Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 4, 2022
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Exemption from GST - pure services or not - The term ‘pure services’ has not been defined under the Act. However, a bare reading of the description of services as specified in serial number 3 of the Exemption Notification denotes supply of services which does not involve any supply of goods can be regarded as pure services. In the present case, the work order has been issued for operation and maintenance of compactor and hook loader. Annual maintenance of compactor and hook loader involves supply of goods like spare parts. The instant supply cannot be held to be pure services. - AAR
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Classification of goods - rate of GST - HSN Code - manufacturing of Industrial Safety belt and Harness - The item industrial safety belt manufactured by the applicant would be classified under chapter sub-heading 6307 20 90 and tax would be levied @ 5% of item sale value not exceeding Rs.1000/- per piece and @ 12% in case where sale value exceeds Rs.1000/- per piece. - AAR
Income Tax
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Validity of Reopening of assessment - The initial notices u/s 148 issued on 31st March, 2021 Section 151 of the Act as it stood prior to 1st April, 2021 would apply. In terms thereof, undeniably, the previous sanction for issuance of both the notices was taken only of the Additional CIT and not of either the Principal Chief CIT (for AY 2015-16) or the Principal CIT (for AY 2016-17). - Notices issued 148 are illegal, quashed - HC
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Exemption u/s 11 - On lifting the veil, it is clear as daylight that the modus operandi adopted by the Assessee Institutions and Trusts are with the twin objectives of circumventing/violating the provisions of the Capitation Fee Act as well as evading tax while seeking tax exemption under the corporate veil of being different and distinct entities receiving funds from each other for purely charitable purposes. Suffice it to say, nothing can be farther from the naked truth that cannot hide itself sufficiently behind the fig leaf of the legal cover sought to be taken by the Assessees under the guise of being charitable trusts and seeking exemption thereof. - HC
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Deduction u/s 80P - there was a few-month delay in filing the ITR by the assessee and ITR was filed within due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s 80P was made. - Claim of deduction u/s 80P of the Act cannot be denied to the assessee only on the basis that the assessee did not file return of income its return of income within due date u/s 139(1) - AT
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Addition u/s. 68 - levy of tax u/s. 115BBE - There is no scope for telescoping inasmuch as the cash receipt to the assessee, as inferred by us, arises in March, 2017, i.e., after the date of survey on 29/11/2016. The credit entry that is unexplained being in October, 2016, the same being liable to tax u/s. 115BBE, shall yet be at 30% - AT
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Disallowance of making charges - If the making charges rate as determined by the Revenue at Rs.3/- per gram has to be considered, the aforesaid karigar’s net profit declared by them from the business in their respective tax returns would be higher than the gross receipts of making charges at Rs.3/- per gram. This itself goes to prove that the making charges cannot be at Rs.3/- per gram. - making charges paid by the assessee ranging from Rs.12/- to Rs.13/- per gram is acceptable - AT
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Addition u/s. 68 - unexplained cash credits - though the assessee had duly substantiated the authenticity of the transactions of having received advances from 18 parties (supra), but the A.O had failed to dislodge the same by placing on record any such material which would irrefutably disprove the authenticity of the said claim. - CIT(Appeals) who in our considered view had rightly vacated the addition made by the A.O u/s. 68 - AT
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Revision u/s 263 by CIT - Period of limitation - In the light of provisions of section 3(1)(a) of Relaxation Act, 2020 & notification dt. 31/12/2020 r.w. press release, we witnessed that, the time limit within which revision action ought to have completed was extended upto 31/03/2021, thus, initiation of revisionary proceedings by issue of SCN and completion by passing an order of revision is saved of limitation - AT
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Deduction u/s 80G - deductions are duplicate in nature - The non-obstinate clause does not impinge the powers of Assessing Officer to examine deductions claimed after computation of income. The Assessing Officer after examining the treatment given by assessee to the donation made to the foundation concluded that the assessee has taken undue benefit of double deduction of the same amount, hence, disallowed assessee’s claim made after computation of income - Additions confirmed - AT
Customs
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Validity of final assessment orders passed by the Customs authorities - violation of principles of natural justice - Since there is obvious violation of the principles of natural justice and Regulation 6 (3) of the Regulations, the Court has no hesitation in setting aside the impugned letter/order - Matter restored back - HC
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Condonation of delay - if we were to accept the presumption created by section 153 (3) of the Act, the respondent revenue would have to discharge the initial burden that the order-in-appeal was sent through post, as claimed, at the proper and complete address of the appellant. In view of the gaps, we are inclined to lean in favour of the appellant, as any other view would be a leap of faith. - HC
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Levy of ADD - Classification of imported goods - FRP rods - The glass fibre is raw material and product in question is final product. Hence, undoubtedly both items are entirely different and clearly classifiable under CTH 70022090. Since the FRP rods clearly specified against the Tariff entry of 7002 by any stretch of imagination the same cannot be classified under CTH 70199090 - AT
Indian Laws
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Interpretation of statute - Overriding effect of provisions of MSMED Act, 2006 - A party who was not the “supplier” as per Section 2 (n) of the MSMED Act, 2006 on the date of entering into the contract, could not seek any benefit as a supplier under the MSMED Act, 2006. A party cannot become a micro or small enterprise or a supplier to claim the benefit under the MSMED Act, 2006 by submitting a memorandum to obtain registration subsequent to entering into the contract and supply of goods or rendering services. If any registration, is obtained subsequently, the same would have the effect prospectively - SC
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Dishonor of Cheque - modification of sentence of imprisonment to fine - though compounding requires consent of both parties, even in the absence of such consent, the Court, in the interest of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused - HC
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Dishonor of Cheque - discharge of burden to prove - The trial court as well as the appellate court correctly appreciated the evidence and came to the conclusion that the evidence available established commission of offence punishable under Section 138 of NI Act by the accused and, accordingly, the accused was convicted - HC
IBC
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Condonation of delay of 13 days in filing the Appeals - The present is a case where Appellant cannot be blamed for not applying the certified copy of the Order dated 08th June, 2022 since according to the Appellant, the Order was not pronounced nor it was uploaded although Appellant was present in the Hearing and his Learned Counsels participated in the Hearing raising objection regarding the maintainability of the Application. - The present is a case where the Appeal cannot be thrown out on the ground of limitation - AT
Service Tax
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Extended period of limitation - Short payment of Service Tax - The suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. - The confirmation of demand for the period beyond the normal period of limitation by invoking the proviso to section 73(1) of the Finance Act cannot be sustained - AT
Central Excise
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Refund of Excise duty paid mistakenly - principles of unjust enrichment - though the appellants produced Cost Accountant and Chartered Accountant’s certificate, these are not certificates issued by their statutory auditors. Further, it is also not stated in the certificates that they have scrutinized financial statements of the appellant. Even after remand, the appellant has not been able to produce necessary documents to substantiate that they have not passed on the incidence of duty to the buyers of the goods. - AT
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Restoration of appeal - SVLDRS - Unless the tax dues as pointed out by the Designated Committee have been paid by the applicant under the said scheme, the issue cannot be said to have settled and therefore, without looking into it merely on applying under SVLDRS, the learned Commissioner (Appeals) erred in dismissing the Appeal as deemed to have withdrawn. - AT
VAT
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Restoration of penalty - The Tribunal is justified in reversing the order of the Deputy Commissioner (Appeals) as the mandatory provision under section 46(3) of the Act, specifically sub clause (e), declaration was not made by the petitioner to the commercial department to make them aware of such import to the state. The contention that the delivery note and self-declaration were available with the consignment is not enough to show that all the documents necessary for the movement of goods from one state to another as per prescribed under section 46 of the Act is complied. - HC
Case Laws:
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GST
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2022 (11) TMI 140
Exemption from GST - pure services or not - Composite supply or not - providing conservancy/solid waste management services - HELD THAT:- In the instant case, the work order issued by the Conservancy Department of Howrah Municipal Corporation describes the nature of the work for annual operation and maintenance of capacity portable compactor and hook loader. Further, from the copies of invoices as furnished by the authorized representative in course of personal hearing, it is noticed that the applicant has issued invoices describing particulars as annual operation and maintenance of Compactor Machine for lifting and removal of garbage . The term pure services has not been defined under the Act. However, a bare reading of the description of services as specified in serial number 3 of the Exemption Notification denotes supply of services which does not involve any supply of goods can be regarded as pure services. In the present case, the work order has been issued for operation and maintenance of compactor and hook loader. Annual maintenance of compactor and hook loader involves supply of goods like spare parts. The instant supply cannot be held to be pure services. The instant supply for annual operation and maintenance of compactor and hook loader is a composite supply of goods and services and such supply can qualify for exemption vide serial 3A of the Exemption Notification only when the value of goods involved in such composite supply does not exceed 25% of the value of supply and the same is provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - the functions entrusted to a municipality as listed in the Twelfth Schedule include the functions like sanitation conservancy and solid waste management. The applicant's services to HMC may be exempted under serial number 3A of the Exemption Notification if the value of goods involved in such composite supply does not exceed 25% of the value of supply.
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2022 (11) TMI 139
Classification of goods - rate of GST - HSN Code - manufacturing of Industrial Safety belt and Harness - to be classified under HSN code 6307 or not - HELD THAT:- It is found that there is no specific heading in the tariff for classification of industrial safety belt manufactured by the applicant. It appears that the item industrial safety belt made of nylon, which may be termed as life belt, can be covered under Tariff item 6307 20 90. Further, serial number 224 of Schedule I and serial number 171 of Schedule-II respectively of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time, [corresponding State Tax Notification No. 1125-F.T. dated 28.06.2017, as amended]. The item industrial safety belt manufactured by the applicant would be classified under chapter sub-heading 6307 20 90 and tax would be levied @ 5% of item sale value not exceeding Rs.1000/- per piece and @ 12% in case where sale value exceeds Rs.1000/- per piece.
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Income Tax
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2022 (11) TMI 138
Validity of Reopening of assessment - mandatory procedure of a prior inquiry u/s 148-A has not been followed - HELD THAT:- As apparent that as regards the subsequent notices dated 8th April, 2021 u/s 148 for the two AYs in question, since the mandatory procedure of a prior inquiry u/s 148-A of the Act has not been followed, those notices are unsustainable in law and they are hereby quashed. The initial notices u/s 148 issued on 31st March, 2021 Section 151 of the Act as it stood prior to 1st April, 2021 would apply. In terms thereof, undeniably, the previous sanction for issuance of both the notices was taken only of the Additional CIT and not of either the Principal Chief CIT (for AY 2015-16) or the Principal CIT (for AY 2016-17). The reply of the Department is simply that the Additional CIT is one of the authorities to reopen the assessment u/s 147 - This still does not answer the requirement of previous sanction having to be obtained only from the Principal Chief CIT (for AY 2015-16) and Principal CIT (for AY 2016-17). The sanction is of the Addl. CIT who is not the competent sanctioning authority. The notices u/s 148 issued in respect of both the AYs on 31st March, 2021 are illegal as they are contrary to Section 151 of the Act as it stood prior to 1st April, 2021. The impugned notices u/s 148 of the Act issued on 31st March, 2021 in respect of both AYs are also hereby quashed.
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2022 (11) TMI 137
Exemption u/s 11 - Denial of exemption as quid-pro-quo element was involved in the trust accepting donations from donors - reliance on Statement recorded u/s 132(4) of donors - Whether ITAT was legally 'justified' in deciding the case on the ground that the AO has not enquired into the source of the donors? - HELD THAT:- What is to be seen, is the existence of the systemised mechanism to collect the capitation fee as donation through other entities. These principles laid down in the above-stated cases while expounding the concept of lifting the corporate veil, especially in cases relating to tax evasion, and in cases where public interest and policy are sought to be defeated by fraud, are squarely applicable to the present appeals where while the Assessee Trusts are controlled by common trustees and are in indeed sister Trusts, this Court may be constrained to lift the veil to see the real beneficiaries and the object of the donations by relatives/friends of parents as quid pro quo for admissions into the Assessee educational institutions as well as the other Assessees who are not educational institutions. On lifting the veil, it is clear as daylight that the modus operandi adopted by the Assessee Institutions and Trusts are with the twin objectives of circumventing/violating the provisions of the Capitation Fee Act as well as evading tax while seeking tax exemption under the corporate veil of being different and distinct entities receiving funds from each other for purely charitable purposes. Suffice it to say, nothing can be farther from the naked truth that cannot hide itself sufficiently behind the fig leaf of the legal cover sought to be taken by the Assessees under the guise of being charitable trusts and seeking exemption thereof. An elaborate exercise was undertaken by AO by issuing summons to various persons and their sworn statements were recorded. These sworn statements point to the factum of payment of amounts extending to atleast around Rs. 5 Lakhs in each of the cases as well as the nexus between the Assessee institutions. The fact that these payments were made by the relatives/friends of the parents of the students who obtained admission in the Assessee institutions would prove the nature of the donations and the reasons therefor. That apart, it is clearly evident that the funds that have been given for admissions, have been routed through the other trusts. The fact that there have been some statements and their change subsequently can at best be said to be under fear of being exposed, which would ultimately tell on the future of the students. Statement recorded u/s 132(4) of the Act and later, confirmed in statement recorded u/s 131 of the Act, cannot be discarded simply by observing that the assessees have retracted the same, because such retraction ought to have been generally made within a reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessees in the belatedly filed affidavit have retracted from their statements. Such retraction is required to be made as soon as possible or immediately after the statement of the assessees was recorded. Duration of time when such retraction was made, assumes significance and in the present case, retraction has been made by the assessees after eight months to be precise, 237 days. It is settled position of law that the admission though important is not conclusive. It is open to the assessee who made the admission to show that it is incorrect as held by in Pullangode Rubber Produce Company Ltd. v. State of Kerala Another [ 1971 (9) TMI 64 - SUPREME COURT] - The onus falls on the person who had earlier admitted to prove it wrong. Therefore, the statements could form the basis of assessment. Statements given to the AO under Section 132 (4) have legal force. Unless the retractions are made within a short span of time, supported by affidavit swearing that the contents are incorrect and it was obtained under force, coercion and by lodging a complaint with higher officials, the same cannot be treated as retracted. There is preponderance of evidence that the contributions are non-voluntary considering the multitude of facts, such as, the detailed sworn statements of the persons, who had made the contributions, being the relatives/friends of the parents of the students, who were given seats in the Assessee educational institution, the nexus between the other Assessee institution, which collected and passed on the contribution though not an educational institution by itself, having common trustees being well-knit, as can be seen from the facts. That apart, the fact that no action has been initiated by the State cannot be a reason to allow the exemption under the provisions of the Act or absolve the liability of the assessees, that too after the device to route the capitation fee was discovered. Illegality cannot be perpetuated. Similarly, any decision even in the assessees' own case cannot have any bearing on the adjudication of the issues before us, because each assessment is independent and has to rest on its own facts. As such, when the contributions cannot be treated as voluntary, the further question of their application to charitable purposes or otherwise, need not be gone into, meaning thereby that the assesses are not entitled to the benefits of Sections 11 and 12 of the Act. Assessing officer, not enquiring about the source of the donors, it is an undisputed fact that the sums have been paid by the parents or acquaintances to the institutions/trusts for securing the seat. Such persons are the source for the assessees. As rightly contended by the learned Senior Standing Counsel for the Revenue, it is not necessary for the assessing officer to go into the source of the source to tax the assessees under assessment and the same cannot be a reason to allow the deduction, which the assessees are not otherwise entitled to. CONCLUSION - In view of our above findings that the amounts collected by the assessees are capitation fee in quid pro qua for allotment of seat in deviation of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992 and the same are neither a voluntary contribution nor to be treated as applied for charitable purpose, the orders of the Appellate Authority as well as the Tribunal, which are impugned in these appeals, are absolutely perverse in nature and therefore, they are set aside. Accordingly, all the substantial questions of law are answered in favour of the Revenue and against the Assessees.
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2022 (11) TMI 136
Refund of tax paid/deposited by the Petitioner along with applicable interest as per law - HELD THAT:- This Court is of the view that as the order of the Tribunal has not been assailed in appeal u/s 260A it has attained finality and the inaction of the Respondents in granting the refund is in contravention of Sections 240 and 244A of the Act. Consequently, the present writ petition is disposed of with a direction to the AO to pass the appeal effect order of the order passed by the Tribunal for the AY 2013-14 within twelve weeks of receipt of this order as well as grant, if any, the consequential refund of tax paid/deposited by the Petitioner along with applicable interest in accordance with law.
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2022 (11) TMI 135
Income deemed to accrue or arise in India - treating the amount received by the assessee during the year under consideration from its Indian subsidiary as Fees for Technical Services (FTS) - Scope of Agreements entered into between the assessee and its Singapore entity - HELD THAT:- assessee will send necessary personnel to Indian subsidiary company NWIL s facilities to provide management expertise and knowledge to assist with specific issues as necessary. This manifests that the assessee was not only providing some services but also deputing its personnel to its Indian entity for providing expertise and knowledge to assist with specific issues as necessary. As clauses of the Addendum to the Agreement that the assessee was obliged to maintain all the necessary details and record of services and the expenses incurred thereon. Since such details were not readily available with the ld. AR, he requested that the matter may be sent back to the AO/TPO for fresh determination of the issue in the light of all the relevant information/evidence. DR did not raise any serious objection to it. In view of the fact that certain crucial evidence for the decision is not available on record and further certain evidence filed as additional evidence has not been examined by the authorities below, we are of the considered opinion that it would meet the ends of justice if the impugned order on this score is set-aside and the matter is remitted to the file of the AO. We order accordingly and direct him to determine the precise nature of services rendered by the assessee to NWIL and then determine its taxability or otherwise. Needless to say, the assessee will be providing all the necessary details as called for by the AO for a proper determination of the issue.
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2022 (11) TMI 134
Revision u/s 263 by CIT - Whether PCIT erred in exceeding his jurisdiction in passing the order u/s 263 ignoring that an order passed u/s 143(3) r/w sec. 153D cannot be revised without revising the approval of the Addl. CIT - additions on account of unexplained investment and on unexplained expenditure? - HELD THAT:- As decided in case of Kapil Mehta [ 2021 (10) TMI 671 - ITAT DELHI] orders of search and seizure passed u/s 153A or u/s 153C of the Act are required to be passed after prior approval of the Joint Commissioner except as provided u/s 154BA(12). Therefore, if the argument of the Ld. AR is to be accepted then in such cases where the assessment has been framed under Section 153A or Section 153C, the same will go out of the ambit of the provisions of Section 263 of the Act and such a view is directly contrary to the decision of the Hon ble Supreme Court in T .N .Civil Corporation [ 2003 (1) TMI 7 - SUPREME COURT] , Osho Forging Ltd. [ 2018 (5) TMI 161 - PUNJAB AND HARYANA HIGH COURT] and in NIIT Ltd. Vs. Union of India [ 2009 (12) TMI 927 - DELHI HIGH COURT] Power of the Commissioner u/s 263 of the Act is in the nature of supervisory jurisdiction. This power is granted to correct an error, which is prejudicial to the interest of the Revenue in the order of the Assessing Officer, even if it is approved by the Joint Commissioner, who is also falling below the rank of the Pr. Commissioner. If the argument of the ld. AR is accepted then the supervisory authority of the Pr. Commissioner granted under the Act is hampered. On provisions of Section 263 of the Act give unfettered right to the CIT to revise any order passed by the Assessing Officer. Whatever was to be excluded by the law has already been provided under that Section and the only exception are the issues decided and considered in the appellate orders. Therefore, the reasoning of the arguments advanced by the Ld. AR on this line also fails and we dismiss the same. Validity of order passed u/s 263 - We find that this is quite contradictory on the part of the ld. Pr.CIT. In one part of the order, he is computing the addition which should have been done in the hands of the assessee. Thereafter, he is stating that there is lack of further enquiry and hence he is invoking the provisions of section 263 and directing the AO to make proper enquiry. In our considered opinion, such contradictory order is not legally sustainable. We note that in the case of Kapurchand Shrimal [ 1981 (8) TMI 2 - SUPREME COURT] Hon ble Supreme Court has held that it is the duty of appellate authority to correct the errors in the orders of the authorities below and remand the matter back to them with or without direction unless prohibited by law. In the present case, we find that the above said ratio is fully applicable and the order passed by the CIT is contradictory in itself. Hence, we remit the issue back to the file of Pr.CIT to consider the issue afresh after giving an appropriate opportunity of being heard to the assessee and in the light of our observation hereinabove. Appeal filed by the assessee is partly allowed for statistical purposes.
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2022 (11) TMI 133
Estimation of income - bogus purchases - CIT(A) restricted the addition to the extent of 5% of aggregate of purchases shown from the entity of Shri Gautam Jain Group - HELD THAT:- Disallowance to the extent of 5% is on lower side particularly when the assessee has shown negligible net profit. The assessee has shown return income of Rs.5,11,120/-only on the turnover of more than Rs.113.00 Crore (Aprox). Thus, in order to meet out the possibility of revenue leakage 6% of the addition of aggregate of disputed purchase will meet the end of justice. We may refer that this combination, where the assessee is beneficiary of similar disputed purchases, either from Rajender Jain, Bhanwar Lal Jain, Gautam Jain or PK Jain, we have consistently restricted or increased the similar addition to 6% of such purchases. Taking the consistent view, the disallowance restricted by ld CIT(A) @ 5% are increased to 6% of the total aggregate of impugned / bogus purchase. Appeal of the Revenue is partly allowed.
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2022 (11) TMI 132
Disallowance u/s 14A read with Rule 8D - sufficiency of own funds - HELD THAT:- Since the assessee company has sufficient own interest free funds and had not borrowed the funds to make investment in shares to earn the dividend income, the provisions of Section 14A is not applicable and consequently, the addition made by the authorities below cannot be sustained in the eye of law. Further, when the A.O. is not accepting the contention of the assessee company that no expenditure is incurred in relation to earning exempt income, then the burden lies on the Revenue to prove that assessee company had incurred the expenditure to earn the dividend income. In the instant case, the A.O. made the impugned addition on conjectures and surmises and applied the provisions of Section 14A read with Rule 8D - We delete the addition made by the A.O. and partly sustained by the CIT(A) on account of disallowance made u/s 14A r.w.r 8D - Accordingly, the grounds of appeal raised by the assessee on this issue are allowed. ALP determined by the A.O.- Arm s Length interest on loan @ 12.83% - HELD THAT:- We find that the assessee company had provided equity to AE, whereas, the TPO treated it as loan transaction and recommended the addition on account of the Arm s Length interest on loan @ 12.83%. We find force in the arguments of Assessee that the TPO treated the equity fund to AE as a loan transaction. Respectfully following the decision of Coordinate Bench of the Tribunal in assessee s own case for the preceding A.Y. 2013-14 [ 2020 (1) TMI 858 - ITAT DELHI] we delete the addition made by the A.O. on account of Arm s Length interest on loan @ 12.83% and sustained by the CIT(A). Accordingly, the grounds of the assessee company on this issue are allowed.
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2022 (11) TMI 131
Estimation of income - bogus purchases - As per CIT 5% disallowance is quite reasonable keeping in view the profit margin in the diamond industry is very low - HELD THAT:- It is a settled law that in case of disputed purchases shown from such hawala dealer s only profit element embedded in such transaction is to be disallowed, to avoid the possibility of revenue leakage and not the substantial part of transaction. No doubt, the Assessing Officer identified the purchases shown from hawala dealers, the assessee may have shown other transaction with some other parties. However, the assessee has offered a meagre income for taxation, thus the assessee was shown an extremely low profit. This combination in other similar cases wherein the purchases are shown from Bhanwarlal Jain or Rajendra Jain or Gautam Jain group have restricted or enhanced the addition to the extent of 6% of such amount or disputed purchases. Therefore, taking a consistent view, the disallowance which was restricted to the extent of 5% by ld. CIT(A) are increased to 6% of the impugned purchases - In the result, the grounds of appeal raised by the Revenue is partly allowed resultantly,
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2022 (11) TMI 130
Reopening of assessment u/s 147 - Bogus purchase - HELD THAT:- Before Ld. CIT(A) no specific submission was made against such re-opening, no doubt the assessee has challenged the validity of reopening before the Ld. CIT(A). CIT(A) in his categorical finding held that assessee has not made any specific submission on reopening. It was also held that information received from Sales Tax Department is sufficient to lead to the believe that income of ae is escaped assessment. We find that Hon'ble jurisdictional High Court in the case of Peass Industrial Engineers (P.) Ltd. [ 2016 (8) TMI 277 - GUJARAT HIGH COURT ] held that where after scrutiny assessment, AO received information from investigation wing that well known entry operator of country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, Assessing Officer was justified in reopening assessment. In view of the aforesaid factual and legal discussion and by following the judgment of Hon'ble jurisdictional High Court in the case of Peass Industrial Engineers (P.) Ltd. (supra), we do not find any infirmity in the reopening. This ground No.1 of assessees appeal is dismissed. Bogus purchases - As neither the books of assessee was rejected nor the sales of assessee is disputed. The Assessing Officer while passing the assessment order treated the recorded nature of business of assessee trading . In trading, the sales are not possible in absence of purchase. In our view if there is allegation of bogus purchases and the AOmade the addition on the basis of third party information without disputing the sales of assessee and without rejecting the books of account of assessee, though the assessee could not fully substantiate the genuineness of such purchase, the entire disallowance of aggregate of purchase is not justified. In such circumstances to avoid the possibility of revenue leakage, only profit element in such purchase may be disallowed. AO has nowhere disputed the sales of assessee. In such circumstances a reasonable and adhock disallowance would be sufficient to avoid the possibility of revenue leakage. Considering the facts and circumstances of the case we are of the view that @ 10% of aggregate of purchase would be sufficient to avoid the possibility of revenue leakage. Disallowance of carry forward loss / unabsorbed business loss - We find that while filing the appeal before Ld. CIT(A) no such ground of appeal was raised. Therefore, thereby the assessee has raised new and additional Ground of appeal. No application for admission of additional grounds of appeal is filed before Tribunal. The addition based on factual appreciation of fact, in our view, once the assessee has not raised such ground of appeal before ld CIT(A)/ FAA, the assessee is now precluded to raise such ground of appeal before Tribunal. Thus ground of assessees appeal is dismissed.
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2022 (11) TMI 129
Nature of expenses - expenses incurred on replacement on spares and parts of machinery - revenue or capital expenditure - CIT(A) granted relief to the assessee by taking view that replacement of part of machinery have not enhanced the capacity of existing facility and in assessee s own case for earlier AYs similar replacement expenses were allowed as revenue expenditure - HELD THAT:- As in A.Y. 2012-13 [ 2022 (8) TMI 1021 - ITAT SURAT] wherein this combination has held that the assessee has replaced the exiting part of machine or replaced the parts which have become obsolete and the replacement was essential. It was held that the replacement has not increased the existing capacity, so entire expenditure was treated as revenue expenditure. - Decided in favour of assessee. Disallowance of depreciation on goodwill - whether goodwill is an asset? - HELD THAT:- As for the A.Y. 2007-08 and 2012-13 [ 2022 (8) TMI 1021 - ITAT SURAT] held that the issue of depreciation on goodwill no more res integra after the decision of Hon'ble Supreme Court in the case of Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] wherein it has been held that goodwill is an asset within the meaning of Section 32 of the Act and depreciation on goodwill is allowablethe amendment brought in the Act by way of Finance Act 2021 will be applicable prospectively and not in the year under consideration.- Decided in favour of assessee. Disallowance u/s 37(1) - expenditure incurred by assessee towards fulfilment of corporate social responsibility - AO disallowed the expenses by taking view that payments was not made for the purpose of business - CIT(A) allowed relief to the assessee by taking view that such contribution was not for doing any charity but for sound business consideration and in building brand image of assessee - HELD THAT:- We find that nature of expenses is not in dispute. Further it is not in dispute that the assessee was setup by State Government and incurring similar expenses in earlier years. We find that similar issue has been decided by this combination in assessees own case for the A.Y. 2012-13 [ 2022 (8) TMI 1021 - ITAT SURAT] held that CSR is a concept whereby assessee-company integrate social and environmental concerns in their business operations and in their inter-action with their stakeholders on a voluntary basis. The emphasis is that business have to endeavour to become responsible actors in society so that their every action leads to sustainable growth and economic development. The CSR is no longer charity or philanthropy instead it should be imbibed in the corporate culture that leads to responsible business. Assessee stated that the CSR contribution has helped in building brand image of the company and publicity among the agrarian community. The activities implemented in the rural areas are publicized on account of large scale so message reaches to the masses. To ensure that the assessee-company gets better publicity, representatives from its team participates in every event like designing the programme, discussion with sarpanch gram Sabha, Bhoomi Pooja, concurrent monitoring evaluation, inauguration event, etc., for the said project. To get wider acceptability, the assessee also installs inaugural stone, boards, banners, etc. wherever and whenever applicable and said project implemented by assessee helps to build a good rapport among the villagers and the agrarian masses. CIT(A) after considering the submissions of the assessee accepted the claim and held that Explanation-2 inserted to section 37 (1) is prospective in nature as the same has been brought in the Act with reference to section 135 of Companies Act. - Decided against revenue. Disallowance u/s 40(1)(ia) - commission payment to dealers - revenue has vehemently supported the order of the Assessing Officer as discount allowed to the dealers are nothing but commissions payment which attracts TDS - HELD THAT:- On comparisons of the facts, with the facts of earlier years, we find that on similar grounds of appeal in assessees own case for the A.Y. 2012-13 [ 2022 (8) TMI 1021 - ITAT SURAT] as held no TDS is made on the discount made to dealers - Decided against revenue. Admission of revised/ additional claim - During the assessment the assesse raised additional claim that the steam generated by CPSU in also eligible for deduction under section 80IA - claim of the assessee was not accepted/ considered by assessing officer by taking view that no such claim is made in the return of income and in absence of any claim in return of income such additional claim cannot be raised during assessment - HELD THAT:- We find that the ld CIT(A) by following the decision of Jurisdictional High Court in Mitesh Impex [ 2014 (4) TMI 484 - GUJARAT HIGH COURT] admitted the revised/ additional claim and directed the assessing officer to examine the claim and allow the same. We find that on similar issue the Jurisdictional High Court in Jay Chemical Limited [ 2020 (3) TMI 231 - GUJARAT HIGH COURT] held that steam produced by the assessee can be termed as power and would be qualified for the benefit of deduction under section 80IA(4). Thus, keeping in view the afforesaid factual and legal position, we do not find any infirmity in the order of ld CIT(A), which we affirmed. Consequently, the corresponding ground of appeal is dismissed. SDT on transfer of power from captive power plant to manufacturing unit - CIT(A) after considering the submissions of the assessee and following the decision of Gujarat Alkalies and Chemical Limited [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT] while following decisions in Shah Alloys Limited [ 2011 (11) TMI 780 - GUJARAT HIGH COURT] and in Pragati Glass Works Limited [ 2012 (1) TMI 309 - GUJARAT HIGH COURT] held that Profits and gains from infrastructure undertakings, deduction under section 80-IA(4) was allowable to assessee for generation of power for captive consumption and same was to be computed considering rate of power on which Electricity Board supplied power to its consumer. Similar view was taken by Bombay High Court in CIT Vs Reliance Limited [ 2019 (2) TMI 178 - BOMBAY HIGH COURT] also held that where assessee had set up a captive power generating unit and provided electricity to its another unit and claimed deduction under section 80-IA in respect of profits arising out of such activity, valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers - we do not find any infirmity in the order passed by ld CIT(A), which we affirm. Resultantly, the corresponding grounds of appeal raised by revenue are dismissed.
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2022 (11) TMI 128
Deduction u/s 80P - Assessee received intimation u/s 143(1)(a) making adjustment in the returned income and not granting deduction claimed in the return of income u/s 80P - as per CPC claim of assessee was incorrect u/s 143(1)(a)(ii) since the return of income was not filed within the due date prescribed u/s 139(1) - assessee submitted that the adjustment made by the CPC was beyond the scope of section 143(1)(a)(v) - HELD THAT:- The claim of deduction under section 80P of the Act cannot be allowed the assessee, if the assessee does not file its return of income within the due date stipulated under section 139(1) of the Act w.e.f. assessment year 2018-19 onwards - amendment has been introduced in section 143(1)(a)(v) of the Act to provide that the claim of deduction under section 80P can be denied to the assessee, in case the assessee does not file its return of income within the time prescribed u/s 139(1) of the Act with effect from 01-04-2021 and does not apply to the impugned assessment year i.e. assessment year 2019-20 relevant to financial year 2018-19. Denial of claim under section 80P of the Act would not come within the purview of prima facie adjustment under section 143(1)(a)(v) of the Act, for the simple reason that the section was not in force during the period under consideration i.e. assessment year 2019-20. Whether the case of the assessee would fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return)? - The case of the assessee would also not fall within the purview of prima facie adjustment under section 143(1)(a)(ii) (an incorrect claim, if such incorrect claim is apparent from any information in the return). We also observe that the counsel for the assessee has filed copies of orders passed by Commissioner (Appeals), NFAC in many other cases of cooperative societies having similar issues, in which it has been held that section 143(1)(a)(ii) of the Act does not deal with disallowance of deduction for deed filing of return of income and also the said adjustment is not permissible under section 143(1)(a)(v) of the Act. We note that the instant case, there was a few-month delay in filing the return of income by the assessee for the assessment year 2019-20 and return of income was filed within due date permissible u/s 139(4) of the Act, in which the claim for deduction u/s 80P was made. Claim of deduction u/s 80P of the Act cannot be denied to the assessee only on the basis that the assessee did not file return of income its return of income within due date u/s 139(1) of the Act , in light of the discussion and judicial precedents highlighted above. Therefore, we are restoring the case to the file of the Ld. CIT(Appeals) for fresh adjudication on merits of the case after giving due opportunity of hearing to the assessee. Appeal of the assessee is allowed.
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2022 (11) TMI 127
Application of section 14A to Insurance business - scope considering the fetters prescribed u/s 44 -- HELD THAT:- As decided in assessee s own case for assessment year 2012 13 [ 2020 (11) TMI 601 - ITAT MUMBAI] and for assessment year 2013 14 [ 2021 (5) TMI 298 - ITAT MUMBAI] Section 44 is a special provision applicable in the cases of insurance companies and applies, notwithstanding anything to the contrary contained in the provisions of the Income Tax Act relating to the computation of income chargeable under different heads. For computing the profits and gains of the business of insurance company, the AO had to resort to Section 44 and the prescribed rules, and could not have applied Section 28 to 43B, since the same were excluded from the purview of Section 44. This necessarily includes the exception provision enshrined under Section 14A of the Act. Therefore, in our view, the AO could not have travelled beyond Section 44 in the first schedule of the Act. Besides, the tribunal has also invoked the rule of consistency since the same view of the Tribunal has prevailed in respect of the earlier assessment years i.e., 2000-01, 2001-02 and 2005-06. Adjustment of negative reserve - Mathematical reserves is a part of the Actuarial valuation and the surplus takes into account the mathematical reserve also. Besides the impugned order follows the decision of the Apex Court in LIC of India [ 1963 (12) TMI 5 - SUPREME COURT] wherein the Apex Court has held that the Assessing Officer has no power to modify the account after Actuarial valuation is done. It is also pertinent to note that for the Assessment Year 2007-08, the Assessing Officer had raised an identical issue during the assessment proceedings and thereafter by the assessment order dated 30 December 2009 held that no adjustment of the Actuarial valuation is to be done by following the decision of the Apex Court in LIC of India's case (supra). Therefore we find no substantial question of law arising for our consideration. Allowance of exemption u/s 10 (34) - Tribunal is correct in allowing the dividend income of assesee as exempt u/s. 10(34) as relying on ICICI Prudential life insurance Co Ltd [ 2015 (7) TMI 1346 - BOMBAY HIGH COURT]
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2022 (11) TMI 126
Correct head of income - Addition u/s 69B v/s business income u/s. 28 - whether the income on account of excess stock found during survey, which is admitted, is assessable as business income u/s. 28, or as income from an undisclosed source u/s. 69 (69B)? - head of income under which the amount represented by excess, i.e., with reference to the assessee s books of account, stock-in-trade, is liable to be assessed, assumes significance as the tax rate for the unexplained income is chargeable u/s. 115BBE, which is @ 60% w.e.f. 01/04/2017 - HELD THAT: - The tax rate being in respect of incomes which are imputed with reference to a transaction/s, it is possible to administer the same, another aspect of the matter that stands considered by us. That is, a tax rate for transactions made up to 14/12/2016, and another for those thereafter. Subsequent mention of the applicability of the amended provisions of ss. 271AAB and 271AAC with reference to the date on which the Presidential assent to the Act is received, further corroborates this view, which is based on the clear language of the Amending Act, as well as the principle that a substantive amendment is to be generally prospective. We draw support from the decision in Vatika Township Pvt. Ltd. [ 2014 (9) TMI 576 - SUPREME COURT] reiterating the settled law of the rule against retrospectivity. The tax rate applicable to the impugned income would, therefore, be at 30%, i.e., the rate specified in sec. 115BBE as on 30/11/2016, the date of the surrender of income per statement u/s133A (PB-1, pgs.35-44). This, it may be noted, is also consistent with our view that the income is liable to be assessed u/s. 69B. Addition u/s. 68 - The assessee has deliberately kept the two transactions apart, and the same stand divulged only now. Rather than providing credence, the same debilitates the assessee s case, clearly suggesting of there being something more to the transaction than meets the eye. Could the same be under circumstance regarded as proved or as satisfactorily explained ? To our mind, surely not; the genuineness of the transaction, even the purpose of which stands not explained at any stage, being highly suspect. The excess stock found at survey seemingly suggest of the assessee s accounts as not reflecting the true state of affairs. It could be a case under-invoicing, as the ld. CIT(A) says, albeit without any material to exhibit the same, which fact was confirmed by us with Shri Bardia during hearing. As it appears to us, then, Rs. 24 lacs represents the on-money on sale of duplex flat to the creditor, who had paid the same in absence of availability of cash. The same was accordingly repaid to him in toto , in March, 2017, subsequent to the sale, on receipt of cash. Assessee, in view of the foregoing, abysmally fails on Revenue s Gd. 1. We, accordingly, have little hesitation in, vacating the findings by the ld. CIT(A), uphold, in the facts and circumstances of the case, the addition for Rs. 24 lacs and, further, u/s. 68. There is also no scope for telescoping inasmuch as the cash receipt to the assessee, as inferred by us, arises in March, 2017, i.e., after the date of survey on 29/11/2016. The credit entry that is unexplained being in October, 2016, the same being liable to tax u/s. 115BBE, shall yet be at 30%, as opined by us at para 4.2 of this order. Revenue s appeal is partly allowed.
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2022 (11) TMI 125
Income deemed to accrue or arise in India - Addition 'as fee for Technical Services (FTS)/Fee for Included Services (FIS) as per the provisions of section 9(1)(vii) and Article 12 of the India-USA Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- As in assessee own case [ 2020 (10) TMI 654 - ITAT DELHI] the amount received by the assessee from freight/logistic support services cannot be treated as FTS/FIS either under the Act or under treaty provisions. Accordingly, the addition was deleted. Identical view was expressed by the Tribunal while deciding the appeals for subsequent assessment years, as noted above. Though, the departmental authorities were conscious of the fact that the Tribunal has decided the issue in favour of the assessee in earlier assessment years, however, for the purpose of keeping the issue alive, a contrary decision has been taken. There being no change either in the factual or legal position relating to the disputed issue in the impugned assessment year, respectfully following the consistent view of the Tribunal in assessee s own case in the preceding assessment years, as mentioned above, we delete the addition made by the assessing officer. This ground is allowed. Reimbursement of global account management charges by treating it as FTS/FIS - We find that this is a recurring issue between the parties continuing right from the assessment year 2010-11. On going through the relevant orders of the Tribunal in assessment years 2010-11 to 2015-16 and 2017-18, it is observed that the issue has been consistently decided in favour of the assessee in all these years, while holding that the amount received towards reimbursement of global account management charges is not in the nature of FTS/FIS. Facts being identical, respectfully following the decision of the co-ordinate benches, we delete the addition made by the assessing officer. Ground raised is allowed. Reimbursement of lease line charges as royalty u/s 9(1)(vi) and Article 12 of India-USA DTAA - As in assessee s own case in assessment years 2012-13 to 2015-16 [ 2022 (1) TMI 1290 - ITAT DELHI] has held that lease line charges are not in the nature of royalty. The same view was reiterated by the Tribunal while deciding the issue in assessment year 2017-18. It is further relevant to observe, while considering the allowability of payment made towards lease line charges at the hands of assessee s payer, the assessing officer had held that the payment made is in the nature of royalty, hence, the assessee was required to deduct tax at source. Since, the assessee has not done so, the assessing officer made disallowance u/s 40(a)(i) of the Act. However, while deciding the issue in case of the payer, held that the payment made, being not in the nature of royalty, no disallowance under section 40(a)(i) of the Act can be made. Thus, in assessee s own case and the decision of the Hon'ble High Court in case of the payer, the addition made cannot be sustained. Accordingly, we delete it. This ground is allowed.
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2022 (11) TMI 124
Disallowance of making charges - addition on account of excess making charges - primary basis of making the addition is the excel sheets found and seized during the course of search - HELD THAT:- There are certain factual inconsistencies in the statements recorded from both the karigars as detailed supra. In any event, it is a fact that both the karigars had duly retracted from their respective statements vide retraction affidavit already placed on record. Hence, no statements of the karigar could be relied upon for the purpose of making addition in the hands of the assessee. As find from the audited financial statement of Shri Lob Kumar Ghorai, he had received total making charges of Rs. 48,15,373/- from Gauti group which includes assessee also and had inturn made making charges to Rs.33,08,138/- to sub-karigars. Thereafter, total net profit from business declared by Shri Lob Ghorai for A.Y.2014-15 is Rs.4,76,716/-. If the contention of the Revenue that only Rs.3/- per gram should be accepted as making charges, then these karigars i.e. Shri Lob Ghorai and Shri Golok Patra could not have reported the net profits as they are reflected in their respective income tax returns. If the making charges rate as determined by the Revenue at Rs.3/- per gram has to be considered, the aforesaid karigar s net profit declared by them from the business in their respective tax returns would be higher than the gross receipts of making charges at Rs.3/- per gram. This itself goes to prove that the making charges cannot be at Rs.3/- per gram. These facts and figures are staring on us to conclude that making charges paid by the assessee ranging from Rs.12/- to Rs.13/- per gram is acceptable and correspondingly the making charges determined by the ld. AO @Rs.3/- per gram is devoid of merits and baseless. Hence, from the above facts and figures, it could be safely concluded that the disallowance of making charges made by the ld. AO by placing reliance on the statements recorded from two karigars is totally baseless. Corresponding statement given by Shri Kirit Kumar Gauti, the key person of the group - We find that Shri Kirit Kumar Gauti had also retracted from his statement given on 09/03/2015 vide his retraction affidavit dated 18/03/2015 which is immediately after the search wherein he had affirmed that he was mentally put under pressure by the Income Tax authorities and he had lost his mental balance and accordingly, he had signed the statement without understanding the contents recorded thereon. He had also stated that under the threat from the department, he had no option but to agree on the dictated statement of the authority and signed on the said pre-written statement of the authority. It is pertinent to note that the said retraction affidavit was duly filed by the assessee before the Investigation Wing as well as before the ld. AO - promoter of the assessee group M/s. Sumatichand Gauti Jewellers had also categorically denied making payment of any excess making charges during the course of his statement on 12/03/2015 vide reply to Question No.62. Hence, the disallowance made based on statement from Shri Kirit Kumar Gauti also falls flat and deserved to be dismissed. We find that the assessee had submitted the comparable price from the market with various parties which goes to prove that the making charges prevailing in the market are ranging from Rs.13 Rs.18/- per gram. The gold receipt vouchers issued by P C Chandra Jewellers, Kolkata show making charges @Rs.18/- per gram. Even going by this comparable data, the making charges debited by the assessee is much lesser than the market price. Hence, there cannot be any disallowance of making charges on the ground that it is paid in excess by the assessee. Accordingly, the ground Nos.2 3 raised by the assessee are allowed. Disallowance made on account of wastage charges - assessee had claimed wastage charges on an average ranging from 3-3.5% - AO by placing reliance on the statements recorded from karigars Shri Lob Ghorai and Shri Golok Patra and statement of Shri Kirti Kumar Gauti and excel sheets containing standard wastage percentage, arrived at the allowable wastage to be at 2.5% - HELD THAT:- The wastage claimed by the assessee in the present case ranges from 3-3.5% which is in consonance with the Government approved standard of 3.5%. Moreover, the assessee had indeed given comparable cases of wastage from P C Chandra Jewellers, Kolkata wherein wastage is mentioned at 3.75%; Deys Guinea House, Kolkata at 4% ; Sremon Jewellers, Kolkata at 6% ; Sremon Jewellers at 5.5% on yet another date etc. This goes to prove that the wastage claimed by the assessee is much less than both the Government approved standard as well as the wastage claimed by the comparable cases. It is also pertinent to note that the aforesaid Government of India norms of allowing wastage at 3.5% has been followed and accepted in the case of Anjali Jewellers Pvt. Ltd., [ 2016 (3) TMI 1445 - ITAT KOLKATA] - In view of the aforesaid observations and respectfully following judicial precedents relied upon hereinabove, we hold that there is absolutely no case made out by the Revenue to disallow the wastage expenses on the ground that it is excess. AO is hereby directed to delete the entire disallowance made on account of wastage. Accordingly, the ground Nos. 5 6 raised by the assessee are allowed and ground Nos. 1-5 raised by the Revenue are also hereby dismissed. Addition made on account of share application money u/s.68 - HELD THAT:- We are unable to understand as to what grievance the Revenue could have in the instant case in as much as the ld. CIT(A) had deleted the protective addition in the hands of the assessee after duly confirming the addition in the hands of M/S. Starpoint Dealers Pvt. Ltd., on substantive basis. Moreover, we see from the ground of the Revenue that addition needs to be sustained in the hands of the assessee on the ground that M/s. Starpoint Dealers Pvt. Ltd., did not have sufficient creditworthiness. When the very same addition has already been made in the hands of M/s. Starpoint Dealers Pvt. Ltd., on substantive basis, AO itself proves the creditworthiness of M/s. Starpoint Dealers Pvt. Ltd. the income tax assessment order of M/s. Starpoint Dealers Pvt. Ltd itself proves the source and creditworthiness of the said party to advance share application money to the assessee company. The assessee need not to prove anything beyond in this regard. In any case, when the substantive addition has already been confirmed by the CIT(A), we do not find any infirmity in the order of the ld. CIT(A) deleting the protective addition made in the hands of the assessee. Accordingly, the ground raised by the Revenue are hereby dismissed.
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2022 (11) TMI 123
Delayed payment of employee contribution to Employees State Insurance and Provident Fund u/s. 43B r.w.s. 36(1)(va) - HELD THAT:- The employees contribution to PF and ESI should be remitted before the due date as per Explanation to section 36(1)(va) i.e. on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s.43B. We therefore see no reason to interfere with the order of the CIT(Appeals). The grounds taken by the assessee on this issue are dismissed.
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2022 (11) TMI 122
Revision u/s 263 by CIT - unexplained investment u/s. 69 - addition made by the AO towards difference in stock is an unexplained investment for which the assessee failed to provide satisfactory explanation and therefore the undisclosed stock should have been considered as an unexplained investment u/s. 69 which is required to be tax at special rate u/s. 115BBE - HELD THAT:- AO has conducted a detailed enquiry with regard to the deviations in stock and has made the addition under the head business income. Further, in the statement recorded during the course of search the Shri Anand Kumar, one of the partners in the assessee firm, he has admitted that there is difference in the stock recorded in the books and the physical stock and agreed to offer the same as additional income. Additional income is offered towards the difference in stock by the assessee. The PCIT has not brought anything contrary to record to state that the amount admitted towards excess stock is from a difference source. When the additional income is offered towards excess stock, the stock being part of the business of the assessee is offered to tax as business income. PCIT has merely substituted his views to the extent that the AO should have done further enquiry when PCIT himself admits that the additional income is from the excess stock. We are of the considered opinion that the revisionary jurisdiction could not be allowed to be exercised by the PCIT either for substituting his own opinion for that of the AO or for making a fishing and roving enquiry. We are of the opinion that the PCIT in the present case has wrongly invoked the jurisdiction under section 263 and the controversy in the present case is fully covered by the judgment of the Hon'ble Bombay High Court in the case of Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] Accordingly the impugned order of the PCIT is quashed. Appeal is allowed in favour of the assessee .
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2022 (11) TMI 121
Levy of penalty u/s 271 (1)( c) - defective notice u/s 274 - non specification of clear charge - AO initiated penalty u/s 271(1)(c) on both aspects, first on returned income as per section 153A of the Act as well as addition of 5% of obtaining accommodation entries - Before final computation of income, AO has initiated penalty proceedings in respect of the same for concealment of income, thereafter, after computing the income, he held that penalty proceedings are initiated separately for furnishing of inaccurate particulars of income - HELD THAT:- As held by higher courts that unless the charge upon the assessee is specific, penalty u/s 271(1)(c) is not leviable on this account also. In this view of the matter also, in our considered opinion and on the facts and circumstances of the case, the assessee s case does not deserves to be visited the rigors of penalty u/s 271(1)(c) of the Act. Hence, we set-aside the order of the CIT(A) and deleted the penalty. Appeal filed by the assessee stands allowed.
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2022 (11) TMI 120
Addition u/s. 68 - unexplained cash credits - Advance received by the assessee from 18 parties - CIT-A vacated the addition made by the A.O u/s. 68 - HELD THAT:- We concur with the CIT(Appeals) that the failure on the part of the stamp vendor to properly maintain his records could not have on such standalone basis justified drawing of adverse inferences as regards the genuineness of the transactions under consideration which the assessee had duly substantiated on the basis of supporting documentary evidence. Also, we are persuaded to subscribe to the view taken by the CIT(Appeals) that now when both the parties to the respective agreements to sell had confirmed the transactions, then, due weightage was required to be given to their respective statements and the same could not have been brushed aside merely on the basis of the unsubstantiated claim of the stamp vendor who had declined of having sold the stamp papers in question. The assessee in order to substantiate the authenticity of his claim of having received an advance of Rs. 128.50 lac from the aforementioned 18 parties had filed with the A.O duly notarized affidavits of all the aforementioned 18 parties who had admitted of having advanced the respective amounts to the assessee for purchase of land at Village Urkura, Phase No. 108, RIC, Raipur (C.G), Kh No. 100/2, Page 252 to 318 of APB. Also, the respective parties in their 'affidavits' had categorically given the reasons for cancelling the deal and receiving back of the advance/earnest money from the assessee. On a perusal of the aforesaid affidavits , it transpires that all of the said parties were being assessed to tax and had categorically mentioned their PAN in their respective depositions. A.R rebutting the aforesaid claim of the A.O had stated that 8 parties had though appeared before the A.O, however, he had recorded the statements of only 2 parties who had in their respective statements confirmed the transactions in question. It is further the claim of the ld. A.R that the assessee was never intimated by the A.O about the fact that the notices issued to some of the parties were returned unserved. In our considered view though the assessee had duly substantiated the authenticity of the transactions of having received advances from 18 parties (supra), but the A.O had failed to dislodge the same by placing on record any such material which would irrefutably disprove the authenticity of the said claim. Also, we are unable to persuade ourselves to subscribe to the view taken by the A.O that the authenticity of the transaction was to be summarily rejected on the basis of the unsubstantiated claim of Shri Zafar Ali, Stamp vendor. We, thus,finding no infirmity in the view taken by the CIT(Appeals) who in our considered view had rightly vacated the addition made by the A.O u/s. 68 of the Act uphold his order to the said extent. Advance received from M/s. Tirthyatra Investment Properties Ltd. for sale of land - As the assessee on the basis of irrefutable documentary evidences had duly substantiated his claim of having received the advance/earnest money from the aforementioned party, viz. M/s. Tirthayatra Investment Properties Ltd., Raipur, and thus, discharged the primary onus that was cast upon it to prove the nature and source of the credit in its books of account, while for the A.O had absolutely failed to dislodge the authenticity of the said claim on the basis of any material proving to the contrary, therefore, there was no justification for the A.O to have dubbed the amount so received by the assessee as an unexplained cash credit u/s. 68 of the Act - Accordingly, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition - Decided in favour of assessee. Disallowance u/s. 14A r.w.r. 8D(2)(iii) - HELD THAT:- As no disallowance u/s. 14A in absence of any exempt income could have been made in the hands of the assessee. We, thus, in the backdrop of the facts involved in the case before us r/w. the aforesaid settled position of law find substance in the claim of the Ld. AR that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s. 14A of the Act was warranted in its case.- Decided in favour of assessee.
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2022 (11) TMI 119
Revision u/s 263 by CIT - Period of limitation - time limit within which the order u/s. 263 can be revised i.e. two years from the end of financial year in which order sought to be revised was passed - HELD THAT:- Due to nation-wide lockdown imposed, the Central Govt. of India through Relaxation Act, 2020' r.w. notification dt. 31/12/2020, has extended the period of limitation upto 31/03/2021 for completion of any proceedings or passing any order or issuance of any notice, intimation, notification, sanction or approval or such other action by whatever name called by any authority, commission or tribunal by whatever name called under the provisions of specified Act which inter-alia includes Income Tax Act, 1961. In the light of provisions of section 3(1)(a) of Relaxation Act, 2020 notification dt. 31/12/2020 r.w. press release, we witnessed that, the time limit within which revision action ought to have completed was extended upto 31/03/2021, thus, initiation of revisionary proceedings by issue of SCN and completion by passing an order of revision is saved of limitation, consequently ground number 1 remains with no locus-standi, hence stands dismissed. Violation of principal of natural justice for passing ex-parte order and without according sufficient opportunity to represent before the conclusion of revisionary proceedings - Following the principle of natural justice, the proceeding were adjourned and re-fixed on 16/02/2021, nonetheless the assessee continued to opt out from making any representation which resulted into ex-parte culmination. Thus, due service of SCN to the appellant, and reasonable opportunity of fair hearing against proposition and prima-facie unbiased approach while dealing with revisionary proceedings apparently stands established and in fortiori, the Ld. AR did not controvert the factual plexus, in the event we disapprove the contention of any such violation, resultantly ground number 2 3 of the appeal also stands dismissed. Eligibility for exemption u/s. 54F - As per CIT AO erred allowing the assessee a claim of exemption u/s. 54F by turning blind eye to the disqualification envisaged in proviso to section 54F(1) of the Act and further picturing the absence of inquiries into source of investment made in new asset, has assumed the revisionary jurisdiction and by service of show cause notice called upon the assessee to showcase the entitlement for 54F claim and explain nature source of investment made - HELD THAT:- Since the Ld. AO in this case had made inquiries with regard to appellant's entitlement for claim of exemption u/s. 54F and after considering the written submission duly supported by release deed, corporation tax challans, utility bills, property card etc., and explanation offered by the appellant as regard to entitlement, the same was on being satisfied, accepted by the Ld. AO, such conclusion of the assessing Officer cannot be held as erroneous simply because the order did not make an elaborate discussion on the subject matter. As it is a well settled law that, an inquiry and/or fresh determination can be directed by the revisionary authority only after coming to the conclusion that the finding of the AO is erroneous and prejudicial to the interests of the Revenue on the basis of evidential material and without doing so, the authority turns powerless to disturb the completed assessment, hence for the reason in our considered opinion, the conclusion drawn by the Ld. CCIT is untenable in law. We de integro and applying the dictum form CIT Vs Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT ] are of the strong view that, the action of Ld. CCIT could not be sustainable in eyes of law, ergo we finding no infirmity with the order of assessment, quash the revisionary order - Appeal of the appellant assessee is allowed.
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2022 (11) TMI 118
Addition made in respect of Interim Bonus paid to the income of the appellant - Whether the appellant has correctly computed the amount of surplus in accordance with the provisions of section 44 of the Act r.w. Rule 2 of the First Schedule to the Act, wherein income is offered basis actuarial report as reported in Form - I - HELD THAT:- We have perused the order passed by the co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2011-12 [ 2017 (9) TMI 1994 - ITAT MUMBAI] which is on identical issue and has been decided in favour of the assessee by remitting the issue back to the AO to examine the factual matrix/utilization of surplus and to decide in accordance with law Deduction u/s 80G - AO has disallowed on the ground that such deductions are duplicate in nature since the income is considered on the basis of actuarial valuation - CIT(A) also upheld the disallowance made by the AO - HELD THAT:- This issue has already been decided against the assessee in its own case [ 2022 (4) TMI 1461 - ITAT MUMBAI] as held a ssessee has not refuted contentions of the Revenue. It is a trait law that the Assessing Officer has no power to go behind accounts drawn in First Schedule applicable to insurance companies, however, the Assessing Officer can always examine correctness of the claim of the assessee with regard to deduction claimed after computation of income. The intent of Legislature while framing special provision for insurance companies can by no means be to allow the benefit of double deduction of the same amount. The CIT(A) in the impugned order has illustrated the impact of assessess e claim of donation as expenditure in P L account on actuarial valuation. The non-obstinate clause does not impinge the powers of Assessing Officer to examine deductions claimed after computation of income. The Assessing Officer after examining the treatment given by assessee to the donation made to the foundation concluded that the assessee has taken undue benefit of double deduction of the same amount, hence, disallowed assessee s claim made after computation of income. The findings of the Assessing Officer have been upheld by the CIT(A) . We concur with the findings of the CIT(A) on this issue - Decided against the assessee. Disallowance u/s 14A read with rule 8D - HELD THAT:- When the Ld. CIT(A) has decided this issue in favour of the assessee by following the order passed by the Ld. CIT(A) in assessee s own case for A.Y. 2015-16 [ 2022 (4) TMI 1461 - ITAT MUMBAI] on identical facts which is covered by the decision rendered by co-ordinate Bench of the Tribunal in Birla Sunlife Insurance Company and Oriental Insurance Co. Ltd. [ 2010 (9) TMI 1117 - ITAT MUMBAI ] we find no illegality or perversity in deletion of addition made by the AO under section 14A read with rule 8D of the Act, hence grounds No.1, 2 3 raised by the Revenue are dismissed.
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2022 (11) TMI 117
Revision u/s 263 by CIT - depreciation claimed by the assessee on the assets which are in finance lease - treatment of income from finance lease transactions only, owing to difference in its treatment in accounting which is governed by Accounting Standards and in computing the total income which is governed by the provisions of the Act - HELD THAT:- Assessee has leased out vehicles under the finance lease which is part and parcel of its business and the income therefrom has been offered to tax under the head profits and gains from business or profession . Evidently, both the conditions enumerated in Section 32 of the Act, has been complied with, entitling the assessee to claim depreciation on the assets financed under the finance lease agreement while computing the total income under the Act. As on the issue relating to the claim of depreciation on the assets financed under the finance lease agreements by the assessee, the principal component of finance lease rentals have been additionally offered in the computation of total income resulting into offering of additional sum of Rs.1053.80 Lakhs for taxation. Also, in respect of the issue relating to recognition of income of Rs.1290.58 lakhs in respect of securitization and assignment of loans, the same has been recognised in the subsequent assessment years as and when it was received by complying with the RBI guidelines, we find that there is no prejudice caused to the revenue and, therefore, the requirement of fulfilment of twin conditions of the order being erroneous insofar as it is prejudicial to the interest of the revenue, as held by the Hon ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] are not fulfilled. The impugned revision order passed by ld. PCIT u/s 263 of the Act holding the assessment order as erroneous in so far as it is prejudicial to the interest of revenue is not sustainable. Thus on both on facts and applicable law along with accounting norms and judicial precedents relating to the issues raised by the ld. Pr. CIT in invoking the revisionary proceedings, we have no hesitation in quashing the revision order passed by the ld. Pr. CIT u/s 263 of the Act. Accordingly, grounds raised by the assessee are allowed.
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2022 (11) TMI 116
Exemption u/s 11 - as per AO assessee was not engaged in charitable activity and had earned above normal profits - CIT-A allowed the benefit - HELD THAT:- It is noted that the Ld. CIT(A) has taken into consideration the fact that the assessee is duly registered u/s 12AA and for the year under consideration, the assessee s total receipt are to the tune of Rs. 822.24 lacs and total expenditure to the tune of Rs. 923.85 lacs which shows that the assessee actually had no surplus rather there is deficit during the year under consideration. Capital expenditure has been incurred to acquire assets namely computer, electrical equipments, furniture and fixtures, laboratory equipments, building construction and related objects of the assessee society. Further the Ld. CIT(A) has taken into consideration the fact that the claim of the assessee has been allowed by the AO for A.Y. 2009-10, 2013-14 and 2014-15 wherein the claim of the assessee has been accepted and exemption u/s 11 has been allowed to the assessee. As regards the double deduction on account of depreciation, the AO has been asked to verify the same as per the law applicable for the year under consideration - No infirmity in the finings so recorded by the Ld. CIT(A) who has considered the entirety of facts and circumstances of the case and has allowed the exemption so claimed by the assessee u/s 11 of the Act. In the result, the ground taken by the Revenue is hereby dismissed.
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2022 (11) TMI 115
Treating the dividend income as not exempt u/s.10(34) - whether the ld. CIT(A) was justified in not allowing the loss claimed by the assessee in the year under consideration? - HELD THAT:- From the perusal of of Section 10(34) we find that the second proviso is incorporated only from 01/04/2021 i.e. commencing from A.Y.2021-22 onwards which categorically states that dividends received on or after 01/04/2020 alone would be subjected to tax. In the instant case, admittedly dividend has been received by the assessee during the F.Y.2019-20 relevant to A.Y.2020-21. Hence, there is no case for taxing the said dividend income during the year under consideration. Accordingly, we direct the AO to treat the dividend income as exempt u/s.10(34) of the Act. The assessee s claim of loss for the year would be eligible to carry forward to subsequent years. Accordingly, the grounds raised by the assessee are allowed.
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Benami Property
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2022 (11) TMI 114
Prohibition of Benami Property Transactions - Attachment, adjudication and confiscation orders - respondent No.5 exercising powers under Section 18(2) of the Benami Property Act has provisionally attached the properties mentioned in the aforesaid orders - petitioner submits that the relevant documents were seized by Special Investigation Team led by the Assistant Commissioner of Police following encounter on 08.08.2016 in which the petitioner s brother viz., Nayeemuddin, who was the petitioner in [ 2022 (7) TMI 530 - TELANGANA HIGH COURT] was killed. The seized documents include several sale deeds as well as link documents - HELD THAT:- Adjudicating Authority is empowered to make or cause to be made inquiries and to call for reports or evidence as it deems fit. It has also the authority to take into account all relevant materials besides reply of the notice and thereafter, to take a decision one way or the other holding the property not to be a benami property and revoking the attachment order or holding the property to be a benami property and confirming the attachment order. Considering the fact that petitioner before us is the sister of late Nayeemuddin, who was the petitioner in [ 2022 (7) TMI 530 - TELANGANA HIGH COURT] being killed in encounter, and facing stringent provisions of the Benami Property Act, it would meet the ends of justice if the adjudicating authority, on receipt of application of the petitioner, calls for the relevant documents/evidence from the authorities including the Special Investigating team and thereafter hand over copies of the same to the petitioner so as to enable her to make effective defence. Directions: - Petitioner shall submit application before the Adjudicating Authority within two (02) weeks from today mentioning therein the documents required for her defence and in whose custody the documents are being kept.On receipt of such application, the Adjudicating Authority shall requisition the relevant documents/evidence from the concerned authorities. On receipt of the documents/evidence by the Adjudicating Authority, petitioner or her authorised representative shall be permitted to go through the same and on their request, photocopies of such documents may be made available to the petitioner or her authorized representative.Thereafter, petitioner shall file her reply to the notice issued by the Adjudicating Authority
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Customs
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2022 (11) TMI 113
Validity of final assessment orders passed by the Customs authorities - it is alleged that the assessment order is passed by the Customs authorities in respect of Bills of Entry submitted by the Petitioner without following the mandatory provisions of the Customs Act, 1962 and the relevant Regulations - violation of principles of natural justice - HELD THAT:- The petitioner points out that not only was no hearing afforded to the Petitioner prior to finalizing the assessment but even the letter/order dated 19th September, 2019 does not provide the reasons for determining the short payment of duty. Since there is obvious violation of the principles of natural justice and Regulation 6 (3) of the Regulations, the Court has no hesitation in setting aside the impugned letter/order dated 19th September, 2019 and remanding the matter to the Assistant Commissioner, Dhamra Customs Division, Dhamra for fresh adjudication after giving the Petitioner an opportunity of being heard and by passing a reasoned order. The orders in respect of each of the 36 bills of entry (enclosed as Annexure-5 series to the petition) are likewise set aside and are remanded to the Assistant Commissioner, Dhamra Customs Division for a fresh reasoned decision after hearing the Petitioner. The matter will now be listed before the Assistant Commissioner, Dhamra Customs Division, Dhamra on 19 th December, 2022 on which dated, the authorized representative of the Petitioner will remain present together with a downloaded copy of this order - petition disposed off.
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2022 (11) TMI 112
Direction to Re-export hazardous waste contained in 13 containers to the respective countries of export at their own cost, immediately - HELD THAT:- The third respondent, All Cargo Logistic Ltd., the Container Freight Station, has filed a compilation dated 17.10.2022 with photographs to show that the wastes are now out of the container and lying in the CFS which constitutes a hazard to the environment in general. It is unfortunate that this matter has been hanging fire since 2018 in spite of the impugned order which, has been correctly passed directing re-export of the goods. As pointed out by learned Standing Counsel for the Customs, the impugned order has rightly been passed upon the liner/carrier, who had been engaged by the exporter. The impugned order is thus confirmed directing reexport to be carried out within a period of three weeks from today. The petitioner is always at liberty to have the costs reimbursed by the exporter/importer, and may take necessary steps in this regard, in accordance with law. Petition dismissed.
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2022 (11) TMI 111
Rejection of revision application - rejection on the ground that the prayer made by the petitioner for condonation of delay was not substantiated - service of notice - section 153 of Customs Act - HELD THAT:- What emerges upon a conjoint reading of various provisions is that if the order, decision, summon, notice or communication is sent via registered post or speed post or courier, it has to be accompanied with an acknowledgement due card/slip. Unlike a registered post, where acknowledgement due card is the mode for recording delivery, in cases where the mode of dispatch is the speed post, the record of acknowledgement or delivery can only be gathered through the tracking report. This appears to be the mode which the Legislature has incorporated for effecting service of an order, decision, summon, notice or communication issued under the Act or Rules. Admittedly, in this case, the order-in-appeal was not dispatched via registered post or through courier. What has emerged is that the order-in-appeal was attempted to be served via speed post - The documents relied upon by the respondent/revenue appear to indicate that an entry to that effect was made on 13.09.2017, whereas, the actual dispatch took place on 16.09.2017. The tracking report would be crucial as it would establish clearly as to whether or not the order-in-appeal was served upon the petitioner. As noted above, the respondent/revenue have not been able to place the tracking report. Therefore, there is a semblance of doubt as to whether the order-in-appeal was actually served upon the petitioner. It appears, the revisional authority did not ask itself the correct question, which is, whether the petitioner had, in fact, been served with the order-in-appeal. Since there is a doubt as to whether or not the petitioner had been served with the order-in-appeal, the benefit of doubt should be given to the petitioner - if sub-section (3) of section 153 is read as being independent of the provision made in clause (b) of sub-section (1) of section 153, it would render the latter provision completely otiose. It would also have to be borne in mind that the impugned order has not been passed by the Revisional Authority on merits. Clearly, it takes away from the petitioner the right of having the tenability of the order-in-appeal being tested, on merits, by the Revisional Authority, and if we were to accept the presumption created by section 153 (3) of the Act, the respondent would have to discharge the initial burden that the order-in-appeal was sent through post, as claimed, at the proper and complete address of the appellant. In view of the gaps, we are inclined to lean in favour of the appellant, as any other view would be a leap of faith. Impugned order set aside - the matter is remitted to the Revisional Authority. The Revisional Authority will pass a fresh order on merits, after giving the petitioner an opportunity to present his case.
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2022 (11) TMI 110
Refund of SAD - SAD paid on importation of Timber Round Logs through 39 Bills of Entry during December 2018 to March 2011 - denial of refund on the ground of time limitation - HELD THAT:- The refund claim was admittedly not filed within the period of one year as prescribed in paragraph 2 of clause C of Notification No. 102/2007-Cus dated 14.09.2007 and the same stands filed within a period of one year from the date of order of Hon ble Supreme court. Further it is on record that appellant regularly filed the refund and department had not granted the refund after the period of 2009 on the ground that one of the condition of the Notification that refund of SAD would be entitled only if the imported goods were sold as such, has not been complied with. Pursuant to the action of department for not granting the refund, the Appellant was issued show cause notice for denial of refund claim on the ground that since the identity of goods imported by the Appellant was changed on account of sawing the timber, appellant was not entitled for refund. Further, Board vide circular No. 15/2010-CUS dated 29.06.2010 also clarified that refund of SAD would not be eligible to the importer in the case there is distinct classification for the imported and the final products that are same in market on which VAT was paid. Further, from the provisions of Section 27(1B) (C), it is clear that refund claim can be filed in consequence of any judgment decree, or direction of the appellate authority within one year - In this case, it is on record that the issue related to refund of SAD was under litigation and attained finality after the decision of Hon ble Supreme Court. Therefore, as per the provisions of Section 27 of the Customs Act, 1962, the limitation for filing the refund claim shall start from date of decision of Hon ble Supreme Court. In these circumstances, it is held that the refund claim filed by the appellant is within time. From the Board s circular No.15/2010-CUS dated 29.06.2010, it is clear that the appellant was not allowed to file refund claim by the government till the issue on merit was settled by the Hon ble Apex court in the appellant s own case COMMISSIONER OF CUSTOMS VERSUS VARIETY LUMBERS PVT. LTD. [ 2018 (6) TMI 1499 - SUPREME COURT] - In the peculiar fact of this case the period upto the decision of the Hon ble Supreme Court shall be reduced for the purpose of the relevant date as prescribed in Section 27 for computing the period of limitation of one year. Accordingly, in this case the relevant date shall be the date of the Apex court decision i.e. 24.04.2018. The appellant admittedly filed the refund claim within one year from the date of the Hon ble Supreme Court judgment. Hence refund claim was filed well within the stipulated time period of one year from the relevant date in terms of Section 27 of the Customs Act, 1962. In the facts of the present case, the refund claim of the appellant is not hit by limitation - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 109
Levy of ADD - Classification of imported goods - FRP rods - to be classified under CTH 70199090 and consequently the same is liable for payment of Anti Dumping Duty under Notification No 30/2011- CUS (ADD) dated 04.03.2011 or to be classified under 70022090? - HELD THAT:- The goods imported by the appellant is FRP rods which is not under dispute even by the department. The department sought to classify the said product under CTH 70199090. The CTH 70199090 is in respect of the Glass Fibre - CTH 7002 is meant for the product manufactured out of glass fibre. The glass fibre is raw material and product in question is final product. Hence, undoubtedly both items are entirely different and clearly classifiable under CTH 70022090. Since the FRP rods clearly specified against the Tariff entry of 7002 by any stretch of imagination the same cannot be classified under CTH 70199090 as held by the lower authority. Moreover, the Hon ble Supreme Court judgment in KEMROCK INDUSTRIES EXPORTS LTD. VERSUS COMMR. OF C. EX., VADODARA [ 2007 (3) TMI 260 - SUPREME COURT] held that the FRP rods are classifiable under chapter 39 since, it is nobody case in the present case that the product is classifiable under chapter 39 however, in view of the Hon ble Supreme court judgment it is clear that under any situation the FRP rods cannot be classified under 70199090. If this so then the Anti dumping duty which is levied on goods falling under 70190900 is not applicable in the present case. Appeal allowed.
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2022 (11) TMI 108
Levy of penalty - Chocolates and other eatables - smuggled goods or not - burden to prove - beyond reasonable doubt - preponderance of probabilities - whether the chocolates and other eatable that were stored in the godown of Appellant-I was to be considered as being stored with his full knowledge to establish conscious possession of the Appellant-I of those goods and if, at all those were none duty paid imported goods? HELD THAT:- Going by the date of adjudication order confirming Customs duty proposed in excess of the declaration made by Appellant M/s. S.D. Enterprises, it was passed on 12.09.2017 and the same was invoiced for sale on 14.09.2017 that was being seized by the Customs Department on the same day and statement of Appellant-I was recorded on its next day. Therefore, there are no reason in disbelieving the Appellant-I s version that goods were kept in godown for last 3, 4 days since it must have been released between 12th September to 14th September and might have been brought to the Appellant s godown between 12th September to 14th September might be through a transit permit or challan. Further the godown is owned by both father and son having two separate proprietorship concern. Exclusive and conscious possession of the Appellant-I and prosecuting him for such possession as well as holding him responsible, so as to confirm demand of duty against him alone, is not sustainable in law since the other Appellant is not only claiming ownership of the goods and explaining his liability concerning local purchase by way of production of tax invoice issued by M/s. S.D. Enterprises, in whose favour the goods described in the tax invoice with many other items were also directed to be released through an adjudication order issued by the Assistant Commissioner of Customs just two days prior to seizer of the goods. It is immaterial also for the purpose of determination of the liability of Customs duty as to if the subsequent purchaser only knew the importer by name or if he had never seen the importer. Be that as it may, it is a settled principle of law that documentary evidence would outweigh oral evidence and exclusion of oral evidence by documentary evidence is well recognised in case of disposition of property under Section 91 of the Indian Evidence Act. The Appellants have succeeded in their appeal by substantiating payment of Customs duty on imported goods by way of production of the copy of the Adjudication order which were seized from them subsequent to the transfer effected through sale invoice. Adjudication order stands in the footing of a public document as per the Indian Evidence Act, 1872 that bears proof of importation of goods by the importer through Customs for which demanding duty again and imposing penalty on these Appellants is improper and unsustainable in law and facts. The orders to the extent of confirmation of Customs duty, interest on the Appellant No-I proprietorship firm and penalties at the reduced rate on both the Appellants with appropriation of sale proceeds of the imported goods through auction is hereby set aside with consequential relief - appeal allowed.
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Insolvency & Bankruptcy
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2022 (11) TMI 107
Condonation of delay of 13 days in filing the Appeals - submissions which has been pressed by the Learned Counsel for the Appellant is that on 08th June, 2022, Application was heard on the preliminary issue but the Order was not pronounced on the said date - HELD THAT:- From the facts and circumstances which have been brought on record and the Report of the Registrar, the mere mentions of the words Order pronounced on 08th June, 2022 is not sufficient to prove that Order was made available on 08th June, 2022. The present is case where Appellant submits that arguments were heard on 08th June, 2022 and Orders were reserved. They were not aware of the Order till it was uploaded hence there was no occasion for filing an Appeal by them - The present is a case where Appellant cannot be blamed for not applying the certified copy of the Order dated 08th June, 2022 since according to the Appellant, the Order was not pronounced nor it was uploaded although Appellant was present in the Hearing and his Learned Counsels participated in the Hearing raising objection regarding the maintainability of the Application. The present is a case where the Appeal cannot be thrown out on the ground of limitation. After order became available on 29th July, 2022, the Appeal has been filed within 45 days from the date when Order was made available to the Appellant. Order was made available on 29th July, 2022 and 30 days limitation period came to an end on 28th August, 2022 and within 15 days thereafter, the present Appeal has been filed on 12th September, 2022 - the jurisdiction under Section 61(2) proviso of the Code is exercised and this is found to be a fit case to condone the delay which is less than 15 days. Delay in filing the Appeal is condoned - List these Appeals For Admission on 07th November, 2022.
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2022 (11) TMI 106
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - whether the demand notice dated 27.08.2018 was properly served? - HELD THAT:- The demand notice sent at registered address of the respondent/corporate debtor, as available on the master data of the corporate debtor, was delivered and tracking report showing its delivery has also been annexed with the petition. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed an affidavit dated 28.11.2018 under Section 9(3)(b) of the Code, wherein it has been deposed that the operational creditor has not received reply to its demand notice from the respondent/corporate debtor. Further, it has been deposed that there is no notice given by the respondent/corporate debtor relating to a dispute of the unpaid operational debt. Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that the present petition was filed vide Diary No.4839 dated 10.12.2018, and the date of default is 11.04.2017 i.e. the date of issuance of invoice (Annexure III). Therefore, this Adjudicating Authority finds that this application has been filed within limitation. There is a total unpaid operational debt of Rs.3,10,000/- as claimed in the petition. As noted above, the operational creditor has provided the details of the debt due and has also annexed with the petition copy of bank account maintained by the operational creditor and the invoice. Accordingly, the petitioner/operational creditor has established the debt and the default, which is more than Rupees one lakh i.e. the threshold limit (pre-revised) - the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident from the above-mentioned facts that the liability of the corporate debtor is undisputed and established. Also, there is no rebuttal to the claim filed by the petitioner as respondent/corporate debtor chose not to appear. Accordingly, the petitioner has proved the debt and the default which is above threshold limit. In the present petition, all the requirements have been satisfied. It is seen that the petition preferred by the petitioner is complete in all respects. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIRP in the case of the corporate debtor, Vishal Lakto India Limited. is admitted. Petition admitted - moratorium declared.
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2022 (11) TMI 105
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Creditors - existence of debt and dispute or not - whether the present application is filed within limitation? - HELD THAT:- It can be seen from the records that the date of default is 09.03.2019 and the present petition is filed vide Diary No.2616 dated 22.05.2019. Therefore, the present petition is filed within limitation. Whether there is a default in payment or not? - HELD THAT:- It is observed from the record that in the present case, the occurrence of default is evidenced by the copies of Income Tax Form AS-26, which clearly shows interest was paid after the deduction of TDS. The same has been admitted by the respondent-corporate debtor in its reply. The fact that Rs. 15,00,000/- has been transferred to the account of the corporate debtor via NEFT was not disputed as the same has been admitted by the respondent in its reply - In the instant matter, the amount in default is admitted and the same is reflected in the reply and written submissions filed by the respondent-corporate debtor, therefore, the contention of the respondent-corporate debtor with regard to Section 65B of the Indian Evidence Act is misplaced. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above the threshold limit, the petition is admitted in terms of Section 7(5) of the IBC - Moratorium declared.
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2022 (11) TMI 104
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Lease rentals - Operational Debt or not - pre-existing dispute or not - HELD THAT:- The issue regarding lease rentals is similar to the issues raised before the five member bench of Hon ble NCLAT in JAIPUR TRADE EXPOCENTRE PRIVATE LIMITED VERSUS M/S METRO JET AIRWAYS TRAINING PRIVATE LIMITED [ 2022 (7) TMI 241 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ]; the issue was whether the licensee fee, which is claimed to be due from the Corporate Debtor, is an Operational Debt within the meaning of section 5(21) of the Code.?'. Wherein, the Hon ble NCLAT has held that the claim of Licensor for payment of license fee for use of Demised Premises for business purposes is an Operational Debt within the meaning of Section 5(21) of the Code. Pre-existing dispute - HELD THAT:- It is pertinent to mention that as per the records at page 196 of the Petition, the demand notice under section 8 of the Code was delivered to the Corporate Debtor on 29 April, 2019. Whereas, the Corporate Debtor invoke the Arbitration Clause vide letter dated 11 July, 2019, which is way after than the demand notice under section 8 of the Code was delivered to them - The Hon ble Supreme Court in catena of Judgments has opined that in an Application under Section 9, the Corporate Debtor can point out any Pre- Existing Dispute raised prior to the issuance of Demand Notice under Section 8, IBC, 2016. The present petition made by the Operational Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Further, no disputes were ever raised by the Corporate Debtor. Petition admitted - moratorium declared.
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PMLA
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2022 (11) TMI 103
Money Laundering - proceeds of crime - obtaining huge loans from Andhra Bank and Union Bank of India for starting a medical college in the name of D.D.Medical College - raising huge amounts from students, for giving admission without even getting the necessary permission from the Medical Council of India - HELD THAT:- Even if the accused was not involved in the criminal activity that generated the proceeds of crime, but, if he is involved in some way or the other with the proceeds of crime so generated, he would be liable to be prosecuted under Section 3 read with 4 of the PML Act. Whether the cars were purchased from and out of the proceeds of crime, is also a question of fact which has to be decided only during trial. There are no infirmity in the orders passed by the trial Court in the discharge petitions warranting interference by this Court. Similarly, there are prima facie materials against Sonia and therefore, the prosecution against her cannot be quashed. The presence of Tataji and Sonia may be dispensed with on the conditions imposed - application disposed off.
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2022 (11) TMI 102
Seeking grant of anticipatory bail - Money laundering - proceeds of crime - scheduled offence - offence of cheating and dishonestly inducing delivery of property - attachment of the property - HELD THAT:- Against the alleged proceeds of crime to the tune of Rs.10,15,94,961/- properties valued at Rs.4,21,85,018 have been identified and have been provisionally attached vide PAO No.09/2018 dated 31.03.2018. A complaint under section 5(5) of PMLA 2002 vide O.C. No.947/2018 dated 23.04.2018 was filed before the Hon ble Adjudicating Authority under PMLA for confirmation of the provisional attachment order and Authority under PMLA confirmed the provisional Attachment order No.09/2018 vide order dated 05.09.2018 considering the fact that the petitioner has committed the scheduled offence, generated proceeds of crime and laundered them - Hence the property in the name of Neelam Devi, w/o Dinesh Prasad Gupta has rightly been identified for attachment. Considering the aforesaid facts and circumstances, it is pertinent that the petitioner has not produced any document to show that he purchased the said land from own money - Petitioner along with his partner i.e. other accused persons are involved in concealment, possession, acquisition and using properties acquired out of proceeds of crime and projecting the same as untainted, as such, the privilege of anticipatory bail cannot be granted. Application dismissed.
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2022 (11) TMI 101
Seeking grant of Bail - Money Laundering - allegation of siphoning off huge amount of money from Mahila Utkarsha Pratishthan, Risod, (hereinafter referred to as the Trust ) for his personal use - it is also alleged that Applicant and the co-accused converted the Trust into Section 8 Company on the basis of forged and fabricated documents - diversion of funds/proceeds of crime - twin conditions as mentioned in Section 45 of the PMLA fulfilled or not?. HELD THAT:- It may be mentioned that Section 45 of the PMLA imposes two conditions for grant of bail to any person accused of an offence punishable for a term of imprisonment of more than three years under part A of the schedule of the Act viz, (i) the public prosecutor must be given an opportunity to oppose the application for such bail; (ii) where the public prosecutor opposes the application, the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and is not likely to commit any offence while on bail. Reverting to the facts of the present case, the thrust of the accusations against the Applicant is that he in connivance with the co- accused Bhavna Gawali cheated and misappropriated the funds of the Trust, for his personal use. The Applicant credited cash of Rs. 3.58 crores into the account of Deepak Prajapati, who transferred the money into the account of M/s. Master Plan Finance Ltd, of which he is one of the Directors. Said Deepak Prajapati aided money laundering by effecting a loan entry to give legitimacy to the proceeds of crime and/or to disguise the illicit nature of criminal proceeds. The said payment was then utilized by the applicant to purchase office No.16 on the first floor of Nariman Bhavan at Nariman Point. The only incriminating material against the Applicant is in the form of the statements of Upendra Mule, Ashok Gandole, Uddhav Gandole, Vinod Pandhare, Santosh Somani, Bharat Devgire and others, who are the accused in crime No.389 of 2020 registered at Risod Police Station, pursuant to the complaint lodged by Bhavna Gawali for cheating and misappropriating the money of the Trust. Said Ashok Gandole and others had filed applications before the Division Bench of this Court at Nagpur Bench for quashing the said FIR. While dismissing the said applications, the Division Bench of this Court had prima facie observed that Ashok Gandole was Incharge of the affairs of the Trust and the other Applicants were connected with him - It is observed that Ashok Gandole and others are alleged to have deposits in their personal accounts and have substantial properties. In the light of these observations, the statements of these witnesses recorded under Section 50 of the PMLA will have to be tested in evidence during trial. Considering the totality of the circumstances, prima facie the offence of cheating is not made out and in all probability, the Applicant may not be ultimately convicted for offence of money laundering. In the absence of any material as regards criminal antecedents of the Applicant, it can be held that there is no possibility of the Applicant committing such crime in future. Most of the co-accused are either on bail or are not arrested. The Applicant is in custody since September, 2021. The charge sheet has been filed and considering the large pendency, the trial is not likely to commence and conclude in the immediate future. The Applicant is a permanent resident of the State and there is no likelihood of the Applicant absconding or tampering with the evidence. Considering the above facts and circumstances, it is not necessary to detain the Applicant any further. Hence, case is made out for grant of bail. Bail application allowed.
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Service Tax
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2022 (11) TMI 100
Extended period of limitation - Short payment of Service Tax - man power supply service - rent a cab service - extended period of limitation - suppression of facts or not - proviso to section 73(1) of the Finance Act, 1994 - HELD THAT:- Even though the Additional Commissioner had not dealt with the issue relating to the invocation of the extended period of limitation, the Commissioner (Appeals) observed that the Additional Commissioner had correctly invoked the extended period of limitation. It was absolutely necessary for the Additional Commissioner to form an opinion that the appellant had deliberately suppressed material information with an intention to evade payment of service tax. Unless the Additional Commissioner had come to a conclusion that the extended period of limitation was rightly invoked in the show cause notice, it could not have confirmed the demand for any period beyond the normal period of limitation. Likewise, it was also necessary for the Commissioner (Appeals) to form an opinion that the appellant had deliberately suppressed material facts with an intention to evade payment of service tax. The suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. The Supreme Court in M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I [ 2007 (8) TMI 11 - SUPREME COURT] also observed in connection with section 11A of the Central Excise Act, that suppression means failure to disclose full information with intention to evade payment of duty. The confirmation of demand for the period beyond the normal period of limitation by invoking the proviso to section 73(1) of the Finance Act cannot be sustained - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (11) TMI 99
CENVAT Credit - Iron and Steel Materials - applicability of principles of user test - April 2008 to March 2009 - levy of penalty - extended period of limitation - HELD THAT:- In the instant case the dispute relates to the period from April, 2008 to March, 2009 whereas the Show Cause Notice is issued on dated 25.07.2012 i.e. beyond normal period of limitation of one year. Therefore, as per Section 11Aof the Central Excise Act, 1944 the entire demand is barred by normal period of limitation. Hence, extended period of limitation cannot be invoked in the instant case in as much as none of the ingredients necessary for invoking extended period under proviso to Section 11A (1) exists. Levy of penalty - HELD THAT:- In the facts and circumstances of the case there is no warrant in levying any penalty upon the Appellant. During the material period the position of law was not settled and there were divergent views expressed by the Courts / Tribunals leading to referral of the matter to Larger Bench in the case of Vandana Global Ltd., Vs. CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] . Hon ble Chhattisgarh High Court has set aside the decision of the Tribunal s Larger Bench in the case of Vandana Global M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] . It is further observed that the principle of user test also need to be considered while deciding the entitlement of assessee to avail CENVAT Credit as laid down by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] . Following the said decision, the Hon ble Madras High Court in the case of Thiru Arooran Sugars [ 2017 (7) TMI 524 - MADRAS HIGH COURT] , has held that iron and steel items and cement used for erection of foundation and support structures would also come within the ambit of the definition of input so long as it satisfies the user test . In the facts of the present case, it is not in dispute that various steel items have been used for the purpose of setting up of Sponge Iron Plant for manufacture of final products. Therefore, by applying the user test principle, the Appellant is entitled to avail credit on the steel items. The Appellant is entitled to avail credit - Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 98
Refund of Excise duty paid mistakenly - refund rejected on the ground of principles of unjust enrichment - it is alleged that appellant have passed on the duty incidence to the buyer - HELD THAT:- Undisputedly, the appellant has mentioned the duty element in the invoices issued to the buyers. The presumption envisaged in section 12B of Central Excise Act, 1944 then applies and the burden rests upon the appellant to rebut this presumption. In para 12 of the impugned order, the Commissioner (Appeals) has discussed that though the appellants produced Cost Accountant and Chartered Accountant s certificate, these are not certificates issued by their statutory auditors. Further, it is also not stated in the certificates that they have scrutinized financial statements of the appellant. Even after remand, the appellant has not been able to produce necessary documents to substantiate that they have not passed on the incidence of duty to the buyers of the goods. The rejection of refund claim is legal and proper - Appeal dismissed.
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2022 (11) TMI 97
CENVAT Credit - input services - sale commission - whether commission agent is directly concerned with sales rather than sales promotion for which the same would not fall within the definition of input services? - effect of N/N. 2/2016-CE(NT) - contention of the Respondent-Department is that the said notification is prospective in nature while Appellant claims that being a beneficial provision, it is a clarification which is retrospective in nature and it covers the period of dispute of Appellant occurred post 2011 amendment. HELD THAT:- Learned Counsel for the Appellant Mr. Harish Bindumadhavan draws attention of this Bench to the decision rendered by this Tribunal in M/S ESSAR STEEL INDIA LTD. VERSUS COMMISSIONER OF C. EX. SERVICE TAX, SURAT-I [ 2016 (4) TMI 232 - CESTAT AHMEDABAD] wherein by applying the ratio of the judgment passed by the Hon'ble Supreme Court in the case of COMMISSIONER OF INCOME TAX (CENTRAL) -I, NEW DELHI VERSUS VATIKA TOWNSHIP PRIVATE LIMITED [ 2014 (9) TMI 576 - SUPREME COURT] it was held that explanation inserted in Rule 2(l) of Rules, 2004 that is in conformity to Board Circular dated 29.04.2011 extending benefit to the assessee would have retrospective effect. Thus, Appellant is eligible to avail credits on the tax paid on sale commission paid to both Indian and overseas agents for the period between April, 2013 and August, 2015 - appeal allowed - decided in favor of appellant.
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2022 (11) TMI 96
Refund of Cenvat Credit lying unutilized in the books of account - refund sought on the ground that the factory of the appellant was closed down and there was no occasion or scope to utilize such accumulated Cenvat Credit for payments of Central Excise duty on the excisable goods manufactured by them - HELD THAT:- Against the outstanding demand of Rs.51,86,838/- confirmed as interest liability, the refund amount sanctioned by the Department was appropriated against such liability. On perusal of the case records and documents submitted by the appellants today at the time of hearing of appeal, it is found that the interest demands has already been settled under the SVLDRS-4, 2019 and consequent upon settlement of dispute, the appeal filed by the appellant before the Tribunal was also dismissed as deemed withdrawal. On perusal of SVLDRS-4 submitted by the appellant, wherein the department has confirmed that the outstanding liability has already been settled under such scheme. Since there is no liability of making any payments towards the adjudged Government dues as on date, there is no question of any appropriation of the sanctioned refund amount against any liability as mentioned in the adjudication order dated 03.11.2017. The appeal filed by the appellant is allowed, with the direction that the appellant should be entitled for grant of refund for an amount of Rs.35,23,640/-.
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2022 (11) TMI 95
Restoration of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) - appellant submits that the learned Commissioner has erred in dismissing the appeal as deemed to have been withdrawn merely because the appellant applied under SVLDRS, 2019 whereas the same has been withdrawn subsequently - HELD THAT:- Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) was introduced by way of Finance (No. 2) Act, 2019 by the Central Government. The main objective of the scheme is to provide for the settlement of pending disputes related to indirect taxes. The Appellant although applied under the said scheme but the same was withdrawn later on for the reasons best known to them. Admittedly, no payment had been made by them within the period stipulated under Section 127(5) of the Finance Act and as a result no discharge certificate in form SVLDRS-4 in terms of Section 127(8) of the Finance Act was issued to the Appellant. Unless the tax dues as pointed out by the Designated Committee have been paid by the applicant under the said scheme, the issue cannot be said to have settled and therefore, without looking into it merely on applying under SVLDRS, the learned Commissioner (Appeals) erred in dismissing the Appeal as deemed to have withdrawn. There are no other option but to set aside the impugned order without going into the merits and remanding the matter back to the learned Commissioner (Appeals) to decide the appeal afresh on merits after following the principle of natural justice - appeal allowed by way of remand.
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2022 (11) TMI 94
CENVAT Credit - Input services - Foreign travel services used for air travel agencies services for their staff or employee to travel abroad for business purpose - scope of the phrase 'personal use or consumption' - after 01.04.2011 the phrase activities relating to business was deleted from the inclusive clause of the input service definition and Rule 2(1)(ii)(C) specifically excluded travel benefit extended to employee for personal use. HELD THAT:- The issue involved has been determined by the Tribunal in ROHA DYECHEM PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE RAIGAD [ 2017 (9) TMI 1995 - CESTAT MUMBAI] , where it was held that Admittedly, the foreign travel expenses were incurred for staff to travel abroad for business purposes. Appellant is a manufacturer and the business of manufacturing does not preclude activities relating to manufacture outside the country. Likewise, the courier was entrusted with dispatch of documents and correspondence from the office of the appellant which can be presumed to have been in connection with its principal activity. Furthermore, it is inconceivable that research development could have been in connection with anything other than manufacture. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (11) TMI 93
Validity of assessment order - Taxability - fly ash procured from the Tamil Nadu Electricity Board (TNEB) - exemption claimed in respect of supplies to be made to Special Economic Zones (SEZ) - ban imposed by the Central Government in transacting in fly ash, for preservation and protection of the environment by way of Notification dated 14.09.1999 - HELD THAT:- The impugned proceedings were triggered by an audit slip wherein there was reference to Section 18 of the Act. The petitioner has specifically disavowed all reference to Section 18 stating that the claim of exemption is not under Section 18 but only under the Government Order as aforesaid. Despite the multiple rounds of prior litigation in this matter, in the present impugned notices as well, the assessing authority merely repeats the same proposals contained in the audit note - The officer proposes, in the impugned notice, to assess the value of the material taking the price at which other suppliers have effected the sale, as a base. While he initially states that the actual turnover must be brought to tax, he goes on to state that the value of fly ash at which other suppliers have supplied the goods to the cement industry will be adopted as the basis of assessment, notwithstanding that the petitioner has set out the actual value at which the fly ash has been procured duly supported by a certificate from the chartered accountant. Supply to developers of SEZ - HELD THAT:- The officer again reiterates that the ingredients of Section 18 of the Act have not been satisfied. Despite the settled position that an assessment should proceed on an independent application of mind by the officer, though naturally, he would take note of the objections raised by audit, and inspite of the submissions of the petitioner that no claim has been made in terms of Section 18, the authority repeatedly refers to Section 18. In light of the reiteration of the same errors by the assessing authority to which learned Government Pleader will accede, the impugned notice shall not be pursued. Let a fresh notice be issued and if and when such notices are issued, responses will be filed by the assessee and assessments be completed expeditiously - the respondent is permitted to issue notices within four (4) weeks from today, bearing note of the flaws pointed out above. If no notice is issued within the aforesaid time frame, the returns of the petitioner for the periods in question will be deemed to have been accepted. Petition disposed off.
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2022 (11) TMI 92
Restoration of penalty - reversal of finding of the Deputy Commissioner s (Appeals) - release of detained goods - main reason for the detention of goods is that the consignment was not declared as per section 46(3)(e) of the Act - HELD THAT:- The sub section (e) to Section 46(3) of the Act mandates that goods when are imported to the state, through coastal cargo, through air and through the Railways, a declaration has to be furnished before the Tax Commercial Officer having jurisdiction over the place of import. This measure has been incorporated in the Act to ensure that the department has knowledge of the import of the goods into the State, so that evasion of tax is averted. The petitioner does not have a case that it has declared the goods before the Commercial Tax department and filed form 8FA as provided in section 46(3)(e) of the Act. Rule 66(6)(ba) of the KVAT Rules prescribes that declaration referred to in clause (e) of sub section 3 of section 46 of the Act shall be in form 8FA, which shall be prepared in duplicate and separate declaration has to be prepared in respect of each consignee. The mandatory documents which are to be accompanied with the consignment are not accompanied would give rise to suspicion regarding the genuineness of the transport and attempt of evasion of tax. Sub section (2) of section 47 of the Act gives power to the officer that if he has reason to suspect that the goods transported are not covered by proper and genuine documents (in cases where such documents are necessary), for reasons to be recorded in writing, detain the goods and allow further transport only on furnishing security for the double the amount of tax likely to be evaded as estimated by the officer. The Tribunal has intrinsically examined the circumstances read with documents, which have bearing on the issues in hand before recording and finding against the petitioner herein. It is this finding which is reviewed in our jurisdiction. Further the Tribunal, being the second fact-finding body, has entered into a finding that the proper documents which are necessary for transportation of goods were not available at the time of transport and hence, the contention of the petitioner that proper documents were accompanied by the goods is factually incorrect. The Tribunal also took note of the fact that the intelligence officer has noted in his order that the no books of accounts were produced before him and also of the fact that no declaration in form 8FA was produced along with the reply though the petitioner had a contention that in respect of goods brought to Kerala form 8FA was uploaded not at the time of interception but later. The Intelligence Officer also verified the declaration in KVAT Act and confirmed that the same was not declared. As per section 46(3)(e) of the Act, declaration should have been done on the arrival of goods into the state on 29.11.2013 itself. The Tribunal is justified in reversing the order of the Deputy Commissioner (Appeals) as the mandatory provision under section 46(3) of the Act, specifically sub clause (e), declaration was not made by the petitioner to the commercial department to make them aware of such import to the state. The contention that the delivery note and self-declaration were available with the consignment is not enough to show that all the documents necessary for the movement of goods from one state to another as per prescribed under section 46 of the Act is complied. The burden of proving that there was no evasion of tax is on the petitioner and he has not discharged the same before the enquiry officer and thus the Intelligence Officer was justified in imposing penalty - On going through the order of the Tribunal, as well as that of Deputy Commissioner (Appeals) and the Intelligence Officer, it is opined that the tribunal was right in reversing the order of the Deputy Commissioner and restoring the order of the intelligence officer. There is no illegality or impropriety in the order passed by the Tribunal, and hence the questions of the law are answered against the petitioner and in favour of the State. The Revision does not warrant interference - the revision is dismissed.
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Indian Laws
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2022 (11) TMI 91
Interpretation of statute - Overriding effect of provisions of MSMED Act, 2006 over the provisions of the Arbitration Act - execution of an independent agreement as contemplated in Section 7 of the Arbitration Act - Jurisdiction of Facilitation Council at Bhopal to adjudicate upon the disputes between the parties - can the Facilitation Council proceed under the provisions of Section 18(3) of MSMED Act, 2006 when there is an independent arbitration agreement between the parties? Whether the provisions contained in Chapter V of the MSMED Act, 2006 with regard to the Delayed Payments to Micro and Small Enterprises would have the precedence over the provisions contained in the Arbitration Act, 1996, more particularly when the parties by execution of an independent agreement as contemplated in Section 7 of the Arbitration Act had agreed to submit to arbitration the disputes arising between them? - HELD THAT:- It is trite to say that the provisions of the special statute would override the provisions of the general statute. It is also well settled that while determining the effect of a statute overriding the other statute, the purpose and policy underlying the two statutes and the clear intendment conveyed by the language of the relevant provisions therein would be the relevant consideration - One of principles of statutory interpretation relevant for our purpose is contained in the Latin maxim leges posteriores priores contrarias abrogant (the later laws shall abrogate earlier contrary laws). Another relevant rule of construction is contained in the maxim generalia specialibus non derogant (General laws do not prevail over Special laws). When there is apparent conflict between two statutes, the provisions of a general statute must yield to those of a special one. The Arbitration Act, 1996 in general governs the law of Arbitration and Conciliation, whereas the MSMED Act, 2006 governs specific nature of disputes arising between specific categories of persons, to be resolved by following a specific process through a specific forum. Ergo, the MSMED Act, 2006 being a special law and Arbitration Act, 1996 being a general law, the provisions of MSMED Act would have precedence over or prevail over the Arbitration Act, 1996 - Even if the Arbitration Act, 1996 is treated as a special law, then also the MSMED Act, 2006 having been enacted subsequently in point of time i.e., in 2006, it would have an overriding effect, more particularly in view of Section 24 of the MSMED Act, 2006 which specifically gives an effect to the provisions of Section 15 to 23 of the Act over any other law for the time being in force, which would also include Arbitration Act, 1996. There cannot be any disagreement to the proposition of law laid down in various decisions of this Court, relied upon by the learned counsel for the buyers that the Court has to read the agreement as it is and cannot rewrite or create a new one, and that the parties to an arbitration agreement have an autonomy to decide not only on the procedural law to be followed but also on the substantive law, however, it is equally settled legal position that no agreement entered into between the parties could be given primacy over the statutory provisions. When the Special Act i.e., MSMED Act, 2006 has been created for ensuring timely and smooth payment to the suppliers who are the micro and small enterprises, and to provide a legal framework for resolving the dispute with regard to the recovery of dues between the parties under the Act, also providing an overriding effect to the said law over any other law for the time being in force, any interpretation in derogation thereof would frustrate the very object of the Act. A party who was not the supplier as per Section 2 (n) of the MSMED Act, 2006 on the date of entering into the contract, could not seek any benefit as a supplier under the MSMED Act, 2006. A party cannot become a micro or small enterprise or a supplier to claim the benefit under the MSMED Act, 2006 by submitting a memorandum to obtain registration subsequent to entering into the contract and supply of goods or rendering services. If any registration, is obtained subsequently, the same would have the effect prospectively and would apply for the supply of goods and rendering services subsequent to the registration. The same cannot operate retrospectively. However, such issue being jurisdictional issue, if raised could also be decided by the Facilitation Council/Institute/Centre acting as an arbitral tribunal under the MSMED Act, 2006. Application disposed off.
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2022 (11) TMI 90
Post operative medical negligence and follow-up care - Section 23 of the Consumer Protection Act, 1986 - HELD THAT:- Taking note of the fact that treating doctors, OP Nos. 1, 2 and 5 are medical experts in the field of nephrology and so far as OP No. 6 hospital where the patient was admitted for transplantation was duly registered under the Act, 1994 and all post operative medical care protocol available at the command of the Respondents was administered to the patient, still his physical condition deteriorated and finally he could not be saved, which is really unfortunate, but there cannot be a legal recourse to what is being acceptable to the destiny. The Commission has not committed any manifest error in arriving to a conclusion that in post operative medical negligence or follow up care, there was no negligence being committed by the Respondents which may be a foundation for entertaining the complaint filed by the Appellants. In consequence thereof, the judgment of the Commission does not call for any interference by this Court. Counsel for the Appellants submitted that the nursing home/hospital where the patient was admitted for post-operative care, was not registered under the provisions of the Act 1994. With the assistance of the counsel for the parties, we have gone through the Scheme of the Act 1994 and the Rules made thereunder. The hospitals where the procedure of transplantation is undertaken are to be registered in terms of Section 14 of the Act 1994, but for postoperative care, particularly after the patient being discharged from the hospital where the procedure of transplantation has taken place, we have not come across any provision under the Act, 1994 where such hospitals are required to be registered under the Act 1994. There are no fault in the reasoning of the Commission, as a result, the appeal is without substance and deserves to be dismissed - appeal dismissed.
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2022 (11) TMI 89
Dishonor of Cheque - discharge of burden to prove - power of revision - HELD THAT:- This Court is exercising power of revision and the power of revision is not available to appreciate or reappreciate to have a contra-finding. It is the settled law that power of revision available to this Court under Section 401 of Cr.P.C r/w Section 397 is not wide and exhaustive to re-appreciate the evidence to have a contra finding. In [(2015) 3 SCC 123 : (2015) 2 SCC (Cri) 19], Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke, [ 2015 (1) TMI 1332 - SUPREME COURT] the Apex Court held that the High Court in exercise of revisional jurisdiction shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. In this matter, the courts below given benefit of presumptions under Sections 118 and 139 of NI Act in favour of the complainant, on the finding that the evidence of PW1 in the matter of transaction led to execution of the cheque is believable. The trial court as well as the appellate court correctly appreciated the evidence and came to the conclusion that the evidence available established commission of offence punishable under Section 138 of NI Act by the accused and, accordingly, the accused was convicted. In fact, there is no reason to revisit the concurrent verdicts of conviction - the concurrent verdicts of conviction stands confirmed - the sentence is modified. There by the accused is sentenced to undergo simple imprisonment for a day till rising of the court and to pay fine of Rs.10,00,000/- (Rupees Ten lakh only) for the offence punishable under Section 138 of the NI Act. Revision allowed in part.
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2022 (11) TMI 88
Dishonor of Cheque - legally enforceable debt - rebuttal of presumptions in favour of the complainant under Sections 118 and 139 of N.I. Act - modification of sentence of imprisonment to fine - HELD THAT:- On a perusal of the record, the Trial Court observed that the accused was not disputing his signature on the cheque, as such, the presumption envisaged under Section 118 of N.I. Act that the cheque was drawn for consideration on the date which the cheque bore, and Section 139 of N.I. Act would enjoin on the Court to presume that the holder of the cheque received it for the discharge of debt or liability and that the accused failed to adduce any probable defence to show that he had not received money from the complainant and failed to adduce rebuttal evidence to discharge the burden laid upon him and did not place any iota of evidence under what circumstances the cheques were issued to the complainant, and held that the offence under Section 138 of N.I. Act was proved against the accused. When the matter is taken up for hearing on 23.08.2022, learned counsel for the revision petitioner / accused stated that the revision petitioner / accused was ready to pay the amount of Rs.2,25,000/- as agreed before the Court on 04.02.2022. But the learned counsel for the respondent / complainant stated that the complainant is not ready for compromise as the accused had not produced the Demand Draft even on the said date. Considering the object of the Act, it is considered fit to modify the sentence of imprisonment to fine and to pay the same as compensation to the complainant for the amount directed by this Court on 04.02.2020. As the revision petitioner / accused reported ready to pay the amount as suggested by this Court on 04.02.2020, and as stated by the Hon ble Apex Court in Meters and Instruments Private Limited [ 2017 (10) TMI 218 - SUPREME COURT] that though compounding requires consent of both parties, even in the absence of such consent, the Court, in the interest of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused, the Criminal Revision Case is dismissed on condition of the revision petitioner / accused to produce the Demand Draft for an amount of Rs.2,25,000/- within a week from the date of pronouncement of order. Revision closed.
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2022 (11) TMI 87
Mismatched blood transfusion - mistake committed at Samad Hospital by giving B+ve blood instead of O+ve blood - being aggrieved by the alleged negligence, during blood transfusion and further treatment, the Complainants filed the Consumer Complaint before the State Commission, Kerala and prayed for compensation of Rs. 45 lakh with interest + Rs. 4.5 lakh towards medical expenditure and Rs. 50,000/- as costs. Whether wrong blood was transfused, if yes- then whether hospital or the blood bank is liable? - HELD THAT:- It was endorsed by Dr. Valentina and has also recorded in case sheet (B6), the probable cause for the transfusion reaction as mismatched blood transfusion and the resultant DIG + ARF + severe bleeding. It is also noted that the patient continues to be oliguric. Thus, the afore entry itself is sufficient to prove that mismatched blood was transfused to the patient. It was due to the blood bag which was kept in hospital refrigerator and transfused on the fateful day. Moreover, it was the duty of hospital to prove the wrong blood was issued from the Blood Bank, but the Appellant failed to prove it. Proper medical record has more importance. The finding of State Commission show the glaring lapses of the Opposite Parties Nos. 1 and 2, who have not kept the transfusion register showing the number of bags, its date of receipt or use or disposal. Thus, possibility of error in identification of the blood bags or identifying the patients was more. According to DW - 2 and 3 the blood transfusion was performed under the control of the duty doctor Salini and the duty nurse but there is no documentary evidence to prove their contention - it is further noted that the blood bag was kept in storage of the Hospital premise. It should be borne in mind that the cross-matched blood received from the blood bank shall be transfused within reasonable time preferably within 24 hours. However, in the instant case, there is no record that when the blood was brought from the blood bank. Therefore, it is concluded that wrong blood was transfused to the patient and the hospital staff is liable for the negligence. Whether it was a Transfusion Reaction or DIC? - HELD THAT:- Admittedly, the surgery was uneventful, but within half an hour of the initiation of the transfusion, the patient suffered shivering and diagnosed it as a transfusion reaction. It is pertinent to note that the witness Dr. Valentina deposed that the transfusion blood of B+ve group whereas the patient was O+ve - From the details of Anaesthesia notes dated 8.8.2002 maintained by OP-3 KIMS Hospital, recorded that as:- post myomectomy patient - mismatched blood transfusion - DIC Renal failure - pulmonary edema, ARDS. The aforesaid entry would make it abundantly clear that it was transfusion reaction. In most of the cases the hospital staff failing to respond to the signs and symptoms of a blood transfusion error. Thus the cause can be as simple as a breakdown in safety protocols or poor training. Though most hospitals and surgical centres have strict procedures on blood storage, but sometimes improper or poorly stored blood got issued. Reporting all transfusion-related adverse reactions to the Blood Bank promptly is more vital. Haemovigilance is the 'systematic surveillance of adverse reactions and adverse events related to transfusion' with the aim of improving transfusion safety. Transfusion reactions and adverse events should be investigated by the clinical team and hospital transfusion team and reviewed by the hospital transfusion committee. The Hon'ble Supreme Court in the case of POST GRADUATE INSTITUTE OF MEDICAL EDUCATION AND RESEARCH, CHANDIGARH VERSUS JASPAL SINGH AND ORS. [ 2009 (5) TMI 1011 - SUPREME COURT] held that mismatch in transfusion of blood resulting in death of the patient after 40 days, a case of medical negligence - In the instant case wrong blood transfusion to Sajeena was an error which no hospital/doctor exercising ordinary care would have made. Such an error is not an error of professional judgment but in the very nature of things a sure instance of medical negligence and the hospital's breach of duty contributed to her death. Thus, there are no hesitation to hold the Opposite Party No. 1 and 2 liable for deficiency in service and the medical negligence. Compensation - HELD THAT:- The Complaint was filed by 6 complainants. The patient Sajeena and her husband A.K. Nazeer were undergoing treatment for infertility at Samad Hospital, therefore A.K. Nazeer (Complainant No. 1) was the most aggrieved party. He unfortunately died in a road accident during the pendency of the complaint before the State Commission. Accordingly, his name was deleted and the parents of deceased Sajeena are Complainants Nos. 2 and 3 whereas Complainant No. 4 to 6 are the two sisters and brother of Sajeena. The parent's most stressful event in their life and cause for a major emotional crisis was that they lost their 28 years married daughter due to medical negligence and son-in-law in road accident - The Complainants stated that the deceased was earning Rs. 15000/- per month, but nothing is on record to prove her earnings. Therefore, in the ends of justice putting reliance upon the recent judgment of Hon'ble Supreme Court in ARUN KUMAR MANGLIK VERSUS CHIRAYU HEALTH AND MEDICARE PRIVATE LTD. ANR. [ 2019 (1) TMI 1992 - SUPREME COURT] and in LATA WADHWA ORS. VERSUS STATE OF BIHAR ORS. [ 2001 (8) TMI 1444 - SUPREME COURT] , a lump sum compensation of Rs. 20 lakh is allowed to the parents of the deceased Sajeena. The Appeal is dismissed with modification to the Order of the State Commission. The Appellants shall jointly and severally pay Rs. 20 lakh as a compensation and Rs. 1 lakh towards the cost of litigation within 6 weeks from today to the parents of deceased Sajeena. Any delay beyond 6 weeks, shall attract interest @ 7% per annum till its realization.
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