TMI Tax Updates - e-Newsletter
November 7, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

GST

• Negative blocking of ECL not allowed: Court upholds taxpayers' right to utilize ITC against GST liability.

  The High Court held that the issue of 'negative blocking' of Electronic Credit Ledger (ECL) as per the Central Goods and Services Tax Act, 2017 and Rules is no longer an open issue and stands concluded by its previous decision. The Court allowed the petition and set aside the orders disallowing debit from the ECL in excess of the available Input Tax Credit at the time of passing the impugned orders, terming it as 'negative blocking'. The action of the respondents in negatively blocking the ECL cannot be sustained.
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• Tax refunds release ordered within 3 weeks after petitioner's appeals allowed.

  The High Court directed the respondents to release all refunds due and payable to the petitioner within three weeks, pursuant to the appellate authority's order dated July 4, 2024. This order was issued as the petitioner's statutory appeals and refund claims were inordinately delayed, compelling the petitioner to approach the Court. The Court disposed of the writ petition after the pending appeals pertaining to the relevant tax periods were allowed in the petitioner's favor, rendering no further issues to be adjudicated.
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• Rule 96(10) of CGST Rules struck down as ultra vires and arbitrary, IGST refunds secured for petitioners.

  The High Court ruled on the constitutional validity of Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017, which was challenged as being ultra vires Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017, and violating Articles 14, 19(1)(g), and 265 of the Constitution. The court held that Rule 96(10), as inserted by a notification dated 09-10-2018 with effect from 23-10-2017, is ultra vires Section 16 of the IGST Act and manifestly arbitrary, producing absurd results unintended by the legislature. Consequently, the court declared Rule 96(10) unenforceable and quashed any actions or orders against the petitioners based on it. The court directed that no proceedings shall be taken to recover IGST refunded to the petitioners by applying Rule 96(10) for the period between 23-10-2017 and 08-10-2024.
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• Movie theaters hiked ticket prices to offset GST cut - profiteering charges upheld.

  Profiteering in GST rates for admission to cinema exhibitions. Despite a reduction in GST rates from 28% to 18%, the benefit was not passed on to consumers, and instead, the base price was increased to maintain a uniform "cum-tax" selling price. The High Court held that once the GST rate was reduced, it became mandatory for the petitioner to pass on the benefit of that reduction. There was no justification to interfere with the Competition Commission of India's (CCI) view, and the petition challenging the CCI's order was dismissed.
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• Taxpayer wins right to claim input tax credit after 2024 retrospective amendments.

  The Court held that due to amendments brought in by the Finance (No. 2) Act, 2024, the registered person is entitled to avail input tax credit for the relevant period subject to conditions prescribed under newly inserted Sections 16(5) and 16(6) of the CGST Act, 2017. The amendments, given retrospective effect from 01.07.2017, rendered the proceedings initiated against the petitioner through the show-cause notice redundant. Consequently, the impugned order was set aside, and the matter was remanded to the jurisdictional officer to pass an appropriate order. The petition was disposed of by way of remand.
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• COVID extension for tax credit orders challenged; law amended retroactively for FYs 2017-21.

  The High Court addressed the challenge to notifications extending the time limit for issuance of orders u/s 73 of the CGST/AGST Act, 2017, due to the "force majeure" condition of Covid-19. The Court noted that amendments introduced by the Finance (No. 2) Act, 2024, retrospectively effective from 01.07.2017, allowed registered persons to claim input tax credit for financial years 2017-18 to 2020-21, subject to conditions prescribed in the newly inserted Sections 16(5) and 16(6) of the CGST Act, 2017. Consequently, the show-cause notice issued against the petitioners became redundant. The Court set aside the impugned order and remanded the matter to the competent jurisdictional officer for passing an appropriate order, disposing of the petition.
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• Extension of time limits for input tax credit due to Covid-19 upheld by court.

  The High Court addressed the extension of due dates u/s 73 of the CGST/AGST Act, 2017 due to the Covid-19 pandemic. It examined the provisions related to the time limit prescribed u/s 73 and the invocation of Section 168A, considering the "force majeure" condition. The Court observed that, notwithstanding Section 16(4), for financial years 2017-18 to 2020-21, the registered person shall be entitled to take input tax credit in any return filed u/s 39 up to November 30, 2021. The amendments brought by the Finance (No. 2) Act, 2024, rendered the challenge in the writ petition redundant. The petitioner is entitled to avail the input tax credit benefit for the relevant period, subject to the conditions prescribed in the newly inserted Sections 16(5) and 16(6). Consequently, the impugned order was set aside, and the matter was remanded to the competent jurisdictional officer for appropriate orders.
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• Court lifts freezing of account; gives chance to reply to tax notice.

  Interim order by High Court lifting attachment on petitioner's bank account pending final disposal, allowing petitioner opportunity to respond to demand notice issued under CGST Act. Court refrains from opining on merits, directs petitioner to appear before respondent authority on specified date for further proceedings in accordance with law. Petition disposed of.
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Income Tax

• Taxpayer's plea for delay in filing tax returns rejected due to insufficient justification.

  The court rejected the petitioner's application for condonation of a 216-day delay in filing their Income Tax Returns (ITRs). The reasons cited by the petitioner, delay in receiving the audit report and the COVID-19 outbreak, were not accepted. The audit report was issued on 02.07.2019, and the statements were made available then, so the delay in receiving the report was not a valid reason. The COVID-19 outbreak occurred in March 2020, seven months after the audit report, so it could not justify the delay. The court held that condoning such a delay without genuine hardship would encourage misdeeds and cannot be allowed, especially in revenue matters. The respondent rightly rejected the application as the petitioner failed to justify the delay.
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• Transfer pricing rules limited - domestic transactions excluded, adjustments only for associated enterprises.

  Regarding the scope of Section 92BA(i) as omitted, the Tribunal held that the reference made to the Transfer Pricing Officer (TPO) for the specified domestic transaction mentioned in clause (i) of Section 92BA of the Act is invalid. This is because the said provision has been omitted, and any addition made concerning the same needs to be deleted. As per the Karnataka High Court's decision in M/s. Texport Overseas Pvt. Ltd., when clause (i) of Section 92BA was omitted by the Finance Act, 2017, with effect from 01.07.2017, it is considered as if it never existed. Consequently, the Assessing Officer's decision u/s 92BA and the reference made to the TPO order u/s 92CA are invalid and unlawful. Regarding Transfer Pricing (TP) adjustment, it was held that it should be restricted only to transactions between Associated Enterprises (AEs). As per the Bombay High Court's decision in Phoenix Mecvano (India)(P.) Ltd., under Chapter X of the Act, re-determination of consideration is to be done only concerning income arising from international transactions on determination of Arm's Length Price (ALP). The adjustment is mandated only for international transactions and not transactions with independent unrelated third parties, as there is no tax avoidance issue requiring adjustment.
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• High Court condones 80-day delay in filing tax returns for COVID warrior doctor due to pandemic hardships.

  The High Court held that the delay of 80 days in filing the Return of Income should be condoned as the petitioner faced genuine hardship due to valid reasons arising from the COVID-19 pandemic. The petitioner, a doctor on COVID-19 duty, lost her father to COVID-19, and her family members were also affected. The valuation of land for computing capital gains could not be completed timely as the valuer, a senior citizen, could not conduct physical verification until mid-February 2021 due to the pandemic situation. The court observed that technicalities should not override genuine human problems preventing timely compliance. The reasons provided by the tax authority for rejecting the condonation plea, such as the petitioner being an educated person with access to tax practitioners, were found unacceptable. Consequently, the High Court quashed the tax authority's order and condoned the 80-day delay in filing the Return of Income for the relevant assessment year.
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• Tax assessees can approach Settlement Commission if search happened before 31/03/2021 & application filed by 30/09/2021.

  Assessees subjected to search u/s 132 prior to March 31, 2021, retained the right to file applications for settlement before the Interim Settlement Board, provided such applications were filed on or before September 30, 2021. The Explanation Clauses accompanying the deleted provisos in Section 245A(b) cannot restrict the definition of 'case' after the deletion of provisos. Accepting the Revenue's interpretation would defeat the legislative intent behind deleting the provisos. The right to approach the Settlement Commission vested in eligible assessees until the Finance Act, 2021 amendments remained enforceable. The High Court concurred with the Bombay High Court's view in Senapati Santaji Ghorpade Sugar Factory Ltd. and Vishwakarma Developers cases. Consequently, orders by the Interim Settlement Board finding applications for settlement filed by petitioners as not maintainable stand set aside if the search u/s 132 was prior to March 31, 2021, and applications were filed by September 30, 2021.
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• Tax authorities mandating FIFO/Average Cost for inventory valuation, excluding LIFO method.

  Constitutionality and legality of Income Computation and Disclosure Standards (ICDS) II and Notification 87/2016, which mandate the use of the First In First Out (FIFO) or Weighted Average Cost method for inventory valuation, excluding the Last In First Out (LIFO) method, while computing income under the head of Profits and Gains of Business or Profession under the Income Tax Act. The court held that FIFO, LIFO, and Weighted Average Cost are recognized methods for inventory valuation, and the adoption of any particular method aims to reflect the fairest approximation of the cost incurred. The valuation of unsold stock is a necessary process for determining trading results, not the source of profits. The amendment to Section 145A and ICDS II were not manifestly arbitrary, as they aimed to provide a uniform method of inventory valuation for assessees computing income under the specified head. The court found no unreasonable classification or violation of the equal protection rule, as the prescription applies to all assessees in the specified category. The appellants cannot claim a fundamental right to follow a particular inventory valuation method that would prevail over statutory prescription. The decision to amend Section 145A and implement ICDS II was based on recommendations from expert financial bodies.
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• Company seeks compound charges based on 2014 guidelines, not 2019 norms cited by authorities.

  The High Court held that the compounding application should be treated as filed on the original date of February 15, 2018, rather than September 24, 2020, as erroneously considered by the respondents. Consequently, the erstwhile 2014 compounding guidelines would apply instead of the 2019 guidelines. The Court directed the respondents to recompute the compounding charges payable by the petitioner based on the 2014 guidelines, considering the application date as February 15, 2018. Upon payment of the recomputed charges, the application shall be processed further in accordance with law.
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• Payments to non-residents sans PE for services abroad & reimbursements sans TDS.

  TDS disallowance u/s 40(a)(i) for non-deduction on overseas payments towards patent fees, reimbursement of official fees and professional fees, treating such payments as royalty taxable in India. Assessee not liable to deduct TDS as payments were reimbursements for expenses incurred by non-resident attorneys for renewal of patents abroad and to registration authorities. Professional fees paid to foreign attorneys without PE in India, not taxable. Payments not income chargeable to tax in India u/s 195, no TDS obligation. Coordinate bench held such reimbursements and official purpose payments not professional/technical services, not taxable income. Payments to non-residents without PE for overseas services and reimbursements not subject to TDS u/s 195. Disallowance deleted, assessee's appeal allowed.
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• Firm transfers land to partners via book entries, no capital gains tax says ITAT.

  The appellant firm had purchased lands for business purposes but did not carry out any business activities on those lands. The firm transferred the amounts pertaining to the immovable properties in its balance sheet to the capital accounts of its partners through book entries, without executing any written instruments. The Assessing Officer treated this as a transfer of immovable property, resulting in capital gains. However, the ITAT held that since the lands were transferred to the partners at book value without any revaluation, no capital gains arose. The ITAT relied on the Bombay High Court's decision in CIT vs. M.J. Mehta and Bros., which held that the transfer of immovable property belonging to a firm to its partners by means of book entry is not valid. The ITAT also noted that the Assessing Officer had partly accepted and partly rejected the transaction, which was not justified. Consequently, the ITAT allowed the assessee's grounds and held that no capital gains arose.
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• Royalty income taxed at concessional 10% rate for timely Form 3CFA filing.

  The Income Tax Appellate Tribunal (ITAT) held that the assessee is entitled to the concessional tax rate of 10% on royalty income u/s 115BBF, as the assessee had uploaded Form No. 3CFA before the completion of proceedings u/s 143(1) of the Income Tax Act. The ITAT set aside the order of the Additional/Joint Commissioner of Income Tax (Appeals), Panchkula, which had rejected the assessee's appeal and directed the Assessing Officer to tax the royalty income at the normal rate. The ITAT directed the Assessing Officer to tax the royalty income at the special rate of 10% against the normal rate adopted by the Centralized Processing Center (CPC). The grounds raised by the assessee were allowed.
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• Construction Revenue Recognition: Assessee wins when AS-9 & Section 43CB deemed inapplicable for ongoing pre-2016 project.

  Income recognition rules and accounting standards for revenue from construction contracts were at issue. The assessee argued that AS-9 was not applicable as it specifically excludes revenue from construction contracts. Section 43CB, introduced with effect from 01.04.2017, mandates revenue recognition based on ICDS-3 for construction contracts. ICDS-3 allows recognizing revenue using the regular method for contracts commenced before 31.03.2016 and not completed by that date. As the assessee's residential project commenced before 31.03.2016 and was ongoing, neither AS-9 nor Section 43CB applied. Consequently, the CIT(A)'s deletion of the addition was upheld, and the Revenue's appeal was dismissed by the Appellate Tribunal.
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• Educational institution's excessive depreciation disallowed but no tax payable due to spending over 85%. Wrongful 200% penalty levied on notional tax.

  Penalty levied u/s 274 read with Section 270A - assessee computed tax on disallowed depreciation amount at maximum marginal rate and levied 200% penalty on payable tax - held, Assessing Officer (AO) contradicted himself by levying penalty while framing assessment with Nil income despite depreciation disallowance. AO resorted to compute notional tax on disallowance where no tax payable by assessee. Assessee did not under-report income as per Section 270A(2). Section 270A(7) refers to penalty on under-reported income tax. No tax payable as assessee spent over 85% of revenue. Commissioner of Income Tax (Appeals) rightly deleted penalty. Revision u/s 263 - Commissioner of Income Tax (CIT) claimed AO did not disallow depreciation claim, amounting to double deduction - held, AO disallowed depreciation u/s 11(6) and assessed income at Nil as assessee applied over 85% of income u/s 11. Argument accepted that since AO disallowed depreciation, CIT(E)'s order u/s 263 has no merits. Order u/s 263 quashed - decided in favor of assessee.
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• Lack of approval for scrutiny renders assessment void.

  The validity of the scrutiny process was challenged due to the lack of approval obtained by the Assessing Officer from the Jurisdictional Principal Commissioner of Income Tax, as mandated by CBDT Instruction No. 5/2017 dated 7.7.2017. It was held that non-compliance with CBDT instructions would render the entire assessment proceedings void ab initio. Reliance was placed on the decision in CIT vs Best Plastics P Ltd, wherein it was ruled that the revenue is bound to follow CBDT instructions, and failure to do so would be fatal to the assessment proceedings. The jurisdictional defect cannot be cured by the provisions of Section 292BB of the Income Tax Act, as held in the case of LAXMAN DAS KHANDELWAL. Consequently, the entire assessment framed for the Assessment Year 2016-17 was quashed, and the assessee's cross-objections were allowed.
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• Bank's tax battle: Expense disallowances, exempt income, broken period interest, stock revaluation, pension cap, bad debt recovery.

  This case discusses various issues related to the income tax assessment of a bank. The key points are: Disallowance of expenditure incurred for reservation of seats in schools for employees' children was upheld based on a favorable High Court decision. Disallowance u/s 14A for exempt income was restricted to 1% of exempt income in line with earlier years. Broken period interest paid on securities constituting stock-in-trade was allowed as deduction following a High Court ruling. Interest on securities was taxable only on due basis, not accrual basis, adhering to the accounting method. Loss on revaluation of investments held as stock-in-trade was allowed based on RBI guidelines and favorable High Court decisions. Contribution to pension fund exceeding statutory limits was disallowed u/s 40A(9) following a High Court judgment. The eligibility of the bank to claim deduction u/s 36(1)(viii) for special reserve was remitted back for examination. Deferred payment guarantee commission was held taxable when guarantee was issued and commission received, following precedents. Disallowance of depreciation on leased assets was confirmed. Recovery of bad debts, where no deduction was claimed earlier, was remitted for fresh examination u/s 41(4). Exclusion of foreign branch income was disallowed for the relevant years, allowing only tax credit under tax.
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• Hospital pharmacy income exempted; 15% deduction allowed on gross receipts for charitable trust.

  Exemption u/s 11 for surplus arising from a pharmacy store run by a hospital, and the deduction of 15% on gross receipts u/s 11(1)(a). Regarding the pharmacy store, it was held that running a pharmacy is incidental to the main objects of running a hospital and research center, and hence not hit by Section 11(4A). The pharmacy store serves only admitted patients, not outsiders, and is an integral part of the assessee's activities. This issue was already decided in the assessee's favor by the ITAT and the jurisdictional High Court. Concerning the deduction u/s 11(1)(a), it was held that the assessee is entitled to claim a deduction of 15% on gross receipts, as per the Supreme Court's decision in Programme for Community Organisation. The deduction is to be calculated on gross receipts and not on surplus or deficit, without any condition imposed by Section 11(1)(a).
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• Lands acquired by assessee: Agricultural or urban for TDS u/s 194L - Matter remanded for thorough inquiry.

  The case pertains to the determination of the nature of lands acquired by the assessee, whether agricultural or urban, for the purpose of deducting Tax Deducted at Source (TDS) u/s 194L. The Assessing Officer (AO) held the lands to be urban, requiring TDS deduction, while the CIT(A), relying on reports from other District Authorities, concluded the lands were agricultural, exempting the assessee from TDS liability. The ITAT observed that the CIT(A) failed to examine all relevant authorities and their contentions, as required u/s 250(4). Consequently, the matter was remanded to the CIT(A) for a thorough inquiry and adjudication, considering the claims and evidence from all concerned authorities to determine the actual nature of the lands. The Revenue's appeal was allowed for statistical purposes to ensure a compliant and judicious adjudication process.
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• Kaccha Aaratiya's TDS credit eligibility on commission & interest income upheld for agricultural produce sales.

  Allowance of Tax Deducted at Source (TDS) claimed by a "Kaccha Aaratiya" (commission agent) engaged in selling agricultural produce on behalf of farmers. The key points are: The assessee, a Kaccha Aaratiya, is entitled to claim TDS credit u/ss 194A (interest income) and 194H (commission income) as the entire income on which TDS was deducted is duly offered for taxation. The disallowance of TDS amounting to Rs. 179,551 is unjustified. Regarding TDS u/s 194Q (purchase of goods), the assessee is eligible to claim credit as they merely facilitate the sale between farmers and principal buyers, earning only commission. The invoices and sale documents establish that the assessee has no control or margin in the sale and earns only commission. As per CBDT Circular 452 (1986), for Kaccha Arahitias, turnover excludes sales on behalf of principals, and only commission income is considered for tax purposes u/s 44AB. TDS deducted u/s 194Q by principal buyers cannot be denied by invoking Rule 37BA read with Section 199, as the sales facilitated are not the assessee's turnover, and the commission income is.
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• Charitable trust's exemption wrongly denied due to non-filing of returns; Tribunal restores exemption.

  The assessee, a charitable trust enjoying exemption u/s 11 since 1954, was denied exemption by the Assessing Officer during reassessment proceedings on the grounds that the assessee had not filed the return of income as mandated u/s 139(1). However, the Commissioner of Income Tax (CIT) revised the order u/s 263, deeming it bad in law. The Tribunal held that the revision was unjustified as the assessee had been granted exemption in scrutiny assessments and by the Tribunal for various assessment years. The assessee's inability to file returns electronically from 2013-14 to 2015-16 due to unavailability of registration details was a circumstance not considered properly. Despite efforts to file physical returns, they were not accepted due to lack of information. The CIT(Appeals) doubted the postal acknowledgments without verifying the assessee's submissions. Consequently, the Tribunal allowed the assessee's appeal, ruling that the revision order could not be upheld in law.
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• Charitable trust's exemption claim denied for late filing of prescribed form due to technical issues.

  Denial of exemption u/s 11(2) was contested due to the trust's failure to file Form No. 10 within the due date specified u/s 139(1) owing to technical issues. The provisions of section 11(2) mandate charitable trusts to apply a specified percentage of income for charitable purposes, with an option to accumulate or set apart the prescribed percentage for application in India, subject to conditions. The issue centered on whether furnishing the statement in the prescribed Form No. 10 on or before the due date of filing the return is mandatory or directory in nature for availing exemption u/s 11(2). Relying on the Supreme Court's decision in PCIT vs. Wipro Ltd., which held furnishing the prescribed form within the due date as mandatory for claiming benefits u/s 10B(8), the Tribunal concluded that filing Form No. 10 is mandatory for claiming exemption u/s 11(2). However, considering the assessee's grievance petition citing technical glitches on the Income-tax portal and the delay being within 365 days, the Tribunal set aside the CIT(A)'s order and remanded the matter to the AO with directions to allow the assessee to apply for condonation of delay to the CIT(Exemption). Upon condonation, the AO shall decide the exemption claim u/s 11.
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Customs

• Customs broker's license revocation wrongly upheld due to lack of evidence.

  Revocation of a customs broker's license and imposition of penalty under the Customs Brokers Licensing Regulations, 2018. The key points are: The finding that the customs broker failed to obtain authorization from each client was held as not proved. The requirement of being in contact with a specific person was confused with obtaining authorization from the client company. The charge of failing to advise the client to comply with statutory provisions was incorrectly invoked, as there was no evidence that the broker did not advise the client properly. The charge of furnishing incorrect information to the client was also not proved. The allegation of attempting to influence the examination report by customs officers was not substantiated, as there was no evidence of threats, inducements, or favors offered by the broker. The charge of failing to verify the correctness of particulars was erroneously upheld based on flimsy presumptions. Consequently, the revocation of the license, forfeiture of the security deposit, and imposition of penalty were set aside by the appellate tribunal (CESTAT) due to lack of evidence and erroneous findings.
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• Customs duty liability determination: Authority's power & limitation period invoked.

  The High Court examined the validity of a show cause notice issued u/s 28 of the Customs Act, invoking the extended period of limitation. The court held that the proper officer has the power to determine the amount payable as customs duty, including interest liability, u/s 28. This power is not subject to or conditional upon the assessment being reopened or set aside. Consequently, the respondent has jurisdiction to invoke Section 28, irrespective of not verifying the self-assessment u/s 17 or not appealing against such self-assessment. Regarding the invocation of the enlarged period of limitation under sub-section (4) of Section 28, the court found that the allegations of wilful misstatement and suppression of facts were made in the show cause notice. Without closely considering disputed facts and documents, the veracity of these allegations cannot be determined at this preliminary stage. Therefore, the court cannot conclude that the respondent invoked sub-section (4) without jurisdiction, especially since the notice appears to be issued within the specified five-year period. The petitioner was granted time to respond to the show cause notice, and the respondent was permitted to proceed with the matter in accordance with the law upon receiving the reply.
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• Importers face duty demands, penalties for forged duty credit scrips.

  The appeals relate to confiscation of Duty Entitlement Pass Book (DEPB) licenses and Telegraphic Release Advices (TRAs), and demands of customs duty u/s 28(1) of the Customs Act, 1962, along with penalties u/ss 112(a) and 114(A). The CESTAT dismissed appeals by importers and traders, holding that the TRAs and DEPBs were forged and fabricated instruments. The High Court affirmed that there can be no credit derived from forged scrips, and the liability for duty, interest, and statutory consequences is unavoidable. The factual findings by authorities were upheld as no perversity was found. Penalties on importers were restored to 50% in line with traders/brokers. The Settlement Commission's orders for co-noticees who approached it cannot be extended to other co-noticees who did not approach it, as the 'case' u/s 127-B relates only to the declarant and not all co-noticees in common proceedings.
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• Asbestos manufacturer inadvertently failed to claim export rewards; High Court allows claim based on intent.

  The Petitioner, a manufacturer of Asbestos Free brake-lining and Brake pads & brake shoes, exported these items under 28 shipping bills. However, due to a technical difficulty, the Petitioner inadvertently marked 'N' instead of 'Y' in the "reward item box" for claiming rewards under the Merchandise Exports from India Scheme (MEIS). Consequently, these shipping bills were not transmitted for granting rewards. The Policy Relaxation Committee rejected the Petitioner's claim for release of the admissible reward amounts under MEIS. The High Court, relying on the Supreme Court's decision in N.C. John case and Mangalath Cashews, ANU Cashew cases, held that where there is an inadvertent mistake of mentioning 'N' instead of 'Y' and the claimant had shown the intent to claim MEIS benefit, the reward should be granted. Since the Petitioner had declared their intention to claim rewards under MEIS while filling the shipping bills, applying the N.C. John case, the Petitioner is entitled to the rewards.
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• License Suspension of Customs Broker Overturned Due to Lack of Evidence.

  The Customs Broker's license suspension under Regulation 16(1) of CBLR, 2018 and its continuation were challenged. The Tribunal examined the Bill of Entry details and found no evidence of illegal activities by the Customs Broker in removing the container or taking it back to the examination area. The duties of examining goods and allowing movement from the Container Freight Station were part of Customs officers' responsibilities, not the Broker's. The impugned order lacked clear findings and reasons for immediate suspension as per CBIC instructions. The Tribunal held that no sufficient grounds were made out against the Broker, and the continuation of license suspension could not be sustained. Following precedent, the Tribunal modified the order by setting aside the Broker's license suspension while allowing proceedings under Regulation 17 of CBLR, 2018 to continue as per law.
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• PVC Resin Anti-dumping Duty Dispute: Importer Wins Based on Documentary Evidence Over Packing Discrepancy.

  The case pertains to the demand of anti-dumping duty on PVC Resin SG 5 imported from China. The appellant claimed to have imported the goods from "CNSG Jilantai Salt Chlori-Alkali Chemical Co. Ltd," while the bags bore the name "CNSG Jilantai Chlori-Alkali Chemical Co. Ltd," with the word "salt" missing. The CESTAT held that the documentary evidence, including the invoice, packing list, and certificate of origin, takes precedence over assumptions/suspicions arising from the packing. Relying on a previous case involving a similar issue, the CESTAT accepted the documentary evidence as adequate proof that "Alkali Company" was the producer and allowed the benefit of the concessional rate to the appellant.
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• Customs duty dispute: Revenue's single appeal against 93 Bills of Entry deemed non-maintainable.

  The central issue revolves around the maintainability of a single appeal filed by the Revenue against multiple Bills of Entry. As per Rule 6(A) of the CESTAT Procedure Rules, 1982, when separate orders-in-original are passed for each Bill of Entry, the appellant is required to file separate appeals corresponding to each order. However, in this case, the Commissioner (Appeals) disposed of appeals concerning 93 Bills of Entry through a common order-in-appeal. Consequently, the Revenue is obligated to file 93 separate appeals challenging each Bill of Entry, as each assessment order constitutes a distinct cause of action. This interpretation aligns with the National Litigation Policy's stance that monetary thresholds apply to individual appeals rather than the aggregate amount. The Tribunal, concurring with prior judicial precedents, held the single appeal filed by the Revenue as non-maintainable and directed the filing of 93 separate appeals if advised.
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DGFT

• Import Relief for Exporters: Duty-Free Inputs Exempt from Quality Control Orders.

  This public notice amends Appendix 2Y of the Foreign Trade Policy 2023 to exempt goods imported under Advance Authorisation, EOU, and SEZ schemes from mandatory Quality Control Orders (QCOs) issued by certain ministries/departments, when such goods are utilized/consumed in the manufacture of export products. The Ministry of Heavy Industries has been added to the list of exempted ministries/departments under Appendix 2Y, enabling imports of inputs subjected to QCOs issued by this ministry for use in export production. This amendment provides relief to exporters by allowing duty-free import of inputs required for manufacturing export goods, even if those inputs are covered under domestic quality control regulations.
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• Revised norms for precious metal wastage in jewelry exports.

  This public notice amends paragraph 4.59 of the Handbook of Procedures, 2023, and modifies the Standard Input Output Norms (SION) M-1 to M-8 for the export of jewellery. It revises the maximum permissible wastage or manufacturing loss percentages for various categories of gold, platinum, and silver jewellery and articles, distinguishing between handcrafted and mechanized production processes. The SION tables specify the quantities of gold, platinum, and silver required as inputs to produce one kilogram of different types of exported jewellery items. The revisions aim to align the norms with current industry practices and ensure efficient utilization of precious metals in jewellery exports.
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• Extension of relaxation on gold/platinum/silver wastage norms for exporters until 31.12.2024.

  This public notice from the Directorate General of Foreign Trade (DGFT) further extends the abeyance of Public Notice No. 05/2024 dated 27.05.2024 regarding modification of wastage permissible and Standard Input Output Norms (SIONs) for Gold/Platinum/Silver content in export items until 31.12.2024. The previous extensions were granted until 31.07.2024, 31.08.2024, 15.09.2024, and 31.10.2024 based on representations from the Gem & Jewellery Export Promotion Council. During this interim period, the wastage norms under Para 4.59 of Handbook of Procedures 2023 and SIONs M1 to M7 as existed prior to Public Notice No. 05/2024 stand restored. The revision of new SIONs is under process. This notice is issued by the DGFT under powers conferred by Paragraphs 1.03 and 2.04 of the Foreign Trade Policy 2023.
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IBC

• Disciplinary panel's 2-year suspension of insolvency professional upheld for e-auction irregularities.

  The High Court upheld the Disciplinary Committee's order suspending the petitioner's registration as an Insolvency Professional for two years due to procedural irregularities in conducting an e-auction as a Liquidator. The key points are: Principles of natural justice were duly followed by issuing a show cause notice, granting an opportunity to reply and oral hearing. The order was based on NCLT and NCLAT orders finding irregularities in the short notice period for the e-auction. The two-year suspension was not disproportionate considering the adjudicated misconduct. The petitioner can continue ongoing assignments at the discretion of creditors/stakeholders. The High Court found no perversity, irrationality or disproportionality in the suspension order and dismissed the writ petition challenging it.
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• Bank loan default before Covid triggers insolvency despite recall notice delays.

  The CD defaulted on loan repayment from January 2020, failing to pay the monthly installment due on 20th January 2020. Though partial payment was made in February 2020, the entire amount including penal interest was not paid, constituting default. The FC issued a recall notice on 06.11.2020, giving 15 days to pay the defaulted amount. The CD cannot claim the recall notice date of 21.11.2020 as the default date to bring it within Section 10A of the IBC, as the default occurred much earlier in January/February 2020, prior to the cut-off period of 25.03.2020 to 25.03.2021. Issuance of the recall notice was a procedural consequence of the pre-existing default. Section 10A is inapplicable as the default predated the cut-off period. The appeal challenging the order admitting the insolvency petition u/s 7 is dismissed.
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Indian Laws

• Power company's right to recover unpaid charges lapses if unreasonable delay in issuing notice.

  Statutory liability under the Indian Electricity Act, 1910 survives after the Electricity Act, 2003's enforcement. The limitation period u/s 56 of the 2003 Act applies to liabilities arising under that Act, not prior. Section 24 of the 1910 Act allows disconnection for non-payment without prescribing a limitation period. However, the licensee's right to claim unpaid charges lapses if notice u/s 24(1) is unreasonably delayed beyond the period for filing a recovery suit. The High Court's judgment allowing the appeal was unsustainable, and the Supreme Court set it aside, allowing the civil appeal.
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• Defendants' spurious defence rejected; admitting liability but claiming payment at own discretion deemed "moonshine".

  The Court dismissed the defendants' applications seeking leave to defend the suit, as their defence was found to be frivolous, vexatious, and without any merit. The defendants admitted their liability to repay the amount claimed by the plaintiff but contended that the repayment was contingent upon an uncertain future event, solely at their discretion. The Court held that admitting liability while claiming non-repayment based on their inability to pay at their sole discretion is a moonshine defence. As the defendants failed to disclose any substantial or genuine defence, leave to defend was rightly refused under Order XXXVII Rule 3(5) of the CPC. The denial of leave is an exception when the defendant has practically no defence or raises only frivolous and vexatious issues without any semblance of triable issues.
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• Company director can't escape cheque dishonor liability by claiming ignorance of affairs.

  A director of a company cannot evade vicarious liability for the offence of dishonor of cheque u/s 138 of the Negotiable Instruments Act by merely claiming to be a housewife and not involved in the company's affairs. The High Court held that while exercising jurisdiction u/s 482 CrPC to quash a complaint, it must be extremely cautious and do so only in rarest of rare cases where allegations are patently absurd and inherently improbable. The Supreme Court in S.P. Mani & Mohan Dairy v. Snehalatha Elangovan clarified that Section 141 extends criminal liability to every person in charge and responsible for the company's conduct at the time of the offence. The director, being one of only three directors, cannot claim to be unaware or uninvolved in the day-to-day affairs. Such contentions are matters for trial, and in the absence of unimpeachable evidence, the summoning order cannot be quashed at this stage. The petition was dismissed.
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VAT

• Excess tax refund claims rejected on time limit, High Court allows explanation for delay.

  The High Court set aside the orders rejecting the petitioner's refund claims for excess tax paid in different assessment years on the ground of time limitation. The Court observed that Rule 29 prescribes the time limit for filing refund claims, but the proviso empowers the authority to admit delayed claims if sufficient cause is shown. The impugned orders did not reflect if the petitioner was given an opportunity to explain the delay. The respondents did not dispute the petitioner's entitlement to refund or the assessment proceedings referred to. The Court remanded the matter to the concerned authority, permitting the petitioner to explain the causes of delay in filing the refund applications.
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• Bank's charge takes precedence over VAT dept's charge on property under SARFAESI Act.

  The court held that the charge created by the bank u/s 26E of the SARFAESI Act would take precedence over the charge created by the respondent u/s 48 of the VAT Act. Relying on a previous judgment, the court ruled that the charge for VAT dues has no legal efficacy in view of the SARFAESI Act and the RDB Act. As the bank had created the charge prior in time, the subsequent charge created by the respondent in 2019 cannot be sustained. Consequently, the respondent was directed to remove the charge over the property, and the mutation entry in the Revenue Record was ordered to be deleted. The petition was disposed of accordingly.
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Central Excise

• Hidden cigarette manufacturing: Excise duty evasion alleged, but petitioner's reply ignored in assessment order.

  Clandestine manufacture and recovery of Central Excise Duty along with interest and penalty - suppression of facts and misrepresentation alleged against petitioner - adjudicating authority failed to consider petitioner's reply while passing impugned order - assessment period covered by earlier orders of coordinate authorities - principles of natural justice violated - doctrine of res judicata applicable. Careful perusal of first appellate authority's order revealed core issue was production capacity of machine, concluded based on evidence as 301-750 pouches per minute, contrary to adjudicating authority's subsequent finding of above 751 pouches. First appellate authority interfered with adjudicating authority's order, holding it unsupported by evidence/records. Clear finding of no suppression or misrepresentation by petitioner. First appellate authority's factual findings binding on adjudicating authority unless overturned by higher authority/court, which is not the case. Mere submissions by respondents without supporting facts cannot establish petitioner's reply was considered. Impugned order passed in violation of natural justice. Principle of res judicata rightly applied by Tribunal. First appellate authority found no willful suppression or mala fide intention by petitioner, rendering invocation of jurisdiction u/s 11A untenable. Alternative remedy under statute not efficacious in present circumstances. Petition allowed.
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• Partial GST refund allowed; remaining claim remanded for fresh adjudication on unjust enrichment.

  Refund claim u/s 142(3) of CGST Act, 2017 read with Section 11B of Central Excise Act, 1994 was partially allowed. Refund of Rs. 20,52,143/- and Rs. 2,19,004/- granted, appellant can approach GST authority for credit in electronic ledger. Refund of Rs. 41,244/- and Rs. 4,87,533/- initially rejected as paid after 01.07.2007, when no CENVAT credit provision existed. However, CESTAT relied on its previous decision in Shree Ganesh Remedies case, holding that Section 142(3) covers amounts accrued pre-GST regime, even if paid post 01.07.2017. Matter remanded to adjudicating authority to pass fresh order considering unjust enrichment, after processing refund claim for Rs. 41,244/- and Rs. 4,87,533/-.
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Notifications

• GST - States

• 35/GST-2 - dated 29-10-2024 - Haryana SGST
  Notification under section 128 to provide waiver of late fee for late filing of NIL FORM GSTR-7 under the HGST Act, 2017.

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• 34 /GST-2 - dated 29-10-2024 - Haryana SGST
  Notification under section 148 of the HGST Act, 2017 to specify special procedure for rectification of demand order issued for contravention of section 16(4) of HGST Act, 2017.

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• 33/GST-2 - dated 29-10-2024 - Haryana SGST
  Notification under section 128A to notify date under sub-section (1) of section 128A of HGST Act, 2017.

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• 19/2024-State Tax - dated 22-10-2024 - Mizoram SGST
  Notification under Section 171 of Mizoram Goods and Services Tax Act, 2017 to provide for the sunset date.

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• 16/2024-State Tax - dated 22-10-2024 - Mizoram SGST
  Seeks to bring in force provisions of various sections of Mizoram Goods and Services Tax (Second Amendment) Act, 2024

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• F.12(1)FD/Tax/2024-99 - dated 9-10-2024 - Rajasthan SGST
  To bring renting of commercial property by an unregistered person to registered person under RCM to prevent revenue leakage

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• F.12(1)FD/Tax/2024-100 - dated 9-10-2024 - Rajasthan SGST
  Clarification regarding registration of supplier of metal scrap as and when it crosses threshold limit

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/IMD/PoD1/CIR/P/2024/150 - dated 5-11-2024
  Disclosure of expenses, half yearly returns, yield and risk-o-meter of schemes of Mutual Funds

News

• Advisory for Form GST DRC-03A

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• Advisory: Time Limit for Reporting e-Invoice on the IRP Portal – Lowering of Threshold to AATO 10 Crores and Above

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• Cabinet approves infusion of equity of Rs.10,700 crore in Food Corporation of India by way of conversion of Ways and Means Advance to equity in 2024-25

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• Government of India and ADB sign $200 million loan to upgrade water supply, sanitation, urban mobility, and other urban services in Uttarakhand

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• Shri M. Nagaraju, Secretary, Department of Financial Services (DFS), reviews credit disbursement to agri-allied sector by Public Sector Banks (PSBs)

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• CCI approves acquisition of shares of STT GDC Pte. Ltd by Ruby Asia Holdings II Pte. Ltd. and Singtel Interactive Pte. Ltd. subject to compliance of certain voluntary commitments submitted by the parties

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• Change in Release Time for Consumer Price Index (CPI) and Index of Industrial Production (IIP)

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• DFS Secretary stresses focus on timely and quality redressal of public grievances by PSBs

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Case Laws:

• GST

• 2024 (11) TMI 193
  Extension of time limits under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 - force majeure condition - Challenge to N/N. 09/2023-Central Tax dated 31.03.2023 and N/N. 56/2023-Central Tax dated 28.12.2023 extending the period of issuance of the orders u/s 73 of the CGST Act, 2017 - HELD THAT:- A careful perusal of the provisions revealed that notwithstanding anything contained under Section 16 (4) of the CGST Act, 2017 in respect of any invoice or debit note for supply of goods or services or both pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto 30th day of November, 2021. Reading of these amended provisions reveal that the challenge made in the writ petition before this Court is no longer required to be addressed in view of the amendments brought in by the Finance (No. 2) Act, 2024. In view of the amendments brought in it is evident that the petitioner is entitled to avail the benefit of input tax credit for the relevant period. In view of the amendments brought in, the petitioners are entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16 (5) and Section 16 (6) of the CGST Act, 2017 [inserted by Finance (No. 2) Act, 2024]. In view of the amendments brought into the statute by the Finance (No. 2) Act, 2024 and which amendments have been given retrospective effect from 01.07.2017, the proceedings initiated against the petitioners by way of show-cause notice No. C. No. IV(09)95/SCN/CD S/TECH-II/GHY-I/2023-24/8434 dated 28.12.2023 have been rendered redundant. Since the decision has already been taken that the same notification is required to be issued by the State Government, taking such submissions into account, this Court deems it proper to close the instant writ petition by setting aside the impugned order in original No. 192/AC/DIC-I/CGST/2023-24 dated 12.03.2024 passed by the respondent no. 4. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order - Petition disposed off by way of remand.

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• 2024 (11) TMI 191
  Challenge to condition imposed on the petitioner while granting bail - operating bogus and non-existing firms and creation of fake invoices/inadmissible Input Tax Credit - HELD THAT:- Considering that the petitioner was arrested on 25.11.2019 at the initial stage of investigation and was admitted on bail vide order dated 12.12.2019, the learned Trial Court rightly put the condition that the petitioner shall not leave the country without prior permission of the Court since that could have hampered the further investigation. However, five years have been taken by the Department to complete the investigation which has led to filing of the complaint now in the year 2024. It is undisputed that the right to travel abroad is a fundamental right and cannot be curtailed in a casual manner. Even though the Courts are empowered to put an appropriate condition so as to ensure the presence of the petitioner during the course of trial, however, the petitioner has already shown his bona fide by not misusing the liberty and has always come back by taking the permission to travel abroad. This Court is of the opinion that continuing with such condition would be onerous. In regard to the impounding of passport, the Hon ble Apex Court in SURESH NANDA VERSUS C.B.I [ 2008 (1) TMI 876 - SUPREME COURT ] observed ' It is well settled that the special law prevails over the general law vide G.P. Singh's Principles of Statutory Interpretation (9th Edn., p. 133). This principle is expressed in the maxim generalia specialibus non derogant. Hence, impounding of a passport cannot be done by the court under Section 104 CrPC though it can impound any other document or thing.' The present petition is allowed and the condition imposed by the learned Trial Court to the extent that the petitioner would need permission of the learned Trial Court is set aside.

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• 2024 (11) TMI 190
  Unblocking of Electronic Credit Ledger [ECL] as maintained by the writ petitioner in accordance with the provisions of the Central Goods and Services Tax Act, 2017 [Act] and the Central Goods and Services Tax Rules, 2017 [Rules] - negative blocking - HELD THAT:- The issue of negative blocking , and on grounds on which it is assailed by the writ petitioner, is no longer res integra and stands concluded by the decision of the Court in BEST CROP SCIENCE PVT. LTD. THROUGH AUTHORIZED REPRESENTATIVE, SH RAGHAV AGARWAL, M/S. JAI MAA ENTERPRISES, HILBERT INNOVATIONS PVT. LTD., M/S. NDCON CONSTRUCTIONS, GNG ELECTRONICS PVT. LTD. KAY KAY OVERSEAS CORPORATION, SHRI BALAJI POLYMERS THROUGH ITS PROPRIETOR MR. ANIL KUMAR VERSUS PRINCIPAL COMMISSIONER, CGST COMMISSIONERATE, MEERUT AND ORS., COMMISSIONER OF CENTRAL TAX AND GST DELHI NORTH ORS., PRINCIPAL CHIEF COMMISSIONER CGST AND CX, DELHI ORS. COMMISSIONER OF DELHI GOODS AND SERVICE TAX ANR., SALE TAX OFFICER OF DELHI GOODS AND SERVICE TAX AND ANOTHER. [ 2024 (9) TMI 1543 - DELHI HIGH COURT] and where it was observed 'the petitions are allowed and the orders impugned in the present petitions, as tabulated below, are set aside to the extent the impugned orders disallow debit from the respective ECL of the petitioners, in excess of the ITC available in the ECL at the time of passing of the impugned orders (referred to as Negative blocking by the counsel during the course of their submissions)'. The action of the respondents cannot be sustained - petition allowed.

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• 2024 (11) TMI 189
  Grant of interest/compensation in accordance with Section 56 of the CGST Act on the refund claims delayed - HELD THAT:- The petitioner was constrained to approach this Court since its pending statutory appeals were not being decided and its claims for refunds were being inordinately delayed - Pursuant to the directions issued in these proceedings, those pending appeals pertaining to the tax periods in question have come to be finally allowed in terms of an order dated 04 July 2024. In view of the aforesaid and since nothing further would survive, this writ petition is disposed off by directing the respondents to ensure that all refunds which have become due and payable pursuant to the order of the appellate authority dated 04 July 2024 are released in favour of the writ petitioner within a period of three weeks from today.

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• 2024 (11) TMI 188
  Right of the petitioners to claim a refund of IGST paid on export of goods - Constitutional validity of Rule 96 (10) of the Central Goods and Services Tax Rules, 2017 - challenge primarily on the ground that the Rule is ultra vires the provisions of Section 16 of the Integrated Goods and Services Tax Act, 2017 - violation of the provisions of Articles 14, 19 (1) (g) and 265 of the Constitution of India - HELD THAT:- Rule 96 of the CGST Rules has undergone various amendments from time to time. Though the pleadings in many of these cases refer to the metamorphosis of Rule 96 of the CGST Rules into its present form, it is conceded at the bar that it may not be necessary for this Court to examine the history of the amendments and the reasons which compelled those amendments to examine whether the provisions as they presently stand are ultra vires the provisions of Section 16 of the IGST Act. A reference to the provisions of Section 16 of the IGST Act both before and after its amendment suggests that the Section itself has not imposed any restriction in the matter of availing either refund of taxes paid on input goods and input services or claiming refund of IGST after payment of IGST on the exports. While, on the authority of the judgment of the Supreme Court in VKC Footsteps [ 2021 (9) TMI 626 - SUPREME COURT] , it may be possible for the Revenue to contend that the Parliament has a right to impose restrictions on the right to refund, it must be noticed that in VKC Footsteps, the Supreme Court was considering a question as to whether the word inputs used in sub-section (3) of Section 54 of the CGST Act includes input goods and input services or input goods only . On a consideration of the matter and having regard to the definition of the word input in Section 2(59) of the CGST Act, the Supreme Court came to the conclusion that the word inputs used in sub-section (3) of Section 54 insofar it applies to a refund of duties/tax arising out of an inverted duty structure contemplates refund of taxes paid on input goods alone and not input services. In VKC Footsteps, the Supreme Court reiterated the principle that in the matter of fiscal legislation, considerable latitude has to be permitted to the State to make provisions so as to achieve its fiscal objectives and it is not the duty of the Court to undertake the task of redrawing the contours of a statutory provision. It was held that this is clearly an area of the law that judicial interpretation cannot go ahead of policy making and fiscal policy ought not to be dictated through judgments of the High Courts or the Supreme Court. Rule 96 (10) of the CGST Rules as presently worded is ultra vires the provisions of Section 16 of the IGST Act, it is manifestly arbitrary as the term is to be understood in the light of the law laid down in Shayara Bano [ 2017 (9) TMI 1302 - SUPREME COURT] and the provision as it stands today produces absurd results, not intended by the Legislature. Rule 96 (10) of the CGST Rules, as inserted by notification No.53/2018-CT dated 09-10-2018 w.e.f. 23-10-2017 is declared ultra vires the provisions of Section 16 of the IGST Act and unenforceable on account of being manifestly arbitrary - any action that has been initiated by the issuance of a show cause notice or otherwise or has culminated in an order against the petitioners in these writ petitions on the basis of the provisions contained in Rule 96 (10) of the CGST Rules, as inserted by notification No.53/2018-CT dated 09-10-2018 w.e.f. 23-10-2017, will stand quashed - It is directed that no proceedings shall be taken to recover any IGST that has been refunded to the petitioners in these writ petitions by applying the provisions of Rule 96 (10) of the CGST Rules for the period between 23-10-2017 and 08-10-2024.

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• 2024 (11) TMI 187
  Profiteering in GST rates - supply of services by way of admission to exhibition of cinematography films - failure to pass on the benefit of reduction in Goods and Services Tax [GST] rates on movie admission tickets and increase in the base price to maintain a uniform base price cum-tax selling price - HELD THAT:- The view as expressed by the CCI is clearly unexceptionable since a broad and maximum limit with respect to movie admission tickets that may have been formulated by a licensing authority would not detract from the statutory obligation which Section 171 of the CGST Act places upon the writ petitioner. Once it was conceded that during the period in question, the CGST rate had come to be reduced from 28% to 18%, it became mandatory for the petitioner to pass on the benefit of that reduction. There are no justification to interfere with the view expressed by the CCI in this regard. There are no ground to interfere with the order impugned - petition dismissed.

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• 2024 (11) TMI 186
  Extension of time limits under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 - force majeure condition - Challenge to N/N. 09/2023-Central Tax dated 31.03.2023 and N/N. 56/2023-Central Tax dated 28.12.2023 extending the period of issuance of the orders u/s 73 of the CGST Act, 2017 - HELD THAT:- A careful perusal of the provisions revealed that notwithstanding anything contained under Section 16(4) of the CGST Act, 2017 in respect of any invoice or debit note for supply of goods or services or both pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto 30th day of November, 2021. Reading of these amended provisions reveal that the challenge made in the writ petition before this Court is no longer required to be addressed in view of the amendments brought in by the Finance (No. 2) Act, 2024. In view of the amendments brought in it is evident that the petitioner is entitled to avail the benefit of input tax credit for the relevant period. In view of the amendments brought in, the petitioner is entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16 (5) and Section 16 (6) of the CGST Act, 2017 [inserted by Finance (No. 2) Act, 2024]. In view of the amendments brought into the statute by the Finance (No. 2) Act, 2024 and which amendments have been given retrospective effect from 01.07.2017, the proceedings initiated against the petitioner by way of show-cause notice bearing C. No. IV(09)16/ N. Deblala/ SCN/ AC/ ADJ/ SIL/ 2023-24/1690 dated 17.10.2023 have been rendered redundant. Since the decision has already been taken that the same notification is required to be issued by the State Government, taking such submissions into account, this Court deems it proper to close the instant writ petition by setting aside the impugned order in original No. 31/GST/ AC/ SIL/ 2023-24 dated 28.03.2024 passed by the respondent No. 4. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order - Petition disposed off by way of remand.

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• 2024 (11) TMI 185
  Extension of time limits under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 - force majeure condition - Challenge to N/N. 09/2023-Central Tax dated 31.03.2023 and N/N. 56/2023-Central Tax dated 28.12.2023 extending the period of issuance of the orders u/s 73 of the CGST Act, 2017 - HELD THAT:- A careful perusal of the provisions revealed that notwithstanding anything contained under Section 16(4) of the CGST Act, 2017 in respect of any invoice or debit note for supply of goods or services or both pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto 30th day of November, 2021. Reading of these amended provisions reveal that the challenge made in the writ petition before this Court is no longer required to be addressed in view of the amendments brought in by the Finance (No. 2) Act, 2024. In view of the amendments brought in it is evident that the petitioner is entitled to avail the benefit of input tax credit for the relevant period. In view of the amendments brought in, the petitioners are entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16(5) and Section 16(6) of the CGST Act, 2017 [inserted by Finance (No. 2) Act, 2024]. In view of the amendments brought into the statute by the Finance (No. 2) Act, 2024 and which amendments have been given retrospective effect from 01.07.2017, the proceedings initiated against the petitioners by way of show-cause notices reference No. ZD18007230064969 dated 24.07.2023 and reference No. ZD1802923016975X dated 29.09.2023 have been rendered redundant. Since the decision has already been taken that the same notification is required to be issued by the State Government, taking such submissions into account, this Court deems it proper to close the instant writ petition by setting aside the impugned order bearing Reference No. ZD181223061367E dated 30.12.2023 passed by the respondent no.5. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order - Petition disposed off by way of remand.

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• 2024 (11) TMI 184
  Extension of time limits under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 - force majeure condition - Challenge to N/N. 09/2023-Central Tax dated 31.03.2023 and N/N. 56/2023-Central Tax dated 28.12.2023 extending the period of issuance of the orders u/s 73 of the CGST Act, 2017 - HELD THAT:- A careful perusal of the provisions revealed that notwithstanding anything contained under Section 16 (4) of the CGST Act, 2017 in respect of any invoice or debit note for supply of goods or services or both pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto 30th day of November, 2021. Reading of these amended provisions reveal that the challenge made in the writ petition before this Court is no longer required to be addressed in view of the amendments brought in by the Finance (No. 2) Act, 2024. In view of the amendments brought in it is evident that the petitioner is entitled to avail the benefit of input tax credit for the relevant period. In view of the amendments brought in, the petitioner is entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16 (5) and Section 16 (6) of the CGST Act, 2017 [inserted by Finance (No. 2) Act, 2024]. In view of the amendments brought into the statute by the Finance (No. 2) Act, 2024 and which amendments have been given retrospective effect from 01.07.2017, the proceedings initiated against the petitioner by way of show-cause notice No. ZD181223004588F dated 06.12.2023 have been rendered redundant. Since the decision has already been taken that the same notification is required to be issued by the State Government, taking such submissions into account, this Court deems it proper to close the instant writ petition by setting aside the impugned order bearing Reference No. ZD180224009080Z dated 09.02.2024 passed by the respondent no. 5. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order - Petition disposed off by way of remand.

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• 2024 (11) TMI 183
  Extension of time limits under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 - force majeure condition - Challenge to N/N. 09/2023-Central Tax dated 31.03.2023 and N/N. 56/2023-Central Tax dated 28.12.2023 extending the period of issuance of the orders u/s 73 of the CGST Act, 2017 - HELD THAT:- A careful perusal of the provisions revealed that notwithstanding anything contained under Section 16(4) of the CGST Act, 2017 in respect of any invoice or debit note for supply of goods or services or both pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto 30th day of November, 2021. Reading of these amended provisions reveal that the challenge made in the writ petition before this Court is no longer required to be addressed in view of the amendments brought in by the Finance (No. 2) Act, 2024. In view of the amendments brought in it is evident that the petitioner is entitled to avail the benefit of input tax credit for the relevant period. In view of the amendments brought in, the petitioners are entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16 (5) and Section 16 (6) of the CGST Act, 2017 [inserted by Finance (No. 2) Act, 2024]. In view of the amendments brought into the statute by the Finance (No. 2) Act, 2024 and which amendments have been given retrospective effect from 01.07.2017, the proceedings initiated against the petitioners by way of show-cause notice No. ZD181223034347J dated 20.12.2023 have been rendered redundant. Since the decision has already been taken that the same notification is required to be issued by the State Government, taking such submissions into account, this Court deems it proper to close the instant writ petition by setting aside the impugned order bearing Reference No. ZD1804240177493 dated 20.04.2024 passed by the respondent no.4. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order - Petition disposed off by way of remand.

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• 2024 (11) TMI 182
  Extension of due dates under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 Pandemic - time limit prescribed under Section 73 of the CGST/AGST Act, 2017 - invocation of Section 168A of the CGST Act, 2017 - force majeure condition - HELD THAT:- A careful perusal of the provisions revealed that notwithstanding anything contained under Section 16 (4) of the CGST Act, 2017 in respect of any invoice or debit note for supply of goods or services or both pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto 30th day of November, 2021. Reading of the amended provisions reveal that the challenge made in the writ petition before this Court is no longer required to be addressed in view of the amendments brought in by the Finance (No. 2) Act, 2024. In view of the amendments brought in it is evident that the petitioner is entitled to avail the benefit of input tax credit for the relevant period. It is also submitted by the learned Standing Counsel, AGST that similar notification is required to be issued by the State respondents. The learned Standing Counsel for the respondents fairly submit that in view of the amendments brought in by the Finance (No. 2) Act, 2024 and in view of the Notification No. 17/2024 dated 27.09.2024, the amendments brought in to Section 16 have already taken effect and with retrospective effect from 01.07.2017. As such, in view of the amendments brought in, the petitioner is entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16 (5) and Section 16 (6) of the CGST Act, 2017 [inserted by Finance (No. 2) Act, 2024]. In view of the amendments brought into the statute by the Finance (No. 2) Act, 2024 and which amendments have been given retrospective effect from 01.07.2017, the proceedings initiated against the petitioner by way of show-cause notice reference No. ZD18002240142212 dated 15.02.2024 has been rendered redundant. Since the decision has already been taken that the same notification is required to be issued by the State Government, taking such submissions into account, this Court deems it proper to close the instant writ petition by setting aside the impugned order bearing Reference No. ZD180324001417Q dated 02.03.2024 passed by the respondent no.5. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order(s) if need be. Petition disposed off by way of remand.

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• 2024 (11) TMI 181
  Lifting of attachment placed on the bank account of petitioner - recovery of the outstanding interest payable in pursuant to garnishee notice - HELD THAT:- Though several contentions have been urged by both sides with regard to compliance/non compliance of the mandatory prescribed by the CGST Act prior to issue of notice, without expressing any opinion on the merits/demerits of the rival contentions and in order to provide one more opportunity to the petitioner to submit his reply to the alleged demand made in Annexure-E, it is deemed just and appropriate to dispose of this petition directing the petitioner to appear before respondent No. 2 on 14.10.2024 and to proceed further in accordance with law. Petition disposed off.

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• 2024 (11) TMI 180
  Violation of principles of natural justice - order-in-original challenged on the ground that the Petitioner could not appear in the personal hearing so provided to the Petitioner as the notice dated 18.02.2022 was received on 10.03.2022 much after the dates which were fixed by the Superintendent of Audit Commissionerate (CGST) - HELD THAT:- It has been fairly submitted that against the order dated 28.03.2022, the Petitioner had preferred an appeal before the First Appellate Authority i.e. the Commissioner (Appeals), Customs, CGST and Central Excise. However the said appeal has been dismissed on the ground of limitation. Taking into account that the said order dated 28.03.2022 has already attained finality in view of the dismissal of the appeal and unless the said order by which the said appeal was dismissed is not set aside, it would not be proper on the part of this Court to exercise the jurisdiction under Article 226 of the Constitution. This Court dismisses the instant petition on the ground of not being entertained without touching on the merits. The Petitioner if so aggrieved by the order by which the appeal has been dismissed, would be at liberty to avail other remedies provided under the CGST Act, 2017 and in such proceedings, the Petitioner would also be at liberty to take such grounds including the ground of not receiving the notice of personal hearing on time. The dismissal of the instant writ petition on the ground that this Court does not find it to be a fit case for entertaining the writ petition would not prejudice the Petitioner in such proceedings if so filed as per the extant law - Petition dismissed.

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• Income Tax

• 2024 (11) TMI 192
  Rejection of provisional registration granted u/s 12AB r.w.s. 12A(1)(ac)(iii) - assessee trust has failed to substantiate the charitable nature of the trust as well as the genuineness of its activities - HELD THAT:- We have gone through the above documents and evidences, and noticed that assessee has satisfied the genuineness of its activities and the nature of activities. After going through the objects of the assessee- trust, we find that objects of the assessee -trust are for general public benefit and not restricted to a particular community or caste. Assessee - trust, under consideration is not for the benefit of any particular religious community or cast, it is open for the benefit of the general public, as evident from the object of the assessee - trust, therefore we do not accept the contention raised by Revenue, to the effect that the assessee- trust was created only for the benefit of particular persons or community or caste. As per the objects of the trust, the assessee - trust under consideration, is open for benefit for all sections of society and general public. That is, the facilities provided by the assessee- trust are intended to serve the needs of attendees of various activities without any discrimination based on caste, colour, or creed. Hence, assessee - trust deserve for registration. Activities of running Atithigruh and Bhojansala - We find that these are not commercial activity. The Atithigruh facilities are intended to serve the needs of attendees of various activities without any discrimination based on caste, colour, or creed, hence, it is not a commercial activity. Besides, Bhojansala is only for providing food to the poor and needy persons of the general public without any discrimination. It is open only for poor and needy persons to provide them food. No any specific community and caste is taking benefit, exclusively, for the Atithigruh and Bhojansala these Atithigruh and Bhojansala are needed to run the charitable activities. Therefore, none of the objects of the assessee-trust, are restricted to any particular community and caste. Expenditure incurred on the objects of the trust - We find that assessee -trust has applied Rs. 4,06,455/- out of total receipt of Rs. 6,61,437/- by way of establishment expenses and registration charges. In future, the assessee-trust would spend the amount for charitable- activities, as pointed out by ld. Counsel. Besides, the construction of a crematorium and the maintenance thereof is for the objects of the trust, which is not for particular caste, or community. No infirmity in the objects and activities of the trust. Therefore, we direct the CIT(E) to examine the objects and activities of the trust and grant the registration, in accordance with law. CIT(Exemption), Pune assuming proper jurisdiction under the law - We find that assessee -trust is situated in Gujarat, therefore CIT (E) - Ahmedabad, would have jurisdiction, over the assessee, who, will pass the order in accordance with law.

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• 2024 (11) TMI 179
  Reopening of assessment - reason to believe - Allegations of accommodation entries and bogus transactions, denying exemption u/s 10(38) - HELD THAT:- Insofar as the petitioner is concerned, the allegation clearly is that the petitioner had purchased 4800 (four thousand eight hundred) shares of Aurobindo, a listed entity, worth ₹56,04,000/-, by an off-market transaction (not through a recognized stock exchange). This was the first limb of the alleged transaction of avoiding payment of tax. This limb of transaction is admitted. AO had noted that investment of such a value was not commensurate with the returns furnished by the assessee during three years (AY 2014-15, 2015-16 2016-17). Admittedly, a copy of the report had been provided to the petitioner. A hard copy of the said report has also been handed over to this Court during the course of the proceedings. As noted that the said report is fairly comprehensive and has sought to deconstruct the manner in which the accommodation entries were being routed through transaction in shares of listed companies, which were regularly traded on the stock exchange. The report indicates that as many as twelve listed companies were identified, whose shares were used for structuring the accommodation entries. The report also included Annexure A, setting out the details of the beneficiaries and the names of the listed companies whose shares had been transferred in Demat Accounts of the beneficiaries. Annexure A to the said report is not produced but the extract, which pertains to the petitioner, has been filed along with an additional affidavit filed on behalf of the Revenue, which clearly indicates that the transaction in respect of 4800 (four thousand eight hundred) number of shares of Aurobindo, through Mridul Securities, was identified as one of the transactions for structuring the accommodation entries. The petitioner in her response to the notice u/s 148A (b) of the Act had denied the allegations. However, it is material to note that she did not provide any details of the alleged transaction of purchase of 4800 (four thousand eight hundred) shares of Aurobindo. The petition is also bereft of any particulars as to the said particulars which were identified and also alluded to in the notice u/s 148A (b) of the Act. The petitioner has not disclosed the price that she had paid for the 4800 shares, the source of funds of the said price, the date on which the said shares were purchased and the date on which the shares were lodged or transferred in the name of the petitioner. In view of the above, we are unable to accept that the information available with the AO is not suggestive of the fact that income of the petitioner had escaped assessment.In the facts of the case, this condition for issuance of a notice under Section 148 of the Act, is clearly met. Decided against assessee.

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• 2024 (11) TMI 178
  Condoning the delay of 216 days in filing their Income Tax Returns (ITR) - delay was occurred due to the delay in receipt of audit report and the COVID outbreak - HELD THAT:- As far as the 1st reason, i.e., delay in receipt of Audit report, is concerned, a perusal of the Audit Certificate dated 02.07.2019 issued by the Auditor would show that the Audit was completed on 02.07.2019 and the statements of (i) Receipts and Disbursements, (ii) Profit and Loss Accounts and Trading Account (iii) Balance Sheet were also appended along with the said Audit certificate. A perusal of the 1st paragraph would show that the account of the petitioner was audited by Thiru.N.Shunmuga Sundaram, Cooperative Audit Officer and the aforesaid Audit certificate was passed along with the Statements of (i) Receipts and Disbursements, (ii) Profit and Loss Accounts and Trading Account (iii) Balance Sheet. That apart, in the 12th paragraph, it has been indicated that a copy of the Audit certificate was communicated to the Society and the same along with the aforesaid documents are open for inspection by any member of the Society. Therefore, it is crystal clear that the Audit report was made available on 02.07.2019 itself and in such case, there is no substances in the reason assigned by the petitioner on the aspect of delay in receipt of the Audit report. In the application filed by the petitioner under Section 119(2)(b) of the IT Act, nothing has been stated with regard to the delay in receipt of Audit report on 24.02.2020. Even if such statement was made in the said application, the same cannot be considered as a reason for delay in filing the ITR since the Audit certificate was issued to the petitioner as early as on 02.07.2019. Therefore, the respondent had rightly rejected the application filed by the petitioner. 2nd reason of COVID outbreak occured only during the month of March 2020, whereas, the Audit report was made ready, along with the statement of (i) Receipts and Disbursements, (ii) Profit and Loss Accounts and Trading Account (iii) Balance Sheet, as early as on 02.07.2019 itself, i.e., 7 months prior to the COVID outbreak. In such case, this Court is of the view that nothing prevented the petitioner to file their ITR before the said COVID outbreak period. However, in the case on hand, though the Audit certificate was issued on 02.07.2019, the ITR was filed by the petitioner only on 03.06.2020. Therefore, the reason of COVID outbreak cannot be accepted as a genuine hardship faced by the petitioner and considering all these aspects, the respondent had rightly rejected the petitioner's application. Thus, by condoning the delay of 216 days, this Court will, either wittingly or unwittingly, be a party to all the acts of omission/misdeeds committed by the petitioner. Since the issue is pertaining to the revenue matters, the present condone delay petition cannot be compared at par with the other applications filed for condoning the delay in filing, representation, etc. If the delay is condoned and the present petition is entertained in the absence of genuine hardships, it would amount to further encourage the misdeeds of the petitioner. In such case, this Court is not inclined to entertain this petition. Thus, the reasons assigned by the petitioner had not at all justified any genuine hardships faced by them in filing their ITR within prescribed time limit. Taking into consideration of all these aspects, the respondent had rightly rejected the application filed by the petitioner.

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• 2024 (11) TMI 177
  Scope of Section 92 (BA) (i) as omitted - Tribunal holding that the reference made to TPO for specified domestic transaction mentioned in clause (i) of Section 92BA of the Act is not valid as the said provision has been omitted and as such addition made in respect of same needs to be deleted - HELD THAT:- As decided in M/s. Texport overseas Pvt. Ltd. [ 2019 (12) TMI 1312 - KARNATAKA HIGH COURT ], when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.07.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken by the Assessing Officer under the effect of Section 92BA and reference made to the order of TPO under Section 92CA could be invalid and bad in law. It is for this precise reason, tribunal has rightly held that order passed by the TPO and DRP is unsustainable in the eyes of law. TP Adjustment restricted only to the transaction between the Associated Enterprises (AEs) - HELD THAT:- As decided in Phoenix Mecvano (India)(P.) Ltd. [ 2017 (6) TMI 1240 - BOMBAY HIGH COURT ] we find that in terms of Chapter X of the Act, re-determination of the consideration is to be done only with regard to income arising from international Transactions on determination of ALP. The adjustment which is mandated is only in respect of International Transaction and not transactions entered into by assessee with independent unrelated third parties. This is particularly so as there is no issue of avoidance of tax requiring adjustment in the valuation in respect of transactions entered into with independent third parties. The adjustment as proposed by the Revenue if allowed would result in increasing the profit in respect of transactions entered into with non-AE. This adjustment is beyond the scope and ambit of Chapter X of the Act. Decided in favour of assessee.

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• 2024 (11) TMI 176
  Delay of 80 days in filing the Return of Income - genuine hardship due to delay - eligible reasons for delay - HELD THAT:- A perusal of the provisions of Section 119 (2) (b) of the Act shows that the power conferred therein upon Respondent No. 1 is for the purpose of avoiding genuine hardship . In our view, the Petitioner would be put to genuine hardship, if the delay in filing the Return of Income is not condoned. This is because the Petitioner has given valid reasons for not filing the Return of Income on time. The Petitioner has mentioned that her father had passed away on 30th November, 2022 due to Covid-19 and that her family members were affected by Covid-19 in November, 2020. The Petitioner, who is a doctor, was involved in Covid-19 duty at that time. The valuation of land for working out capital gain could not be completed prior to the due date of filing of the Return due to the said reasons and as the valuer was not able to carry out physical verification of the site until 13th February, 2021 and provide the Valuation Report until 16th March, 2021. In this context, it is important to note that the valuer was also a senior citizen aged 75 years. In our view, if for these reasons, the delay of 80 days in filing of the Return of Income by the Petitioner was not condoned, then definitely the Petitioner would be put to genuine hardship as the Petitioner was prevented by genuine and valid reasons for not filing the Return of Income on time. It can never be that technicality and rigidity of rules of law would not recognize genuine human problems of such nature, which may prevent a person from achieving certain compliance. It is to cater to such situations that the legislature has made a provision conferring a power to condone the delay. These are all human issues which prevented the assessee, who is otherwise diligent, in filing the Return of Income within the prescribed time. In our view, Respondent No. 1 failed to consider the same. Respondent No. 1 completely lost sight of the fact that not only was the Petitioner a doctor who was on covid duty but that the Petitioner faced various other problems due to the Covid-19 pandemic, and that was the reason why the Petitioner could not file her Return of Income within time. Respondent No. 1 has also rejected the Application on the ground that the Petitioner, being an educated person, was well equipped with basic taxation law knowledge and, had accessibility to tax practitioners and, therefore, the claim of the Petitioner that she was not able to collect various information regarding income tax calculation, was not tenable. Again, we are afraid that we are unable to accept this reason of Respondent No. 1. The Petitioner has not claimed lack of accessibility to a tax practitioner. It is the case of the Petitioner that, for various reasons, which arose due to the Covid-19 pandemic, she was not able to obtain the Valuation Report in respect of the property on time and, therefore, was not able to compute the capital loss and file the Return of Income. In this view of the matter, we are unable to accept the said reasons given by Respondent No. 1 for rejecting the Petitioner s Application for condonation of delay. Thus impugned order dated 20th October, 2023 passed by Respondent No. 1 is hereby quashed and set aside.The delay of 80 days in filing of the Return of Income for Assessment Year 2020-2021 by the Petitioner is hereby condoned.

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• 2024 (11) TMI 175
  Denial of credit of TDS on salaries - petitioners are ex-employees of Karvy Stock Broking Limited and in spite of the fact that the tax was deducted from their salary but not deposited by the said Company - HELD THAT:- This Court in [ 2024 (4) TMI 1195 - GUJARAT HIGH COURT ] recording the facts of the case, issued the Notice and stayed the impugned notices till final disposal of the petition. Today, petitioners submitted that the petitioners are suffering continuous loss as they are not entitled to the refund because of the pendency of this proceeding. Learned Senior Standing Counsel Mr. Sanghani submitted that in one of the matters, the reply is already filed by the respondent. Considering the above submissions, list these matters for final disposal on 07.10.2024 on top of the Board.

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• 2024 (11) TMI 174
  Stay of demand - Undertaking by the Petitioner to pay 20% of the amount due for pending appeal proceedings - HELD THAT:- Petitioner had approached the authorities under Section 226(6) of the Income Tax Act, 1961 which was rejected vide proceedings dated 24.02.2022. It appears that for the Assessment Year 2018-2019, the Petitioner has paid a paltry amount of Rs. 54,794/- only. The Petitioner cannot expect the appeal to be heard without mandatory pre-deposit of the amount as is required as per the Office Memorandum issued by the Central Board of Direct Taxes issued from time to time. Unless the Petitioner pre-deposits the amount the Petitioner cannot expect any protection from recovery of tax dues confirmed against the Petitioner. Under these circumstances, these Writ Petitions are dismissed. However liberty is given to the Petitioner to move suitable application for waiver in terms of the decision of the Hon'ble Supreme Court in Principal Commissioner of Income Tax 5 and Others vs. M/s.LG Electronics India Private Limited [ 2018 (7) TMI 1905 - SC ORDER] .

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• 2024 (11) TMI 173
  Stay petition - application was partly allowed by directing the petitioner to deposit 20% of the demand - Contention of petitioner that the learned appellate authority was totally guided by CBDT Office Memorandums dated 29.02.2016 and 31.07.2017 and directed the petitioner to deposit 20% of outstanding demand and here is no whisper or iota of discussion about exemption notifications - HELD THAT:- Prima facie reading of Annexures-P.9 and P.10 shows that petitioner could make out a prima facie case. Sadly, the appellate authority has not taken any pain to consider the singular contention raised by the petitioner based on these notifications. Thus, in the peculiar facts of this case, we deem it proper to restrain the respondents from taking any coercive action against the petitioner, pursuant to assessment order, during the pendency of the appeal. Accordingly, this writ Petition is disposed of. It is made clear that this Court has not expressed any opinion on the merits of the case. It will be open for the appellate authority to adjudicate the appeal on its own merits.

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• 2024 (11) TMI 172
  Eligibility of the petitioners to file applications for settlement in terms of the provisions contained in Section 245C following the amendments to the provisions contained in Chapter XIX-A of the 1961 Act by the Finance Act, 2021 - HELD THAT:- Even though the time-frames mentioned in the Explanation Clause only identified the period of exclusion with reference to each of the proceedings taken out of the definition of case by operation of the provisos which were deleted (as already noticed, two provisos deleted in 2010 and the rest were deleted in 2014) the Explanation Clauses that were ancillary to the provisos, continued to remain in the statute book. With the deletion of the provisos, the Explanation Clauses cannot by themselves control or restrict the definition of case in Section 245A(b). If the interpretation now sought to be canvassed by the Revenue is accepted, the legislative intent behind the deletion of the provisos will not be achieved and the period which was originally excluded by operation of the provisos read with the explanations will become the period during which an application for settlement could be filed. This is, obviously, not the intention of the parliament. It is settled that where two views are possible and one produces anomalous results it is the duty of the Court to adopt the view that does not produce anomalous results. The right that had accrued to eligible assessees to approach the Income- tax Settlement Commission until the the Finance Act, 2021 came into force on 01-04-2021 remained vested in them and such rights continued to be enforceable notwithstanding the amendment to the relevant provisions. A Division Bench of the Bombay High Court in Senapati Santaji Ghorpade Sugar Factory Ltd. [ 2024 (4) TMI 204 - BOMBAY HIGH COURT ] and in Vishwakarma Developers [ 2024 (8) TMI 366 - BOMBAY HIGH COURT ] essentially take the same view. We are in respectful agreement with the views expressed in those cases. The order issued by the Central Board u/s 119(2) of the 1961 Act permitted the actual filing of applications by assessees who are entitled to make such applications by 30.9.2021. Thus upon the interpretation that has been placed on the amended provisions of Chapter XIX-A of the 1961 Act and taking into consideration of the order issued under section 119(2) of the 1961 Act. Since it is not disputed before me that the search u/s 132 in the case of all the petitioners in these cases was prior to 31-03-2021, the persons/entities, who were subject matter of the search, will be entitled to maintain an application for settlement before the Interim Settlement Board, provided such application has been filed on or before 30-09-2021. These writ petitions are therefore ordered directing that if the search u/s 132 in respect of the petitioners was prior to 31-03-2021, the petitioners are entitled to maintain applications for settlement before the Interim Board for Settlement, provided such applications were filed on or before 30-09-2021. Orders issued by the Interim Board for Settlement finding the applications for settlement filed by the petitioners as not maintainable will stand set aside.

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• 2024 (11) TMI 171
  Constitutionality and legally of Income Computation and Disclosure Standards [ICDS] II and the Notification 87/2016 dated 29.09.2016 and Section 145A - as prescribed that the cost of inventories shall be computed by using the First In First Out (FIFO) or Weighted Average Cost method, to the exclusion of other methods relating to valuation of inventory, such as the Last In First Out (LIFO) method, while computing income under the head of Profits and Gains of Business or Profession under the Income Tax Act HELD THAT:- It is not in dispute that FIFO, LIFO and Weighted Average Cost are methods recognised by the Accounting Standards for the purposes of Inventory/Stock valuation. As per those standards inventories are valued at the lower of cost or net realisable value, the latter term being a reference to the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The principle behind valuing stock at the lower of cost or realisable value is that no prudent trader would care to show increased profit before its actual realisation and hence, while anticipated loss is taken into account, anticipated profit in the shape of appreciated value of closing stock is not brought into the account [Chainrup Sampatram v. Commissioner of Income-Tax, West Bengal [ 1953 (10) TMI 2 - SUPREME COURT] . The adoption of any particular method of stock valuation is towards ensuring that it reflects the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition. Whatever be the method of valuation adopted, it is a misconception to think that any profit arises out of the valuation of closing stock. As noticed in Chainrup Sampatram (supra), the valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading results of that period, and cannot be regarded as the source of such profits. Thus, the issue canvassed in these appeals in the context of Article 14 of the Constitution, essentially boils down to whether the appellants herein can be said to be legally prejudiced, either on account of a law that is manifestly arbitrary or on account of any discrimination meted out to them through a validly enacted law. The term manifest arbitrariness, in the context of plenary or subordinate legislation, refers to something done by the legislature capriciously, irrationally and/or without adequate determining principle. It also takes in situations where something is done which is excessive and disproportionate [Shayara Bano v. Union of India and Others 2017 (9) TMI 1302 - SUPREME COURT] Can the amendment to Section 145A r/w the prescriptions under ICDS II, be seen as manifestly arbitrary in the light of the principles enumerated above ? - We think not. The ICDS II was issued with the objective of providing for a uniform method of inventory/stock valuation for assessees whose income was computed under the head profits and gains of business or profession , and Section 145A was amended so as to remove the basis of The Chamber of Tax Consultants ( 2017 (11) TMI 465 - DELHI HIGH COURT] There was, therefore, a determining principle that informed both the statutory amendment and the ICDS II. It is also significant that the ICDS is applicable only for computation of income chargeable under the specified heads of income and not for the purpose of maintenance of books of accounts. Thus, while the assessees have the freedom to maintain their books of accounts using any of the methods recognised by the accounting standards, Section 145A only mandates that they shall follow the specified methods of inventory/stock valuation while computing their income under the head Profits and gains of business or profession . Aspect of discrimination - It is trite that there is no infringement of the equal protection rule if the law deals alike with all of a certain class, as the legislature has the right of classifying persons and placing those whose conditions are substantially similar under the same rule of law, while applying different rules to persons differently situated. It is only if the classification is unreasonable and bears no rational relation to the object sought to be achieved by the legislative measure that it will be struck down as discriminatory and unconstitutional [Kerala Hotel Restaurant Association Others v. State of Kerala Others [ 1990 (2) TMI 259 - SUPREME COURT] On the facts of the instant appeals, since the prescription in ICDS II, with regard to the method of valuation of inventory/stock, is applicable to all assessees whose income is chargeable to tax under the head Profits and gains of business or profession , we do not find any unreasonable classification as having been effected among persons who are similarly situated. Further, the prescription under the ICDS II being one that is directed towards achieving the object of uniformity and consistency in the computation of income of assessees falling under the specified categories, we fail to see how the same would offend the equality clause under the Constitution. As a matter of fact, we also fail to see what pre-existing right of the appellants has been taken away by the prescription imposed through the amended Section 145A of the IT Act read with ICDS notified under Section 145 (2) of the Act ? Surely, the appellants cannot be heard to contend that they have a right, fundamental or otherwise, to follow a particular method of inventory/stock valuation that would prevail over a contrary statutory prescription under the IT Act. At best, the appellants could have contended that for the period upto 01.04.2018, they had already valued their stock/inventory in accordance with the LIFO method and their vested right to do so in accordance with the law as it stood then could not be retrospectively taken away. We find, however, that this contention of the appellants was accepted by the learned Single Judge who declared the retrospective operation of the provisions w.e.f. 01.04.2017 to be bad in law, and the revenue has not chosen to impugn the said finding of the Single Judge in any appeal preferred by it before us. Thus, we find that the decision to amend Section 145A of the IT Act and make the ICDS II applicable to a certain category of assessees while computing their income for the purposes of the IT Act, was taken by the legislature after considering the opinions and recommendations of expert financial bodies. We therefore do not think it necessary to interfere with the findings of the learned Single Judge in the judgment impugned in these appeals - Writ appeal dismissed.

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• 2024 (11) TMI 170
  Compounding application u/s 276CC - HELD THAT:- The respondents have proceeded on the premise that the compounding application was made for the first time on 24 September 2020. The aforesaid order does not even allude to or notice the original applications which had been made on 15 February 2018. We also take note of the fact that the filing of the original application on 15 February 2018 is not disputed by the respondents. In view of the aforesaid and the clear stipulations contained in the 2019 Guidelines, it would be the erstwhile compounding guidelines which would apply. This since it is the stated case of the respondents that the 2019 Guidelines would have applied only to applications made or received after 17 June 2019. We allow the instant writ petition and call upon the respondents to compute the compounding charges liable to be paid by the writ petitioner in accordance with the 2014 Guidelines, treating the application to have been first made on 15 February 2018. Subject to the aforesaid computation exercise being completed and the petitioner depositing the compounding charges, the application may be processed further and disposed of in accordance with law.

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• 2024 (11) TMI 169
  LTCG - Exemption u/s 54F - non-investment of the sale consideration or portion thereof in the designated capital gains - HELD THAT:- In view of the law laid down in Shri. K. Ramachandra Rao [ 2015 (4) TMI 620 - KARNATAKA HIGH COURT ] to the effect that mere non-deposit of the sale consideration or portion thereof in a designated capital gains account would not deprive or come in the way of the petitioner from claiming exemption from payment of capital gains tax, that the impugned reassessment order and notices are contrary to law and the aforesaid judgments of the Court and the same deserves to be quashed. Decided in favour of assessee.

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• 2024 (11) TMI 168
  Disallowance u/s 80P(2)(a)(i)/80P(2)(d) - Interest income earned form nationalized bank - assessee is a Cooperative Society engaged in banking business among its members - HELD THAT:- The Pune Bench of the Tribunal in the case of Sharad Nagari Sahakari Patsanstha Maryadit [ 2024 (4) TMI 746 - ITAT PUNE] has decided the impugned issue in favour of the assessee under the similar set of facts stating interest income derived from investments made in nationalized/other bank(s), the Revenue could hardly dispute that case law The Vaveru Cooperative Rural Bank Ltd. [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] that interest income(s) derived from such nationalized/other bank(s) also qualifies for sec.80P deduction and thereby declined it s very stand. Thus accept the assessee s sec.80P(2)(a)(i)/80P(2)(d) deduction claim(s) in very terms. Also see Yogiraj Nagari Sahakari Patsanstha Maryadit [ 2024 (6) TMI 1415 - ITAT PUNE] as direct the Assessing Officer to allow deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from other cooperative banks. Appeal of the assessee is allowed.

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• 2024 (11) TMI 167
  Levy of penalty u/s 270A - Disallowance of excess depreciation on computer software - as per AO internally generated software to fall under the ambit of intangible assets thereby eligible for depreciation only @25% as against @60% claimed by the assessee - HELD THAT:- The facts narrated herein above, in our considered opinion, clearly prove that there is neither underreporting nor misreporting by the assessee. The disallowance of depreciation by adopting different rate had arose only due to difference in interpretation by the ld AO by not agreeing to the contention of the assessee. Ultimately this is only disallowance of a claim made by the assessee. There cannot be any allegation of either underreporting or misreporting of income. There is no concealment on the part of the assessee as all the details relevant for adjudication of the issue had been duly placed on record by the assessee in the return coupled with tax audit report thereon. Hence, the principles laid down by the Hon'ble Supreme Court and various Hon ble High Courts on the levy of penalty for concealment of income or furnishing inaccurate particulars of income u/s 271(1)(c) of the Act shall duly apply to the misreporting or underreporting of income in Section 270A of the Act. Hence, by placing reliance on the decision of Reliance Petro Products Ltd [ 2010 (3) TMI 80 - SUPREME COURT] and Price Waterhouse Coopers (P) Ltd [ 2012 (9) TMI 775 - SUPREME COURT] there is absolutely no justification at all for levy of penalty u/s 270A - Appeal of assessee allowed.

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• 2024 (11) TMI 166
  Undisclosed investment in committees - a diary was found at the residential premises of the assessee during the course of search, which contain certain transactions in respect of investment made in various committee - HELD THAT:- Tribunal had in the first round given specific directions to the ld AO to make verification of claim of the assessee with the relevant documents filed before the Hon ble ITSC. The assessee on his part had duly submitted the said documents to substantiate his claim. AO does not bother to look into the said documents and proceeds to tax the assessee for the second time on the same transaction which had already suffered tax before the Hon ble ITSC. This illegal action of the ld AO is upheld by the ld CIT(A). Hence we have no hesitation to conclude that both the orders of the lower authorities are perverse and the revenue does not deserve another chance in these appeals. Hence we hereby delete the additions made by the ld AO towards undisclosed investment in committees for both the Asst Years 2007-08 and 2008-09 and accordingly the Ground raised by the assessee are allowed.

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• 2024 (11) TMI 165
  TDS u/s 195 - disallowance u/s. 40(a)(i) - non deduction of tax at source (TDS) on overseas payment towards patent fees, reimbursement of official fees and professional fees, by treating such payments as Royalty taxable in India - whether such income had accrued or arisen outside India? - Whether the assessee was liable to deduct tax at source on payments made to non-resident attorneys where such payments are in the nature of official fees, reimbursement of renewal fees and professional fees? - HELD THAT:- The department has not disputed the fact that the overseas payments made by the assessee are towards reimbursement of expenses incurred by the non-resident attorneys towards renewal of registration of patents abroad and payments to registration authorities. Revenue has not controverted the fact that professional fee paid to the foreign attorneys who are non residents have no Permanent Establishment (PE) in India and none of the Attorneys have visited India during the year under assessment. After examining the nature of payments made by assessee, we are of considered view that the AO and the CIT(A) have erred in coming to the conclusion that the assessee is liable to deduct tax at source on the aforesaid payments. The coordinate bench in the case of Chandra Mohan Lall [ 2021 (12) TMI 1354 - ITAT DELHI] held these payments being in the nature of reimbursement and payment made for official purpose and trade fair services cannot come within the purview of either professional or technical services. Therefore, such payments not being in the nature of income chargeable to tax in India in terms of section 195 of the Act, there was no obligation on the assessee to deduct tax at source on such payment. Therefore, delete the disallowance of the aforesaid amount. The payments made by assessee to non-resident attorneys who have no permanent establishment in India for the services rendered overseas are not subject to TDS provisions u/s. 195 - Similarly, the payments made towards reimbursement of renewal fee and official fee are not subject to TDS provisions. Thus, the assessee was not under obligation to deduct tax at source on such payments. Assessee appeal allowed.

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• 2024 (11) TMI 164
  Levy of penalty u/s. 271(1)(c) - defective notice as it did not clearly specify the grounds for the penalty - additions/disallowances on account of set off of losses and disallowance u/s. 37 (including disallowance of donation) - HELD THAT:- A perusal of the same reveals that the notice is issued in a pre printed performa, without striking off irrelevant clauses in the notice. It is an omnibus notice. As decided in the case of PCIT vs. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] following the decision rendered in the case of CIT vs. Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] deleted penalty where the AO failed to clearly specify the limb of section 271(1)(c) of the Act for levy of penalty in the notice. As in the case of Mohd. Farhan A Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] has held that where assessment order records satisfaction for imposing penalty on one or other or both grounds mentioned in section 271(1)(c) of the Act, a defect in notice in not striking of irrelevant matter would vitiate penalty proceedings. An omnibus notice suffers from the vice of vagueness. Assessee appeal allowed.

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• 2024 (11) TMI 163
  Rejecting application for registration u/s 12AB - non-furnishing/furnishing of incomplete compliance, which are not to the satisfaction of CIT(E) and in the manner as desired - HELD THAT:- There was no comment by the Ld. CIT(E) qua the objects and activities of the assessee trust that the objects of the assessee trust are not in the nature as defined under the provisions of section 11 12 of the IT Act or the Activities carried out by the assessee trust are not genuine. Since the genuineness of activities and conduct of the assessee trust towards the objects of the as per there bylaws are not doubted by the CIT(E), neither any plausible reason or reasonable explanation to hold the same not in charitable nature was noted by the Ld. CIT(E), under such circumstances, we are of the considered view that this crucial aspect was left to be looked into by the approving authority, therefore, the matter requires to be restore back to the file of Ld. CIT(E). Thus, respectfully following analogy of law drawn from the order of Shaheed Nand Kumar Patel Vishwavidyalaya [ 2024 (9) TMI 976 - CHHATTISGARH HIGH COURT ] and case of Koi Apna Sa Ho Society [ 2024 (5) TMI 1481 - ITAT RAIPUR] in absence of any contrary decision, fact, or submission by the revenue, we find it appropriate to restore the issue to the files of Ld. CIT(E), with the directions to re-visit the application of the assessee and dispose of the same under express finding qua the objects and activities of the trust in deciding the eligibility of the assessee trust for grant of registration u/s 12AB of the Act. The assessee is also directed to assist in the proceedings before the Ld. CIT(E) to furnish all the information necessary so as to satisfy the approving authority about the objects of the trust and the genuineness of its activities

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• 2024 (11) TMI 162
  Transfer of capital assets owned by the appellant firm to its partners resulting into Capital Gains - transfer of immovable property by book entries - As per AO assessee firm had purchased the lands for business purpose and due to no business activity carried on in these lands, the same were transferred to the partners - as argued appellant firm has transferred only the amounts pertaining to the immovable properties sitting in the Balance Sheet of the assessee firm to its partners capital accounts without execution of any instruments in writing and hence there was no legal transfer of the impugned properties to the partners giving rise to the Capital gains HELD THAT:- Perusal of the Balance Sheet of the assessee firm shows that the opening value of such land as on 01.04.2016 was shown as Rs. 2,28,29,180/- which was transferred to the two partners on the ground that the lands were registered in their name originally. It is an admitted fact that there was no revaluation of such lands and no excess amount other than the cost of the lands has been credited to the capital accounts of the partners which is otherwise eligible for withdrawal by the partners. It is also an admitted fact that the lands were transferred to the capital accounts of the partners at book value only and therefore, no capital gain has arisen. Since there was no revaluation of any asset and the assets were transferred at cost price to the partners, therefore, the decision of Mansukh Dyeing and Printing Mills [ 2022 (11) TMI 1180 - SUPREME COURT] is not applicable to the facts of the present case. As assets in question were transferred to the two partners by passing a journal entry only. The Hon ble Bombay High Court in the case of CIT vs. M.J. Mehta and Bros. [ 1992 (9) TMI 11 - BOMBAY HIGH COURT] has held that the transfer of immovable property belonging to the firm to its partners by means of book entry was not valid. Once the transfer is treated as not valid because of mere passing of book entry, therefore, in our opinion, there cannot be any capital gain. While the AO has brought the amount being transfer of land to Sameer A Pimple, however, the amount transferred to Shirish K Sankhe towards the land has not been brought to tax and no action either u/s 263 or 147 of the Act has been initiated. In other words, the Assessing Officer has partly accepted a transaction and partly rejected the same. Therefore, the CIT(A)/NFAC in our opinion is not justified in sustaining the addition made by the AO - Grounds raised by the assessee are accordingly allowed.

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• 2024 (11) TMI 161
  Denial of Concessional tax rate on royalty income u/s 115BBF - Treating royalty income as taxable @ 10% of royalty at a special rate of 10% as against the normal rate charged by the CPC - HELD THAT:- Since in the instant case, admittedly, the assessee has uploaded the Form No.3CFA before completion of the proceedings u/s 143(1) of the Act, therefore, we are of the considered opinion that the Addl/JCIT(A), Panchkula should not have rejected the appeal filed by the assessee and thereby directing the AO to tax the royalty income at normal rate. We, therefore, set aside the order of the Addl/JCIT(A), Panchkula and direct the Assessing Officer to tax the royalty income at special rate of 10% as against the normal rate adopted by the CPC. The grounds raised by the assessee are accordingly allowed.

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• 2024 (11) TMI 160
  Income recognition - Addition of profit on advances received from customers as revenue on sale of flats /shops - Scope of accounting standard AS-9 - as per AO assessee, having executed the sale agreements and having received 100% of the consideration in most of the cases, the condition transferring to the buyer all significant risks and rewards of ownership and the seller retains no effective control of the real estate to a degree usually associated with ownership' laid down in AS-9 stood fulfilled in the case - CIT(A) deleted addition - HELD THAT:- CIT-DR s first and foremost argument before us quotes the relevant accounting standard AS-9 to reiterate the Revenue s stand that the Assessing Officer herein had rightly adopted percentage than project completion method to assess the impugned advances in assessee s hands. The assessee on the other hand invites our attention to the above AS-9 wherein clause 2(i) makes it clear that This statement does not deal with the following aspects of revenue recognition to which special condition apply (i) Revenue arising from construction contracts . We thus see no merit in the Revenue s instant first plea seeking to invoke AS-9 in very terms. Section 43CB also gets attracted in assessee s case for the purpose of revenue recognition w.r.e.f. 01.04.2017, attracting percentage completion only - We note that section 43CB itself envisages revenue recognition in light of the income computation and disclosure standards/ICDS notified u/s 145(2) of the Act, which in turn, take us to ICDS-3 containing not only clause 9 that contract revenue shall be recognized when there is reasonable certainty of its ultimate collection but also clause 22.2 in the nature of Transitional Provisions making it explicitly clear that only the regular method followed ought to be adopted for revenue recognition relating to construction contracts commenced on or before 31.03.2016 and not completed upto this clinching date, as the case may be. Learned counsel at this stage highlights the point that the assessee s impugned residential project admittedly commenced prior to the said cut of date and had not attained completion upto 31.03.2016. This being the assessee s clinching case, we hold that neither AS-9 nor section 43CB r.w.s. 145(2) r.w. ICDS-3, apply and therefore the CIT(A) s impugned findings deleting the impugned addition stand upheld. Revenue appeal dismissed.

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• 2024 (11) TMI 159
  Penalty levied u/s 274 r.w. 270A - assessee has mis-reported income by computing the tax on the amount disallowed as depreciation and subjected it to the maximum marginal rate and levied the penalty 200% on the amount of tax payable - HELD THAT:- AO has contradicted himself by levying penalty whereas while framing the assessment accepted Rs. Nil as income even after disallowance of depreciation. AO has resorted to compute notional tax on the disallowance on which no tax is payable by the assessee. Further as argued by the Ld.AR, the assessee has not under-reported his income as per section 270A sub-section (2) clause (a) to clause (g). Further sub-section (7) of section 270A refers to penalty leviable on the amount of tax on the under-reported income. In the instant case there is no tax payable by the assessee as the assessee has spent more than 85% of the revenue collected during the year. This fact is not disputed by the revenue. We are therefore of the considered view that Ld.CIT(A) has rightly deleted the penalty and hence we find no infirmity in the order of the Ld. CIT(A) thereby dismissing the appeal filled by the revenue. Revision u/s 263 - as per CIT AO has not disallowed the claim of depreciation on assets, thereby amounting to claim of double deduction of the same amount - HELD THAT:- AO while framing the assessment has disallowed the depreciation u/s 11(6) of the Act and has assessed the income at Rs. NIL as the assessee has applied more than 85% of the income as per section 11. We find merit in the argument of the Ld.AR that since the Assessing Officer has already disallowed the depreciation the order passed under section 263 of the Act by the Ld.CIT(E) directing the AO has no merits. We therefore quash the order passed by the Ld. CIT(E) u/s 263 - Decided in favour of assessee.

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• 2024 (11) TMI 158
  Validity of scrutiny process - no approval was obtained by the ld AO from the Jurisdictional PCIT as mandated in the Instruction No. 5/2017 dated 7.7.2017 - Whether non-following of the CBDT Instructions would become fatal to the assessment proceedings per se? - HELD THAT:- This question is answered in the case of CIT vs Best Plastics P Ltd [ 2006 (4) TMI 53 - HIGH COURT, DELHI] wherein it was held that the revenue is bound to follow the instructions given by CBDT and not following the same would become fatal to the entire assessment proceedings We hold that the entire assessment proceedings becomes void ab initio as the return was selected for scrutiny in violation of Para 1(vi) of CBDT Instruction No. 5/2017 dated 7.7.2017 by not getting approval from the PCIT. DR vehemently placed reliance on the provisions of section 292BB of the Act which would cure the defect pointed out in the instant case. We find that the jurisdictional defect cannot be cured by provisions of section 292BB of the Act. See LAXMAN DAS KHANDELWAL [ 2019 (8) TMI 660 - SUPREME COURT] Reliance placed by the DR on section 292BB of the Act would not rescue the ld AO if there is a defect in assuming jurisdiction per se. Accordingly, we quash the entire assessment framed in the hands of the assessee for the Asst Year 2016-17. The grounds raised by the assessee in his cross objections are allowed.

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• 2024 (11) TMI 157
  Levy of penalty u/s. 271(1)(c) - AO rejected the books of account of the assessee and computed the income of the assessee by applying gross profit rate of 8% and assessed the income of the assessee on estimate basis - HELD THAT:- We observe that in this case, assessee who was handling the assessment proceedings before the AO has agreed that the books of account of the assessee may be rejected subject to non-initiation of penalty proceedings. Assessing Officer has partly accepted the reply of assessee, as evident from the fact that he has rejected the books of account, however, he initiated penalty proceedings, which means, part of the submission made by assessee has not been accepted by the AO, which in our view, is not permissible, since it is settled position that an admission made has to be accepted and acted as whole and not in parts. The reasoning on the basis of which, additions have been made in assessment proceedings may be good so far as framing of assessment is concerned. However, these reasonings on standalone basis are not enough for levying penalty u/s. 271(1)(c) of the Act. Thus penalty in the facts of present case is not leviable. Further, we observe that in this case the assessee has neither furnished inaccurate particulars of income nor concealed the particulars of its income and the income has been determined on estimate basis only. Thus no penalty is leviable against the assessee - Decided in favour of assessee.

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• 2024 (11) TMI 156
  Correct head of income - rental income earned by the assessee - Income from House Property v/s business income - HELD THAT:- We notice that the assessee has treated the properties as its Investment only. Assessee has been declaring the rental income under the head Income from House Property only in the earlier years and the same has been accepted by the AO in the preceding years. In support of the same, the assessee has furnished in the paper book copies of assessment orders passed in AY 2015-16 and 2016-17. During the year under consideration, the AO has changed the head of income into Income from Business on the reasoning that the rent has been received under the name Licence fee and further, the objectives of the assessee included renting of properties. However, he has ignored the fact that the relevant properties have been shown as Investments by the assessee, meaning thereby, the assessee did not treat the relevant properties as its business assets. The nomenclature given to the rental receipts may not be relevant to determine the head of income. Hence both the reasoning given by the AO would fail. We notice that the Ld CIT(A) has also taken support of Principle of Consistency, which, in our view, cannot be faulted with in this case. CIT(A) was justified in holding that the rental income received by the assessee is assessable under the head Income from House Property . Treatment of loss incurred by the assessee in F O Transactions - normal business loss v/s speculation loss as held by the AO - as per CIT(A) F O transactions are treated as normal business transactions - HELD THAT:- IT(A) has rendered his decision following the above said provisions, which by way of deeming fiction has excluded the eligible transactions in respect of trading in derivatives from the definition of speculative transaction . Before us, the Revenue could not show any other contrary provision to demonstrate that the reliance placed by Ld CIT(A) on the provisions of sec.43(5) of the Act was wrong. The finding of fact given by the Ld CIT(A) with regard to the noting made in the broker note was also not proved to be incorrect by the Revenue. Under these set of facts, we do not find any infirmity in the order passed by Ld CIT(A) on this issue. Disallowance u/s 14A - A.R submitted that the assessee did not earn any exempt income during the year under consideration from out of the investments held by it - HELD THAT:- The fact would remain that the assessee did not earn any exempt income during the year under consideration. As held in the case of Kohinoor Project (P) Ltd [ 2020 (1) TMI 1161 - BOMBAY HIGH COURT] that the disallowance u/s 14A is not required to be made if no exempt income is received or receivable during the relevant previous year. Since the decision rendered by Ld CIT(A) on this issue is contrary to the decision rendered by Hon ble jurisdictional Bombay High Court, the same cannot be sustained.

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• 2024 (11) TMI 155
  Validity of reassessment proceedings - reasons to believe - Bogus loans u/s 68 - HELD THAT:- In this case assessee has filed its ROI on 30.09.2012, declaring total income, the same has been processed u/s. 143(1). The aforesaid contents of the reason for reopening shows that assessing officer was not aware of the fact that the scrutiny assessment of the assessee was already carried out and order u/s. 143(3) of the Act was passed, which is part of the assessee s assessee s paper book wherein it is mentioned that after verification of various details filed by the assessee the return of income filed by the assessee is accepted and income is assessed at Rs. 6,68,55,810/-. As further noticed that before passing the original order, AO issued notice u/s. 142(1) - AO called for the details of unsecured loans along with the loan confirmation and interest paid. In response thereof assessee submitted his letters. Statement of unsecured loan is also shown of an amount of Rs. 35,00,000/-. This shows that in the reasons recorded for the reopening of the assessment, AO has formed his reason to believe on the basis of the fact that original return filed by the assessee was not picked up for scrutiny. However, the record show that return of income of the assessee was scrutinised and assessment order u/s. 143(3) was passed. Once the issue of reopening was examined in the scrutiny assessment proceedings, the reason framed under wrong facts are not valid reason, therefore such reasons to believe cannot be sustained. In view of this, assessee s ground against reopening of assessment is allowed reassessment based on such invalid reason is quashed. Assessee appeal allowed.

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• 2024 (11) TMI 154
  Addition of treating the amount shown to be received as corpus donation as voluntary donation received - genuineness of unsecured loan - CIT(A) directed addition - HELD THAT:- We find that as correctly observed by the CIT(A), it remains undisputed that the A.O. simply disallowed 33% of the total unsecured loans as unexplained, without ascribing any reason for his action. Either a loan transaction can be genuine, or it is not; there is no scope for an in between finding in an adhoc manner. No comments have been made by the AO on the documents submitted by the Assessee to establish the genuineness of the loans and creditworthiness of the lenders. There is no material whatsoever on record to establish that the loan transactions were not genuine; in fact, no attempt has also been made by the AO to that end. As observed from the assessment order, there is no enquiry made by the AO from any of the lenders from whom the Assessee had received unsecured loans. CIT(A) has rightly deleted addition. Decided against revenue.

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• 2024 (11) TMI 153
  Assessment u/s 153A - addition u/s. 69C of the Act towards commission paid on alleged accommodation entries on sales and purchases @ 3% of the said transaction - Whether any new incriminating material found or seized during the search? - CIT(A) deleted addition - HELD THAT:- CIT(A) held that the ld. A.O. has merely made the addition based on the incriminating material that was already relied upon by the ld. A.O. in section 153A proceeding and in the absence of any new incriminating material deleted the impugned addition - A.O. has made the addition to rectify the mistake apparent from the record in the assessment order passed u/s.153A r.w.s. 144 which has erroneously not made the addition on the actual sales and purchase figures while computing the commission income. CIT(A) further has directed the ld. A.O. to rectify the mistake apparent from the record in the assessment order passed u/s. 153A r.w.s. 144 of the Act in the case of the assessee dated 26.02.2021 and to determine the commission income according to the actual amount of bogus sales and purchases. We find no infirmity in the order of the ld. CIT(A) in deleting the addition made u/s. 69C of the Act and in directing the ld. A.O. to rectify the mistake apparent from record in the assessment order passed u/s. 153A r.w.s. 144 of the Act. We, therefore, dismiss the ground of appeal raised by the Revenue.

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• 2024 (11) TMI 152
  Disallowance of sum incurred by the assessee on reservation of seats in the schools for the children of the bank officer - bank has paid the above sum to various schools towards reservation of seats for the children of the officers of the bank - assessee has claimed that this is staff welfare expenditure as the payment has been made to mitigate the hardship faced by the officers of the bank for children's education during the transfer - HELD THAT:- As we find that this issue is squarely covered in favour of the assessee by the decision of the honourable High Court in case of the assessee for assessment year 1996 1997 [ 2016 (8) TMI 963 - BOMBAY HIGH COURT] which is not disputed by the revenue before us, therefore, we confirm the order of the learned CIT A on this issue deleting the disallowance - Further argument raised by the revenue that whether such amount is chargeable to tax in the hands of the parents of the children i.e., employees and whether it is reflected as income of those parents or not is irrelevant for the reason that, we are supposed to examine whether the assessee has incurred this expenditure for the purposes of the business or not. This is not the issue raised by the learned assessing officer also. In view of this, ground number 2 of the appeal is dismissed. Disallowance u/s 14A - as submitted assessee has sufficient owned interest free funds available - provisions of rule 8D is prospective in operation or applies to the appeals for assessment year 2006 07 and 2007 08 pending? - HELD THAT:-There cannot be any interest disallowance in the hands of the bank which has sufficient own / interest free funds more than the amount invested in the stock securities earning tax free income. In view of this even in absence of separate books of accounts, even in absence of showing direct Nexus of the funds, no interest disallowance could have been made in the hands of the assessee u/s 14 A. Disallowance of administrative expenditure for earning the exempt income - We find that in the case of the assessee for assessment year 2005 06 the coordinate bench in its order dated 22nd of March 2022 and for other years also has retained the disallowance to the extent of 1% of the exempt income. It is not shown before us that nature, quantum of expenditure is different in this year compared to earlier years, or there are specific expenditure incurred for earning exempt income, which exceeds the 1 % of the exempt income, Therefore, in absence of any change in the facts and circumstances of the case and because of the non-applicability of rule 8D for these assessment years, we direct the learned assessing officer to retain the disallowance under section 14 A of the act to the extent of 1% of the exempt income earned by the assessee. Nature of expenditure - broken period interest expenditure - Tribunal justification in holding that interest paid by the assessee on purchase of securities constituting stock-in-trade but paid for the broken period is allowable as a deduction? - HELD THAT:- In view of the decision of honourable high court in Bank of Hyderabad [ 2023 (1) TMI 673 - TELANGANA HIGH COURT] we also do not incline to the argument of the ld. CIT DR. with respect to broken period interest paid on securities which are on closing stock. Thus, we do not find any merit and hence we confirm the order of the ld. CIT (A) in allowing the broken period interest included in the cost of securities at the time of purchase correctly written off/ debited to profit and loss account as allowable interest. Accordingly Ground no 4 (a) is dismissed. Revenue recognition - Treating interest on securities on due basis - claim of the AO is that when the assessee is following mercantile system of accounting the interest on securities to be accounted for on accrual basis while arriving at profit - HELD THAT:- As per the accounting methodology applied by the assessee for revenue recognition of accrual, and also the method adopted by the assessee of offering income only which is accrued in the due instead of accrual as on the last day of the accounting year, but, respectfully following the decision of the honourable High Court Credit Suisse first Boston (Cyprus) Ltd. [ 2012 (8) TMI 17 - BOMBAY HIGH COURT] we find that the addition to the income cannot be made of interest accrued as on the last day of the accounting year but only the income which has accrued and due can be charged to tax, therefore, this ground of appeal no 4 (b) does not survive, hence, dismissed. Loss on revaluation of investments - assessee has booked a total loss on account of depreciation of securities on the last day of the financial year - HELD THAT:- The claim of the assessee that in accordance with the guidelines issued by the reserve bank of India investments in held to maturity category should be carried at acquisition cost. In case the purchase price is higher than the face value, the premium should be amortized over the remaining period of maturity of the security. The bank as amortized the sum being amortization cost of investment held in that bucket i.e., held to maturity [HTM]. No doubt the investments held by the assessee are trading securities therefore such amortization premium is claimed as allowable by relying on the decision of the honourable Bombay High Court in assessee s own case for assessment year 96 97 [ 2016 (8) TMI 963 - BOMBAY HIGH COURT] wherein the appeal of the revenue was dismissed on this count. Similarly for assessment year 97-98 also the honourable Bombay High Court as per order [ 2019 (6) TMI 1183 - BOMBAY HIGH COURT] decided the issue in favour of the assessee. Disallowance of contribution to pension fund by applying provisions of section 40A (9) - AO has found that the contribution to provident fund and pension fund was excess by 27% of basic salary and DA - HELD THAT:- We find that as this issue is squarely covered by the decision of GlaxoSmithKline pharmaceuticals Ltd. [ 2013 (3) TMI 759 - BOMBAY HIGH COURT] which is not disputed by the revenue, ground number 3 do not survive and hence dismissed. Disallowance u/s 36 (1) (viii) - taxing the deferred payment guarantee commission on receipt basis - HELD THAT:- According to provisions of section 36 (1) (viii) allows deduction in respect of any special reserve created and maintained by a financial Corporation which is engaged in providing long-term finance for industrial or agricultural development or development of infrastructural facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for specified activities, the deduction is amount not exceeding 40% of the profits derived from such business before making any deduction under this subsection. Now such deduction is available only to financial Corporation which shall include a public company and the government company, the claim of the revenue raised before us for the first time is that state bank of India does not qualify for this deduction as it is neither a company, nor a financial corporation and also not a government company. Therefore, state bank of India, assessee is not eligible for this deduction at all for impugned assessment year. Though the issue is decided in favour of the assessee as stated by the learned authorized representative however we do not find that those decisions have looked into this aspect. The learned authorized representative also could not show us whether this aspect is examined by the coordinate benches in earlier year or not. Further ground number 3 in appeal of the assessee is also on this issue wherein assessee has stated that the learned CIT A has not at all adjudicated this issue as far as computation is concerned. In view of these facts where the eligibility itself of the assessee is contested by the revenue to claim this deduction, we restore this ground of appeal back to the file of the learned assessing officer with a direction to the assessee to satisfy the learned assessing officer that how assessee qualifies for this deduction. Taxing the deferred payment guarantee commission on receipt basis - such commission relates to subsequent years - whether guarantee commission should be accrued and chargeable to tax in the hands of the bank as and when it is received [at the time of issuing the guarantee] or such income can be spread on the basis of the time for the period for which guarantee is persisting - HELD THAT:- Revenue recognition policy of the bank as per accounting policy number 9.2 (a) wherein the commission other than the commission on deferred payment guarantee and government transactions) is recognized on realization basis. Thus, the deferred payment guarantee is recognized as income not on realization basis. We also do not find any revenue recognition policy with respect to commission on deferred payment guarantee in the annual accounts of the assessee. Therefore, those are accounted for on accrual basis as per policy number 9.1. We find that the learned Departmental Representative has correctly relied on the judgment rendered in Kerala Urban Development Finance Corpn. Ltd. [ 2002 (12) TMI 18 - KERALA HIGH COURT] in which case the administration and supervision charges were collected and retained by the assessee, a nodal agency for disbursement and loan realized by HUDCO to various urban local bodies. It has been held in this case that the income accrued to the assessee at the time of disbursal of loan and hence assessable to tax in the year in which the loan amount was disbursed. Accordingly, respectfully following the decisions of the tribunal in assessee's own case for the earlier years, we find that the commission on deferred guarantee issued by the bank is chargeable to tax as and when deferred guarantee is issued and commission is received. Accordingly ground number 1 of the appeal is dismissed. Disallowance of depreciation on leased assets confirmed. Whenever bad debts written off is recovered should not be liable to tax under section 41 (4) for the reason that assessee has not claimed any deduction of such advances under section 36(1)(vii) - HELD THAT:- It is crystal clear that it is for the assessee to first establish that what is the outstanding amount of that debt, whether out of such that any deduction has been allowed to the assessee under section 36(1)(viia) of the act, whether there is any recovery of debts subsequently from that account, what is the difference between the amount outstanding as at that date and the amount of deduction allowed as a provision to the assessee, thereafter give an effect to the provisions of section 41 (4) of the act. It is the duty of the assessee to give these primary details to the assessing officer, thereafter the learned assessing officer may look at each of such accounts against which the deduction of provision under section 36(1)(viia) of the act is allowed to the assessee and then apply the provisions of section 41 (4) of the act. Undoubtedly, it would be the duty of the assessee to show before the learned assessing officer that in such cases where there is a recovery of outstanding that, assessee has not claimed deduction under section 36(1)(viia) of the act. On furnishing of such information, the learned AO is duty-bound to examine the same. Accordingly with above direction, the issue is restored to the file of the learned AO. Assessment of profit from its foreign branches - HELD THAT:- The impugned assessment year before us is assessment year 2006 07 and 2007 08. Therefore, the assessee is not entitled for exclusion of the income of foreign branches from its tax computation but is only entitled to tax credit or exemption in accordance with those agreements. The assessee was specifically asked to give the details of the Double Taxation Avoidance Agreement where assessee is claiming benefit of exemption, in all those agreements as per article 22 or article 23 or article 25 only the credit methods for elimination of Double taxation are provided. Therefore, assessee is entitled to only credit of foreign taxes paid. Reliance on the decision of the coordinate bench by the learned authorized representative in case of bank of India [ 2015 (1) TMI 1418 - BOMBAY HIGH COURT] does not help the case of the assessee as it pertains to assessment year 2003 04. The reliance placed on the decision of Bank of India [ 2015 (1) TMI 1418 - BOMBAY HIGH COURT] also does not help the case of the assessee as it also pertains to assessment year 2003 04 - Ground dismissed.

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• 2024 (11) TMI 151
  Exemption u/s 11 - treating surplus arising out of pharmacy store in the assessee hospital, to be business income - whether running a pharmacy was incidental to the main objects of running a Hospital and Research Centre and hence would not be hit by the provisions of Section 11(4A)? - HELD THAT:- The activity of medical facility and hospital are achieving the object of medical relief. The ld. AO treated the activity of the pharmacy store is nature of business. The separate books of accounts are cardinal requirement for running pharmacist store u/s 11(4A) of the Act. The ld.AO mention in argument that the maintenance of medical shop is incidental towards activity of the assessee. The pharmacy store is only serving to the admitted patient not the outsider. The issue is squarely covered and already decided in assessee s own case by the order of the co-ordinate bench of ITAT [ 2016 (6) TMI 1486 - ITAT MUMBAI] and the order of the Hon ble jurisdictional High Court in assessee s own case [ 2022 (6) TMI 1515 - BOMBAY HIGH COURT] - Further, the medical store is an integral part of the assessee s activities. Deduction @15% on the gross receipts u/s 11(1)(a) - as stated that the assessee has actual deficit 1.85 crore as per claim of expenses but pursuing provision U/s 11(1)(a) of the Act claimed compulsory set apart amount of Rs. 28.35 crore and consequently claimed deficit amount to Rs. 30.20 crore is not justified - HELD THAT:-We note that the claim of set apart on gross receipt is duly covered by the order of the Hon ble Apex Court in Programme for community Organisation [ 2000 (11) TMI 4 - SUPREME COURT] which respectfully followed in the impugned appeal order. We further note that the @15% of income on gross receipt of trust is to be set apart and not on the surplus or deficit. The section 11(1)(a) has not imposed any condition for claiming set apart on surplus or deposit. The view taken by the ld. CIT(A) is justified and we do not find any reason to interfere in this issue.

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• 2024 (11) TMI 150
  Unexplained bank deposits - assessee is an Individual and is an aged lady. She is engaged in the business of selling religious items like Sandal wood, Janoi, Diva etc in a Parsi Temple - assessee submitted that she has voluntarily disclosed the Gifts amount as her undisclosed income under PMGKY Scheme in order to avoid any dispute and get peace of mind. HELD THAT:- We notice that the assessee is an old lady and she was residing in a joint family consisting of her family and her husband s brother s family. It is noticed that the family of the assessee was small and consequently, the domestic expenses could be lower. Since the assessee is carrying on a business on small scale for the past several years, it cannot be denied that she could have saved money over the years. The assessee could not prove this claim with evidences, since she was not required to maintain books of accounts under the law. It is also possible that the said savings could be from her own business and other own sources and it may include money received from her husband also over the years. Accordingly, considering her age and the business activities carried on by her, we are of the view the claim of past savings of Rs. 7,20,000/- could be accepted. Assessee has voluntarily disclosed a sum under PMGKY scheme, which fact shows that money, which could not be explained was offered as income. The corollary is that the assessee was sure that her explanations with regard to the claim of past savings of Rs. 7,20,000/- would be accepted. Accordingly, we are of the view that the genuineness of her claim may be accepted. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the addition of Rs. 7,20,000/-. Balance amount it is claimed that the same has been inherited from her husband s brother s wife. The fact would remain that the said deceased lady was 87 years old when she died. It is stated that she was also carrying on a business on a small scale and it is possible that she could have also made savings over the years out of her income and out of the money given by her husband. The assessee has proved that she is the lone surviving heir of the deceased lady by furnishing the details of flat inherited from her. We also noticed that the assessee has voluntarily disclosed her unexplained money of Rs. 5,72,000/- under PMGKY scheme and we have held earlier that the said voluntary action of the assessee should also be considered while examining the veracity of the claim made by the assessee. Accordingly, we are of the view that the claim of inheritance of Rs. 7,80,000/- from her husband s brother s wife, in the facts and circumstances of the case, could not be brushed aside. Accordingly, we hold that the said explanation may be accepted. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the addition of Rs. 7,80,000/- also. Assessee appeal allowed.

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• 2024 (11) TMI 149
  TDS u/s 194L - Demand u/s. 201(1) and 201(1A) on account of failure to deduct TDS on payments were made for acquisition of agricultural lands - determination of the exact nature of the lands - assessee is claiming it to be agricultural in nature v/s AO has held it to be urban - CIT(A) relying on reports of other District Authorities, Kunti held that as per the provisions of the Act, the assessee was not liable to deduct TDS since the impugned lands were agricultural in nature. HELD THAT:- As per Section 250 (4) CIT (A) shall, by himself or through an assessing officer, make necessary inquiry before adjudicating any appeal. In the present case, it was incumbent on the ld.CIT(A) to clearly bring on record the basis of their respective claims as made by other all district authorities. Neither any examination of these authorities has been done by him nor any reason cited for brushing aside the report of the Executive Officer, Khunti which has been heavily relied upon the ld.AO. He has considered a one-sided version to be correct which, to our mind is not a judicious approach on his part. In such a situation, the matter needs to be remanded back to the ld.CIT(A) to arrive at a conclusion by examining the authorities concerned, so as to find out the actual basis for their respective contentions. During the hearing, the ld.CIT(DR) expressed satisfaction with a restoration of the matter to the CIT(A) for reconsideration of the issue in hand. Thus, in the in the interest of justice, we deem it appropriate to allow the appeal for statistical purposes, emphasizing the need for a thorough and compliant adjudication process. Appeal of the Revenue are allowed for statistical purposes.

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• 2024 (11) TMI 148
  Unexplained money u/s 69A - cash deposits during the demonetization period - HELD THAT:- It is an admitted fact that the assessee has withdrawn Rs. 1,20,000/- on 22.07.2016 and Rs. 13,80,000/- on 28.07.2016 from the bank account - AR demonstrated the withdrawals by filing the bank statements. On perusal of the bank statements, it is noticed that the assessee has withdrawn cash after redeeming mutual fund investments. However, we are not able to accept the cash balances available with the assessee on the date of deposits arising out of the rental income or any other past savings in the absence of any documentary evidences provided for the same, even before us. Further we also notice from the Income Tax Returns submitted by the assessee, rental income is being adjusted against the interest payment on the housing loans. We are therefore of the considered view that assessee has properly explained the sources of cash with respect to the withdrawals made by the assessee during July 2016 aggregating to Rs. 15,00,000/- and hence we consider amount of Rs. 15,00,000/- as properly explained by the assessee. We therefore direct the AO to allow amount of Rs. 15,00,000/- as properly explained by the assessee. TDS u/s 194IA in the case of joint co-owners for the property - Treating the assessee as assessee in default - submissions made before revenue authorities stating that there are three joint owners as evidenced by the sale deed - HELD THAT:- As reading section 194-IA we noticed that transferee responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property is subject to deduct TDS @1% at the time of credit of such sum to the account of the transferor. In the instant case, it is evidenced by the sale deed submitted before us that there are three transferors holding equal shares in the property. Accordingly, the sale consideration of Rs.99 Lakhs is being shared by the three transferors at Rs. 33 Lakhs each. The revenue is not in dispute with respect to consideration of Rs. 99 lakhs. Since there are three joint co-owners the provisions of section 194-IA shall not be apply where the consideration for each co-owner is below the specified limit of Rs. 50 Lakhs and hence demand raised by the revenue becomes unsustainable. We are therefore allowing the grounds of appeal raised by the assessee.

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• 2024 (11) TMI 147
  Disallowing TDS claimed by invoking provisions of Rule 37BA - assessee is a Kaccha Aaratiya engaged in selling agriculture produce on behalf of the farmer to the principal buyer - HELD THAT:- After evaluating rule 37 BA, we found that this rule envisages allowance of TDS credit in proportion to the income declared by the assessee. This proportion needs to be established for every nature of receipt on which TDS has been claimed by the assessee, therefore while allowing TDS claimed under each section, it has to be ascertain that entire income on which TDS has been claimed is duly offered in the ITR by the assessee and in case the income so declared for each nature of receipt on which TDS has been claimed, is lesser than that appearing in form 26AS then only CPC May deny the credit of TDS for relevant nature of receipt. Since the receipt of interest and Commission on which TDS has been claimed u/s 194A and 194H are fully declared in ITR, therefore the entire TDS claimed under section 194A and 194H needs to be fully allowed. Hence the proportionate TDS, disallowed to the extent of rupees 179551, is absolutely unjustified and therefore deserves to be allowed and thus, we order accordingly. Balance TDS credit being TDS under section 194Q - AR has drawn our attention to sample invoices on which TDS was deducted under section 194Q by the principal buyer and the corresponding Vikray Parchi issued by the Mandi to the respective farmers. These documents clearly show that the amount invoiced by the assessee to the principal buyer and the value of goods transferred by assessee to the farmer is exactly the same. Therefore turnover of kutcha aaratiyan is merely the commission paid by principal buyer on which the principal buyer deducts TDS under section 194H and which has been duly shown as income in the ITR by the assessee, therefore the TDS deducted by such principle buyers by virtue of provisions of section 194 Q is eligible to be claimed by the Kaccha aaratiya in his ITR on the Grounds that the assessee is a kacha arhatia and is duly registered as such with the Ramganj mandi, Kota. Perusal of the vikray parchi issued at the mandi to the farmers and the corresponding invoice raised by the assessee to the principal buyer undoubtedly establishes the fact that the assessee has no control or margin in the sale facilitated by him and earns merely commission from such transactions. Assessee has no domain over the goods sold to the principle buyers. And as clarified by Central Board of Direct Taxes in its circular no. 452 (1986) so far as Kachha Arahitias are concerned the turnover does not include the sales effected on behalf of principals only commission (gross) has to be considered for the purpose of Income tax section 44AB . TDS deducted u/s 194Q by the principle buyers cannot be refused by invoking Rule 37BA r.w.s. 199 of the Act, as the sales facilitated by the assessee for the farmers is not the turnover of the assessee and the income from such transaction (commission) being duly offered for tax by the assessee in his ITR, the TDS deducted both u/s 194H and 194Q deserves to be fully allowed. Further the Form 26AS also depicts that the invoices on which TDS have been deducted u/s 194Q also has TDS deducted u/s 194H of the Act. Thus the contention of the assessee that he is merely a kachaa arhatia is potrayed beyond all doubts and needs to be accepted. See Madan Lal Gupta case [ 2024 (4) TMI 1174 - ITAT JAIPUR] wherein on the similar issue TDS claimed under section 194Q was fully allowed in the case of kutcha aaratiya - direct the AO to allow the TDS claimed under section 194Q by the assessee. Assessee appeal allowed.

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• 2024 (11) TMI 146
  Addition u/s 68 - bogus share transactions - HELD THAT:- The appellant made purchases and sales of the shares through SEBI registered share broker being member of the recognized stock exchange. The shares are duly reflected in the transaction of the share statement of the assessee and payment receipt of the consideration of the share value are reflected in the bank account of the appellant assessee. It admits of no doubt that SEBI is the sole authority regulating the share trading and, in its order, SEBI has held that M/s. India Infotech and Software Ltd. is not a shell company that the company was not involved in any manipulation in the price of the scrip and consequently no fraud or unfair advantage was done due to any shareholder or investor. We have also gone through the copy of contract note towards sale of the shares which has been field by the assessee in the paper book that goes to show that the average price of the share for this company in January 2022 was around Rs. 10/- per share. It is also made clear that SEBI has itself stated in its order that there is no misappropriation of funds of the company nor there is any manipulation in the price of the scrip. SEBI has further held that no disproportionate gain was caused to anyone nor created any unfair advantage to the appellants nor any specific loss was caused to any investor. There was nothing before the AO to establish any collision with any of the person involved in the manipulation of the price of share of M/s. India Infotech and Software Ltd. How the AO and ld. CIT(A) come to this conclusion that the assessee could not be able to prove the genuineness of the transaction. It is an undisputed fact that assessee has sold 2,85,000 shares of M/s. India Infotech and Software Ltd. at a price ranging from Rs. 19/- to Rs. 22/-. The shares were traded through Demat account of the assessee held with Kotak Securities Ltd., a world-wide renowned company. Copy of the contract note towards sale of the shares has also been brought before us and the same was also brought in the notice of ld. CIT(A). It is also important to mention here that the share of this company has gone as Rs. 48.6/- and as such if the assessee was so inclined and involved in receiving bogus capital gains, then the assessee would have sold the shares at the highest pick point and not in the range between Rs. 19/- to Rs. 22/- per share. Keeping in view the facts of the case, documents filed by the assessee as well as going over the cited decisions, especially the order passed by SEBI in favour of M/s. India Infotech and Software Ltd., we are of this view that additions are erroneous and liable to be deleted. Decided in favour of assessee.

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• 2024 (11) TMI 145
  Revision u/s 263 - Eligibility of the assessee for exemption u/s 11 - as per CIT AO inadvertently allowed exemption u/s 11 but the assessee filed return of income during reassessment proceedings only, thus exemption would not be available to the assessee HELD THAT:- The impugned revision of the order u/s 263 is certainly bad-in-law. It is undisputed fact that the assessee is enjoying the exemption as applicable to a charitable trust since 1954. It has been granted this exemption in scrutiny assessment for AYs 1980-81, 1987-88 and 1988-89. The issue of exemption has been decided in assessee s favor by the Tribunal for AYs 2002-03, 2007-08 and 2010-11. Assessee has not filed the return of income as mandated u/s 139(1) - The circumstances under which the return of income could not be filed have not been considered in the required perspective. Due to efflux of time and change in office bearers of the assessee trust, the grant of registration by the CIT-TN III could not be traced and hence the reference thereto by way of identification as C. No. could not be furnished in the returns of income for AY 1997-98. In the era of electronic filing of return of income w.e.f. 01-04-2013, the mentioning of this information became mandatory and the assessee was unable to e- file the returns for AYs 2013-14 to 2015-16. Ultimately, the assessee sought fresh registration which was granted on 09-06-2016. To ensure compliance of Sec.139(1), the assessee made efforts to file the returns of income in physical mode and unfortunately, in the absence of such information, the same was also not accepted at Tapal center of the department. Left with no option, the assessee dispatched the returns through registered post which is evidenced by postal acknowledgements. The Ld. CIT(A), though admitted receipt of post on 03-10-2013, doubted the contents of the same without verifying the submissions of the assessee. Therefore, revision of the order could not be upheld in the eyes of law. Assessee appeal allowed.

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• 2024 (11) TMI 144
  Demand u/s 201(1)/201(1A) - assessee in default towards non-deduction of TDS u/s 194I on lease rent paid to NOIDA Authorities - second round of proceedings - assessee contends that the assessee acted under bona fide belief that payment towards lease rental is not susceptible to provisions of Section 194-I in view of specific communications made by the NOIDA Authorities on the applicability of Section 194-I of the Act AND applicability of the observations and conclusions in Rajesh Projects [ 2017 (2) TMI 1109 - DELHI HIGH COURT] is prospective. HELD THAT:- On appraisal of the factual matrix and the position of law, we find considerable force in the plea raised on behalf of the Assessee. The assessee has successfully demonstrated the existence of bona fide belief. This demonstration on standalone basis enables us to exonerate the assessee from the clutches of Section 201(1) and 201(1A). We however further find that the operation of the judgment in Rajesh Projects (supra) have been made prospective as mentioned in paragraph 20 of the judgment. The cause of action under Section 201(1)/201(1A) in pursuance of the judgment of the Hon ble Delhi High Court is thus not available to the Revenue for A.Y. 2012-13 in question. We also find that in the identical factual matrix, the Co-ordinate Bench [ 2023 (12) TMI 1368 - ITAT DELHI] has granted relief similar to what is claimed in the present case. Thus, we have no hesitation to set aside the first appellate order and quash the impugned order passed u/s 201(1) and 201(1A) of the Act under challenge. Decided in favour of assessee.

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• 2024 (11) TMI 143
  Denial of exemption u/s 11(2) - trust has not filed Form No. 10 within the due date specified u/s 139(1) due to technical issues - HELD THAT:- Under the provisions of section 11(2) of the Act, any charitable trust has to apply certain specified percentage of income (which was 85% during relevant period) for charitable purpose, but if income to that extent is not applied to the prescribed percentage, then the assessee can accumulate or set apart said income for application to such purposes in India subject to the conditions prescribed in section 11(2) of the Act. Whether for availing exemption u/s 11(2) of the Act, the requirement of furnishing statement in prescribed form No. 10 on or before the due date of the filing of the return of income is mandatory in nature or directory in nature? - We find that in judgement of the Hon ble SC in the case of PCIT Vs Wipro Ltd. [ 2022 (7) TMI 560 - SUPREME COURT] has held that for claiming the benefit under Section 10B(8) of the IT Act, the following twin conditions are Mandatory, firstly, furnishing a declaration to the assessing officer in writing that the provisions of Section 10B (8) are applicable to him; and secondly, the said declaration has been furnished on before the due date of filing the return of income under sub-section (1) of Section 139 of the IT Act. The Hon ble Supreme Court observed that the wording of the Section 10B (8) is very clear and unambiguous, therefore the audit report prescribed in form 10CCB of the Income-tax Rules, 1962 must be furnished before the due date of filing the return of income under sub-section (1) of section 139. Thus, in view of the decision of Hon ble Supreme Court, it is mandatory for the assessee to file the prescribed form No. 10 along with the return of income filed for the relevant year. The assessee has filed a copy of the grievance petition, which was filed on Income-tax Portal on 21.03.2022 where he has submitted that assessee could not file the form due to technical glitches on the portal of the Income-tax Department. Thus it is evident that delay is within the period of 365 days and the assessee was prevented by sufficient and reasonable cause in filing the Form No. 10. Thus, we set aside the order of the CIT(A) and restore the matter back to the file of the AO with the direction to the assessee for applying to the concerned commissioner of Income-tax (Exemption) and seek condonation for delay in filing Form No. 10. After condonation of delay in filing for No. 10 by the CIT (E), the AO shall decide the claim of exemption u/s 11(2) of the Act in accordance with law. The grounds allowed for statistical purposes.

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• Customs

• 2024 (11) TMI 142
  Validity of show cause notice issued u/s 28 of the Customs Act - invoking the extended period of limitation - Principal Commissioner of Customs jurisdiction to issue a show cause notice in respect of goods that were previously assessed - HELD THAT:- Except under exceptional circumstances, the writ court does not entertain a challenge to a show cause notice. One of the exceptions is if the show cause notice was issued without jurisdiction. The conclusion that flows from the text of sub-sections (5), (6), (8) and (9) of Section 28 is that the proper officer is empowered to determine the amount payable as customs duty, including interest liability, under this provision. It is significant to notice that there is nothing in the text of Section 28 which indicates that the exercise of power u/s 28 is subject to the assessment being reopened by appellate proceedings or otherwise. Indeed, conspicuous by its absence from the text of Section 28 is any reference to Section 17 or to assessment under the said provision. Keeping in mind the above statutory context, it is relevant to consider the judgments relied upon by the petitioner. In ITC [ 2019 (9) TMI 802 - SUPREME COURT] the question that arose for consideration was whether the refund application could be entertained in the absence of a challenge to the order of assessment. In that context, the Hon'ble Supreme Court examined Sections 17, 27 and 28. Upon consideration of the language of Sections 17 and 28 and the judgments relied upon by the contesting parties, conclude that the power under Section 28 is a power to determine duty and interest. Such power is not subject to or conditional upon the assessment being reopened or set aside. Consequently, it cannot be concluded that the respondent does not have the jurisdiction to invoke Section 28 either on account of not having verified the self-assessment in terms of Section 17 of the Customs Act or not appealing against such self-assessment. Respondent jurisdiction to invoke the enlarged period of limitation under sub-section (4) of Section 28 - contention of the petitioner was that the relevant goods were cleared by classifying such goods under CTH 8517 over a period of about four years, i.e. between 15.11.2018 and 16.12.2022, and that the enlarged period of limitation cannot be invoked in those circumstances - HELD THAT:- As is noticeable from the language of sub-section (4), such power may only be exercised if the non-levy, non-payment, short levy, short payment, erroneous refund, etc., was by reason of collusion or wilful misstatement or suppression of facts. From paragraph 6 of the petitioner's affidavit, it appears that multiple goods, such as base stations and modules, servers and modules, LTE products and modules, MIMO products, OTN products and modules, POT products, PTN products and modules, session border controllers and modules, soft switches and modules, media gateway (modules) and VoIP equipment and modules were imported by the petitioner. This is also evident from the impugned show cause notice which expressly refers to the relevant bills of entry. The show cause notice is detailed and deals extensively with the nature of goods imported by the petitioner, and the self-classification thereof in the relevant bills of entry. Mr.Tarun Gulati contended that the show cause notice is replete with inferences of fact and that such inferences cannot be the basis for invoking jurisdiction under sub-section (4) of Section 28 on the ground of wilful misstatement or suppression of facts. The said contention is not entirely devoid of merit inasmuch as a finding of wilful misstatement cannot be recorded without some basis to hold that the petitioner's statements, as opposed to the inferences therefrom, were made with knowledge of falsity. It bears repetition, however, that the matter is at the show cause notice stage and only allegations have been made as on date. On examining the show cause notice, it is apparent that such allegations of wilful misstatement and suppression of facts have been made in several paragraphs. In order to interfere at this stage, a conclusion should be reached that the petitioner definitely did not indulge in suppression of facts or make wilful misstatements while importing the goods. Without closely and carefully considering disputed facts and documents relating to the import of multiple telecommunication-related products under a large number of bills of entry, the veracity of the respondent's allegations cannot be determined. Such detailed consideration is inappropriate at this juncture for multiple reasons. Hence, at this preliminary stage, in the factual matrix outlined above, especially in exercise of discretionary and summary jurisdiction, it cannot be concluded that the respondent invoked subsection (4) of Section 28 without jurisdiction. In this regard, it should also be noticed and recognized that it appears prima facie that the notice was issued within the period of five years specified therein. The upshot of this discussion is that the petitioner has failed to make out a case to interfere with the show cause notice. Since the hearing pursuant to the impugned show cause notice was deferred in view of this case, it is, however, just and appropriate that the petitioner be granted time to respond to the show cause notice. For reasons aforesaid, W.P. is disposed of by refusing to interfere with the show cause notice but by permitting the petitioner to respond thereto within one month from the date of receipt of a copy of this order. Upon receipt of such reply, it will be open to the respondent to proceed with the matter in accordance with law. Consequently, connected miscellaneous petitions are closed.

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• 2024 (11) TMI 141
  Confiscation of DEPB licences and TRAs - demands of Customs Duty u/s 28(1) of the Customs Act, 1962 (Act) along with penalty under various provisions, including Sections 112(a) and 114(A) of the Act - 67 appeals preferred by importers and traders of Duty Entitlement Pass Book (DEPB) scrips and Telegraphic Release Advice (TRA) challenging adjudication orders, alleging that the TRAs and DEPBs had been forged and constituted fabricated instruments - CESTAT dismissed the appeals in full in the case of Satish Mohan Agarwal holding him to have played a pivotal role in the entire sequence of fraudulent events including the preparation of the fake DEPB scrips and TRAs. Penalty was also upheld. HELD THAT:- There is no question of deriving any credit from forged scrips. While one may defend his case stating that there was no collusion or fraud, the liability for duty, interest and other statutory consequences are unavoidable. The conclusions of the CESTAT are based upon the results of investigation which have established conclusively that the DEPB scrips and TRAs were fabricated and forged. The parties were thus held to be liable on the ground of fraud which, rightly has been held to vitiate the transactions in full. The orders of the lower authorities and the order of the Tribunal, the final fact finding authority establishes clearly that the documents were fake. The explanations tendered by the individual appellants have also found to have no credence and nothing new is placed before us to persuade as to take a different view in this matter. The questions of law raised for our consideration touch upon the factual findings rendered by the authorities. We see no reason to intervene in those findings as no perversity has been made out in any of the findings or in the appreciation of the facts and circumstances based upon which those findings have been rendered. There is no question of law that arises for determination save what has been answered in the paragraphs to follow. The component of duty and interest have been confirmed in all cases and we find no cause to intervene. Some portion of the penalties have been reduced and the revenue is in appeal on this score. Justification in the Tribunal having deleted the penalty on importers in full - Having stated that the importers had not conducted due diligence from the market and also having referred to the evidence gathered by Revenue that established the falsity of the scrips, we do not find any justification in the Tribunal having deleted the penalty on importers in full. The exercise of discretion as in the case of the traders/brokers would have been appropriate in the case of importers as well. Hence, we restore the penalty to the extent of 50% of the same in line with the penalty confirmed in the case of the brokers and traders. The revenue appeals are disposed as above. Some of the co-noticees had approached the Settlement Commission for settlement of the issues arising from the common show cause notice and the Settlement Commission had accepted the settlement in their cases. Hence the individual appellants before us would seek to avail the benefit of those orders of the Settlement Commission based upon its status as a co-noticee - Section 127-B is clear in stipulating that the application for settlement should be in respect of a case relating to an importer, exporter or any other person. Case has been defined under Section 127-A(b) to mean any proceeding under the Act or any other Act for the levy, assessment and collection of customs duty, pending before an adjudicating authority on the date on which an application under Sub- Section (1) of Section 127-B is made. In our view, the reference to case u/s 127-B can only be to the case qua the declarant and cannot encompass the cases of all other co-noticees under the proceedings offered for settlement by the declarant. In fact, a common show cause notice normally contains the proposals in respect of several persons related to a common cause of action. The proposals as relating to one noticee would also vary based upon the role and involvement of that person to that common cause of action. Therefore the contours of a case as relevant to one noticee may or may not contain the same ingredients as in the case of other co-noticees. Section 127-C sets out the procedure to be followed by the Settlement Commission on receipt of an application under Section 127-B in minute detail, such as admission, calling for report from the Commissioner in regard to the application, examination of records and report of the Commissioner and thereafter passing of an order. Thus, in our considered view, there is a vast difference between the Kar Vivad Samadhan Scheme and the scheme of Settlement as envisaged under the Customs Act. The consequences of extension of benefit of settlement to co-noticees who have not approached the Settlement Commission, is that they too would be offered immunity if the declarant has been granted the same, without even having approached the Settlement Commission. There is thus no merit in the contention that an order passed by the Settlement Commission in the case of one declarant would apply in the case of other co-noticees as well. This question of law is answered in favour of the revenue.

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• 2024 (11) TMI 140
  Entitlement of a reward under the MEIS - Decision of the Policy Relaxation Committee (PRC) wherein as rejected the claim for release of the reward amounts admissible under the Merchandise Exports from India Scheme (MEIS) of Foreign Trade Policy 2015-20 under 28 shipping bills of the Petitioner - Petitioner is a manufacturer of Asbestos Free brake-lining (CTH 6813 81 00) and Brake pads brake shoes (CTH 8708 30 00) and exported these items to various countries Case of the Petitioner that in 28 shipping bills generated by Electronic Data Interchange (EDI), due to a technical difficulty, they inadvertently marked N in the reward item box instead of Y in the Reward. Consequently, these 28 shipping bills were not transmitted from customs to Respondent No. 2 server for grant of rewards - HELD THAT:- The Supreme Court in N.C. John case [ 2022 (8) TMI 240 - SC ORDER] has set out that where there was an inadvertent mistake of mentioning N instead of Y in the Column and the claimant had shown the intent to claim the MEIS benefit, which was granted by the High Court, in such a situation the Court sees no reason to interdict with the grant of such reward under the MEIS to the claimant. Also see MANGALATH CASHEWS, ANU CASHEW [ 2020 (3) TMI 1066 - KERALA HIGH COURT] Undisputably the only reason for denying the MEIS benefits to the Petitioner is the fact that the Petitioner had inadvertently marked 'N' instead of 'Y' in a declaration that it intends to claim rewards under the MEIS in view of an inadvertent lapse on its part. The Petitioner while filling the aforesaid 28 Shipping Bills in the EDI system had declared their intention in the affirmative by stating we intend to claim rewards under Merchandise Exports from India Scheme (MEIS) . Thus, the intention of the Petitioner was from the very beginning to make such a claim. Applying the judgment of the Supreme Court in the N.C. John case, the Petitioner is entitled to the rewards.

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• 2024 (11) TMI 139
  Delay of 66 days filling appeal before before the Commissioner of Customs (Appeals-II)/first respondent - as argued impugned order was sent to old address of the petitioner company, as the petitioner was unaware of the same, he failed to file the appeal in time - recovery of drawback for exported goods, interest, and penalty - HELD THAT:- In the present case, the reason assigned by the petitioner for the delay in filing the appeal is that the petitioner was unaware of the impugned order since it was sent to its old address. In view of the settled proposition of law that when cause for substantial justice and technical considerations are pitted against each other, the cause of substantial justice should be given due weightage, this Court is inclined to condone the delay of 66 days in filing the Appeal before the Appellate Authority. Learned counsel on either side submitted that they will contest the case before the Appellate Authority. Under these circumstances, this Court is inclined to entertain this Writ Petition by remanding the matter to the Appellate Authority for passing appropriate orders.

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• 2024 (11) TMI 138
  Revocation of customs broker license and imposition of penalty under Customs Brokers Licensing Regulations, 2018 - Forfeiture of the entire amount of security deposit besides imposing penalty of ₹ 50,000 under regulation 18 of Customs Brokers Licensing Regulations, 2018 - HELD THAT:- The finding pertaining to the requirement that a customs broker shall obtain authorisation for each client was held as not proved by the enquiry officer. The licensing authority has held that the statements and other evidences indicate that the customs broker had not been in contact with the Director and hence held the charge to be proved. We find it odd that the requirement of obtaining auhorisation had been confused with being in contact with particular person in the company. The client is a company and, as an artificial person, operates through its authorised person. The authorisation contemplated in the Customs Brokers Licensing Regulations, 2018 is a document and the manner in which it is delivered does not erase the fact of existence of such authorisation. It is not on record that such authorisation did not exist but that there was a flaw in the manner of delivery. This is not the intent of regulation 10(a) of Customs Brokers Licensing Regulations, 2018 and the finding that the charge is held as proved is erroneous. In regulation 10(d) of Customs Brokers Licensing Regulations, 2018, the customs broker is required to advice his client to comply with the provisions of statutes and, incase of non-compliance, bring the matter to the notice of the designated authority. Here too, the licensing authority has relied upon lack of contact with the Director of the importer company with all documents were received through a freight forwarder and, on this basis, held that the customs broker had failed to produce evidence that he had advised his client as warranted. There is no evidence on record that the client had not been advised properly by the customs broker. It is not humanly possible for any person to bring on record the nature of any advice having been given from a presumption that such advice had not been. The regulation is abundantly clear that any information which is furnished to the client should be correct and failure to furnish correct information was liable to be held against the customs broker. There is nothing on record to suggest that any information furnished to a client had been found to the contrary. The finding that mis-declaration, which should have come to light during the course of examination by the customs officers, would again have been brought to the notice of the customs officers is not a rational expectation. In fact, for both these provisions, the charge, had been invoked incorrectly and without ascertainment of role of charged person. These were intended to be brought into play when a client of a broker claims to have had advice given to him that is incorrect or information furnished to him was erroneous. These are not to be presumed merely because some offence under the Customs Act, 1962 has occurred. The charge of having breached regulation 10(e) of Customs Brokers Licensing Regulations, 2018 is, therefore, not proved. It is very clear from the expression deployed in the obligation that it attempt to influence would lead to initiation of proceedings against the customs broker and attempt , by definition, is one which has failed. It would, therefore, appear that the intent of this regulation is to proceed against a customs broker on a complaint preferred by an official of the customs; the officer who purportedly carried out the examination has not done so and nor is there any allegation that the furnishing of an incorrect examination report was at the behest of the customs broker. Furthermore, it is also abundantly clear from the said regulation that there should have been use of threat, false accusation, duress or the offer of any special inducement or promise of advantage or by the bestowing of any gift or favour or other thing of value. There is nothing on record to indicate that any of these had been utilised by the customs broker to influence the examination report. Therefore, finding on breach of obligation in regulation 10(i) cannot be held as proved. Regulation 10(n) requires the customs broker to verify the correctness of particulars specified therein. It is seen from the impugned order that these particulars had been obtained but the fact of having received documents through freight forwarding agent has been held to suffice for the purpose of holding the charge to be proved against the customs broker. According to the licensing authority, it was the responsibility of the customs broker to have substantive record of communication with the importer. This is tantamount to adding prescriptions which do not exist in the regulations. The upholding of the charge on such flimsy presumptions is contrary to the intent of the said regulation. Consequently, the finding that the charge is proved is erroneous. In view of the above the revocation of licence, forfeiture of security deposit and imposition of penalty have no basis and are set aside to allow the appeal.

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• 2024 (11) TMI 137
  Immediate suspension of the appellant Customs Broker s license under Regulations 16(1) of CBLR, 2018 and the continuation of such suspension - whether the impugned order has correctly held that it is covered under the category of appropriate cases where immediate action is necessary pending enquiry proceedings against alleged violations of Regulations 10(d), 10(e), 10(m) and 10(n) ibid? HELD THAT:- On careful perusal of the B/E No. 8766607 dated 14.11.2023, more particularly at column H providing details of Processing Details , it is mentioned that the said B/E was submitted by the appellants before the customs authorities on 14.11.2023 at 21.06 Hrs.; thereafter, the said B/E was assessed on 15.11.2023 at 11.13 Hrs.; and the goods were examined on 18.11.2023 for which the examination report was made at 18.58 Hrs. and the imported goods were given Out-Of-Charge (OOC) by the customs officers performing their duties at the MoD CFS at 19.01 Hrs. on 18.11.2023. Even though it may be a fact that the container was not allowed to be moved out from the MOD CFS by the Customs officer posted at the gate office of said MOD CFS, the facts as indicated above in the B/E, do not support the allegations against the appellants CB, that they had indulged in illegal activities of removing the Container and taking it back to the examination area. On examination of the imported goods and giving permission for moving out of the CFS, are part of the duties of the customs officers posted at the MOD CFS and the responsibilities of the custodian of MOD CFS. Therefore, any illegality therein cannot be blamed against the appellants CB. We do not find that in terms of instructions of CBEC, any clear-cut findings, reasons were given by the learned Principal Commissioner in the impugned order for immediate suspension and/or its continuation, and therefore we have no hesitation to hold that the instructions laid down by CBIC had not been followed in this case. From the above discussion and analysis, we are of the considered view, that there is no sufficient and reasonable grounds made out in the impugned order, in respect of charges framed against the appellants CB, and therefore, the impugned order for continuing suspension of the CB license of the appellants cannot be sustained on merits. As in the case of N.C. Singha [ 1998 (6) TMI 91 - HIGH COURT OF JUDICATURE AT CALCUTTA] had decided on the issue of immediate suspension specified in the CBLR, 2018 by holding that the basic requirements having not been fulfilled, as it did not spell out that such immediate suspension was required. The impugned order providing for continuation of the suspension of the appellants CB license does not survive the legal scrutiny. We accordingly modify the impugned Order by setting aside the suspension of the CB license of the appellants only, as indicated in paragraph 15.1 of the impugned order. The other part of the impugned order at paragraph 16, relating to proceeding to be initiated under Regulation 17 of CBLR, 2018 shall continue in accordance with law. The Principal Commissioner of Customs (General), NCH, Mumbai Zone-I shall issue necessary order immediately allowing operation of the CB license of the appellants.

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• 2024 (11) TMI 136
  Rejection of interest under Section 27A of the Customs Act, 1962 - 20% deposit do not partake the nature of duty under the Customs Act, 1962 and are security deposits refund of which do not attract interest liability on the department relying upon the orders of Rajendra Mechanical Industries [ 2004 (9) TMI 533 - CESTAT, KOLKATA ] and Advance Mechanical Works [ 2004 (12) TMI 107 - CESTAT, MUMBAI ] HELD THAT:- This issue is no more res integra and this Tribunal in the case of M/s Saraswati Knitwear Pvt. Ltd. [ 2023 (9) TMI 582 - CESTAT CHANDIGARH ] has examined this issue and held that the appellant-assessee is not entitled to interest on refund if the assessment is finalized within three months as prescribed under Section 18(4) of the Customs Act, 1962. Decided against assessee.

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• 2024 (11) TMI 135
  Demand of anti dumping duty - appellant had imported PVC Resin SG 5 from China appellant have claimed to have imported the goods from CNSG Jilantai Salt Chlori-Alkali Chemical Co. Ltd whereas the bags in which Goods were found to bear the name CNSG Jilantai Chlori-Alkali Chemical Co. Ltd - only difference between the two names is word salt does not appear in the name printed on the bags - HELD THAT:- The name of the supplier appears at Sr No. VI of column 6 of the said table against the Sr No. 1. In the case of M/s. Vinayak Trading (supra) the case pertains to import made from the manufacture namely M/s. Xinjian Shengxiong Chlor-Alkali Ltd. appearing at Sr No. IV of column 6 against the Sr. No. 1 of the notification. Other facts of the case are identical. The appellants have produced the documents like invoice, packing list and certificate of origin to the effect that the goods are manufactured by CNSG Jilantai Salt Chlori-Alkali Chemical Co. Ltd . In identical circumstances benefit was allowed by Tribunal to M/s. Vinayak Trading [ 2024 (8) TMI 1469 - CESTAT AHMEDABAD] has allowed the benefit to the similar impugned product at concessional rate by holding Alkali Company as the manufacturer by noting that Chemical Company was related and allowed the benefit to the appellants by treating Alkali Company as the producer. In view of the foregoing, since documentary evidence in any case gets precedence over assumption/suspicion emanating from the packing specially till it is controverted, we are inclined to accept the above documentary evidence including certificate of origin as adequate evidence to accept that Alkali Company were the producers in the present instance and in the fact of the matter brought on record.

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• 2024 (11) TMI 134
  Maintainability of the one appeal filed by the Revenue against 93 Bills of Entry - as submitted the importer/respondent had preferred separate appeals before the Commissioner (Appeals) in respect of each Bill of Entry and the Commissioner (Appeals) disposed of the said appeals filed by the importer/respondent in respect of the assessment of 93 Bills of Entry by way of one Order-in-Appeal HELD THAT:- As per Rule 6(A) of the CESTAT Procedure Rules, 1982, it is clear that in a case where there are numbers of Bills of Entry and for all Bills of Entry, if one common order-in-original is passed, then only one appeal is sufficient; however as per the Explanation of the Rule 6(A) ibid, it is clear that when more than one order-in-original are passed, then appellant or assessee is required to file numbers of appeals as many as numbers of order-in-original. But in the present case, the Commissioner (Appeals) passed a common order-in-appeal disposed of the appeals covering 93 Bills of Entry; therefore, as per Rule 6(A) ibid the Appellant-Revenue is required to file 93 appeals challenging each Bill of Entry which is an assessment order in itself. As we find that the Ahmedabad Bench in the case of CMR Nikkie India Pvt Ltd [ 2021 (6) TMI 270 - CESTAT AHMEDABAD] has also interpreted Rule 6(A) and has held that the number of appeals which the department is required to file, will be equivalent to the number of Bills of Entry filed by the importer/assessee. We find that in the case of CGST CE, Jammu vs. M/s Narbada Industries [ 2022 (5) TMI 1361 - JAMMU KASHMIR HIGH COURT] while interpreting the National Litigation Policy and specifically the phrase monetary limits below which appeal shall not be filed , in its aforementioned pronouncement lucidly elucidated that the said phrase pertains to the monetary threshold of a singular appeal, rather than the aggregate amount of multiple appeals. This interpretation is founded on the fundamental principle that each appeal represents a distinct cause of action, necessitating separate consideration in determining the applicability of monetary thresholds. Thus, we are of the considered opinion that the present appeal filed by the Revenue is not maintainable. Revenue is directed to file 93 appeals instead of one appeal, if they are so advised.

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• Insolvency & Bankruptcy

• 2024 (11) TMI 133
  Suspension of petitioner s registration as an Insolvency Professional for a period of two years - procedural irregularities in the conduct of the e-auction by the petitioner as a Liquidator - HELD THAT:- There is no serious grievance raised in the challenge to the order passed by the DC on the premise that the principles of natural justice had been breached. After the show cause notice was issued to the petitioner, he was granted due opportunity to reply and after granting him an opportunity of oral hearing which the petitioner availed, the impugned order came to be passed. The investigation reports that were called by the IBBI have been referred to in paragraph 2 of the show cause notice and the said reports were annexed as Annexures A and B thereto. Once it is found that the impugned action has been taken after duly complying with the principles of natural justice, the limited scope available for examining the impugned order would be on the touchstone of perversity and irrationality. Since the show cause notice is based principally on the order passed by the NCLT on 2nd March 2023 as upheld by the NCLAT vide order dated 4th July 2023, it would be necessary to refer to the said orders. Before the NCLT, Interim Application No.927 of 2022 came to be filed by a bidder praying that the notice of sale of assets dated 2nd April 2022 be set aside. A grievance was raised that while the notice of sale of assets was dated 2nd April 2022, the e-auction was scheduled on 8th April 2022. In the light of the short time-frame fixed for conducting the e-auction, the bidder challenged the same. The reply filed by the petitioner in his capacity as Liquidator was considered. On the aspect of proportionality, it was urged on behalf of the petitioner that the suspension of registration for a period of two years was excessive and unwarranted. It cannot be said that the suspension of the petitioner s registration for a period of two years in the facts of the present case is in any manner excessive or disproportionate. The basis on which the action of suspension has been taken being the adjudication undertaken by the NCLT and thereafter the order passed by the NCLAT which has attained finality, the DC was within its jurisdiction in prescribing the requisite penalty. The conduct of the petitioner has been found to be questionable and hence his registration has been suspended. It may be noted that despite such suspension of registration, the petitioner is not completely barred from continuing his ongoing assignments. The DC has left it to the discretion of the Committee of the Creditors / Stake-holders Consultation Committee to take a call as to whether the existing assignments of the petitioner can be continued - It is not that the suspension of the petitioner s registration for a period of two years is disproportionate, warranting interference. There are no scope whatsoever to interfere with the impugned order dated 30th January 2024 suspending the registration of the petitioner for a period of two years. The impugned order does not suffer from any perversity whatsoever nor is it irrational or disproportionate. There are no merit in the challenge as raised to the order dated 30th January 2024 passed by the DC - The writ petition stands dismissed.

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• 2024 (11) TMI 132
  Validity of the order admitting petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 - precise grievance of the Appellant is that the Financial Creditor has given various dates of default i.e. in column II of Part IV the date of default has been mentioned as 20.02.2020 and in the same column it is mentioned that the default has been committed since January, 2020 - whether the recall notice dated 06.11.2020 by which a period of 15 days was given to the CD to pay off the defaulted amount has to be considered to be the date of default as 21.11.2020 to hold that the application filed under Section 7 is hit by Section 10A of the Code? HELD THAT:- The loan was advanced by the FC to the CD in two tranches, based on the agreement to which both the parties were bound, Clause 5.1.1 of the agreement deals with the dues to be repaid by the CD in which schedule 1 of the agreement states that due date shall be as per the repayment schedule and schedule 2 and repayment schedule in schedule 2 reproduced hereinabove, clearly shows the due date of the amount of instalment etc. There is no dispute that the amount of instalment was to be paid on monthly basis. The CD did not pay the monthly instalment from Jan, 2020 which was due to be paid on 20th Jan, 2020 rather it was paid in month of Feb, 2020 but without the penal interest, therefore, the entire amount due was not paid - The CD cannot be permitted to take advantage of the fact that the FC had issued a notice of recall dated 06.11.2020, giving 15 days time, to the CD to pay the same and to calculate the date of default as 21.11.2020 which falls within the cut off period of Section 10A because issuance of recall notice, in pursuance of the clause 10.3 of the agreement, was on the occurrence of any of the events of default, which had already occurred in the month of January or at the most February. It does not mean that the default has occurred with the issuance of recall notice as the notice was a consequence of the occurrence of default and it was a procedural step for recalling of the entire loan amount. The argument raised by the Appellant has no legs to stand because the default had occurred in the month of Jan, 2020 partly when the amount of penal interest was not paid and fully when the entire amount was not paid in Feb, 2020. Section 10 A postulates that the CIRP cannot be initiated either under Section 7, 9 or 10 if the default occurs during the cut of period i.e. 25.03.2020 to 25.03.2021. In the present case, Section 10A would not apply because the date of default occurred much prior to 25.03.2020. There are no merit in the present appeal and the same is hereby dismissed.

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• PMLA

• 2024 (11) TMI 131
  Money Laundering - predicate offence - bail sought on medical grounds - applicability of Section 45(1) of PMLA - HELD THAT:- The proviso to Section 45(1) of PMLA specifically contemplates that a person who is sick or infirm may be released on bail if the Special Court so directs. The petitioner is 67 years old and has spent nearly a year and three months in custody. Based on the medical evaluation which has been provided by the Medical Team at Sir J J Group of Hospitals, Mumbai, it is evident that the petitioner fulfills the threshold required for being enlarged on bail. The petitioner is directed to be released on interim bail subject to such terms and conditions as may be imposed by the Special Court - SLP disposed off.

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• 2024 (11) TMI 130
  Seeking grant of bail on medical grounds - HELD THAT:- Let a team of doctors examine the petitioner and give an appropriate report as regards the medical condition of the petitioner. List this matter on 14 October 2024.

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• Service Tax

• 2024 (11) TMI 129
  Rejection of refund applications filed by the appellant vide Order-in-Original - HELD THAT:- We find that the protective show-cause notice issued after the sanctioning of the refund by the adjudicating authority was adjudicated by the adjudicating authority vide Order-in-Original and the refund claims were rejected. Against this order, the appellant has filed an appeal before this Tribunal along with stay. Considering the above facts and the order of the Hon ble Supreme Court [ 2022 (1) TMI 1472 - SC ORDER] we find that the appeals filed by the appellant are infructuous. Further, the appeals filed by the Department are not sustainable in view of the decision of the Hon ble Supreme Court. Further, the appeal filed by the appellant against the Orders-in-Original needs to be allowed in view of the above decision of the Hon ble Supreme Court.

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• 2024 (11) TMI 128
  Service taxable under 'Business Auxiliary Service' - Incentives received by the appellant on the quantum of sale of vehicles during the relevant period amounts to service - whether the service tax confirmed on the said amount under the service category of 'Business Auxiliary Service' is tenable? - AR submits that it is evident that the activities of the appellant amounts to service and liable to pay service tax under the category of Business Auxiliary Services . HELD THAT:- Tribunal in identical cases have already held that the said incentives are in no way a consideration for providing any service and cannot be liable for service tax under 'Business Auxiliary service'. See M/s SK Cars (India) Ltd. [ 2023 (6) TMI 243 - CESTAT CHENNAI] , M/s Audi Motors Pvt. Ltd. [ 2023 (4) TMI 1369 - CESTAT NEW DELHI] M/s Jubilant Motor Works (South) Pvt. Ltd. [ 2024 (2) TMI 819 - CESTAT CHENNAI] We find that the issue is no more res integra, since the issue is squarely covered by the decisions of the Tribunal and the activity cannot be considered as a service provided by the appellant to M/s MSIL. We do not find any reason to differ with the decisions of the Tribunal and following the decisions of the Tribunal, the appeal filed by the M/s AVG Motors is allowed with consequential relief, if any as per law. Consequently, the appeal filed by the Revenue is dismissed.

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• 2024 (11) TMI 127
  Recovery of the Cenvat Credit wrongly availed and utilized by the appellant - input service for the period prior to 01.04.2011 and from April 2011 to March 2012 - Renting of immovable property service - Management, maintenance or repair service - Transportation of goods by road service - Event management service - Commercial or industrial construction service - Rent-a-cab operator s service. Renting of immovable property service - Management, maintenance or repair service - Transportation of goods by road service - Event management service - Commercial or industrial construction service - HELD THAT:- It is a well settled principle in the case of M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2009 (8) TMI 50 - BOMBAY HIGH COURT ] wherein it has been held by the Hon ble Bombay High Court that in the event an assessee satisfies any one of the limbs of the definition of the term input service , the credit of the input service would be available. Further, it is found that the input services namely Renting of immovable property service , Management, maintenance or repair service , Transportation of goods by road service , Event management service and Commercial or industrial construction service has been held to be input service in the various case laws relied upon by the appellant. Therefore, as these services fall within the definition of input service and the Cenvat Credit has been wrongly denied to the appellant. Rent-a-cab operator s service - HELD THAT:- It is found that the said service has been put in the category of negative list w.e.f. 01.04.2011 and the Cenvat Credit is not available on the said service. Further, the appellant has failed to prove as to what purpose the Rent-a-cab operator s service was availed and also has not submitted the documentary evidence to establish and substantiate their claim. Therefore, in respect of Rent-a-cab operator s service , the appellant is not entitled to Cenvat Credit on the same. Appeal allowed in part.

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• Central Excise

• 2024 (11) TMI 126
  Assessment of excise duty - levy of interest and penalty - evidence of manufacture of excisable goods by the appellant - initiation of proceedings based on the registers and loose sheets recovered from the premises of the appellant without corroboration of the manufacture done and the clearance effected of excisable goods - HELD THAT:- The two questions of law framed are mixed questions of law and fact. The questions of law were also framed on the ground taken by the assessee that there was no evidence regarding the manufacture of excisable goods by the appellant and the proceedings were based only on registers and loose sheets which cannot lead to imposition of penalty without anything substantiating manufacture. The allegation against the imposition of penalty is that there is no evidence to establish manufacture and clearance of manufactured goods without payment of excise duty - the imposition of penalty was not on account of the allegation of clearance of excisable goods without payment of duty alone as was noticed in the narration of facts. There was excess stock found on verification, there was excess raw materials found to have been consigned to the appellant in two trucks which were examined by the inspection team at the premises of the appellant; on which examination and proper weighment done, presence of raw material in excess of that declared in the invoice was found. In addition to this was the allegation of manufacture based on the documents recovered from the premises of the appellant on inspection. Insofar as the excess of 3.280 Metric Tonnes of Forged Steel Grinding Media Balls; the same was detected on proper stock verification conducted in the presence of two employees of the appellant. The stock verification report was the basis of the allegation so levelled of excess stock found - With respect to the clearance of excisable goods without payment of duty, the records recovered from the premises of the appellant on inspection was relied on specifically in paragraph no. 10 of the show cause notice. The calculation chart was also annexed as Annexure-XXI along with the show cause notice. Brims Products [ 2008 (9) TMI 603 - PATNA HIGH COURT ] was a case in which some loose papers were recovered from the dustbin of the premises of the manufacturer. It was found that the manufacturer assessee had received some consignments of betel-nuts which were not entered in the stock register maintained; specifically four numbers of consignments. A clean chit was given to the assessee with respect to two consignments finding no actual purchase having been made by the manufacturer of the raw materials - The investigation was confined to the transporters of the consignments and there could be no presumption drawn of a manufacture and removal of the final product. Even if it is assumed that some raw materials were received at the factory of the respondent, the same cannot be a conclusive proof of production and clandestine sale to different parties was the finding recorded. Due to lack of paucity of evidence benefit of doubt was given to the assessee in that case - it is not convincing that the facts apply to the present case. It is already noticed that the proceedings were initiated on three counts (i) the excess stock found on stock verification, (ii) the excess raw material found physically on inspection of two trucks found at the premises of the appellant with raw materials consigned to the appellant supported by invoices drawn in favour of the appellant but revealing far less quantity than that loaded in the vehicles and (iii) the production details as obtained from the registers, note-pads and loose sheets recovered from the premises. It cannot at all be said that there was no evidence indicating production of excisable goods. The registers, note-pads and cash-books maintained by the assessee clearly indicated the production of the finished product far in excess of that revealed in the books of account, as having been cleared after paying excise duty. It is found on facts that there was sufficient evidence to support the allegation of production in excess of that cleared by payment of excise duty. There are absolutely no reason to entertain the appeal, having found the factual premise to have been adjudicated properly by the adjudicating authority and the appellate Tribunal, there are absolutely no reason to interfere with the order passed. The questions of law answered in favour of the Revenue and against the assessee - appeal dismissed.

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• 2024 (11) TMI 125
  Clandestine manufacture and its clearance - Recovery of Central Excise Duty along with interest and penalty as well as for appropriation of the amount deposited by the petitioner during the investigation against differential duty payable - suppression of facts and misrepresentation by the petitioner - adjudicating authority did not consider the reply submitted by the petitioner while passing the impugned order as no reference to the materials placed by the petitioner by way of the reply has been referred to in the impute order - assessment period is covered by earlier orders passed by the co-ordinate authorities - Principles of natural justice - principles of res-judicata. HELD THAT:- A careful perusal of the order of the first appellate authority reveals that the core issue before the appellate authority was the capacity of production of the concerned machine. The appellate authority, on the basis of the materials available for the authority, concluded that the capacity of the machine was 301-750 pouches per minute and which was a finding recorded by the adjudicating authority for the earlier periods. The subsequent order passed by the adjudicating authority vide order dated 27.11.2015, whereby the capacity of the machine was found to be above 751 pouches minute was held to be not based on correct information/evidence. The questions which are raised in the present petition are essentially questions of facts based on the records and the evidences available before the Departmental authorities. There is no dispute that for several periods earlier the petitioner filed in the proper form the speed of the packing machines and which was duly approved by the adjudicating authority. The first appellate authority by its order dated 30.08.2016 interfered with the order passed on 27.11.2015 by the adjudicating authority holding the same to be not based on the evidences/the records available. There is clear finding that there was no element of suppression or misrepresentation as could be inferred from the records available - The findings of fact arrived at by the first appellate authority as seen from the order dated 30.08.2016 has not yet been interfered with by a still higher authority, namely the second appellate authority as prescribed in the statute, namely the CESTAT, Kolkata before which the appeal being appeal No. E/7689/2016-EX (DB) preferred by the respondent authority is presently stated to be pending. Therefore, the findings arrived by the first appellate authority are binding on the adjudicating authority and the adjudicating authority is duty bound in law to maintain the judicial discipline and accept the findings of the first appellate authority unless the same are interfered with by a still higher authority and/or an appropriate judicial forum. Such is not the position as on date and which is not in dispute. In ABDUL KUDDUS VERSUS UNION OF INDIA (UOI) AND ORS. [ 2019 (5) TMI 1856 - SUPREME COURT ], the Apex Court while examining the orders passed by collateral quasi- judicial bodies held that where a judicial or a quasi judicial tribunal gives a finding on law or fact, its findings cannot be impeached collaterally or in a second round and are binding until reversed in appeal by way of writ proceedings. The characteristic attitude of the judicial act or a decision is that it binds, whether right or wrong. Thus, any error either of fact on law committed by such bodies cannot be controverted otherwise than by way of an appeal or a writ unless the erroneous determination relates to the jurisdictional matter of that body. The Act and power of judicial review vested with the constitutional courts provide sufficient safeguards, in the present context. Mere submissions by the counsel appearing for the respondents without supporting facts and materials before the Court cannot be accepted to arrive at a conclusion that the reply filed by the petitioner was suitably considered by the respondent authority. Under such circumstances, prime facie, it appears that the impugned order passed by the Principal Commissioner was passed in violation of the basic principles of natural justice as the reply filed by the petitioner was not found to have been duly considered by the respondent authority upon careful perusal of the impugned order. In COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. ABM INTERNATIONAL LTD. ANR. [ 2015 (8) TMI 1118 - SC ORDER ] on the question of principle of res judicata, the Apex Court held that it is not in dispute that the first round of litigation, the matter had come up to this Court and was decided in favour of the respondent assessee. While dismissing the appeal of the Revenue, considering the facts of this case, no doubt this Court left the question of law open. However, that could not be a ground to reopen the case of the Revenue. The Apex Court is therefore of the opinion that the Customs, Excise and Service Tax Appellate Tribunal has rightly applied the principle of res judicata. The first Appellate authority namely the Commissioner (Appeals) on the basis of the materials and records available with the department returned a clear finding on facts that there was no willful or deliberate suppression of material or information. The Commissioner (Appeals) returned a finding that there were amply opportunity prescribed under the provisions available to the adjudicating authority to make necessary enquiries including physical verification before approval of the declaration and which was admittedly not done by the adjudicating authority. The Commissioner (Appeals) recorded a categorical finding that there were no records/evidences of clandestine removal of finished products by the petitioner during the period from June 2015 to October 2015 to show any mala fide intention on their part and any such reasoning given by the adjudicating authority was not supported by facts - the very foundation on the basis of which the show cause notice and the enquiry proceeded against the petitioner under Section 11A of the Central Excise Act ceases to exist. Such action by the department will amount to invocation and/or usurpation of jurisdiction when the circumstances clearly indicate that the departmental authorities ought not to have invoked its jurisdiction under Section 11A of the Central Excise Act. This Court having arrived at a conclusion that until the findings of fact in the Commissioner (Appeals) in its order are not interfered with by a higher statutory forum or an appropriate Court of law, this finding of fact cannot be ignored by the departmental authorities and consequently the invocation of jurisdiction under Section 11A in the absence of any deliberate or willful suppression or mis-statement of facts by the petitioner, no proceedings can be initiated under Section 11A as have been sought to be done. This Court is of the view that the writ petitioner cannot be non-suited on the ground of availability of alternative remedy. This court is of the considered view that the alternative remedy prescribed under the statute will not be an efficacious and effective alternative remedy to the present petitioner in the attending facts and circumstances of the case. The submission of the respondents that the writ petitioner should be dismissed on the ground of alternative remedy cannot be accepted and is therefore rejected. Petition allowed.

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• 2024 (11) TMI 124
  Rejection of Assessee s appeal on the ground of non-compliance of payment of pre-deposit as required under provisions of Section 35 F of the Central Excise Act, 1944 - CENVAT credit - process amounting to manufacture or not - activities of packing/ re-packing/ labelling/ re-labelling/ affixing of new MRP on the goods clutches for automobiles falling under CETH 87089300. Whether the Appellant is eligible to avail CENVAT credit on the clutches received from their Unit 1 when there is no process of manufacturing involving packing or re-packing of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer as contemplated in Section 2(f)(iii) of the Central Excise Act, 1944? HELD THAT:- The admitted facts are that the Appellant is engaged in the activities of packing/ re-packing/ labelling/ re-labelling/ affixing of new MRP on the goods Clutches procured from their vendors which amount to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1994 which were cleared on payment of duty under Section 4A of the Central Excise Act, 1944. However, in respect of the goods procured from their Unit 1 from 01.04.2012 to 09.05.2012 which were not subjected to the above process as contemplated under Section 2(f)(iii) of the Central Excise Act, 1994 and as such, they could not considered as inputs and the credit taken on such items is not in accordance with the law and they are not eligible for the CENVAT credit availed to an extent of Rs.1,70,46,634/- was the stand of the Revenue for initiation of these proceedings against the Appellant. It is found that for the earlier period in the Appellant s own case, the Tribunal Chennai has passed an order in M/S. LUK INDIA PRIVATE LIMITED VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE, SALEM [ 2024 (2) TMI 1018 - CESTAT CHENNAI ] allowing the Appellant s appeal. The facts being identical, the decision is squarely applicable - It was held in the said case that 'When the department has collected duty on the finished products, the credit availed on the inputs cannot be denied alleging that the activity does not amount to manufacture.' The impugned Order-in-Appeal No. 71/2017 dated 30.11.2017 of the Commissioner of GST and Central Excise, Coimbatore, Circuit Office @Salem, cannot be sustained and so ordered to be set aside - appeal allowed.

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• 2024 (11) TMI 123
  Recovery of allegedly inadmissible credit alongwith interest and penalty - inputs or not - allegation against the appellant was that credit of duty paid, on inputs used exclusively in the research and development (R D) division of the appellant, had continued to remain on their books despite the non-dutiability of the products emanating from the said division - HELD THAT:- The Tribunal in their own dispute in FORCE MOTORS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE I [ 2018 (4) TMI 466 - CESTAT MUMBAI] , relating to the immediately succeeding period, i.e., April 2013 to December 2013 has held that ' Considering the wide latitude offered for availment of credit, and in the absence of any allegation that research and development is not concerned with manufacture of the appellant, the disallowance of Cenvat credit does not find favour and must be set aside.' The impugned order is set aside - appeal allowed.

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• 2024 (11) TMI 122
  Admissibility of credit - input service - Goods Transport Agency Service [GTA] availed by the appellant for outward transportation of goods on Free on Road [FOR] destination basis from the factory gate or depot of the appellant to the premises of the customers - HELD THAT:- From the records of the case, it is found that there is no dispute that the appellant was selling their final products on FOR destination price as the said fact is acknowledged in the show cause notice as well as by the Adjudicating Authority. The place of removal in FOR destination sales is customer s premises wherein the ownership/property in the goods stands transferred. The Appellant Company also bears the freight charges incurred for outward transportation. The price charged to customers for goods on which central excise duty is paid is inclusive of freight. The Appellant engages transporters for outward transportation of goods and paying freight charges to the transporters. The Appellant also bore the risk of loss/damage during transit till the goods reaches the doorstep of the customers. In this regard, the appellant also taken transit insurance policy. The appellant also paying service tax under reverse charge mechanism on payment made to transporters and availing credit of the same. The High Court in AMBUJA CEMENTS LTD. VERSUS UNION OF INDIA [ 2009 (2) TMI 50 - PUNJAB HARYANA HIGH COURT] decided in favour of the appellant that the transportation of the goods upto the customer s premises would also be covered within the definition of input service . The impugned order is un-sustainable and needs to be set aside - Appeal allowed.

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• 2024 (11) TMI 121
  Denial of benefit of the exemption notification for job work - whether the appellant is liable to pay central excise duty on the goods manufactured by them on job work basis under Notification No.214/86-CE dated 25.03.1986 for M/s. Neelgiri Electricals, who were availing the area based exemption under Notification No.49 50/2003-CE and were clearing the goods at Nil rate of duty? - levy of interest and penalty as well - HELD THAT:- Having perused the decision in M/S. R.N. ALLOYS VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX, UTTARAKHAND [ 2023 (11) TMI 364 - CESTAT NEW DELHI] , it is found that identical facts were involved in the said case, where the principal manufacturer, who supplied the raw materials/inputs to the job worker, was availing the benefit of area based exemption under Notification No.50/2003-CE dated 10.06.2003 and, therefore, were not paying the central excise duty on their final products. Considering the provisions of the notification and the conditions specified therein, it was noticed that the principal manufacturer had not submitted the undertaking that the goods shall be removed on payment of duty for home consumption from his factory. In the present case, M/s. Neelgiri Electricals, being the principal manufacturer was availing the benefit of the area based exemption notification and, was, therefore, clearing the goods at Nil rate of duty and in that view, they have not furnished the undertaking as required under the notification that the supplier of the raw material or semi-finished goods gives an undertaking that the said goods shall be removed on payment of duty for home consumption from his factory. As a result, neither the appellant, who is the job worker has paid the duty nor the principal manufacturer, who was availing the area based exemption, paid the central excise duty, which is not the intention of the notification and the interpretation thereof placed by the various decisions. If the principal manufacturer has not discharged the tax liability, the burden would fall on the job worker and in that view, the appellant is liable to discharge the duty liability. Penalty - HELD THAT:- The Authorities below have rightly imposed the penalty on the appellant as well as on the Director. It was within the knowledge of the appellant that M/s. Neelgiri Electricals was availing the exemption of central excise duty under the area based exemption notification as mentioned on the job work challan and also as admitted by Shri Raghu Nandan Chhimpa, Manager and Authorised Signatory of the appellant in his statement recorded under Section 14 of the Act on 17.05.2023. Interest - HELD THAT:- As the appellant had failed to pay the central excise duty, they are liable to pay interest thereon under Section 11AA of the Act. There are no merits in this appeal and, therefore, the impugned order is upheld. The appeal, accordingly stands dismissed.

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• 2024 (11) TMI 120
  Rejection of refund claim made under Section 142 (3) of CGST Act, 2017 read with Section 11B of the Central Excise Act, 1994. HELD THAT:- As regard the refund claim of Rs. 20,52,143/- and Rs. 2,19,004/- as submitted by learned counsel, the same has been allowed in the revised Trans-1. However, the same has not yet been credited in their electronic credit ledger. In this regard, the appellant has liberty to approach the concerned GST authority for further credit in the Electronic Credit Ledger. Therefore, as regard the refund claim for the amount of Rs. 20,52,143/- and Rs. 2,19,004/- the same became infructuous. As regard the refund claim of Rs. 41,244/- and Rs. 4,87,533/-, the same was rejected on the ground that appellant have paid the amount after 01.07.2007, thereafter, no Cenvat credit provision was excisting. It is found that this issue has been considered by this Tribunal in the case of SHREE GANESH REMEDIES LIMITED VERSUS COMMISSIONER OF C.E. S.T. -VADODARA-II [ 2024 (8) TMI 1468 - CESTAT AHMEDABAD] wherein dealing with the same issue this Tribunal has held that ' The Section 142(3) also deals with the amount which is accrued prior to GST regime. Accordingly, the situation arose in the present case is exactly the same for which provision of Section 142(3) was enacted. The amount of service tax was pertaining to the period prior to 01.07.2017 which is payable under the existing law. Subsequently, the said amount became admissible as a Cenvat credit under existing law and since the same cannot be availed as Cenvat credit after 01.07.2017, the only option is to refund the same in terms of Section 142(3).' From the above decision, it is clear that even though the tax/duty paid subsequent to 01.07.2017 but for the period prior to 01.07.2017, the same is eligible as Cenvat credit under existing law. Therefore, only because the Service Tax was paid after 01.07.2017 refund cannot be rejected. However, the refund has to be processed by following the law such as unjust enrichment, etc. Therefore, only for this limited purpose, this matter related to refund of Rs. 41,244/- and Rs. 4,87,533/- is remanded to the adjudicating authority, for passing a fresh order. Appeal disposed off.

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• 2024 (11) TMI 119
  Recovery of amount availed as excess refund - violation of condition of N/N. 56/2002-CE dated 14.11.2002 - HELD THAT:- This issue is no more res integra as held in various decisions. This Tribunal in the case of M/s Pace Non Woven Fabric Products [ 2024 (8) TMI 201 - CESTAT CHANDIGARH] has considered the identical issue and has held ' since the department has not challenged the refund sanctioned order till date and in the absence of challenge to the refund sanction order, the refund cannot be rejected as held by the Hon'ble Gauhati High Court in the case of CCE, Shillong vs. Jellalpur Tea Estate [ 2011 (3) TMI 11 - GAUHATI HIGH COURT ]. The impugned order is not sustainable in law and the same is set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (11) TMI 118
  Non-refund of the excess tax amount paid by the petitioner for different assessment years - rejection of refund claim on the ground of time limitation - HELD THAT:- It is evident that the Rule 29 clearly prescribes the period before which the refund claims are required to be filed. However, proviso to Rule 29 (1) (a) empowers the prescribed authority to admit an application for refund beyond the period prescribed, namely, 180 days from the date of assessment or reassessment, if the authority is satisfied that the sufficient cause has been made out to justify the delay for not making the application within the said period. From a perusal of the impugned orders it is evident that the refund applications were rejected on the ground that these were time barred. Impugned orders do not reflect that the petitioner was given any notice to explain the cause of delay. The affidavit-in-opposition filed by the respondents also does not explain the position as to whether the petitioner was put to notice and given an opportunity to explain the reasons for the delay in filing the refund applications prior to issuance of the impugned orders. There is no dispute also that claims for refund sought for by the petitioner is also not disputed by the respondent Department denying the claims that the petitioner is otherwise not entitled under the law to claims the refund. The notices issued for the proceedings that the assessment by the Department which are referred to in the writ petitions are also not disputed by the Department. Under such circumstances, it is evident that the Department did initiate a proceeding for assessment which, however, was not carried out for the reasons best known to the Department. The impugned orders dated 16.11.2016, 15.09.2016 and 07.01.2017, therefore, are set aside. The matter is remanded back to the concerned respondent(s)/prescribed authority and this Court permits the asessee to explain the causes of delay that may have occurred in filing the refund application - Petition allowed by way of remand.

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• 2024 (11) TMI 117
  Challenge to order of Sales Tax Appellate Tribunal - no C-Form register - transactions in respect of which the assessee has claimed exemption under Section 6(2) of the Central Sales Tax Act, 1956 challenged on the ground that the transactions were transit sales - HELD THAT:- In the absence of any records such as the C Form Register or the communication from the assessing authority of Sattur Assessment Circle, it is not inclined to disbelieve the claim of the petitioner. There are no reason to disallow the C Forms produced. No doubt, it is for the assessee to establish its claim of exemption. In this case, primary particulars such as the details of selling dealers and the C Forms issued by the officer have been produced. The presumption is, no doubt, rebuttable, and the Department is at liberty to establish that the particulars produced are false. Though the Department has alleged so, it has failed to prove the falsity of the claim, as it alleges. There is nothing to disprove the C Forms produced by the petitioner. As regards the cancellation of the registration of the selling dealers, the factum of cancellation was not available in public domain as it is today, and the petitioner cannot be made to suffer on this count. Their burden hence stands discharged. The appellate authority has rendered a categoric finding that there was no willful default on the part of the assessee in claiming the exemption and reliance is placed on the C Forms produced. Hence, the existence of the C Forms, and their genuineness has been accepted in the deletion of penalty and this order has been accepted by the Commercial Taxes Department - the impugned order is set aside and this writ petition is allowed.

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• 2024 (11) TMI 116
  Seeking to withdraw charges and raise attachment levied by their office over the mortgaged property exclusively charged in favour of this Petitioner - Section 48 of the SARFAESI Act - HELD THAT:- It would be germane to refer to the decision of this Court in case of PARTNERS OF SIDDHESHWAR TAX FAB ORS. VERSUS STATE OF GUJARAT ORS. [ 2024 (7) TMI 1547 - GUJARAT HIGH COURT] wherein, it is held ' the charge in respect of the property in question created for sales tax dues or VAT dues is of no availand has no efficacy in law in view of the provisions of SARFAESI Act and the RDB Act. The property in question was sold by respondent no.6-Bank under the provisions of SARFAESI Act and the petitioners were successful purchasers and the sale certificate is issued and sale deed is also executed by which the petitioners have become absolute owners of the property and therefore considering the existing position of law, the charge created by the respondent State over the property in question in the year 2018, cannot be sustained and is accordingly quashed and set aside and as a consequence the mutation entries in revenue records also stands deleted.' In view of the above settled legal position, the attachment order of the respondent-State would not survive and is accordingly ordered to be quashed and set aside and consequently, the mutation entries in the revenue record also stand cancelled. Petition disposed off.

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• 2024 (11) TMI 115
  Priority of charge under SARFAESI Act over VAT Act charge - seeking declaration that the Petitioner Bank has first charge over the promo mortgaged by the Respondent no. 3 u/s 26E of the SARFAESI Act, which would override the charge of the Respondent No. 2 under Section 48 of the VAT Act - HELD THAT:- In case of PARTNERS OF SIDDHESHWAR TAX FAB ORS. VERSUS STATE OF GUJARAT ORS. [ 2024 (7) TMI 1547 - GUJARAT HIGH COURT] , this Court held that ' the charge in respect of the property in question created for sales tax dues or VAT dues is of no availand has no efficacy in law in view of the provisions of SARFAESI Act and the RDB Act. The property in question was sold by respondent no.6-Bank under the provisions of SARFAESI Act and the petitioners were successful purchasers and the sale certificate is issued and sale deed is also executed by which the petitioners have become absolute owners of the property and therefore considering the existing position of law, the charge created by the respondent State over the property in question in the year 2018, cannot be sustained and is accordingly quashed and set aside.' In view of the above, the respondent No. 2 is directed to remove the charge over the property (in question) as it is not in dispute that the petitioner-Bank has created the charge prior in point of time and hence, as per the settled legal position, the charge created by the respondent No. 2 in the year 2019 would not survive and accordingly, the mutation entry in Revenue Record stands deleted. Petition disposed off.

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• 2024 (11) TMI 114
  Seeking declaration that the action of the respondent No.2-Sales Tax Department of continuing charge over the property in question was invalid and illegal on the ground that the petitioner is a successful auction purchaser of the property in public auction held by the secured creditor - HELD THAT:- It would be germane to refer to the relevant paras of the decision of this Court in case of PARTNERS OF SIDDHESHWAR TAX FAB ORS. VERSUS STATE OF GUJARAT ORS. [ 2024 (7) TMI 1547 - GUJARAT HIGH COURT] wherein the question as to whether the auction purchaser would be liable to discharge the dues of the sales tax department is no more res integra. This Court in the aforesaid decision has held ' the charge in respect of the property in question created for sales tax dues or VAT dues is of no avail and has no efficacy in law in view of the provisions of SARFAESI Act and the RDB Act. The property in question was sold by respondent no.6-Bank under the provisions of SARFAESI Act and the petitioners were successful purchasers and the sale certificate is issued and sale deed is also executed by which the petitioners have become absolute owners of the property and therefore considering the existing position of law, the charge created by the respondent State over the property in question in the year 2018, cannot be sustained and is accordingly quashed and set aside and as a consequence the mutation entries in revenue records also stands deleted.' The respondent authorities are directed to remove the charge in respect of the property in question created for sales tax dues in view of the provisions of the RDB Act as the sale certificate and sale deed is executed and the petitioner has become the absolute owner of the property. Accordingly, the charge created by the respondent-State over the property in question in the year 2014 cannot be sustained and is quashed and set aside and as a consequence, mutation entry in revenue record being Entry No. 5303 also stands deleted. Petition disposed off.

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• Indian Laws

• 2024 (11) TMI 113
  Recovery of sums payable under the Indian Electricity Act, 1910 - whether section 56(2) of the 2003 Act has any application to a demand raised by the appellants on the first respondent for recovery of sums payable under the 1910 Act? - HELD THAT:- In KUSUMAM HOTELS (P) LTD. VERSUS KERALA STATE ELECTRICITY BOARD AND ORS. [ 2008 (5) TMI 723 - SUPREME COURT ], this Court, while examining the issue of retrospective discontinuance of tariff concessions for the tourism industry, held that the liability accruing to the licensee being statutory in nature would continue to survive even after the enforcement of the 2003 Act. As settled by this Court, section 185(5) of the 2003 Act read with section 6 of the 1897 Act would lead to the inescapable conclusion that the limitation period of two (2) years prescribed for recovery of dues under section 56 of the 2003 Act would apply to liabilities arising under the 2003 Act, and not prior to the enforcement thereof. Thus, the Division Bench manifestly erred in holding that the liability incurred by the first respondent prior to the enforcement of the 2003 Act would still be barred by the provisions of section 56(2) thereof. Whether the demand, if it be treated as one under the 1910 Act, is sustainable having regard to the long delay? - HELD THAT:- Section 24 did not refer to any period of limitation as in section 56(2) of the 2003 Act. If the licensee were to opt for institution of a suit, it cannot be contended with any degree of conviction that since section 24 does not prescribe a period of limitation or does not refer to the Limitation Act, 1963 a suit can be instituted at any time as per the convenience of the licensee. Electrical energy is a saleable commodity or goods, which we find usually to be sold on credit. That is, the licensee first supplies the energy and a bill is raised by the licensee specifying the date by which the charges are to be paid, whereafter it is the liability of the consumer to pay it. On neglect to pay, the consequences in section 24(1) are attracted. Although section 24 of the 1910 Act prescribes no period of limitation, it does allow the licensee to discontinue supply of energy upon a consumer neglecting to pay charges that are demanded by raising a bill, irrespective of the fact that a suit for recovery of unpaid charges would be barred if not instituted within three (3) years of the liability accruing. There appears to be no limitation as regards the period within which notice under section 24(1) has to be issued, evincing the intention of the licensee to disconnect supply for nonpayment of claimed dues. However, if in case, despite the consumer not paying the charges demanded and the notice thereunder is not issued within a reasonable period or at any time within which a suit for recovery could be instituted, whether the right of the licensee to claim the unpaid charges would lapse will have to be decided by the court before whom the lis is brought upon consideration of the defence that is raised and the explanation for the delay. However, since the appellants accepted the order of the learned Single Judge dated 16th July, 2009 and issued a fresh demand for a reduced amount and which has since been recovered by encashing the bank guarantee, no order is made for changing the position flowing from the said order. The impugned judgment and order of the High Court allowing the intracourt appeal being unsustainable in law has to be and is, accordingly, set aside with the result that the civil appeal stands allowed.

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• 2024 (11) TMI 112
  Prayer by plaintiff for the judgment and decree to be passed in his favour - defendant has failed to apply for leave to defend the Suit within the period prescribed in Order XXXVII Rule 3(5) of the CPC - HELD THAT:- Order XXXVII Rule 3(5) of the CPC provides for the defendant to apply for leave to defend the Suit. It further provides that the leave to defend may be granted to the defendant unconditionally or upon such terms that may appear to be just to the Court. It further provides that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that the defendant has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous and vexatious. It further empowers the Court to direct the deposit of the admitted amount by the defendant, where the Court finds that a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him. The denial of leave to defend is not the rule but an exception. However, leave to defend may not be granted where the defendant has practically no defence and is unable to give out even a semblance of triable issues. Where the defendant raises triable issues indicating a fair or bona fide or reasonable defence, albeit not a positively good defence, the defendant would still be ordinarily entitled to unconditional leave to defend. Where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or there is a doubt about the genuineness of the issues, the Court may impose conditions both as to time or mode of trial, as well as payment into the Court or furnishing of a security by the defendant. Where the defence appears to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of the payment into the Court or furnishing security or both - Where the defendant admits to a part of the claim of the plaintiff, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the Court. The only defence of the defendants is that the said amount was repayable on an as and when able to basis - the defendants in their applications seeking leave to defend have also stated that the amount was repayable to the plaintiff when Mr. Shivinder Mohan Singh would be released from custody. The learned senior counsel for the plaintiff has asserted that the same also happened about one and a half years back. The Court is, therefore, faced with the defence whereby the defendants admit that they are liable to repay the amount but claim that the said amount has not become repayable as of now and shall become repayable on a future date, which is uncertain and at the sole discretion of the defendants and only when the defendants are able to repay the same. In the present case, the liability to repay is admitted by the defendants. It is also admitted that they had given the cheques under their own signatures with the amounts filled in to the plaintiff, and the plaintiff has merely inserted a date on the said cheques - the defence raised by the defendants is completely moonshine, frivolous and vexatious and, in fact, the defendants have admitted to their liability owed to the plaintiff. The applications are hereby dismissed.

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• 2024 (11) TMI 111
  Dishonour of Cheque - vicarious liability for the offence of the company - principal contention raised by the Petitioner is that she is the housewife and has never dealt with the affairs of the Company and that the cheque in question was not signed by her and she was not the authorised signatory of the Company - HELD THAT:- It is well settled that while exercising its jurisdiction under Section 482 Cr.P.C, the High Court must be extremely cautious and slow in quashing a complaint at an initial stage. It is now well settled that the power of quashing should be exercised sparingly and that too in the rarest of rare cases and courts must not embark upon enquiry as to the reliability or genuineness or otherwise of the allegations made in the Complaint unless the allegations in the complaint are so patently absurd and inherently improbable so that no prudent person can reach such a conclusion. The Apex Court in S.P. Mani Mohan Dairy v. Snehalatha Elangovan, [ 2022 (9) TMI 846 - SUPREME COURT] , after examining the issue as to who would be held vicariously liable for the offence of the company has held that Section 141 extends such criminal liability in case of a company to every person who at the time of the offence, was in charge of and was responsible for the conduct of the business of the company and such a person is vicariously liable to be held guilty for the offence under Section 138 and punished accordingly. The proviso to Section 141 of the NI Act states that the officer who is being accused of committing an offence under Section 138 of the NI Act as being responsible and in-charge of the company can escape the punishment if he/she proves that the offence was committed without his/her knowledge or that he/she was not responsibly for the affairs of the company. The Petitioner herein is a Director of the accused Company. In the Master Data, the Petitioner has not been shown as an independent Director or a Non-Executive Director or a Deputy Director, who can be said to be not responsible for the conduct of day-to-day affairs of the company. This Court is of the opinion that when there are only three Directors in the Company, it cannot be said that the Petitioner herein, who is one of the three Directors of the company, is not responsible for the day-to-day affairs of the company. The contentions raised by the Petitioner is a matter of trial and at this juncture, this Court is not inclined to quash the summoning Order in the absence of any unimpeachable and incontrovertible evidence beyond suspicion and doubt that the Petitioner herein was not responsible for the day-to-day affairs of the accused Company. Petition dismissed.

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• 2024 (11) TMI 110
  Grant of Anticipatory Bail - financial fraud and conspiracy - offences punishable under Sections 406, 408, 420, 465, 467, 468, 471, 477A read with Section 34 of the Indian Penal Code - whether the applicants could be forced to supply the documents which are not in existence? - HELD THAT:- The overall facts of the case reveal that it is purely an accounting matter. A detailed investigation has been done. Necessary ledgers of the applicants as well as the complainant have been recovered and assistance of the Chartered Accountant has also been taken. It may be an attempt of the complainant to recover money from this criminal case only. However, criminal law does not provide for recovering money through criminal proceedings. Besides, the complainant has filed cases against the Kawadiya Brothers under Section 138 of the N.I. Act before lodging the report and legally enforceable debt would be a matter of facts and the evidence of the case. Considering the cooperation extended by the applicants during the interim protection, the Court is of the view that sending the applicants to custodial interrogation would serve no purpose. As far as the allegations against applicant Bharat Machhindra Khedkar are concerned, he resigned long back. Whether he committed fraud of such huge money would be determined by appreciating the evidence. The relevant bank account has been recovered. Nothing has remained to be recovered from him. He also cooperated with the Investigating Officer. Whether he was the plant head is also question of fact. This Court is of the view that custodial interrogation of the applicants is not essential. Hence, they deserve anticipatory bail - bail application allowed.

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