunal set aside the impugned order and allowed the appeal, classifying the goods under Tariff Item No. 9026 10 10, making them eligible for consequential relief as per law.
  Visit to Get Source

  ---

• Customs Broker Cleared of Penalties After Fictitious Entity Discovery; Tribunal Recognizes Good Faith Actions in Import Case.

  Case-Laws - AT : Whether penalties and confiscation of goods are justified against the Appellant (customs broker) and its proprietor for facilitating imports by a non-existent entity (M/s Blazeing Star Trade Pvt. Ltd.) under an Advance Authorization. The key points are: The Appellant entered into a High Sea Sales agreement with Blazeing Star, who imported PVC resin under Advance Authorization. After investigation revealed Blazeing Star was fictitious, the Appellant requested to cancel the agreement and amend the Bills of Entry, which was allowed by the authorities u/s 149. The goods were released after payment of duty without the Advance Authorization benefit. The Tribunal held that after allowing the amendment, there was no ground for confiscation or penalties as there were no misdeclarations or discrepancies in the amended Bills of Entry. The Appellant had paid the entire duty and interest before the show cause notice, indicating bona fide intention. No evidence was presented to show the Appellant abetted or was aware of Blazeing Star's fictitious nature. The penalties u/ss 112(a)(ii), 114AA, and 117 were held unjustified as the necessary ingredients, such as mens rea, false declarations, or abetment, were not established against the Appellant.
  Visit to Get Source

  ---

• Customs officer accused of bribery, but lack of reliable evidence leads to penalties being overturned.

  Case-Laws - AT : Customs case involving alleged undervaluation of imported goods and demand of illegal gratification by a Customs officer. The Tribunal found the statements of co-accused relied upon by the adjudicating authority were not reliable evidence against the appellant as cross-examination was denied. No specific allegation proved that the appellant's act rendered the goods liable for confiscation. Statements did not implicate appellant in receiving money. Penalties u/ss 112 and 114AA of the Customs Act were set aside as there was no sustainable ground to impose them on the appellant. The order imposing penalties could not be upheld due to lack of evidence.
  Visit to Get Source

  ---

• Tribunal Rules Pulse Waste Classified Under Dried Leguminous Vegetables, Rejects Department's Classification Argument.

  Case-Laws - AT : The summary focuses on the classification of waste arising from pulses, whether classifiable under 2302 5000 as claimed by the department or under chapter heading 0713 as claimed by the appellant. The Tribunal held that chapter heading 2302 applies to goods derived from cereals or leguminous plants, but pulses are not covered under either category. Therefore, the department's proposed classification under 2302 failed. The Tribunal further examined the appellant's claim of classification under 0713, which covers "DRIED LEGUMINOUS VEGETABLES, SHELLED, WHETHER OR NOT SKINNED OR SPLIT." The Tribunal concluded that the waste of pulses is appropriately classifiable as dried leguminous vegetables under 0713, agreeing with the appellant's classification.
  Visit to Get Source

  ---

• Tribunal Overturns Confiscation, Fine, and Penalty for Importer After Compliance with Customs Valuation Dispute.

  Case-Laws - AT : Appellant imported fuel filters and other filters from China, but upon examination, it was found that the goods were of superior quality branded as Komatsu, Deutz, Volvo, etc., originating from Germany, South Korea, allowing the importer to sell them as original branded filters. The declared invoice value from the Chinese exporter could not be accepted prima facie. The appellant initially agreed to pay the differential duty as per the enhanced value determined by Customs officials but later sought re-examination by a Chartered Engineer approved by DGFT. The Tribunal found no error in the Chartered Engineer's examination and value determination. The appellant was directed to pay the differential duty of Rs.25,23,360/- along with interest to clear the consignment. However, considering it was not a serious contravention and the appellant was initially willing to pay or re-export, the confiscation order, redemption fine, and penalty of Rs.2,50,000/- were set aside.
  Visit to Get Source

  ---

DGFT

• India Updates Trade Codes: Changes Impact Communion Wafers, Aviation Fuel, Menthol, Paracetamol, E-Bikes, and More.

  Notifications : The notification amends the Indian Trade Classification (Harmonized System) 2022, Schedule 1 (Import Policy) in sync with the Finance Act 2024. It provides a list of ITC (HS) codes with their item descriptions, import policies, and policy conditions that have been inserted, deleted, amended, split or merged. The changes include revisions to item descriptions, section notes, chapter-wise main notes, and supplementary notes. Key amendments relate to items like communion wafers, blended aviation turbine fuel, menthol, paracetamol, ballistic protection products, architectural membranes, carpet mats, bridges and bridge sections, parts of structures, machinery and parts for aeroplanes/helicopters/unmanned aircraft, lorries with bridging systems, and e-bicycles. The updated ITC (HS) 2022 will be available on the DGFT website.
  Visit to Get Source

  ---

FEMA

• Foreign Currency Accounts: 'Startup' definition aligned with govt notification for regulatory compliance & clarity.

  Notifications : This notification amends the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015. It substitutes the explanation to sub-regulation 5E and para 1(vii) of Schedule I, redefining the term 'startup' to mean an entity recognized as a startup by the Department for Promotion of Industry and Internal Trade pursuant to notification G.S.R. 127(E) dated February 19, 2019, and as amended from time to time. The amendment aims to align the definition of 'startup' with the government's notification for better regulatory compliance and clarity.
  Visit to Get Source

  ---

IBC

• High Court Denies Company's Bid to Excuse 4486-Day Delay in Appeal, Citing Lack of Diligence and Insufficient Justification.

  Case-Laws - HC : The High Court refused to condone the delay of 4486 days in filing an appeal against a money recovery decree. The delay was inordinate, and the appellant, a limited company, failed to provide a satisfactory explanation. The professional misconduct of the appellant's erstwhile counsel was not a sufficient justification as the appellant had a duty to remain diligent. The appellant's attempt to claim the benefit u/s 14 of the Limitation Act for the period from 29.11.2019 to 20.09.2024 was rejected due to lack of good faith and due diligence. The appellant had filed an application under Order IX Rule 13 CPC without an ex-parte judgment, prolonging the proceedings for almost five years. The High Court held that by liberal standards, the appellant's actions could not be treated as proceedings pursued in good faith. Consequently, the delay condonation application was dismissed, denying the appellant the benefit u/ss 5 and 14 of the Limitation Act.
  Visit to Get Source

  ---

• Share Application Money Not 'Financial Debt' Under IBC; Lacks Time Value of Money Criteria and Valid Agreement Evidence.

  Case-Laws - AT : The Appellate Tribunal dismissed the Section 7 application filed by the Appellant, ruling that the share application money deposited by the Appellant with the Corporate Debtor did not constitute a 'financial debt' u/s 5(8) of the Insolvency and Bankruptcy Code (IBC). The key points are: 1) For a debt to qualify as 'financial debt', there must be a disbursal against consideration for time value of money, and the transaction must fall within the ambit of sub-clauses (a) to (i) of Section 5(8). 2) Share application money is not expressly covered u/s 5(8). 3) The Companies (Acceptance of Deposits) Rules, 2014 apply only if the share application money was received pursuant to a private placement offer made in accordance with the Companies Act, 2013. 4) In the present case, there was no evidence of a valid concluded agreement between the parties regarding allotment of shares, nor any proof of a private placement offer made as per the Companies Act. 5) Therefore, the share application money advanced by the Appellant could not be treated as a deposit under the Rules, and consequently, did not qualify as a 'financial debt' under the IBC. The Appellate Tribunal found no infirmity in the Adjudicating Authority's order rejecting.
  Visit to Get Source

  ---

SEBI

• Public offer banking activities expanded; SEBI registration now mandatory.

  Notifications : This notification amends the Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994. It expands the definition of "bankers to an issue" to include providing escrow services, opening separate bank accounts for public offers, and other activities specified by SEBI. It mandates obtaining SEBI registration to act as a banker to an issue. The amendment aims to enhance regulatory oversight and streamline processes related to public issuances and corporate actions involving bankers.
  Visit to Get Source

  ---

• SEBI Updates Buyback Rules: New Calculation Method, Non-Participating Promoter Exclusion, Enhanced Disclosure Requirements.

  Notifications : This notification amends the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018. Key changes include: modifying the calculation of maximum permissible buyback size based on lower of two amounts; allowing promoters not participating in buyback to be excluded from entitlement ratio computation; prohibiting further share issuances during buyback period except for discharging subsisting obligations; mandating disclosure of subsisting obligations and their impact in buyback documents; specifying additional disclosures on cover page of Letter of Offer regarding entitlement ratio and weblink for shareholders to check entitlement. The amendments aim to enhance transparency, protect interests of non-participating shareholders, and streamline buyback regulations.
  Visit to Get Source

  ---

Service Tax

• Writ plea upheld, appeal revived despite delay due to petitioner's extraordinary circumstances.

  Case-Laws - HC : Appeal dismissed as filed beyond statutory time limit. Court considered petitioner's extraordinary circumstances preventing timely filing. Applying precedent, Court allowed writ petition, set aside Appellate Authority's order rejecting appeal as time-barred. Directed Appellate Authority to hear appeal on merits in accordance with law. Writ petition allowed, restoring petitioner's appeal for disposal by Appellate Authority.
  Visit to Get Source

  ---

• Late Service Tax Refund Claim Denied; Only Pre-Deposit Refundable Due to Time-Bar under Central Excise Act.

  Case-Laws - AT : The appellants claimed that the entire amount of service tax paid by them should be considered as a deposit u/s 35FF of the Central Excise Act, 1944, and sought a refund. However, the refund arose only after a de novo order dropped the duty amount of Rs.12,99,411/-. According to Section 11B Clause (ec), the relevant date for filing a refund claim is the date of the judgment, decree, order, or direction of the appellate authority, Appellate Tribunal, or court. The appellant should have filed a refund claim by 20.03.2021, but they filed it u/s 35FF on 07.05.2021, which was received by the Revenue on 15.06.2021. Therefore, the claim is barred by limitation u/s 11B of the Central Excise Act, 1944. The Commissioner (Appeals) correctly held that only the pre-deposit amount of 7.5% of Rs.16,97,430/- is eligible for refund. Regarding the notice before rejecting the refund claim, the appellant made submissions during the personal hearing on 18.08.2021, which were considered in the order. There was no violation of natural justice principles.
  Visit to Get Source

  ---

• Banks Can Claim CENVAT Credit on Deposit Insurance Services, Says Tribunal; Appeals Allowed, Orders Set Aside.

  Case-Laws - AT : The Tribunal, after examining relevant provisions, held that the insurance service provided by the Deposit Insurance Corporation to banks is an 'input service', and banks can avail CENVAT credit of service tax paid for this service for rendering 'output services'. The Larger Bench affirmed this view, and the Kerala High Court upheld the Tribunal's decision, which attained finality. Another Larger Bench in Bank of America case also affirmed this view. The Tribunal found no violation of Rules 4(7) and 9(1) by the appellant in availing CENVAT credit before invoice issuance. Registration with DICGC is compulsory for banks, and payment of insurance premium is integral to providing banking services, entitling banks to avail CENVAT credit. Accordingly, the impugned orders were set aside, and the appellant's appeals were allowed.
  Visit to Get Source

  ---

• Training Institute's Book Sales Exempt from Service Tax.

  Case-Laws - AT : The appellant renders commercial training and coaching services, selling books/study materials to enrolled students at concessional rates and to non-enrolled students. The books' prices are printed, and VAT is payable but exempt in West Bengal. As per Notification No. 12/2003-S.T., the value of materials on which VAT is payable is excluded from the assessable value for service tax computation. The Tribunal has previously ruled in FIITJEE Ltd.'s case that the sale value of books/study materials is not liable for service tax under the 'commercial training and coaching service' category. Consequently, the appellant is not liable to pay service tax on the sale value of books/study materials.
  Visit to Get Source

  ---

• Telecom Provider Wins CENVAT Credit for DG Set Services; Tribunal Rejects Extended Limitation Period for Tax Demands.

  Case-Laws - AT : The appellant, a telecom service provider, was disallowed CENVAT credit on services related to procurement, transportation, and filling of diesel for DG sets at cell sites, as well as services for dismantling of DG sets and towers. The Tribunal held that the services for procurement, transportation, and filling of diesel qualify as 'input services' as they are necessary for continuous running of DG sets and sustenance of cell sites, which are essential for providing telecom services. Similarly, services for dismantling of DG sets and towers were also held eligible for CENVAT credit as 'input services' used in the course of telecom business. The Tribunal set aside the disallowance of CENVAT credit on these services. Further, it held that extended period of limitation cannot be invoked in the absence of suppression of facts or mala fide intent, and when the issue involves interpretation of statute. Consequently, the demands confirmed by invoking extended period were held unsustainable.
  Visit to Get Source

  ---

Central Excise

• Appeal Allowed: No Evidence of Clandestine Manufacturing, Penalty on Director Overturned Due to Lack of Corroboration.

  Case-Laws - AT : Clandestine manufacture and removal allegation - substantial electricity consumption cited as evidence - no other corroborative evidence found - Revenue failed to rebut appellant's claims - penalty imposed on Director. Held: Search commenced suddenly without notice, no chance for appellant to hide evidence. No raw materials, consumables, in-process or finished goods stocks found or recorded in Panchanama. Panchanama did not indicate manufacturing activities noticed during surprise visit. Revenue claimed six trucks carried finished goods, appellant countered they carried scrap from Kilns fabrication and installation. No clarity on when CPU was seized and whether Panchanama prepared for it, raising doubts on veracity of Revenue's claims based on emails. Retraction of initially recorded statements by appellant's officers. Electricity consumption attributed to Kilns fabrication and installation by appellant, Revenue did not provide detailed analysis to negate it. Proceedings based on presumptions and assumptions without proper corroborative evidence. Revenue failed to fortify claims despite appellant's satisfactory answers, shifting onus. Appeal allowed on merits. Penalty on Director set aside as confirmed demand unsustainable against main appellant. Impugned order set aside, appeal allowed.
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2024 (11) TMI 1273
  Maintainability of appeals filed by the Revenue before the ITAT on low tax effect - HELD THAT:- On perusal of the circular dated 15.03.2024, which was later on, amended by Circular No. 09/2024, vide order dated 17.09.2024 issued by CBDT supersedes the circular dated 11.07.2018 and 08.08.2019, it is seen that it does not provide exception clause wherein the appeal can be filed notwithstanding that the tax effect entailed is less than the monitory limits under the exception given. The issue involved herein is no longer resintegra and present Income Tax Appeal stands allowed keeping in view non-existence of exception clause as well as monitory limit as per Circulars dated 15.03.2024 read with Circular dated 17/09/2024. Accordingly, order dated 31/05/2022 passed in M.A. Nos. 11 and 12/JAB/2020 (Annexure A/7) is hereby set aside.

  ---

• 2024 (11) TMI 1272
  Penalty proposals u/s 271B - breach of the procedure contemplated u/s 44AB - non filling of the audit report as mandated under the said provision within the time limit specified - whether the assessee Societies had demonstrated a reasonable cause for the delay in submitting audit reports as mandated u/s 44AB of the I.T. Act before the Assessing Authority? - HELD THAT:- It can be seen from a perusal of the statutory framework that the assessee Co-operative Societies had virtually no control over the completion of the audit by the statutory auditors. We also note that there is nothing on record that would suggest that the delay occasioned by the statutory auditors in finalising the audit reports was in any way attributable to the conduct of the assessees in these appeals. We make this observation at this stage because we notice that, unlike the findings of the Assessing Authority and the First Appellate Authority, the observations of the Tribunal in the orders impugned before us are suggestive of such lethargy on the part of the assessees without there being any tangible material before the Tribunal based on which it could arrive at such a finding. We also find that, at any rate, the audit reports were made available before the Assessing Authority at the time of completion of the assessment, and hence, there was really no prejudice caused to the Department in the matter of finalisation of assessment. The appellants/assessees before us cannot be seen as persons who did not establish a reasonable cause for the belated filing of the audit reports before the Assessing Authority. The peremptory phraseology used in Section 273B of the I.T. Act therefore mandated that no penalty under Section 271B be imposed on them. For the same reason, and since reasonable cause was demonstrated by the assessees in the instant cases, the decision of Peroorkkada [ 2020 (1) TMI 624 - KERALA HIGH COURT] would have no application to the case of the appellants before us. We therefore set aside the impugned orders of the Appellate Tribunal, to the extent it confirms the penalty under Section 271B of the I.T. Act on the appellants/assessees, and allow assessee appeal.

  ---

• 2024 (11) TMI 1271
  Writ application challenging validity of assessment passed u/s 153C - Unexplained income to be taxed u/s 69A - HELD THAT:- Both learned counsel would bring to the notice of the Court that post institution of the writ appeals, the appellants have instituted statutory appeals, the details of which are extracted below, before the Commissioner of Income Tax (Appeals). They would also confirm that they have raised all necessary grounds in those appeals, including on the aspect of assumption of jurisdiction We see no reasons to entertain these writ appeals as the appellants are seen to be riding two horses, which is impermissible. Hence, these writ appeals are dismissed. It is made clear that none of the observations made by the learned Judge in order dated 18.01.2024 will stand in the way of the appellant in the adjudication of the appeals, that shall be decided in accordance with law. Addition of amount of unexplained income to the accounts of both the directors - appellants is primarily aggrieved by the fact that, while directing de novo assessment Ld Judge has added a caveat that the unexplained income u/s 69A of the Income Tax Act, 1961 shall be added to the income of the appellants - We see some merit in this contention, as the assessment has been remanded to be re-done, de novo. Hence, it is appropriate that the question of unexplained income to be taxed under Section 69A, also be considered by the assessing authority, in accordance with law. The contents of paragraph 115 shall not be read as a direction to the assessing officer, who is at liberty to conduct the assessment proceedings afresh.

  ---

• 2024 (11) TMI 1270
  Correct head of income - receipts of rent collected by the appellant in relation to leased property - business income OR Income from House Property OR Capital gain - HELD THAT:- In these appeals we are concerned with an assessee who has been consistently seen as deriving income from letting out house property owned by it. It is on that basis that it has been assessed in all the assessment years prior to, and subsequent to, the assessment years under consideration in these appeals. Merely for the reason that in the said assessment years, the assessee effected a sale of some of its properties, it cannot be seen as having embarked upon a business of buying and selling properties in those years, even if it was authorized to do such business as per its Memorandum of Association. The sale of properties by the assessee in the two years under consideration in these appeals must be seen as merely incidental to the activity of letting out of properties for rent carried out by it in the years prior and subsequent to the said two years. The said sale transactions cannot have the effect of changing the very nature of the income earning activity consistently carried on by the assessee, and accepted by the Department. Thus, we are of the view that the income derived by the assessee, from the sale of properties owned by it, during the two years under consideration in these appeals, can only be assessed under the head of capital gains and not as business income . Period of limitation - jurisdiction of Appellate Tribunal to consider the rectification application belatedly - Appellate Tribunal being a creature of the Statute cannot extend its jurisdiction beyond what is expressly conferred on it under the Statute. we find considerable force in the contention of the learned counsel for the appellant that the Appellate Tribunal did not have the jurisdiction to consider the rectification application belatedly preferred by the Revenue, based on the liberty granted to it by the Tribunal while dismissing the Revenue s appeals in the earlier round of litigation. The time permitted for filing an application under Section 254 (2), for rectifying a mistake in an order passed by the Appellate Tribunal under Section 254 (1) is six months from the end of the month in which the order under Section 254 (1) was passed. In the instant cases, the applications under Section 254 (2) were preferred by the Revenue beyond the said period and it was these applications that the Appellate Tribunal allowed while restoring the appeals to file and passing final orders thereon against the appellant assessee. It is also debatable whether, while restoring the appeals before it and deciding them against the assessee, after having dismissed the appeals earlier citing low tax effect, the Appellate Tribunal was merely exercising its power of rectification of mistakes or whether it was in effect exercising a power of review that it did not have under the Statute. In either event, the exercise by the Appellate Tribunal was without jurisdiction and hence void ab initio . Decided against revenue.

  ---

• 2024 (11) TMI 1269
  Validity of Faceless assessment order in violation of the principles of natural justice and in a manner contrary to the provisions of the Income Tax Act - petitioner was not issued a show cause notice-cum-draft assessment order, as per requirement of the provisions of Section 144B as retrospectively brought into effect from 01 April 2021 by the Finance Act, 2022 - HELD THAT:- The principles of natural justice are statutorily recognized in the provisions of Section 144B of the IT Act. Any non-adherence to the mandatory requirement of the statutory provisions and such principles as recognized by it, would render the assessment order patently illegal. The action of the respondents which is contrary to the mandate of the statutory provisions or in breach of the principles of natural justice would be rendered illegal and invalid. It needs no elaboration that when an order under a statute is to be passed which would entail civil consequences, causing a prejudice to the person, against whom it is being passed, such order would be required to be passed in strict adherence to the principles of natural justice i.e. after issuance of a show cause notice and an opportunity of a hearing being granted. It is well settled that an order passed in breach of the principles of natural justice would be required to be held to be vitiated, non-est and a nullity. In the present case, the impugned assessment order is passed without issuance of a show cause notice and an opportunity of a hearing being granted to the petitioner. As noted above, Section 144B inheres the application of the principles of natural justice. For such reasons, the impugned order would be manifestly illegal and a nullity in the eyes of law. This is a fit case, wherein the impugned order would deserve to be quashed and set aside, so that further appropriate procedure as recognized by law under the relevant provisions of the IT Act can now be followed and an appropriate assessment order in accordance with law passed. Petition allowed.

  ---

• 2024 (11) TMI 1268
  Tender bid disqualified by the Technical Evaluation Committee - as alleged petitioners had submitted documents, which were not in conformity with Clause 13(h) of the NIT - petitioners counsel submits that the petitioners technical bid had been rejected on the ground that the petitioners had not submitted the copy of the income tax returns for the years 2022-23 - documents required under Clause 13(h) would come within the ambit of the Average Annual Financial Turnover provided as per Clause 3(b) of the NIT HELD THAT:- Average Annual Financial Turnover would have to be considered to be different than an Income Tax Return and the exemption given under Clause 3(e) to MSEs, from submitting the Average Annual Financial Turnover in Clause 3(b) does not include within it s ambit Clause 13(h) of the NIT. There is also no provision for submission of the Average income tax returns for the last 3 years in either Clause 3(b) or Clause 3(h). Though the Income Tax Return can be supportive of the Average Annual Financial Turnover, the Average Annual Financial Turnover cannot be said to be the same as an Income Tax Return or vice versa. As an Income Tax Return cannot said to be an Average Annual Financial Turnover document, this Court holds that the relaxation provided to MSEs under Clause 3(e) would not cover the Income Tax Returns required to be submitted by a bidder under Clause 13(h). As the petitioners have submitted only the Income Tax Returns for 2 years, which is not in consonance with the requirement of filing the Income Tax Returns for 3 years, this Court does not find any infirmity with the decision of the respondent authorities in disqualifying the petitioners Technical Bid.

  ---

• 2024 (11) TMI 1267
  Invoking extraordinary jurisdiction of the High Court during pending appeal and review proceedings - Validity of reopening of assessment - illegality of the notice issued to the petitioner u/s 148 - petitioner as fairly submitted that the petitioner has come before the Court after the petitioner had already filed an appeal against the impugned assessment order, as also the petitioner has filed a Review Application before the Principal Chief Commissioner u/s 264 and both the proceedings are pending - revenue would submit that much prior to the decisions of this Court in Hexaware [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] as also in Siemens [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] the petitioner in the present case has availed of an alternate remedy HELD THAT:- We find much substance in the contention as urged by Mr. Sharma on behalf of the revenue. Once the petitioner has availed of an alternate remedy as provided under the Act, namely, of a substantive appeal being filed, and if the assessment order as also the notices issued to the petitioner prior thereto under Section 148A and under Section 148 are contrary to the substantive provisions of Section 151A and Section 151 of the Act, as interpreted by this Court in Hexaware and Siemens (supra), the Appellate Authority as also the Revisionary Authority being bound by the said decisions of the jurisdictional High Court, need to consider such legal position. Thus, the petitioner is not precluded from raising all such contentions, as raised before us in the present proceedings, before the said authority. The proceedings which are pending before the CIT(A) as also the Revisionary proceedings, be decided considering the contentions of the petitioner, namely, as to whether the impugned assessment order as also the notice under Section 148 of the Act is illegal when tested on the law as declared by this Court in the aforesaid decisions. We are of the opinion that an approach ought not to be followed that when the appellate authority is already seized with the proceedings, we entertain writ petitions to adjudicate, what can certainly be adjudicated by the appellate authority, considering the said decisions of this Court. Accordingly, we are not persuaded to entertain the present proceedings which assail the assessment order dated 15 March 2024 when appeal is already filed by the petitioner as also the revision proceedings are pending. Order:- The petitioner shall pursue the proceedings before the CIT(A) against the impugned assessment order as also the proceedings before the Revisionary Authority. It is open to the petitioner to raise contentions in regard to the illegality of the notice issued to the petitioner under Section 148, in the light of the decisions of this Court in Hexaware and Siemens (supra). Till the proceeding before the Appellate Authority or Revisionary Authority are decided, the impugned assessment order shall remain stayed.

  ---

• 2024 (11) TMI 1266
  Estimation of income - Bogus purchases - Tribunal partly allowed the appeal of the Revenue and restricted the disallowance at 6% of the amount of the unexplained purchases - HELD THAT:- As decided in PANKAJ K CHOUDHARY [ 2023 (3) TMI 1402 - GUJARAT HIGH COURT] the view taken and the conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. No substantial questions of law.

  ---

• 2024 (11) TMI 1265
  Assess the income of rent received by co-owners as income of A.O.P. (Association of Persons) - appellant and co-owners purchased property jointly and rented out godowns and plinths - HELD THAT:- The rent was being paid by the Government Companies jointly in the hands of co-owners treating them as a single landlord and the amount was also being deposited in the single account. The loans were also raised for construction of the godowns in the name of M/s Y.S. Co-owners. In view thereof, it is factually not disputed that the action was to be taken by the Revenue against the assessee as an AOP. The order passed by the CIT (Appeals) treating the same to be the income received individually on the specified shares is solely based on the sale deed regarding purchase of land. There is no defined share to the rental income and AOP has jointly received the income. There is no division in terms of the law and all of them were co-landlords of each rented out property. In ITO vs Ch. Atchaiah [ 1995 (12) TMI 1 - SUPREME COURT] the Apex Court held that merely if the members of an AOP have been assessed individually, the revenue would not be barred to assess such income in the hands of AOP if the income relates to AOP. The decision taken by the ITAT, therefore, on the issue of the rental income being that of AOP does not warrant any interference and question no.(i) is, accordingly, answered in favour of the Revenue. Income from house property - Plinth constructed would be treated as a building or not? - income received for letting out the plinth to be treated as a house property - Plinth level as per P. Ramanatha Aiyar s Advanced Law Laxicon, 5 th Edition (2017) means the level of the floor of building just above the surrounding ground. Thus, if a land where construction has been made upto plinth level, cannot be treated to be a house property and is open land with the outlining construction on which further walls and columns would be constructed and thereafter a roof shall be constructed on the said columns and walls to complete a building. Construction of plinth, therefore, can in no manner be said to be construction of a building. In fact a plinth and an area surrounded by the plinth, where no construction has been done would be a land not appurtenant to the building because construction on the plinth can be done separately. In no circumstances, it can be treated a plinth, therefore, to be falling within the definition of a building. The depreciation, therefore, could not have been allowed and would not be entitled for treating as building within the meaning of Section 26 of the Act. The said question is, therefore, answered in favour of the Revenue. We, accordingly, set aside the observations of the ITAT on this aspect.

  ---

• 2024 (11) TMI 1264
  Additions on account of excessive shortage and scrap value of discarded cables - abnormal increase in wastage - AO observed that assessee had shown wastage of 76,336 Kgs. on consumption of 5,85,295 Kgs. which worked out to 13.04% as against wastage shown @ 8.66% of last year on spinning of worsted yarn - HELD THAT:- Trading account and the stock has been found to be within the satisfaction of the Income Tax authorities and the AO had accepted the same. The wastage of 13.04% shown by the assessee has been held to be more higher than the wastage shown for the previous year i.e. 8.66%. From the perusal of the record, as maintained by the assessee, shown in the tabular form for the various assessment years from 1975-76 upto 1983-84, we find that the wastage percentage was varying from 13.64% and increased upto 16.43% and decreased to 8.66% only for a period of three months in the year 1982-83, while in the year 1983-84 remained consistent to 13.04%. Thus, it cannot be said that the wastage has been shown on the higher side for the year 1983-84. Moreover, this Court find that the Income Tax Authorities had accepted the earlier wastage percentage without any demur. This Court, however, is also satisfied and accept the contention of the assessee that since the stock production and consumption records were maintained under the supervision of the Excise Authorities and there is no objection raised with regard to the said stock. The Assessing Officer has not objected to the total stock maintained, it could not have proceeded on a presumption alleging higher wastage shown by the assessee. The income-tax department throughout accepted the trading account of the assessee and there is no dispute regarding the quantity of cotton shown to be consumed as per the books of account maintained by the assessee and no material to show and to establish that the increase in percentage of wastage was attributable to any suppression of weight or any suppression of production. The Assessing Officer without mentioning any irregularity in the accounts and accepting it could not make addition without giving any reasoning and fresh computation. The closing stock is valued as per the computation by the assessee regarding the profits and losses and if the books of account of the assessee including rate at which closing stock had been valued are accepted by the Assessing Officer, the addition to the net profit could not be made without recomputing the trading result of the assessee and if as per Section 145(1) of the Act, the trading account of the assessee are accepted to be correct and complete, the Assessing Officer without re-computing cannot make additions to the net profit. Thus, the addition on account of excessive shortage is held to be not sustainable in the eyes of law. Addition of profit u/s 41(2) on the sale of copper wire - A perusal of the assessment order and the explanation given by the assessee shows that the assessee explained each and every question put by the Assessing Officer. Further inspite of the fact that the Assessing Officer himself personally visited the factory premises alongwith the Inspector Sh. S.K.Gupta, and nothing was found to show that the assessee has tried to evade tax, the Assessing Officer on assumptions and presumptions made addition as profit. The reasoning given by the Assessing Officer for such an addition is found to be contrary to the facts. We hold that the Tribunal has erred in assessing the additions made by the Assessing Officer. Accordingly, the reference is answered in favour of the assessee and against the revenue.

  ---

• 2024 (11) TMI 1263
  Revision u/s 263 - Disallowance u/s 14A - assessee has not declared any exempt income - HELD THAT:- We observed that the assessee has not declared any exempt income during the year even though it has made several investments as recorded in its balance sheet. As far as disallowance of section 14A is concerned, it is settled law, as per which no disallowance can be made wherein no exempt income is declared by the assessee during the year. It is fact on record that assessee has not earned any exempt income during the year and ld. PCIT has invoked the provisions of section 14A with the observation that investments do have potential to earn exempt income in the future and it has hidden and embedded expenses in making such investments which are exempt from tax. Accordingly we are inclined to set aside the order passed u/s 263 of the Act and ld. PCIT has not brought on record any mistake apparent on record or the action of the assessing officer is against the law. Assessee appeal allowed.

  ---

• 2024 (11) TMI 1262
  Revision u/s 263 - CIT directing AO to levy penalty u/s 271B - delay filling tax audit report - HELD THAT:- It is a fact that tax audit report was furnished by the assessee before the Learned AO before the completion of assessment. Hence the tax audit report was indeed made available before the completion of assessment before the Learned AO. We hold that the tax audit report is only meant for providing guidance to the Learned AO to understand the various compliances made by the assessee under various provisions of the Act. Since the Tax Audit Report was indeed made available before the Learned AO by the assessee before the completion of assessment proceedings, the larger purpose of provisions of Section 44AB read with Section 139 of the Act stood complied with and there is no need to levy penalty under Section 271B of the Act We hold that this is not a fit case for levy of penalty u/s 271B - Hence, PCIT was not justified in invoking revision jurisdiction under Section 263 of the Act by directing the Learned AO to levy penalty under Section 271B of the Act. Assessee appeal allowed.

  ---

• 2024 (11) TMI 1261
  Validity of Revision u/s 263 by CIT - reasons for selection of the case for scrutiny through CASS was not examined and order is passed in prima facie view, without making enquiries and verification which should have been made - PCIT has raised 11 issues which required verification, which the AO has failed to carry out HELD THAT:- AO has issued several notices to the assessee on various dates on all the issues and assessee has submitted relevant information as called for. Based on the submissions made by the assessee, the AO completed the assessment and taken one of the possible views in all the issues for which assessment was initiated. However, ld. PCIT has reviewed the assessment order and according to ld. PCIT, the verification carried out by the AO is not justified and he should have properly verified. Accordingly, he has invoked the Explanation 2 to section 263 of the Act. It is also brought to our notice that as regards issue no.7, no doubt raised by ld. PCIT, however in order giving effect to the revision order, AO has not made any addition after due verification. As relying on Clix Finance India (P.) Ltd. [ 2024 (3) TMI 157 - DELHI HIGH COURT] we are inclined to observe that the AO has duly verified various issues raised by the ld. PCIT and he has taken one of the possible views. Now ld. PCIT has invoked Explanation 2 to section 263 of the Act with a view that AO has passed the order without making an enquiry or verification, is not justified as per various documents submitted before us. Thus, we are inclined to set aside the order passed u/s 263 - Assessee appeal allowed.

  ---

• 2024 (11) TMI 1260
  Credit of TDS - as per DR claim of the assessee is not in conformity with the provisions of Rule 37BA(3)(ii) - HELD THAT:- The provisions of section 199 of the Act, deals with credit for taxes deducted and as per the said provisions, any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government, shall be treated as a payment of tax on behalf of the person from whose income, the deduction was made. Rule 37BA(3)(ii) of the Income Tax Rules, 1962, deals with the credit for tax deducted at source and paid to the Central Govt. and as per said rule credit for TDS shall be given for the A.Y for which such income is assessable. We find, there is no dispute with regard to the provisions of section 199 r.w Rule 37BA(3)(ii) of the Income Tax Rules, 1962, however, whether the said provision is applicable to the given facts of the present case are not is to be seen. Admittedly, the assessee has received mobilization advances of Rs. 157.65 crores on which the TDS of Rs. 3,15,30,612/- has been deducted. CIT (A) has recorded a categorical finding that the works allotted to the appellant for which mobilization advance has been paid was cancelled. Once the contract awarded to the appellant got cancelled and no income accrues to the assessee from the said contract, then the question of spreading the income over the years does not arise and consequent Rule 37BA(3)(ii) cannot be applied to the assessee. Since the findings of the facts recorded by the learned CIT (A) that, works awarded to the appellant has been cancelled and mobilization advances received from the principal has been returned net of taxes, in our considered view, the assessee has rightly claimed credit for TDS deducted on said mobilization advance, because there is no income to be offered in the subsequent financial years. No error in the reasons given by the learned CIT (A) to allow credit for the impugned A.Y - Decided against revenue.

  ---

• 2024 (11) TMI 1259
  Denial of registration u/s 12AB - the fund raising programme carried out by the assessee trust by way of coupon sales and mega lucky draw were in the nature of business activities which is not identical to carry out the object of the trust and violation of conditions specified in Section 12AB(4) - HELD THAT:- As undisputed fact that the assessee trust made the fund raising programme Adbhut Hungama by selling donation coupon for Rs. 500/- each and also given prices worth of Cars to Tea Mugs. The surplus out of this fund raising programme were utilized for buying Six Dialysis machines, CT Scan machines, 4 Catract operating equipments and establishing Blood Bank, Skin Bank at various places at Gujarat and Rajasthan. Ld. CIT(E) has elaborately considered fund raising programme in his impugned order, but to failed address the activities carried out by the assessee trust and thereby denied registration u/s. 12AB of the Act which is in our considered opinion is against the provisions of law. The Ld. CIT(E) is not disputing the Medical Equipments, Machines donated to various institutions to carry out medical relief to the needy and poor. Hon ble High Court in UNITED WAY OF BARODA [ 2020 (3) TMI 233 - GUJARAT HIGH COURT ] on an identical issue wherein the trust organizing Garba event at Baroda during Navratri period by selling tickets and the surplus out of that Garba event is used for charitable purposes which was held to be not in the nature of trade commerce or business. The Hon ble High Court confirmed the Coordinate Bench decision of this Tribunal and dismissed the appeal filed by the Revenue stating the object of introducing the first proviso is to exclude the organizations which are carrying on regular business from the scope of charitable purpose . An activity would be considered business if it is undertaken with a profit motive, but in some cases, this may not be determinative. Normally, the profit motive test should be satisfied, but in a given case the activity may be regarded as a business even when the profit motive cannot be established/ proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. We have no hesitation in holding that the one-time fund raising programme carried out by the assessee trust is not an organized activities in the nature of business akin to selling of lottery tickets. Since the surplus were been invested in buying medical equipment and establishing Blood Bank and Skin Bank at various parts of Gujarat and Rajasthan. There is no question of violation of Section 12AB(4) of the Act. Thus we hereby set aside the order passed by the Ld. CIT(E) and direct him to grant exemption u/s. 12AB of the Act. Application of provisions of Section 13 at the stage of registration - The provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration under Section 12A of the Act. Our view is further supported by the decision of Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT ] wherein on the issue of denial of grant of registration us 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. In the case of United Way of Baroda [ 2020 (3) TMI 233 - GUJARAT HIGH COURT ] the Hon ble High Court held that sales of tickets for Garba events during Navratri period does not amount to trade , commerce and business as occurring in the first Proviso to Section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. Thus the Hon ble High Court held that denial of exemption u/s. 11 during the assessment proceedings is also held to be not correct on sales of tickets for Garba events. Thus the assessee cannot be denied registration u/s. 12AB of the Act. Assessee appeal allowed.

  ---

• 2024 (11) TMI 1258
  Addition u/s 69 - year of assessment - addition u/s 69 would be for AY 2013-14 or AY 2014-15 - assessee submitted different versions of arranging sources for the purchase of this property received from assessee s husband and relatives - Assessing Officer was not convinced with different versions of sources and justification submitted by the assessee - HELD THAT:- We observed that the assessee has entered into agreement of sale in AY 2013- 14 and made the substantial payment and taken the possession of the property also in AY 2013-14. Ld. CIT (A) has rightly decided that the transaction pertained to AY 2013-14. AO was directed to delete the addition in AY 2014-15. However, he gave an advice to AO to proceed with the reopening of the assessment for AY 2013-14 as per law. AR objected to the above advice. After considering the finding of ld. CIT (A), we observed that the advice given by him has only advisory value and cannot be treated as direction, therefore, even the ld. CIT (A) has advised so but it has no value for persuasion and it does not partake the value of direction. Invoking of section 56(2)(vii)(b)(ii) - CIT (A) in AY 2014-15 even though after giving proper finding that the transaction under consideration is pertained to AY 2013-14 merely because the registration of the transaction was made in AY 2014-15 it does not change the character of the transaction and it belongs/pertains to AY 2013-14 only. The provisions of section 56(2)(vii)(b)(ii) of the Act was amended w.e.f. 01.04.2014. The ld. CIT (A) cannot invoke the provisions of section 56(2)(vii)(b)(ii) of the Act on the transactions pertaining to previous assessment year, as held in the case of M. Syamala Rao [ 1998 (4) TMI 113 - ANDHRA PRADESH HIGH COURT] Therefore, in our considered view, transaction under consideration pertained to AY 2013-14 and ld. CIT (A) cannot treat this transaction as pertains to AY 2014-15 and also cannot invoke provisions of section 56(2)(vii)(b)(ii) of the Act which was amended w.e.f. 01.04.2014 effective from AY 2014-15. Accordingly, we delete the additions made by ld. CIT (A) by invoking the provisions of section 56(2)(vii)(b)(ii) of the Act.

  ---

• 2024 (11) TMI 1257
  Additions u/s 69C - Bogus transaction - AO concluded that the bills are nothing but a mode to create a paper trail just to camouflage the actual transaction - HELD THAT:- Transporter not only provided the consignment no. but also provided the bill no. as well as the quantity of the consignment. We find that apart from making a general allegation that the bills look non-genuine since most of them are the same, the lower authorities did not point out any infirmity in the detailed documents, as noted above, submitted by the assessee during the assessment proceedings. Having carefully perused all the details filed by the assessee during the assessment proceedings, which form part of the record, we are of the considered view that the assessee has duly explained the nature of transactions of purchase made from M/s Mint Agro Tech Pvt. Ltd. during the year under consideration. Accordingly, we are of the considered view that the addition made by the AO and upheld by the learned CIT(A) is unsustainable, and thus the same is directed to be deleted. As a result, the impugned order on this issue is set aside and ground no.2 raised by the assessee is allowed.

  ---

• 2024 (11) TMI 1256
  Reassessment proceedings against non existent company - HELD THAT:- Notice u/s 148 of the Act apparently has been issued in the name of the non-existent company. The nonest company could not file the return of income in pursuance of such notice of non-existent company. It is settled position of law that assessment framed in the name of non-existent company based on enforceable of issuance of notice is of no consequence. We guided by the judgement rendered in the case of Pr.CIT vs Maruti Suzuki India Pvt.Ltd [ 2019 (7) TMI 1449 - SUPREME COURT ] wherein Hon ble Supreme Court held that the assessment made in the name of Suzuki Power Train India Ltd. is a nullity since the entity has been amalgamated with the Maruti Suzuki India Ltd., an approved scheme of amalgamation and was not in existence at the time of amalgamation. he assessment framed in the instant case in the name of non-existing company thus, suffers from vice of jurisdictional defect and is not a procedural irregularity which can be possibly cured u/s 292BB of the Act. Revenue appeal dismissed.

  ---

• 2024 (11) TMI 1255
  Denying Registration u/s 12AB - charitable purposes as defined u/s. 2(15) - objects of the Trust are for the benefit/welfare/interest of the members of the association only namely alumni and faculty members of Indus University and not for the benefit of public at large - HELD THAT:- Looking into the objects of the trust, it cannot be held that the assessee/applicant trust has been formed only for the benefit of a particular set of public namely alumni and faculty members of the University. Perusal of the activities carried out by the Trust as reproduced in the table at Paragraph 3 above namely Food Donation, Blood Donation, Women Empowerment, English Learning, Awareness of ecological concept, New Library for the under privileged school children in Tramba Village activities clearly demonstrate that the Trust is not doing a charitable activities only for the alumni members of the Trust but for the general public at large. We also agree with the Counsel for the assessee that this aspect should be considered at the time of grant of exemption u/s 11 of the Act and the provisions of Section 13 should not be invoked at time of grant of registration u/s 12AA of the Act in the result. The impugned order is hereby set aside with a direction to CIT(E) to grant final registration u/s. 12AB of the Act.

  ---

• 2024 (11) TMI 1254
  Revision u/s 263 against the reassessment order passed by the National E-Assessment Centre, Delhi, u/s. 147 r.w.s. 144B - Determination of period of limitation - HELD THAT:- The issued dealt with by AO in the re-assessment proceedings and the order passed u/w. 147 and the one dealt in the revisionary proceedings u/s.263 and the order passed thereon by ld. CIT(E) are altogether un-related and different in their character. CIT(E) has sought to revise the re-assessment order on a subject matter which had not come to the notice of the AO in the re-assessment proceedings since the issue dealt by him as recorded in the reasons to believe was on a different footing. For the issue raised by the ld. CIT(E) to invoke revisionary proceedings u/s.263, it had to necessarily relate to intimation passed u/s.143(1) which falls beyond the bracket of two years prescribed u/s. 263 of the Act. Facts in this respect are undisputed and uncontroverted as narrated above. We thus, are in agreement with the contentions raised by the ld. Counsel of the assessee. We draw force from the decision of Lark Chemicals Ltd. [ 2013 (9) TMI 959 - BOMBAY HIGH COURT ] as well as Indira Industries [ 2018 (6) TMI 840 - MADRAS HIGH COURT ] both of which had considered in the case of Alagendran Finance Ltd. [ 2007 (7) TMI 304 - SUPREME COURT ] Accordingly, at the threshold of the jurisdictional issue, relating to impugned revisionary order barred by limitation, we allow the appeal of the assessee and quash the revisionary order passed u/s. 263 of the Act.

  ---

• 2024 (11) TMI 1253
  Claim of exemption u/s 10(23G) - disallowance u/s 14 in respect of exempt income - contention of the assessee that it has more than sufficient interest free funds available for making the investments - HEKD THAT:- As seen from the chart that the assessee has sufficient interest free funds available with it for making the impugned investment. Therefore, the ratio laid down in the case of CIT vs Reliance Utilities Power Ltd.[ 2009 (1) TMI 4 - BOMBAY HIGH COURT] HDFC Bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] squarely apply wherein the Hon ble Superior Courts have held that, where the assessee has common pool of funds, it has to be presumed that the investment made is out of the interest free funds available with the assessee. While drawing such presumption, availability of interest free funds as on the date of balance-sheet has to be seen. As decided in South Indian Bank Ltd.[ 2021 (9) TMI 566 - SUPREME COURT] it will be presumed that interest free funds have been utilized for making the investments and further it is the assessee who has the right of appropriation and also the right to assert from what part of the fund a particular investment is made and, therefore, it may not be permissible for the revenue to make an estimation of a proportionate figure. Contentions of the ld. D/R become redundant. Depreciation on leased assets - HELD THAT:- We find force in the claim of the assessee. The Co-ordinate Bench in AY 2004-05 [ 2017 (11) TMI 1839 - ITAT MUMBAI] has considered a similar claim allowed as there is no new lease transaction. The assessee has claimed depreciation on its own fixed assets and depreciation claimed on leased assets were continuing from past tease transactions. Notably, in assessment year 1997-98 Tribunal while deciding the issue had allowed assessee s claim of depreciation. Addition made u/s 41(4) - assessee has written back bad debts which comprises of cash write back and non-cash write backs - HELD THAT:- We find force in the contention of the ld. Counsel for the assessee. The Coordinate bench in assessee s own case for AY 2003-04 [ 2023 (7) TMI 1500 - ITAT MUMBAI] wherein as consistent with the view expressed by the Tribunal in the preceding assessment year as referred to above, we restore the issue to the file of the Assessing Officer for considering afresh. Amount written off and claimed as bad and doubtful debts - additions were challenged before the ld. CIT(A) and it was strongly contended that the bad debts written off by the assessee during the year under consideration, fulfil all the conditions laid down u/s 36(2) - HELD THAT:- As the claim of the assessee falls under Clause (i), wherein it has been specifically mentioned that debt represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee. In our considered opinion, the contention of the ld. D/R that the ratio laid down by the Hon ble Supreme Court in the case of TRF Limited [ 2010 (2) TMI 211 - SUPREME COURT] has been diluted in the case of Khyati Realtors Pvt. Ltd. [ 2022 (8) TMI 1141 - SUPREME COURT] is not a proper way of interpreting the judgment of the Hon ble Supreme Court and since the ld. CIT(A) has rightly followed the decision of the Hon ble Supreme Court (supra), we do not find any error or infirmity in the findings of the ld. CIT(A) which calls for any interference. Accordingly, Ground are dismissed. Claim of business loss and sales promotion expenses - HELD THAT:- There is no dispute that the loss claimed on sale of assets was in the ordinary course of business. It is also not in dispute that the discrepant notes not accepted by the RBI has to be written off as business loss and similarly, the offers made to credit card customers cannot be said to be for non-business purposes. Considering the facts of the case in totality and on finding that in earlier AYs a similar claim was allowed by the ld. First Appellate Authority, following the rule of consistency, the claim is allowed and the findings of the ld. CIT(A) cannot be faulted with. Accordingly, Ground is dismissed. Disallowance of club membership fees - HELD THAT:- Hon ble Supreme Court in United Glass Manufacturing Co. Ltd. [ 2012 (9) TMI 914 - SUPREME COURT] has held that club membership fees for employees are to be treated as business expenditure of a company under section 37. Disallowance of loss on investments made in South Asian Regional Apex Fund - said loss was claimed vide revised computation of income filed during the course of assessment proceedings - AO was of the firm belief that the ratio laid down in the case of Goetze India Pvt. Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] squarely apply and as the said loss was not claimed vide revised return of income, the AO denied the claim of loss - HELD THAT:- When the matter was agitated before the ld. CIT(A), the ld. CIT(A) accepted the view taken by the AO without realizing the fact that the Hon ble Supreme Court has not put any fetter on the powers of the First Appellate Authority to consider the claim of loss through computation of income - we deem it fit to restore the issue to the file of the AO for examination/verification of the claim of loss as per the provisions of law and deciding the issue accordingly. Accordingly, Ground No. 4 is allowed for statistical purposes.

  ---

• 2024 (11) TMI 1252
  Eligibility for exemption from tax in India or not - Income deemed to accrue or arise in India - UAE authorities choose not to tax the assessee owing to DTAA wherein the capital gains are to be taxed by the UAE - HELD THAT:- As relying on FRATE LINE, DUBAI, C/O PATVOLK, DIVISION OF FORBS GOKAT LTD. [ 2010 (10) TMI 1259 - ITAT MUMBAI] , Shri K. E. Faizal [ 2019 (7) TMI 598 - ITAT COCHIN] and RAMESHKUMAR GOENKA [ 2010 (4) TMI 720 - ITAT, MUMBAI] we hold that the assessee is eligible to get benefit of the India-UAE DTAA. Appeal of assessee allowed.

  ---

• 2024 (11) TMI 1251
  Denial of registration u/s 12A - cancelling the provisional registration granted earlier - HELD THAT:- It is the submission of assessee that given an opportunity, the assessee is in a position to file the requisite details as called for by the CIT(Exemption). We deem it proper to restore the issue to the file of the CIT(Exemption) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue as per fact and law. Assessee is also hereby directed to appear before the CIT(Exemption) on the appointed date and file the requisite details without seeking any adjournment under any pretext, failing which the CIT(Exemption) is at liberty to pass appropriate order as per law. Appeal filed by the assessee is allowed for statistical purposes.

  ---

• 2024 (11) TMI 1250
  Denial of deduction u/s 11 - assessee failed to file the return before the due date and secondly audit report in Form-10B was not filed before the due date prescribed in this Act - HELD THAT:- We are of this view that the appellant is entitled to deduction and his claim cannot be denied only on this regard that Form-9A has been filed later on, not with the returned income. The appellant has been able to establish his ground of delay that the trustee responsible for handling tax related matters was hospitalized and he had been suffering from severe illness. It is also not in dispute that the copy of discharge certificate and doctor s prescription has been filed by the assessee before CIT(E). Accordingly, we condone the delay and the matter is sent back to the file of CIT (E) to pass order as per law. Accordingly, the appeal is hereby allowed. Appeal filed by the assessee is allowed for statistical purposes

  ---

• 2024 (11) TMI 1249
  Addition u/s 68 - Cash deposited during demonetization period - AO was of the opinion that the sum was not deposited in the bank in one go, rather it was deposited in piece-meals in the months of November and December 2016 - HELD THAT:- A careful perusal of the chart furnished by assessee clearly shows that the facts of the case in hand are identical to the facts of the case in M/S. FINE GUJARANWALA JEWELLERS [ 2023 (3) TMI 1196 - ITAT DELHI] . AO was of the view that cash deposit in every transaction was below Rs. 2 lakhs which was done to avoid application of provisions of section 258BA r.w.r. 114E of the Act, which has no legs to stand as there is nothing on record to prove the same. AO has not pointed out any flaw, fallacy or deficiency in the regular books of account maintained during the normal course of his business. It is a settled principle of law that once the Assessing Officer accepts the books of account and the entries in the books of account are matched, there is no case for making the addition as unexplained. Submission of assessee that income of the assessee has to be computed by the AO on the basis of available material on record and it is very important to have direct evidence to make an addition rather than circumstantial evidence. AO as well as the ld. CIT(A) have based their findings on surmises and conjectures. Moreover, the AO has not examined any party to whom the goods were sold by the assessee and has come to the conclusion that the sales are not genuine, without rejecting the books of account, which is bad in law. We are of the considered opinion that the AO disbelieved the explanation of the assessee on the basis of presumptions and assumptions and has acted arbitrarily. Appeal of assessee allowed.

  ---

• 2024 (11) TMI 1248
  Disallowing the application of income - denial of benefit of section 11 and 12 - non-filing of form 10B before filing of return - CIT(A) held that the Form 10B has been filed after five months of its filing the return, which was not filed within the time frame outlined in the Act - HELD THAT:- The undisputed fact is that the assessee has obtained audit report alongwith Form 10B prior to filing of return of income. The CBDT vide Circular 3/2020 dated 03.01.2020 and Circular 16/2022 dated 19.07.2022 have mandated condonation of delay upto 365 days for delay in filing Form 10B for AY 2018-19 or for any subsequent AYs. We direct the AO to admit the audit report with Form 10B and decide the issue afresh as per provisions of law. We restore the issue to the file of the AO. The assessee is directed to furnish the original documents for verification and the AO is directed to examine the same and decide the issue as per the provisions of law after affording reasonable and sufficient opportunity of being heard to the assessee. Appeal of the assessee allowed for statistical purposes.

  ---

• 2024 (11) TMI 1247
  Taxing of Returned Income of Assessee Trust under Maximum Marginal Rate in place of normal rate and levy of interest U/s 234 A, B, C D - HELD THAT:- In the present case, the appellant trust has claimed to be formed for the purpose of public charitable activities and registered with Devasthan Vibhag under the Rajasthan Public Trust Act 1959 and since 1970, it is regularly filing its return of income. However, no details are provided whether the appellant was granted registration u/s 12AA either before the CIT appeal or before us. The appellant trust issue of application of tax rate on the return income in absence of Registration u/s 12AA is covered by the decision of Gurjar Pushkarana Vidyotejak Mandal [ 1987 (12) TMI 60 - ITAT AHMEDABAD-A ] wherein held where assessee-trust is not entitled to exemption under section 11 or 12 by virtue of provisions to section 13(1)(b), its income cannot be charged at maximum marginal rate but has to be charged at rates specified for an AOP u/s 164(2). If the provisions of clause (c) or (d) of sub-section (1) of section 13 are attracted, then, the relevant income of the trust has to be taxed at maximum marginal rate. The provision of Section 164(2) lays down that where relevant income or part of the income is not exempt u/s 11 due to violation of Section 13(1)(c ) or 13(1)(d) of the Act, then in that eventuality tax shall be charged on the relevant income or part of the relevant income at MMR and not that entire income of the trust would be charged to tax at MMR. In the present case, the entire income declared in the Income Tax return by the appellant Trust is not exempted in absence of registration u/s 12AA. Meaning thereby the income returned shall be chargeable to Tax at normal tax rates as per proviso to section 164(2) of the I.T. Act 1961. In the case of Income Tax Officer vs. Gurjar Pushkarana Vidyotejak Mandal (Supra) the proviso to Section 164(2) is well considered and in our view appellant trust case is squarely covered. Thus, we don t think it would be relevant to examine whether the appellant trust has violated the provisions of section 13 of the Act as the same has become infructuous in the facts and circumstances of the present case. In absence of registration u/s 12AA, the whole income of the appellant trustee shall be subject to Normal Tax Rate as per proviso to section 164(2) of the Income Tax Ac, 1961 as applicable in the case of AOP. Assessee appeal allowed.

  ---

• 2024 (11) TMI 1246
  Disallowance on account of payment exceeding the limit specified u/s 40A(3) - HELD THAT:- We are of the considered view that payment made in excess of the limit prescribed u/s 40A(3) are to be examined keeping in view the exigencies of the business run by the Assessee. In case such expenses are must for running the business and the Revenue has no doubt about the identity of the payee and the genuineness of the transactions, disallowance on such occasion is not required. In the given case, the Assessee is having the business of event management and the excess as shown by the Counsel of the Assessee may be necessary to run the show, therefore, in this situation, and in our opinion, the addition made by the AO and sustained by the CIT(A) on this account cannot be sustained. Accordingly, the Assessee s appeal on this issue is allowed. Disallowance of deduction claimed u/s VI-A - claim made in returns filed in response to notice u/s 153 A/B/C - HELD THAT:- We are of this considered view that the issue decided in the case of CIT vs. Sun Engineering Works [ 1992 (9) TMI 1 - SUPREME COURT] is not applicable on claim made in returns filed in response to notice u/s 153 A/B/C. Accordingly, the findings given by the CIT(A) on this issue cannot be sustained and, thus, the appeal filed by the Assessee on this issue is allowed. Disallowance of credit of TDS - as per CIT(A) credit of TDS is to be given only with regard to the TDS deducted in appellant s name during the year under consideration and further restricted to the business income from the case assessed in appellant s hand - HELD THAT:- We are of this considered view that it is only the Assessing Officer who can calculate the refund of TDS to the appellant ( in case applicable) as per the provisions of the Income Tax Act, 1961. Accordingly, we direct the Assessing Officer to calculate the amount of refund to be given to the appellant as per the provisions of the I.T. Act. Accordingly, this ground stands allowed.

  ---

• 2024 (11) TMI 1245
  Difference/variation in sales/turnover shown in ITR and GST Returns - Assessee is following project completion method consistently - whether the Assessee is entitled to follow the project completion method as per its own choice or not ? - HELD THAT:- Coming to the instant case, admittedly, as the Assessee is consistently following the project completion method, and therefore there was no logic or plausible reason to discard the accounting method being continuously followed by the Assessee, hence the action of AO in rejecting the project completion method followed by the Assessee and applying percentage completion method is un- sustainable and contentions raised by the Ld. DR in support of decision of AO qua this aspect, are untenable and hence the same are rejected and project completion method approved by the Ld. Commissioner is sustained. In the instant case, the admittedly Assessee out of 228 flats, has entered into agreements to sell of 24 flats only, which is admittedly 10.5 % only. The Assessee has also been able to demonstrate that though the project of Assessee consists of 23 storey residential building which is saleable, however, during the assessment year under consideration it has completed 1st slab only and thereafter the project was/is on hold owing to certain legal impediments and financial difficulties, as appears from the letter of the bank (supra) whereby the Bank has declared the loan availed by the Assessee as NPA and therefore the Assessee during the assessment year under consideration, has completed 10% of the project/saleable building only and few clients have made agreements to sell but not the sale deeds and therefore, the parameters/conditions as prescribed for application of percentage completion method though not admitted but even otherwise has not being achieved. On the aforesaid analyzations, we are of the considered view that even otherwise for the sake of argument though submitted but not admitted by the Assessee, still the Assessee has not achieved the minimum threshold to declare the revenues received and therefore contentions raised by the Ld. DR that the Assessee has completed 38.71% of its project and therefore the Assessee would have recognized the revenue under the percentage completion method and/or thus the Ld. Commissioner had erred in concluding that only 10% of the project has been completed, are also untenable, hence rejected. Payments qua Commission/Brokerage Expenses - DR claimed that because the Assessee has paid the brokerage commissions and therefore, it should have recognized the revenue received - HELD THAT:- We observe the AO proposed the addition on this count and in response to that, the Assessee by filing its reply has claimed that it had appointed Indiabulls Distribution Services Limited (IDSL) as a Marketing Agent on Commission Basis during the AY under consideration, to act on behalf of the Assessee. IDSL had a monopoly to sell flats to the various customers, as it appears from the copy of Agreement with IDSL. Whatever the commission paid to IDSL was, as per the Agreement and not on the basis of sales of TDR during the year. The Assessee also provided the copy of Ledger Account and details/invoices of commission paid through NEFT/Cheque/RTGS. We observe that the aforesaid reply/claim of the Assessee has duly been considered by the AO and accepting the same as correct, admittedly no addition on this count was made by the AO. Even otherwise in view of judgment of DLF Universal Ltd. [ 2015 (4) TMI 981 - DELHI HIGH COURT] by the Hon ble High Court of Delhi, the expenses incurred on brokerage and commission in terms of agreement entered into with IDSL, are allowable in full in the year, in which the same were incurred. In our view, just on the reason that the Assessee has paid the commission and brokerage amount during the year under consideration, the percentage completion method cannot be applied. On the aforesaid analyzations, the present contention raised by the ld. DR is also not tenable. Differences between sales shown in the GST return and Income Tax Return - We are in concurrence with the contention of the Ld. Sr. Counsel that different statutes such as GST Act and the Income Tax Act as applicable to the instant case, are having their own parameters and cannot be equated with each other. As in the CGST Act, the consideration which is received or receivable is supposed to be disclosed, as it appears from the definition and therefore in compliance to the terms of GST Act, the Assessee has shown the amount received or receivable and paid the relevant taxes as per CGST Act accordingly. Whereas for the income tax purposes, as the Assessee has been consistently following the project completion method and therefore treated the consideration received on account of flats sold, as advances as current liabilities, but not as sales/turnover. Hence, in our considered view, the difference between the turnover shown in GST Return and ITR has been properly reconciled by the Assessee before the authorities below, as well as before us and therefore addition made by the AO on this aspect, at all is not sustainable and therefore has rightly been deleted by the ld. Commissioner. Consequently, on the analyzations made above, the decision of the Ld. Commissioner in deleting the addition under consideration is sustained and the appea filed by the Revenue Department is dismissed. Disallowance of architect and professional fee - Assessee has not furnished copies of bills/vouchers of payment and ledger accounts of the parties, details of the genuineness of the transactions as well as PAN details and addresses of many parties as wrong and has also not furnished any details qua TDS deducted - HELD THAT:- It is admitted fact that the assessment proceedings were carried out during the covid-19 period, when the entire Nation was on hold and therefore the reasonable cause for not submitting the relevant documents before the AO cannot be ruled out and thus, we are inclined not to take any adverse view. As the Assessee has rectified its mistake by filing appropriate document and/or willing to rectify its mistake, therefore in our considered view, the real adjudication of the issue under consideration would take place. Hence, for the substantial justice and proper decision of the issue under consideration, we are inclined to remand the instant issue to the file of the AO for decision afresh, suffice to say by affording reasonable opportunity to the assessee to substantiate its claim by producing relevant documents and reply/clarification, requires if any, by the AO. Disallowance u/s 40(a)(ia) - disallowance qua transportation charges paid to the transporters - As observed above by us that admittedly the assessment proceedings were carried out during the covid-19 period, when the entire Nation was on hold and therefore the reasonable cause for not submitting the relevant documents before the AO cannot be ruled out and thus, we are inclined not to take the adverse view. In our considered view, the documents submitted by the Assessee qua transporters appear to be essential and important for adjudication of the issue involved. And the amount involved qua four transporters out of above eight is substantive and therefore the Assessee by filling the relevant documents qua such 04 transporters, justified its claim as bonafide and reasonable. It is the mandate of the Law that the income tax is chargeable or payable on the Real income but not otherwise, thus, considering the facts in totality, we deem it appropriate to remand the instant issue under consideration as well, to the file of the AO with a direction to decide afresh.

  ---

• Customs

• 2024 (11) TMI 1244
  Classification of imported goods - Clear Float Glass (CFG) - to be classified under Tariff Item 7005 10 90 or under CTH 7005 2990 of the Customs Tariff Act (CTA) or not - benefit of exemption under Sl.No.934 (I) of Notification 046/2011-CUS dated 01.06.2011 - As decided by CESTAT [ 2023 (11) TMI 485 - CESTAT KOLKATA] Clear Float Glass imported by the appellant are absorbent and having non-reflecting layer, in that circumstances, the appellant has qualified the merit classification under CTH 7005 1090, therefore, the correct classification of the Clear Float Glass imported by the appellant under the impugned Bills of Entry is classifiable under CTH 7005 1090. Consequently, the appellant is entitled for benefit of Serial No.934 (I) of Notification No.046/2011-CUS dated 01.06.2011. HELD THAT:- Issue notice on the application seeking condonation of delay as well as on the Civil Appeal(s). Application for stay is dismissed.

  ---

• 2024 (11) TMI 1243
  Classification of BAYLAN branded water meters - Tariff Item No. 9026 10 10 subject to nil rate of Customs duty v/s Tariff Item No. 9028 20 00 subject to pay Customs duty at the rate of 7.5% - HELD THAT:- On going through the parameters set by the Indian Standards [IS 2401:1973 and ISO 4064] we find that all these parameters are required to be followed for import of water meters . From the brochure submitted by the Appellant, it is clearly seen that the equipment pertains to water meters only. When the factual details and the documentary evidence produced very clearly point out that the goods are water meters only, we do not see the reason as to why the lower authorities have ignored these documentary evidence and taken the view that the goods would be classifiable under the heading 9028. Therefore, we set aside the impugned order and allow the appeal on merits. The Appellant would be eligible for consequential relief, if any, as per law.

  ---

• 2024 (11) TMI 1242
  Levy of penalty - Customs Broker - Import w/o payment of Customs duty under Advance Authorization - sale of consignments on High Sea Sale basis - confiscation of goods when any goods do not correspond in respect of value or any other particular - On the basis of information received from the DRI, Pune that the imports made by M/s Blazeing Star Trade Pvt. Ltd. under Advance Authorization appears to be suspicious, enquiry was initiated and on being reported by CGST, Dehradun that the said importer firm is non-existent at the declared address Whether the Appellant and its proprietor are liable to pay penalty u/s 112(a)(ii) and 114AA of the Act, respectively, along with redemption fine on alleged premise that the Appellant in connivance with High Sea Buyer i.e M/s Blazeing Star Trade Pvt. Ltd. facilitated the import of PVC resin to non-existent entity i.e Blazeing Star on the basis of fake Advance Authorisation and GST certificate and whether penalty under Section 117 of the Customs Act is imposable on M/s Saarthee Shipping Co. (Custom Broker)? - HELD THAT:- We find that Appellant and Blazeing Star entered into a High Sea Sales agreement wherein Blazeing Star imported the said goods vide Bills of Entry No. 5440564 dtd. 14.09.2021 under Advance Authorisation and another Bill of Entry No. 5548138 dtd. 22.09.2021 without duty under Advance Authorisation. After the investigation, revenue alleged that Blazeing Star is fictitious and non-existent entity. Appellant vide its letter dtd. 17.01.2022 and 18.02.2022 requested to cancel the High Sea Sales Agreement and requested to allow to amend the Bill of Entry dtd. 14.09.2021 and 22.09.2021. Deputy Commissioner of Customs House, Mundra vide letter dtd. 07.06.2022 accepted the request of the Appellant and directed them to make payment of duty, execution of Bond/ Bank Guarantee etc., and on payment of duty and on furnishing of Bond/Bank Guarantee, the Bills of Entry were amended. The said goods were released provisionally, and value was reduced on account of deduction of 2% High Sea Sales charges. We find that by allowing amendment, obviously under Section 149, the authority had no rationale to deny having allowed said amendment under Section 149. In the present matter in terms of Section 149 of the Customs Act, the importer s name was substituted in the Bill of Entry and department allowed him to clear the imported goods with payment of customs duty without taking benefit of disputed advance authorization. So after allowing such amendment the Department had no ground to confiscate the goods and impose fine and penalty. The revenue has not challenged the said amendment. Further we also find that Revenue did not appeal against the order passed by Original Authority under Section 149 of Customs Act, 1962, allowing the amendment to the Bills of Entry. Section 111(m) deals with confiscation of goods when for any goods information given is not correct in respect of value or any other particular, however after amendment in Bills of Entry, in the present disputed matter, there is no mis-declaration in Bills of Entry. After the amendment, the goods in dispute are not imported under Advance Authroization and there are no discrepancies in relation to value, quantity of the goods. In these circumstances, we find no reason to sustain the confiscation of goods and imposition of penalties on Appellant. We also find that appellant has, prior to issuance of show cause notice dtd. 17.05.2023, deposited the entire duty, without taking benefit of Advance Authorization, alogn with interest. This shows that the intention of Appellant was always bona fide. Further revenue has not brought any evidence to show that the Appellant in any way abetted Balzeing Star in importing the said goods under fake Advance Auhorisation or that the Appellant was aware about the fictitious nature of Blazeing Star. Further it is also not the case of the revenue that the Appellant had any stake in the firm or business of Blazeing Star. It is also not the case that the Appellant Proprietor had any connection with Blezeing Star. Importantly, the Appellant on realising that the original importer may be fictitious, paid entire duty along with interest. We also agree with the argument of Ld. Counsel that for imposition of penalty mens-rea has to be established about the wrongful act. In the present case, the only document made/signed by the Appellant are High Sea Sales agreements which are not alleged to be fake/incorrect. From the plain reading of Section 114AA it is evident that penalty under this section can be imposed on a person who intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular for the transaction of any business under the Customs Act, 1962. In the present case nothing has been brought on record by which it can be said that the appellant had made or caused to be made any declaration/used or caused to be used any statement or document which is false or incorrect. No document etc., which has been produced by him was found to be materially wrong. As the ingredients for invocation of provisions of Section 114AA are absent in the present case penalty under the said section is not justified. As it is clear, penalty under Section 117 are for contravention, not expressly mentioned. But, there should be sufficient evidences to show mala fide intention resulting in contravention of any provisions warranting penalty. There is no material on record to conclude that the appellant facilitated misdeclaration of imported goods. Penalty under Section 117 of the Customs Act, 1962 can be imposed only if abetment on the part of the appellant is brought out which means that the appellant should have knowledge or reason to believe that the provisions of the Customs Act relating to correct valuation of the goods were being contravened. No such evidence is forthcoming; therefore, penalty upon the appellant cannot be sustained. Further in the present matter being a customs broker appellant only performing his duties. He is not aware about the fictitious status of High Sea Buyer. We do not find any justifiable ground to impose penalty on the Appellant.

  ---

• 2024 (11) TMI 1241
  Undervaluation of imported goods - reliability of statement of the co-accused - Penalty on the appellant u/s. 112(a)(i) 112(a)(ii) the Customs Act, 1962 and another penalty u/s. 114AA of the Customs Act, 1962 - as alleged for the purpose of clearing the disputed consignments, Appellant/Superintendent of Customs, SIIB, Mundra had demanded gratification - as alleged Appellant, Superintendent, working then at SIIB, Customs House, Mundra had deliberately misguided his superior officer to aid in clearance of subject consignment illegally and that he handed over customs file to a private person and used a fabricated panchnama in clearance of goods HELD THAT:- We find that in the impugned order, the Ld. Commissioner noted that Shri Ankit S. Travadi has affirmed in his statement that he offered amount to accused Customs officers for clearances of disputed goods and he was also actively involved in negotiation with the Customs Officers. The amount is seen to have been arranged through Anagadia and had reached Mundra. In addition to the statement of Shri Mayur Mehta, Shri Ankit Travadi, Shri Chirag Taavadi and Shri Nasir Khan, there are some Audio clips/voice message retrieved from the mobile phone of Shri Nasir Khan which show that Shri Nasir khan and Shri Mayur Mehta sent big amount of illegal gratification to the Customs Officers at Mundra. We find that in the present matter even after the request of appellant for cross-examination of these persons/witnesses and panchas, were not offered. In such circumstances we find that their statements are not reliable evidence against the Appellant. The adjudicating Authority has not examined the persons who have given the statements which have been relied upon to implicate the appellant. Also, no opportunity of cross-examination was given to the appellant to question the basis on which the co-accused has implicated the appellant in this case. When the procedure set out in Section 138B is not followed, the statement of the co-accused has no evidentiary value. Also, in this case the statement of the co-accused has not been corroborated by any other evidence. Except the bald allegation that Appellant had demanded illegal gratification, there is no specific allegation against the appellant to prove that Appellant have done or omitted to do any act which itself rendered the goods liable to confiscation. We also observed that as evident from show cause notice, Shri Ankit S. Travadi reiterated in his statement dtd. 29.09.2017 recorded u/s 108 of the Customs Act, 1962 that the amount of Rs. 8 lakhs arranged through angadia and collected by his younger brother Chirag from Bhuj; that the said amount was given by him to Shri Rajdeep Sinh and Shri Vaibhav Dholakia from whom he had borrowed earlier. Shri Rajeepsinh Jadega and Shri Vaibhav Dholakia have in turn confirmed this fact in their respective statement dtd. 01.11.2017. None of these persons has ever stated that they have paid any money to Appellant. We find that for Customs Act, irrespective of the fact whether the person is an officer of Customs or any other person, penalty for an offence of abetting can be imposed only on establishing a positive act on abetment of another person s act or omission which will make the connected goods liable for confiscation. On careful consideration of the evidence on record and submission made by the appellant, we find that there is no sustainable ground to impose penalties u/s 112 on the appellants in the present case. We also find that section 114AA (supra) is attracted when a person knowingly or intentionally makes, signs or uses or causes to be made, signed or used, any declaration, statement or document which is false or incorrect. Needless to mention that when the appellant had no personal interest in the transaction or that the charge of demand of illegal gratification fails, then automatically it is concluded that there was no knowledge or intention on part of the appellant. Therefore, no penalty could be imposed on the appellant u/s 114AA also. Thus, it is difficult to uphold the orders passed by the Ld. Commissioner imposing penalties on the Appellant.

  ---

• 2024 (11) TMI 1240
  Refund claim for refund of 4% SAD paid on the imported goods under 48 bills of entry - partial rejection of refund for three bills holding that two Bills of Entry were time-barred and one Bill of Entry was rejected as the duplicate copy of Bill of Entry and original copy of TR6 challan were not submitted - HELD THAT:- From the facts of the case it is seen that the appellant received OIO 14284/2011 dated 25.01/2011 which was unsigned. An un-signed document looses its efficacy. As in SRK Enterprises Vs Assistant Commissioner (ST) [ 2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT ], held that an unsigned order cannot be covered under any provision of law dealing with mistake, defect or omission therein, hence affecting the validity of the order and set aside the same with direction to the Competent Authority to pass fresh order in accordance with law. In the present case find that a signed order was subsequently issued on 30/11/2011 whereas the appeal was filed on 16/02/2012 involving a delay of 18 days which is within the condonable period as per proviso to Sec. 128 of the Customs Act, 1962. We, feel that the ends of justice would be served by remanding the matter back to the file of the Ld. Commissioner Appeals to be decided afresh on merits. The appeal is hence allowed by way of remand to the Ld. Commissioner Appeals, Custom House, Chennai, for a decision on merits and is disposed of accordingly.

  ---

• 2024 (11) TMI 1239
  Classification of waste arise from the pulses - Classifiable under 2302 5000 as claimed by the department or under chapter heading 0713 as claimed by the appellant - HELD THAT:- From the plain reading of the chapter heading 2302, it is found that the same is applicable for the goods such as Bran, Sharps and others residues whether or not in the form of palates derived from the sifting, milling or other working cereal or of leguminous plants. That means it applies to the goods namely, cereals of leguminous plant. In the present case the waste arise from the pulses and pulses are not covered either as cereals or leguminous plant. Therefore, on this basis, it is clear that the appellant s product being a waste arise from the pulses does not cover under the tariff heading 2302. It is a settled legal position that irrespective of the position whether the assessee s claim of classification is right or wrong but if the classification proposed by the department fails than the entire proceeding is vitiated and no consequential demands will sustain. Therefore, in the present case, since, it could not be established that the goods in question is classifiable under tariff heading 2302. The impugned order is not sustainable. Classification of goods i.e. waste of pulses under 0713 - The entry of the same reads as DRIED LEGUMINOUS VEGETABLES, SHELLED, WHETHER OR NOT SKINNED OR SPLIT . We find that as against the cereal and vegetable plants, the goods is appropriately classifiable as dried leguminous vegetables. Therefore, in our considered view, we hold that the appellant have correctly classified the goods under 0713.

  ---

• 2024 (11) TMI 1238
  Enhancement of value and additional duty - re-determine the value of the goods - appellant had imported Fuel Filters and other filters from China - consignment was ordered for examination and thereafter, it was found that the goods were of a much better quality i.e., made in Germany, South Korea, etc. - HELD THAT:- We find that there is no dispute as to the fact that the filters carried the brand names of reputed parties such Komatsu, Deutz, Volvo, etc., along with the countries of origin embossed as Germany , Korea , etc. This basically would allow the importer to sell these filters to buyers who want to replace these filters with the original branded filters. Hence, we find that the value as shown in the invoice of the Chinese exporter cannot be accepted prima facie. The importer himself had volunteered to pay the differential Customs Duty as per the enhanced value arrived at by the Customs officials, but subsequently appears to have changed their stand and sought re-examination of the goods by the Chartered Engineer. There is nothing on record to indicate that the Chartered Engineer, who was also duly approved by the DGFT, has committed any mistake in examining the subject consignment and arriving at the value. Therefore, we do not find any merit in the arguments adduced by the appellant that the Revenue has not followed the proper procedure while enhancing the value. Therefore, we hold that the lower authorities have correctly arrived at the value as per which the appellant would be required to pay Rs.25,23,360/- (as per the original estimate of the Customs officials). Since it was not a very serious contravention by the appellant and initially, they were even ready to pay the differential duty arising thereon and further were also ready to re-export the consignment for which they had given a written request, we find that confiscation of the goods is not warranted. Accordingly, we set aside the said order of confiscation and consequently, the redemption fine imposed also stands set aside. We also set aside the penalty of Rs.2,50,000/- imposed on the appellant. We give an option to the appellant to pay the differential Customs duty along with interest, to clear the consignment.

  ---

• 2024 (11) TMI 1237
  Enhancement of Composite penalty - appellant did not submit the documents with regard to 6 Bills of Entry - penalty of Rs. 40000/- has been enhanced to Rs. 3,00,000/- - Adjudicating Authority imposed a penalty under Regulation 5 of Customs (Provisional Duty Assessment) Regulations, 2011 - appellant submits that although they have not filed the documents in time but later on the documents were filed - HELD THAT:- As relying on the decision of Shyam Steel Industries Ltd. [ 2024 (1) TMI 473 - CESTAT KOLKATA] wherein held reduced penalty can be imposed for such procedural violations. Thus penalty of Rs. 40,000/- imposed by the Adjudicating Authority shall meet the end of justice.

  ---

• Insolvency & Bankruptcy

• 2024 (11) TMI 1236
  Dismissal of Company Appeal against the order admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - existence of pre-existing dispute has not been proved - HELD THAT:- The appellants have not placed on record even the proof of dispatch of the letters and the Notice referred above, leave apart, the proof of service. More pertinently, while replying to the Demand Notice dated 26th April, 2017 issued by the respondent under Section 8 of the IBC, none of the letters and the Notice referred above have been referred to and relied upon. In the absence of the proof of dispatch and/or service of the letters and the Show Cause cum Demand Notice dated 11th December, 2012, it is impossible to come to the conclusion that there was a pre-existing dispute. A contention regarding pre-existing dispute has to be supported by the evidence. In this case, it is wholly unsupported by the evidence. The view taken by the NCLAT is agreed upon - appeal dismissed.

  ---

• 2024 (11) TMI 1235
  Condonation of delay of 4486 days in filing the appeal to assail money recovery decree - benefit under Section 14 of the Limitation Act - professional misconduct of the counsel of appellant. HELD THAT:- The delay in filing the appeal is not for an insignificant period; it is an inordinate delay of 4486 days. The impugned judgment and decree being dated 18.09.2012, the period of limitation prescribed for filing appeal expired on 17.12.2012. The delay till 29.11.2019 (the date of filing of application under Order IX Rule 13 CPC) has been attributed by the appellant company to the professional misconduct of their erstwhile counsel. The appellant is not an individual litigant, much less an illiterate lay person. The appellant is a limited company. Admittedly, the appellant was being represented through an employee of theirs, who left job. That being so, the appellant cannot claim no duty to be diligent in keeping track of the lis. Further, during arguments learned counsel for appellant submitted that no action has been taken against the erstwhile counsel for his alleged misconduct - no satisfactory explanation is set up by the appellant to explain their having not filed the appeal during the period from 17.12.2012 to 29.11.2019. The period from 29.11.2019 to 20.09.2024 has been explained by the appellant, pleading that they filed application under Order IX Rule 13 CPC, which got dismissed, so they filed the present appeal on 08.10.2024. The appellant has claimed benefit under Section 14 of the Limitation Act for the said period of almost five years - The expression good faith is defined under Section 2(h) of the Limitation Act, stipulating that nothing shall be deemed to be done in good faith which is not done with due care and attention. What is to be seen is as to whether the institution and prosecution of the other proceeding in wrong forum was done with due care and attention, thereby in good faith. Another requirement of Section 14 of the Act is that the applicant must have been prosecuting the previously instituted proceedings with due diligence. Due diligence is a measure of prudence or activity expected from and ordinarily exercised by reasonable and prudent person under the particular circumstances. In the present case, complete lack of due care and attention is writ large on the face of record. According to the appellant s own case, for the first time they became aware of the impugned judgment and decree upon receipt of demand notice on 27.09.2019 and filed application under Order IX Rule 13 CPC on 29.11.2019, which application was dismissed by the trial court vide order dated 27.05.2024 - There is not even a whisper in the impugned judgment that it was being passed ex-parte. Even counsel for the appellant was conscious that the impugned judgment and decree was not ex-parte and that is the reason, the appeal FAO 300/2024 was withdrawn on 20.09.2024. Evidently, the appellant first filed the application under Order IX Rule 13 CPC without there being ex-parte judgment and decree, and thereafter, continued to prolong the application from 29.11.2019 to 20.09.2024 i.e., almost five years. By any liberal standards, it cannot be treated as proceedings pursued by the appellant in good faith. Therefore, for the period from 29.11.2019 to 20.09.2024, benefit of Section 14 of the Act cannot be granted to the appellant. In any case, since for the first part of delay period of almost seven years no sufficient cause has been shown, thereby disentitling the appellant benefit under Section 5 of the Act, for the subsequent part of delay period of more than five years, no benefit under Section 14 of the Act can be granted. This is not a fit case to condone the colossal delay of 4486 days in filing the present appeal. Therefore, the delay condonation application is dismissed.

  ---

• 2024 (11) TMI 1234
  Dismissal of Section 7 application filed by the Appellant - financial debt or not - share application money in respect of the shares not allotted - whether in the facts of the present case, the share application money which was deposited with the Corporate Debtor by the Appellant fell in the category of Section 5(8) of the IBC? - HELD THAT:- The basic ingredients which are required to be met for a debt to become financial debt are that there must be a disbursal against the consideration for time value of money. Further sub clauses (a) to (i) of Section 5(8) delineates the various transactions which are included in the ambit of financial debt . Prima-facie, amounts raised by way of share application money is not expressly covered in the transactions covered by sub clauses (a) to (i) of Section 5(8) of the IBC. On looking at Rule 2(c)(vii) of the CADR Rules, 2014 and the explanatory clause appended thereto, it becomes clear that it refers to any amount received and held pursuant to an offer made in accordance with the provisions of the Companies Act, 2013 towards subscription to any securities, including share application money. It flows therefrom that for the aforementioned CADR Rules to be attracted in respect of share application money, there has to be a clear nexus to show that the share application money amount was advanced in conformity with the relevant provisions of the Companies Act, 2013 - There is no evidence of any valid concluded agreement between the two parties with respect to allotment of shares. Hence, the amount which was advanced by the Appellant cannot be treated to be amount in response to the private placement offer. Rule 2 of CADR Rules envisages that only if any amount is received pursuant to any private placement offer made in accordance with the provisions of the Companies Act, 2013 and no shares are allotted qua that amount, only then the sum becomes a deposit. When no proof of any private placement offer made in accordance with the provisions of the Companies Act, 2013 has been placed on record by the Appellant, the CADR Rules cannot be held to be applicable. Since the amount advanced cannot be related to Section 42 of the Companies Act, the applicability of Section 42(6) cannot be pressed as is being sought by the Appellant in the present case. There are no infirmity in the order of the Adjudicating Authority rejecting the Section 7 application of the Appellant - there is no merit in the appeals - appeal dismissed.

  ---

• Service Tax

• 2024 (11) TMI 1233
  Dismissal of appeal as filed belatedly and beyond the time permitted by the statute - petitioner vehemently submits that this is a case where certain events peculiar to the petitioner have to be noticed while this Court considers the question as to whether the appeal filed by the petitioner must be restored to file for the purposes of disposal on the merits of the matter - HELD THAT:- As in normal circumstances, this Court will not restore an appeal which has been rejected on the ground that it was filed beyond the period of limitation if it has found that such rejection was justified by the statutory provisions governing the filing of such appeal. However, if this Court comes to the conclusion that there are some special and extraordinary circumstances which could have prevented the person filing the appeal from presenting the appeal within time, this Court cannot be denuded of the authority to issue a writ of mandamus commanding the Appellate Authority to consider the appeal on the merits and to take a decision in the matter. Taking cue from the observations of the Supreme Court in B.C. Chaturvedi [ 1995 (11) TMI 379 - SUPREME COURT] in the extraordinary and special circumstances of this case, the order of the Appellate Authority can be set aside and the appeal filed by the petitioner against Ext. P3 order can be restored to file with a direction to the Appellate Authority to hear and dispose of the appeal on merits and in accordance with the law. This writ petition is allowed, setting aside Ext. P5 order of the Appellate Authority and directing that the appeal filed by the petitioner against Ext. P3 order-in-original shall be heard and disposed of in accordance with the law.

  ---

• 2024 (11) TMI 1232
  Refund of pre-deposit - dispute over inclusion of certain reimbursement expenses such as freight, stationery, printing charges, telephone charges, asset hire, courier, insurance and other taxes while providing Clearing and Forwarding agency services. HELD THAT:- Revenue has accepted that once the appeal is decided in favour of the assessee, he shall be entitled to refund of the amount deposited along with interest at the prescribed rate from the date of making the deposit to the date of refund, irrespective whether the order of the Appellate Authority is proposed to be challenged by the Department or not. The amount of 10% of the tax amount deposited by the appellant had become refundable as with the passing of the final order dated 1.5.2019 in their favour by the Tribunal, the entire demand had become annulled. Therefore, conclude that the deposit made by the appellant is not a payment of duty but only a pre-deposit for availing the right of appeal and such amount is bound to be refunded when the appeal is allowed with consequential relief. The impugned order is unsustainable and is hereby set aside. The appellant is entitled to refund of Rs.70,400/- along with interest @6% from the date of deposit till the date of actual refund is made. The Department is directed to release the amount within a period of 4 weeks.

  ---

• 2024 (11) TMI 1231
  Demand of service tax was confirmed under Cargo Handling Service along with interest and penalty - whether the services provided by the appellant to WCL are taxable under the category of Cargo Handling Service or Transportation of Goods by road service ? - HELD THAT:- The primary nature of work awarded to the appellant was transportation as is evident from the valuation of the work, which is attributable mainly to the transportation activities and the very limited portion is towards mechanical loading of coal. The work orders of WCL shows the combined rate for loading and transportation of coal as well as work orders for only loading coal in the wagons. It has been pointed out that the element of loading in combined contract is merely 5% and the remaining 95% of valuation is attributable towards transportation activities. Therefore, logically the primary and the dominant nature of work is transportation within the mining area and would, therefore, not fall under Cargo Handing Service . We are of the view that the Commissioner was not justified in holding that the appellant had undertaken the activity of Cargo Handling Service . In fact, the Commissioner while passing the impugned order had not adjudicated the issue within the four corners of the remand order passed by the Tribunal. In view of the issue having been settled as referred above, the impugned order is unsustainable and is hereby set aside. The appeal is accordingly allowed.

  ---

• 2024 (11) TMI 1230
  Refund claim - appellants plea that the service receiver had already paid an amount - appellant s claim is that the entire amount of service tax paid by them was to be considered as deposit u/s 35FF of the Central Excise Act, 1944 and claimed refund of the same - HELD THAT:- In the present case, the refund arose only after the passing of the de novo order wherein the duty amount of Rs.12,99,411/- was dropped. The provisions of Section 11B Clause (ec), the relevant date for filing a refund claim is stated as follows: in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction . Therefore, the appellant should have filed a refund claim on or before 20.03.2021, however, admittedly the appellant has filed a refund claim under Section 35FF of Central Excise Act, 1944 only on 07.05.2021 which has been received by the Revenue on 15.06.2021, therefore, the claim is barred by limitation as per the provisions of the Section 11B of the Central Excise Act, 1944. Hence, the Commissioner (Appeals) has rightly held that pre-deposit amount of 7.5% of Rs.16,97,430/- is only eligible as refund. Whether notice is to be issued before rejecting any refund claim as claimed by the appellant? - In the instant case, the appellant had made his claim only on the ground that the entire amount is to be considered as pre-deposit under 35FF of the Central Excise Act 1944. The appellant appeared before the Original Authority for the personal hearing held on 18.08.2021 and had filed written submissions 18.08.2021 which was taken on record. The order was passed taking into consideration the submissions made by the appellant. As rightly observed the Commissioner (Appeals), there is no violation of principles of natural justice as claimed by the appellant.

  ---

• 2024 (11) TMI 1229
  Demand on account of irregular availment of cenvat credit on exempted services needs - period under dispute from 2013-14 to 2017-18 (upto June 2017) - levy of penalty for non-filing of ST-3 returns, thus, contravening the provisions of Rule 7 of Service Tax Rules, 2004 read with Section 70 of the Finance Act, 1994. HELD THAT:- The Cenvat Credit Rules, 2004 read with Section 66D of the Finance Act, 1994 clearly states that trading activity is an exempted service and therefore, cenvat credit is not available for the exempted services. Taking of irregular credit on the trading activity was known to the appellant and from 01.03.2011 they were not liable to avail cenvat credit on the trading activities - after the amendment with effect from 01.04.2011 wherein trading activity was specifically included in the negative list, clearly establishes that trading activities are to be considered as exempted services and any credit taken on the exempted service needs to be reversed. From the above Final Order, it is also seen that the demand was confirmed for the period 01.04.2011 to 31.03.2012 which was dropped only on limitation. The appellant being aware of this fact, continued to take credit even after the amendment and after confirmation from department on merits in their own unit at Bangalore South for the period 01.04.2011 to 31.03.2012. This clearly establishes that appellant had suppressed this fact and continued to avail the credit, the fact that they have filed the returns regularly does not absolve them from their liability. As clearly held by the Commissioner (Appeals), the appellant working under self-assessment procedure had to comply with the relevant Act and Rules especially when the issue was already known to them. Hence, the credit on the exempted product both on merits and limitation is upheld. Amendment allowed reversal of proportional credit along with interest, in the cases where common credit was being availed on both dutiable and exempted goods, the demand of 6% / 7% on the exempted value cannot be sustained, the matter stands remanded for calculating the proportionate cenvat credit to be reversed along with interest. Penalty imposed under Section 78 of the Finance Act, 1994 is set aside. Penalty for non-filing of returns, it is noticed that the appellant had filed the returns but uploaded returns were rejected by the portal due to some unspecified technical error from the records placed before us and hence, as rightly claimed by the appellant they cannot be penalised for non-filing of returns. Accordingly, the penalty imposed under Section 77(2) of the Finance Act, 1994 is set aside. Demand under Rule 6(3) of the Cenvat Credit Rules, 2004 the matter is remanded for re-determining the proportionate cenvat credit along with interest on the trading activities that are considered to be exempted.

  ---

• 2024 (11) TMI 1228
  Method of calculation of taxable value - Differential value and service tax demand - Appellant has received the rent in excess of the rent booked in the books of accounts on the basis of four tenants statements out of total tenants of 238 - revenue calculated the rent value on the basis of statements of persons - HELD THAT:- We find that, it is settled law that though the admission is an important piece of evidence but it cannot be said to be conclusive and it is open to the person who has made the admission to show that this is incorrect. Admission of persons, cannot be considered to be conclusive evidence to establish the guilt of the assessee. Burden of proof is on the Revenue and same is required to be discharged effectively. In the present matter tenant nowhere produced any records/piece of paper in support of their statement. The only oral statements of service recipient cannot be accepted as admissible piece of evidence. No cash receipts has been relied upon by the department, no financial flow back has been relied upon by the department for the collection of rent in cash, no rent agreement has been found by the department for the support of excess rent , no ledger entry in the books of accounts of the appellant found for so called excess collected rent. Moreover, none of the persons on whose statement reliance was placed by the department were cross-examined by the Ld. Commissioner in the present matter. Clearly, the Adjudicating Authority had failed to follow the requirement of Section 9D of the Central Excise Act 1944, which is applicable in Service Tax matters, regarding examination in chief of witness, therefore quantification of demand of service tax on the basis of statement of persons not sustainable. Before fastening the service tax demand, it was incumbent on the revenue to come up with tangible evidence to prove the suppression of taxable value and quantify the demand on the basis of documentary evidences. We also find that in the present matter appellant also produced the details of rent received from each tenant and shops during the disputed period before revenue and Ld. Commissioner. Department has calculated the demand of service tax on all the shops for whole periods without verifying the details that whether the said shops have been given on rent during the whole disputed period or not; whether shops have been given on rent or sale basis; what is the actual rent recoverable or received by the appellant; how many month occupant s have been holding the shops as a tenant. We noticed that in the present matter revenue has not considered the proper facts while calculating the liabilities against the department. As per details of quantification of rent produced by the appellant before us, we, therefore, reduce the demand of Service tax from Rs. 72,61,747 to Rs. 17,82,992/- together with interest. Penalty imposed - As we find that the appellant in the present matter not disputed the liability of services tax and has admittedly paid the service tax well before the issuance of show cause notice. In these circumstances, we do not find that there was any mala fide on the part of the appellant. Therefore, benefit of Section 80 should be extended for the appellant and penalties imposed by the Ld. Commissioner are set aside. Penalty imposed under Section 76 and 78 - We are of the view that simultaneous penalty under Section 76 and 78 cannot be imposed as held in the case of Rawal Trading Company [ 2016 (2) TMI 172 - GUJARAT HIGH COURT]

  ---

• 2024 (11) TMI 1227
  Short payment of service tax - Demand of service tax worked out after comparing the income declared in Form 26AS/ITR vis- -vis- taxable value disclosed in ST-3 return - Appellant had declared less/not declared any taxable value in their ST-3 return for F.Y. 2015-16 and 2016-17 as compared to the value declared in their form 26AS - appellant have provided Manpower Recruitment Service to various companies. HELD THAT:- Appellant basically provided the Labours to the pharmaceutical companies as may be required to provide for packing, loading/unloading, cleaning and maintenance etc. works at factory. Appellant is responsible for deducting and remitting provident fund and ESIC contributions and also for payment of wages to labours and other dues, and also shall require to maintain records and registers, obtain any license or registration required by law for supply of workmen/labour. Further conditions of agreements clearly indicate that the Appellant is supplying Labour/manpower to the pharmaceutical companies. We find that the tenor of the agreements clearly indicate that the Agreement entered into by the appellant is a Labour Supply Contract and so the services rendered would fall under Manpower Recruitment or Supply Agency service. Notification No. 30/2012-ST dtd. 20.06.2012 amended vide Notification No. 7/2015 -ST dtd. 01.03.2015 provides, in case of Manpower Supply Service 100% service tax is payable by the Service recipient w.e.f. 01.03.2015. Before this amendment Service provider was required to pay 25% service tax and 75% service tax was required to be paid by the Service recipient. In the present matter Appellant provided the manpower supply service to above pharma companies on which as per the above provisions service recipient is required to pay 100% Service tax. We also noticed that in the present matter on the Appellant s service aforesaid pharma companies have paid the service tax. The Appellant also produced before us the copies of Challans and certificate issued by said pharma companies regarding the payment of service tax on the appellant s activity. In the present disputed matter service recipient itself considered the nature of service of Appellant as Labour Supply/ Manpower Supply and discharged the service tax liability on said activity. Therefore, it is clear that the Ld. Commissioner have committed an apparent error in confirming service tax demand in the present matter. Since the service tax on entire value has been discharged there cannot be double taxation. In the present matter undisputedly the service tax has been paid by the Pharma companies on Appellant s activity. The demand of service tax from the Appellant would be double taxation on same amount which itself is erroneous. Hence the demand is not sustainable for this reason as held in case of Dinesh M. Kotian -[ 2016 (1) TMI 973 - CESTAT MUMBAI] We find that tribunal in the case of Navyug Alloys Pvt. Ltd. [ 2008 (8) TMI 100 - CESTAT AHEMDABAD] has held that once tax already paid on the services, it was not open to the Department to confirm the same against the appellant, in respect of the same services . Allow the appeal of appellant with consequential relief.

  ---

• 2024 (11) TMI 1226
  Cenvat credit of service tax paid on deposit insurance premium to Deposit Insurance and Credit Guarantee Corporation - HELD THAT:- Since there are conflicting views of various benches of the Tribunal, a Larger Bench of the Tribunal has been constituted in the matter of South Indian Bank [ 2020 (6) TMI 278 - CESTAT BANGALORE - LB] in order to resolve the issue whether the insurance service received by the banks from DICGC can be considered as an input service ? Larger Bench of the Tribunal after examining various provisions of Finance Act, Cenvat Credit Rules, Deposit Insurance Act and the Regulations has answered the reference in the following terms: The insurance service provided by the Deposit Insurance Corporation to the banks is an input service and Cenvat Credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering output services . Following the Interim Order of the Larger Bench, the Tribunal [ 2020 (6) TMI 278 - CESTAT BANGALORE - LB] allowed the appeal of South Indian Bank. The said order of the Tribunal was thereafter challenged by the Revenue before the Hon ble High Court of Kerala at Ernakulum by way of filing Central Excise Appeal No.1/2021 in the matter of Principal Commissioner of Service Tax and Central Excise, Kochi vs. South Indian Bank alongwith other connected appeals and the Hon ble High Court [ 2022 (12) TMI 1479 - KERALA HIGH COURT] dismissed the appeal filed by Revenue and upheld the decision of the Tribunal in South Indian Bank (supra). Nothing has been brought to our notice to show that any appeal has been filed by the Revenue against the aforesaid decision of Hon ble Kerala High Court, therefore, it attained attained finality. The view taken by the Larger Bench in the matter of South Indian Bank Ltd. (supra) has further been affirmed by another Larger Bench of the Tribunal in the matter of Bank of America, National Association vs. Principal Commissioner, CGST Central Excise, Mumbai [ 2024 (4) TMI 1149 - CESTAT MUMBAI] Allegation against the appellant that they have violated the provisions of Rule 4 (7) and 9(1) ibid by availing cenvat credit even before issuance of two invoices by DICGC - We do not see any irregularity in availment of cenvat credit by the appellant against invoices dated 20.9.2012 and 03.06.2013 respectively and there is no violation of Rule 4(7) or Rule 9 (1) ibid and therefore no interest can be imposed on the appellant. We are of the view that the registration of the banks with DICGC is not optional but compulsory. All Banks have to obtain a licence from Reserve Bank of India u/s 22 of the Banking Regulation Act without which no bank can function and all of them have also to compulsorily obtain registration with the DICGC in order to protect the interest of depositors. The registration can be obtained by the banks only on payment of premium to DICGC. If a Bank fails to pay premium to DICGC, its registration would be cancelled, which ultimately would result in cancellation of licence granted to the Bank by Reserve Bank of India. Which means without payment of insurance premium to DICGC, the Bank will not be able to function or provide any banking and other financial services. Therefore payment of insurance premium to DICGC is an integral part of banking and other financial services and is an input service for which Cenvat Credit can be availed by the banks. Accordingly the impugned orders are set aside and the appeals filed by the Appellant are allowed.

  ---

• 2024 (11) TMI 1225
  Invoking the extended period of limitation alleging suppression and the period of dispute is 2015-16 - HELD THAT:- Original Authority after considering all the documents provided by the appellant has come to the conclusion that there is no service involved and it pertains to sale of goods. Further, find that the learned Commissioner (Appeals) in the impugned order has observed that the appellant has failed to provide various documents, which is factually incorrect. Consultant appearing for the appellant has also brought to my notice that the appellant has explained the discrepancy regarding the invoice dated 18.04.2015 but the learned Commissioner has wrongly interpreted the said invoice in order to confirm the demand. Thus, find this Tribunal in the case of M/s Girdhari Lal Construction Private Limited [ 2024 (9) TMI 241 - CESTAT CHANDIGARH] has considered the issue of invoking the extended period of limitation and has held that when the show cause notice is issued on the basis of third party data, in that case, extended period of limitation cannot be invoked. Appellant s appeal succeeds on limitation without going into the merits of the case.

  ---

• 2024 (11) TMI 1224
  Service tax demand - taxable services under the category Security Agency Services - as per department appellants not registered themselves and have not discharged the applicable service tax - HELD THAT:- As decided in Principal Bench of the CESTAT [ 2016 (12) TMI 289 - CESTAT NEW DELHI] the lower authorities have, however, taken the view that the activity undertaken is not in the nature of statutory duty, but an activity undertaken for a consideration which is not a statutory fee. We find ourselves unable to agree to this stand taken by the lower authorities. The police department has the mandatory duty to maintain public peace and order. For such duty, which is in the nature of sovereign function, no charges are recoverable from the citizens. In the present case, the police department has recovered fees for deploying additional police personnel on request. The statutory functions of the police of the State Govt. make it explicit that such activity, even at request of the other person, is to be carried out only for the purpose of public security or for the maintenance of public peace or order. The charge for deployment of such additional force is also prescribed by the statutory notification issued by the State Govt. We are of the view that the activity of deploying police personnel on payment basis is to be considered as part of statutory function of the State Govt. and the fees recovered are to be considered as statutory. It is also not disputed that such amounts recovered have been deposited into the Govt. treasury. On the basis of the above discussion, we conclude that police department, which is an agency of the State Govt., cannot be considered to be a person engaged in the business of running security services. Consequently, the activity undertaken by the police is not covered by the definition of Security Agency under Section 64(94) of the Act. We also find that in terms of C.B.E. C. s circular on this subject, the fees collected by the police department is in the nature of fee prescribed for performing statutory function, which has been deposited into the Govt. treasury. In the light of the C.B.E. C. s circular also, there can be no levy of service tax on such activities carried out by the police department. Also as per State of Punjab and others vs. Union of India and others [ 2018 (9) TMI 2001 - PUNJAB HARYANA HIGH COURT] where this issue has been examined and writ petition against the similar show cause notices demanding service tax for providing security guards to the public sector Banks and General Post Office has been set aside and the writ petition was allowed. While allowing the writ petition, it has seen observed that under Article 289 of the Constitution of India that the property and income of a State shall be exempted from Union taxation. We are of the considered opinion that the issue stands decided in favor of the Home Guards.

  ---

• 2024 (11) TMI 1223
  Service tax under Commercial or Industrial Construction Service by invoking the extended period of limitation - HELD THAT:- This issue is no more res integra and has been held by various benches of the Tribunal that if the service rendered by the assessee is works contract service , even then it cannot be taxed under any other category even after 01.06.2007. As decided in Bajrang Lal Gupra vs. CCE, Gurgaon [ 2023 (6) TMI 246 - CESTAT CHANDIGARH ] held composite contract or works contract service even after 01.06.2007 cannot be taxed under Construction of Complex Service under Section 65 (105) (zzh) read with Section 65 (30a) of the Finance Act, 1994 - The fact that there was no proposal in the show cause notice to include the income as auxiliary business service is indisputable in view of the contents of the show cause notice and therefore in the absence of any notice issued to the respondent in view of the provisions of Section 73, it is clear that imposition of tax and consequently interest and penalty cannot be sustained and the same has been rightly set aside by the Tribunal. As no order to treat the income as Business Auxiliary Service had been passed without proposing the same to the respondent in the show cause notice, the order passed by the Tribunal is justified and substantial question of law has to be answered against the revenue. Alsoin the case of Srishti Construction [ 2017 (12) TMI 172 - CESTAT CHANDIGARH ] the Division Bench of this Tribunal has also set-aside the demand of service tax under Works Contract Service and has also held that the extended period of limitation is not invokable and allowed the appeal of the appellant with consequential relief, if any, as per law.

  ---

• 2024 (11) TMI 1222
  Demand of Service Tax on sale of books provided for training and coaching of students, under the category of commercial training and coaching service - HELD THAT:- We observe that the Appellant has been rendering commercial training and coaching services. As a part of this service, they were also selling books/study materials to the students. The prices of the books were printed on the said books. We also find that these books were available for sale not only to students enrolled with the Appellant, but also to other students who were not enrolled. The only difference is that the books are being sold at a concessional rate to the enrolled students. We find that the Appellant is liable for payment of VAT for the sale of such books. However, as the sale of books was exempt from levy of VAT in the State of West Bengal during the impugned period, they were not paying VAT thereon. Accordingly, we find that the Appellant is eligible for the benefit of Notification No.12/2003-S.T. dated 20.06.2003 which excludes the value of books/study materials sold from the taxable value. As per Notification No. 12/2003-S.T., dated 20-6-2003 we observe that the value of materials supplied on which VAT is paid or payable, is not includable in the assessable value for the purpose of computing the service tax liability. In this case, it is not in dispute that VAT is payable on the books sold by the appellant, even though it is exempted in the state of West Bengal. Accordingly, as per the Notification 12/2003-ST dated 20.06.2003, we hold that the value of books sold is not includable in the assessable value for the purpose of computing the service tax liability of the appellant. We also find that the issue is no longer res integra as the Tribunal, New Delhi has already decided the issue in favour of the Appellant in the case of FIITJEE Ltd. [ 2017 (1) TMI 1602 - CESTAT, NEW DELHI] Thus we hold that the Appellant is not liable to pay Service Tax on the sale value of the books/study materials sold, under the category of commercial training and coaching service .

  ---

• 2024 (11) TMI 1221
  Disallowance of CENVAT Credit availed on DG set and tower dismantling services - inward supplies of Services of transportation, procurement and filling of diesel and DG set and tower dismantling services. CENVAT Credit on the services of transportation, procurement and filling of diesel by the appellant - HELD THAT:- We observe that that the DG sets are necessary for running of the cell sites and providing the telecommunication service by the appellant. For continuous running of the DG sets, diesel should always be available. Thus, as a part of providing operations maintenance services, the service providers procured, transported and filled diesel in the DG sets to ensure their continuous operation and sustenance of the cell sites. On such activity of procurement, transportation and filling, the service providers charged service tax to the Appellant under the head Business Support Services. We observe that the means clause of the definition of input service includes those services which are used by the service provider for providing output services. Given the wide ambit of the said definition, we hold that the CENVAT credit availed by the appellant on the business support services qualifies as input services . Accordingly, we hold that the Appellant is eligible for the credit as input service . The issue is no more res integra as this Tribunal has already decided the same issue of the appellant for the prior period April 2011 to December 2011 and allowed the Cenvat Credit on such services as reported in M/s. Bharti Hexacom Limited [ 2024 (10) TMI 1064 - CESTAT KOLKATA] We find that the appellant is eligible for the CENVAT credit availed on the business support services, which qualifies as input services and accordingly, we set aside the disallowance of the credit in the impugned order. CENVAT Credit on DG sets and tower dismantling services - We observe that the DG sets needs to be dismantled when they stop working due to wear and tear or due to various administrative reasons. When they are dismantled and a new DG set needs to be installed in its place, the appellant availed the services of some service providers for the dismantling work. We observe that such services which are used to dismantle the DG sets or Towers, are used by the Appellant only in the course or furtherance of the telecommunication business. Accordingly, we hold that the Appellant are eligible for the credit of service tax paid on such services, as input service and accordingly, we set aside the disallowance of the credit in the impugned order. We also observe that that the Appellant has not suppressed any information from the Department. In the absence of any suppression of facts or mala fide intent on the part of the Appellant, extended period of limitation is not invokable. We agree with the submission of the Appellant that extended period cannot be invoked when the issue involves interpretation of statute. Thus, we hold that the demands confirmed in the impugned order by invoking the extended period of limitation are not sustainable.

  ---

• Central Excise

• 2024 (11) TMI 1220
  Clandestine manufacture and removal - substantial electricity consumption - no other corroborative evidences - Revenue faied to rebut the claims made by the appellant - penalty imposed on the Director Mahabir Prasad Rungta - HELD THAT:- Since the search had commenced suddenly without any notice, there would be no chance for the appellant to hide these factual evidences. But no evidence towards stock of raw materials, consumables, in-process stock or finished goods stocks have been found or recorded in the Panchanama. The panchnama nowhere indicates anything to suggest that manufacturing activities were noticed by the investigating team at the time of their surprise visit. Even in the six trucks loaded with materials, while it is being claimed by Revenue that they are finished goods by nature, the appellants have countered the same stating that these trucks were carrying scrap arising out of Kilns being fabricated and installed in the factory. Coming to the evidence on account of the data of sales said to be obtained from the CPU and based on the emails [forensically inspected], there is no clarity as to when the CPU was seized, and if seized, whether Panchanama was prepared towards the same is not coming out anywhere - The date of signing and date of printing gives raise to serious doubt towards the very veracity of the Revenue s claim. Added to this is the fact is the issue of retraction of the initially recorded statement of the officers of the appellant. The Electricity consumption used for arriving at the clandestine manufacture has been countered by the appellant to make their submission that since Kilns were being fabricated and installed in the factory premises, the electricity was being used. The Dept has not come out with any detailed analysis to negate the claim of the appellant. The proceedings are purely based on presumptions and assumptions without proper back up corroborative evidence. The issues raised by the Revenue have been answered satisfactorily by the appellant, thereby shifting the onus to prove the clandestine manufacture / clearance on to the Revenue. But neither corroborative evidence, nor any counterpoint have been brought in by the Revenue to fortify their claim - Appeal allowed on merits. Penalty on Director Mahabir Prasad Rungta - HELD THAT:- Since the confirmed demand is not sustainable against the main appellant Shriram Power Steel Pvt. Ltd., on merits the penalty imposed on the Director Mahabir Prasad Rungta also does not legally sustain. Accordingly, the penalty imposed on him is set aside. The impugned order is set aside - appeal allowed.

  ---

• 2024 (11) TMI 1219
  Denial of CENVAT credit - input services - godown rent - loading, unloading, freight, painting and other miscellaneous expenses - HELD THAT:- The present demand is a statement of demand subsequent to a show cause notice dated 04.10.2016. It is noted that the said show cause notice dated 04.10.2016 culminated in M/S. WHEELS INDIA LTD. VERSUS COMMISSIONER OF CGST CE, PUNE-I [ 2022 (9) TMI 735 - CESTAT MUMBAI] . On going through the said final order, it is noted that cenvat credit availed by the appellant on input services such as godown rent, unloading, loading etc. were held to be eligible input services for the appellant and cenvat credit was allowed to the appellant. The impugned order is set aside - appeal allowed.

  ---

• 2024 (11) TMI 1218
  Conversion of 100% EOU into DTA - denial of CENVAT Credit - non-registration of debonded EOU - denial of credit u/r 10 of CENVAT Credit Rules, 2004 - denial of transfer of PLA balance of debonded EOU to CENVAT credit of DTA. Denial of CENVAT credit of Rs. 10,77,05,805/- on allegation of non-registration of debonded EOU - HELD THAT:- The appellant provided all possible disclosures in their application. Pursuant to this letter, the department issued amended central excise registration certificate on 11-03-2013. In this background, when the appellant made all disclosures in their application and amended central excise registration was issued, we do not find any merit in confirming the demand on allegation of non-registration - there are force in appellant s arguments that the department is taking contrary stand as at one hand it is denying credit on the ground that DTA excise registration does not bear address of debonded EOU but at the same time has accepted payment of central excise duty on the clearance made from the premises of EOU. When the appellant provided re-defined boundaries for amended registration in their application and basis the said application revised excise registration was issued, merely non mentioning of the specific plot number cannot lead to denial of credit - there are force in appellant s arguments that it is a settled law that registration of premises is not a pre-requisite for availing credit. It was held in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT ] that In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Also, the appellant s submission that substantial benefit of credit cannot be denied for procedural lapse is a settled preposition of law as has been held by various decisions including the Bombay High Court decision in COMMISSIONER OF CENTRAL EXCISE, NAGPUR, VERSUS M/S. LARSEN TOUBRO LTD., THE CUSTOM EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, MUMBAI [ 2022 (1) TMI 665 - BOMBAY HIGH COURT ] - thus, the demand do not sustain. Denial of credit of Rs. 4,21,16,159/-, under Rule 10 of CENVAT Credit Rules, 2004 - HELD THAT:- On a bare perusal of provision of Rule 10 of CCR it can be seen that the said provision can be invoked in specific circumstances like shifting of manufacturing unit at another site of transfer of factory due to change of ownership, sale, merger, amalgamation, lease or transfer of the factory to a joint venture. Herein, the appellant has merged adjacent debonded EOU into their DTA unit for which clearly provision of Rule 10 of CCR cannot be invoked and therefore, no demand can sustain under Rule 10 of CCR. The appellant converted its EOU unit into DTA and during the said conversion transferred the balance CENVAT credit of EOU into DTA. There are force in appellant s arguments that during conversion of unit from DTA to EOU or from EOU to DTA there is no bar on transfer of CENVAT credit. The issue at hand pertains to conversion of EOU to DTA, it is observed that there is no provisions under the law which bars debonded EOU unit to avail credit in its DTA unit post conversion - the demand of Rs. 4,21,16,159/-, cannot sustain. Denial of transfer of PLA balance of Rs. 7,89,895/- of debonded EOU to CENVAT credit of DTA - HELD THAT:- The PLA is nothing, but appellant s own money lying in balance which can be utilized at a future event for payment of excise duty. Herein, transiting of credit into DTA unit, on merger of EOU into the said DTA, also serves the same purpose. Also, since the Leaned Commissioner admits that the appellant is entitled for refund of the same, transiting the credit in DTA unit has no revenue impact. As has been held in JAY SHREE TEA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., KOLKATA [ 2005 (8) TMI 189 - CESTAT, KOLKATA ] pending utilization of the PLA amount towards excise duty, the department has no claim over such amount. As such, demand on this issue is not sustainable. Thus, no demand can sustain. Accordingly, the impugned order is set aside and the appeal allowed with consequential reliefs, if any.

  ---