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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter December 16, 2023 Case Laws in this Newsletter: GST Income Tax Benami Property Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Articles LEGAL HEIR v. LEGAL REPRESENTATIVES 12% GST applicable on job work done on goods owned by other registered persons under GST GST Quarterly return filing option for small businessman Time limit for claiming refund not applicable when Service Tax paid erroneously News Delhi Customs Preventive seizes more than 3 kg smuggled gold worth Rs. 1.96 crore at IGI Airport, 2 arrested India’s overall exports in November 2023 is estimated at USD 62.58 Billion; an increase of 1.23 percent over USD 61.82 Billion in November 2022 Notifications GST - States G.O. Ms. No. 563 - dated 24-11-2023 - Andhra Pradesh SGST Amendment in Notification G.O.Ms.No.62, Revenue (CT-II) Department, dated 17.01.2023 12/2023-State Tax (Rate) - dated 3-11-2023 - Mizoram SGST Seeks to amend Notification No. 11/2017-State Tax (Rate), dated the 7th July, 2017 11/2023-State Tax (Rate) - dated 3-11-2023 - Mizoram SGST Seeks to amend Notification No 1/2017-State Tax (Rate), dated the 7th July, 2017 33/2023-State Tax - dated 30-10-2023 - Mizoram SGST Seeks to notify “Account Aggregator” as the systems with which information may be shared by the common portal under section 158A of the Mizoram Goods and Services Tax Act, 2017 28/2023-State Tax - dated 30-10-2023 - Mizoram SGST Seeks to notify the provisions of sections Mizoram Goods and Services Tax (Amendment) Act, 2023 SEZ S.O. 5320 (E) - dated 6-12-2023 - SEZ Central Government de-notifies an area of 1.7782 hectares, thereby making resultant area as 15.6508 hectares at IT/ITES SEZ at Ramapuram, Chennai in the State of Tamil Nadu Circulars / Instructions / Orders Customs PUBLIC NOTICE NO. 49 /2023 - dated 12-12-2023 Regular Operation of Drive Through Container Scanner (Road) at Kattupalli Port & Mobile X-ray Container Scanner (MXCS) at Kamarajar Port Limited, Ennore-reg. PUBLIC NOTICE NO. 36/2023 - dated 6-12-2023 Practice of assessment of Petroleum products under CTH 2710 — reg. Highlights / Catch Notes GST Refund of the Input Tax Credit (ITC) - as per the Circular, the refund claim filed could not be spread across different financial years - Rule 89(4) of the CGST Rules - It was neither permissible for the Appellate Authority to overlook the Rule as it stands nor disregard the Circular dated 31 March 2020. The appellate authority ought to have recorded a finding on such issue. - HC Visit to Get Source Classification of supply - rate of GST - bundled services - The Cattle Feed Plant is an immovable property and supply of goods and services by the appellant for setting up and running of Cattle Feed Plant amounts to composite supply of works contract as defined in clause (119) of Section 2 of CGST Act, 2017. - AAAR Visit to Get Source Exemption from CGST - recognized Unit Run Canteen - goods sold to authorized customers - applicant is a subsidiary canteen of the Central Police Force Canteen System (CPFCS) - the applicant is not covered under the Unit Run Canteen as they are a subsidiary canteen of CPF canteen under the Ministry of Home Affairs. Therefore the applicant is not entitled to claim the exemption - AAR Visit to Get Source Income Tax Addition u/s 69A - respondent/assessee is a Non-Resident Indian and his source of income in India being from interest on bank accounts and interest on income tax refund - Assessee is not required to maintain books of accounts - It appears to us prima facie that the expression “if any” specifically used in Section 69A of the Act amplifies that where books of account are not maintained, it would not be possible to invoke this provision. - Order of ITAT deleting the additions u/ 69A sustained - HC Visit to Get Source Direct Tax Vivaad se Vishwas Act, 2020 - Though Section 10 of the VSV Act gives power to the CBDT to issue directions, yet this Court is of the view that the said Section is similar to Section 119 of the Act, 1961. Consequently, the CBDT under Section 10 of VSV Act cannot issue circulars adverse to the assessee. - HC Visit to Get Source TDS u/s 195 - non deduction of TDS on management fees paid by assessee [to its Associated Enterprises (AEs)] - As revenue, says that the appeal against the aforementioned order of the Tribunal was not preferred because of low tax effect. It is also not in dispute that in any event, as of today, the appeal is time-barred. - Revenue appeal dismissed - HC Visit to Get Source Bogus LTCG - capital gains arising on sale of shares - We see potency in the plea of the assessee that such capital gains arising on sale of shares cannot be regarded as sham profit and consequently, additions u/s 69A of the Act is not justified. AO has not provided anything on record to justify additions under section 69C of the Act either. The modus operandi spelt by itself is not a adequate ground to impeach the transactions. - AT Visit to Get Source Penalty u/s 271(1)(c) - sale of land was not disclosed in the original return of income - additions during scrutiny assessment - the addition was made by invoking the “deeming provisions” under Section 56(2)(vii)(b) - nothing has been brought on record to demonstrate that the assessee had concealed the particulars of income or had deliberately furnished inaccurate particulars of income. - No penalty - AT Visit to Get Source Deduction u/s 80IA(4)(iii) - Excluding signage income - It is not in dispute that the signage income is derived from the tenants occupying the building forming part of the notified industrial park. Hence, the same becomes inextricable connected with building connected with the notified industrial park and partakes the same character of lease rental income derived from the tenants thereon. - AT Visit to Get Source Depreciation on goodwill claimed on acquisition of its subsidiary - the assessee company was holding 95% of total equity share capital of its subsidiary RMIPL prior to execution of scheme of arrangement. It remained an undisputed fact that, the subsidiary company RMIPL had no goodwill in its books of accounts as on the date of its acquisition by its holding company, the appellant. Therefore, the question of transfer of any such amount of goodwill while recording assets of subsidiary company into its books in first place uncloudly failed. - Claim was rightly denied - AT Visit to Get Source Disallowance of Royalty paid u/s 37(1) - assessee is a franchisee bottler for the brand Aquafina owned by the franchisor PepsiCo India Holdings Pvt. Ltd. - there is no material available on record to show that the assessee has infringed the trademark registered in the name of PepsiCo Inc. - No basis in the submissions of the Revenue in denying the claim of deduction of Royalty paid by the assessee to Pepsi Foods Private Ltd during the year under consideration. - AT Visit to Get Source Netting of interest income - Once this fact is established that the Interest earned have Direct Nexus to Interest Paid, then applying the concept of Real Income, only Net Interest shall be capitalised - AT Visit to Get Source Revision u/s 263 - exemption u/s 11(2) - all the technical requirements were duly fulfilled by the assessee along with satisfactory response to the queries raised through notice under section 142(1). The only objection raised by the learned Commissioner of Income-tax (Exemptions) through notice issued u/s 263 was that the assessee has not specifically mentioned the purpose of accumulation, is not a valid objection for which proceedings u/s 263 cannot be carried out. - Revision order set aside - AT Visit to Get Source Customs Imposition of penalty u/s 114A of the Customs Act, 1962 equivalent to the duty short-paid - Leyv of personal penalty - There are no error of facts or in application of law in arriving at the said conclusion by the learned Commissioner when the allegation of gross undervaluation of the product and transferring the suppressed amount later through non-banking channels have been accepted in the statements of the Managing Director and other persons of the appellant-company; consequently, the penalty imposed on the appellant-company is hereby upheld. - AT Visit to Get Source Denial of request for converting free shipping bill to DEPB shipping bill - The request by the appellant was to convert shipping bill from free to advance license shipping bill. The Respondent cannot entertain such request for conversion without examination of the records. It is not fair to expect the department to consider the request for such amendment after 5 long years. - AT Visit to Get Source Direct Taxes Prohibition of Benami Property Transaction - Initiating Officer issuing provisional attachment of the property order u/s 24(3) of the PBPT Act - "adjudicating authority" is best suited and statutorily obliged to consider the validity of provisional attachment order and the case put forth by the present appellants. - Petition dismissed - HC Visit to Get Source Prohibition of Benami Property Transaction - funds infused into the shell companies by multiple layering in the guise of share capital or loan - as contended on the side of the appellants (Revenue) that Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 will have retrospective effect and therefore, the common order passed by the Tribunal, to the contrary, is liable to be interfered with. - pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. - HC Visit to Get Source IBC Rejection of claim by the Resolution Professional - The Agreement was executed in reference to Clause 7.5(b) of the Debenture Trust Deed and the Agreement was only of for the purpose of creating additional security. The RIHPL being party to the Agreement dated 29.03.2019, the additional security as given under the Agreement can be enforced as per Clause 6 of the Agreement. Giving of additional security by Agreement dated 29.03.2019 cannot be read to mean that the Corporate Debtor has given any guarantee in reference to the secured obligations of the Obligors under the Debenture Trust Deed. - The Resolution Professional did not commit any error in refusing to admit the claim of the Appellant - AT Visit to Get Source Service Tax Delay in filing of appeal or not - appeal rejected on the ground of being filed much after a period of 60 + 30 days from the date of receipt of the Order-in-Original - It gets clear from the affidavits that the Order-in-Original could never be brought to the notice of the appellant. It is only from the recovery notice dated 23.02.2023, the appellant acquired knowledge about the Order-in-Original dated 28.07.2020. On the very next day, appellant applied for the copy of the said order and not in later than 10 days of getting the copy of the impugned order, appeal has been filed. - The present appeal shall not be thrown at the threshold and shall be decided on the merits of the case - AT Visit to Get Source VAT Levy of penalty u/s 86 of the DVAT Act, 2004 - Bonafide Beliefs - The appellants had while furnishing their returns proceeded on the bona fide belief that revenues generated from the sale of reprocessed vehicles would not be exigible to tax under the Act. - No penalty - HC Visit to Get Source Case Laws: GST 2023 (12) TMI 667 Restoration of Petitioner's GST registration - SCN for cancellation of registration was not received by the petitioner, as the petitioner was not in Mumbai - HELD THAT:- There are much substance in the submission as urged on behalf of the petitioner. We may observe that in identical circumstances when similar show cause notice was issued without setting out any reasons, as also an order passed without application of mind, this Court had set aside the orders passed by the respondent in the decisions as relied on behalf of the petitioner and as noted by us hereinabove. The Court had quashed and set aside the show cause notices, however, remanding the proceedings for a fresh show cause notice to be issued in accordance with law by the designated officer. The respondents are directed to issue a fresh show cause notice in accordance with law within a period of three weeks from today. The petitioner shall file a reply to the show cause notice within two weeks after receipt of the show cause notice. The designated officer shall thereafter proceed to hear the petitioner and pass appropriate orders in accordance with law. Petition disposed off. 2023 (12) TMI 666 Violation of principles of natural justice - impugned order is passed without giving any personal hearing although mandated by Section 75(4) of the CGST Act - HELD THAT:- There has been a violation of principles of natural justice in passing the impugned order for more than one reason; firstly, under Section 75 sub-section (4), it is mandatory for the respondents to give a personal hearing to the petitioner if an adverse order is contemplated to be passed against the assessee. In the facts of the present case, a personal hearing was not given to the petitioner, inspite of an adverse order having been passed. Secondly, the petitioner vide various emails requested for details of parameters No. 70 and 73 be furnished. However, details of such parameters were not furnished to the petitioner. There is no explanation by the respondents as to why details of parameter No. 72 were furnished and not the parameters of 70 and 73, except to state that everything is available on the portal. If it was available on the portal, then there was no reason why parameter 72 details were furnished and parameters 70 and 73 is not furnished. Thirdly, the impugned order on one hand states that no reply is submitted, whereas on the other hand states that the documents were not sufficient which itself is self-contradictory. Fourthly, the impugned order does not give any reasons of the alleged discrepancies so as to enable the petitioner to file its submission. The impugned order would certainly be required to be held to be in breach of principles of natural justice so as to enable this Court to exercise jurisdiction under Article 226 of the Constitution of India although, an alternate remedy is available - order under Section 73 dated 26th July 2023 is quashed and set aside. 2023 (12) TMI 665 Petitioner s right for cancellation of its Goods and Service Tax (GST) registration - petitioner states that the petitioner would join the investigation immediately - HELD THAT:- It is considered apposite to dispose of the writ petition by directing that the respondent shall take steps for cancellation of the petitioner s GST registration in terms of its application. 2023 (12) TMI 664 Freezing of petitioner's bank account - violation of principles of natural justice - violation of statutory provisions in Section 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- There is a factual dispute with respect to service of notice as contended by the petitioner and the respondents. Admittedly, the petitioner had not informed about the change of email ID to the respondents. The petitioner is also not in a position to explain as to why the petitioner did not inform the change of email ID and why he did not check the portal although the petitioner himself contends that based on the new consultant s advise, he made payment of shortfall for the period 2017-18. This issue would require adjudication on facts which cannot be gone into under Article 226 of the Constitution of India. Therefore, it would be in the interest of the petitioner that the petitioner is relegated to the remedy of an appeal for adjudication of all his contentions including on natural justice. Petitioner is relegated to alternate remedy of appeal - Petition disposed off. 2023 (12) TMI 663 Refund of tax paid on export of services - rejection of application for refund on the ground that there is no nexus between input and output supply - adequate opportunity to file the documents not provided to petitioner - violation of principles of natural justice - HELD THAT:- There appears to be an apparent violation of the principle of natural justice, inasmuch as the Order in Original was passed dated 30th December 2021 was passed without giving the petitioner adequate opportunity to file the documents which the petitioner had uploaded on 17th January 2022 by which time the Order in Original was already passed. The Order in Original dated 30th December 2021 does not contain any reason for rejection of the refund application. The Order in Appeal relies on Rule 89 of the CGST Rules which is not part of the show cause notice nor the same was put forth to the petitioner. Furthermore, the Appellate Authority had not called for the details on the basis of which he has rejected the appeal. In the interest of justice, the Order in Original dated 30th December 2021 and Order in Appeal dated 4th May, 2022 is required to be set aside on the ground of the same being passed without considering such material - refund application is restored to the file of respondent no. 3 for fresh adjudication. 2023 (12) TMI 662 Refund of the Input Tax Credit (ITC) - primary ground of challenge as urged on behalf of the petitioner is that the Appellate Authority has erroneously proceeded to apply Circular dated 18 November 2019, which provides that the refund claim filed could not be spread across different financial years - HELD THAT:- There are much substance in the contentions as urged on behalf of the petitioner. It appears to be an admitted position that the petitioner had filed refund application under Section 54 (3) of the CGST Act for the relevant period which is defined under Rule 89(4) of the CGST Rules. In the statutory pattern, the electronic ledger is required to be maintained, it was permissible for the petitioner to club the ITC credit available to the petitioner for the prior period. As the credit which was available for the period prior to 1 April 2018 pertained to the financial year 2017-18 the same was certainly available to the petitioner in its electronic ledger in the form of a running account - from the reading of the impugned order, it appears to be quite clear that such aspect of the matter has been overlooked and / or not addressed in so far as to what has been clarified by the department itself, so as to bring the interpretation as held by Circular dated 31 March 2020 to be in consonance with what has been provided by Rule 89(4) of the CGST Rules. It was neither permissible for the Appellate Authority to overlook the Rule as it stands nor disregard the Circular dated 31 March 2020. The appellate authority ought to have recorded a finding on such issue. The order passed by the Appellate Authority cannot be sustained and would be required to be set aside - Petition allowed. 2023 (12) TMI 661 Classification of supply - rate of GST - bundled services - composite supply of cattle feed plant under GST regime - contract involving supply of equipment/machinery erection, installation commissioning services without civil work thereof - works contract service or not. Whether the composite supply towards setting up of cattle feed plant, by the appellant without civil work can be treated as 'immovable property and would fall within the ambit of 'works contract'? - HELD THAT:- The various equipments assembled by the appellant at their customer's premises arc cither fitted with foundation/structures or fitted on foundation/structures. The cattle feed plant which is set up by the appellant at their customer's premises cannot be shifted from one place to another without dismantling of all the equipments, machine parts and accessories and electrical systems - the cattle feed plant supplied involves supply of goods as well as services like installation, erection and commissioning of the plant. Thus, it is held it fulfills the criteria of an 'immovable property' as cattle feed plant is type of plant and machinery which is attached to earth or permanently fastened to anything attached to the earth. Reference made to Board Circular No. 177/09/2022-TRU dated 03.08.2022, where it was clarified by CBIC that supply, construction, installation and commissioning of a dairy plant on turn-key basis constitutes as works contract and dairy plant which comes into existence is an immovable property. The Cattle Feed Plant is an immovable property and supply of goods and services by the appellant for setting up and running of Cattle Feed Plant amounts to composite supply of works contract as defined in clause (119) of Section 2 of CGST Act, 2017. 2023 (12) TMI 660 Exemption from CGST - recognized Unit Run Canteen - goods sold to authorized customers - similar exemption available under State GST also or not - eligibility to claim refund of CGST and SGST paid on goods purchased till date. Whether the applicant being a recognized Unit Run Canteen be exempted from levying CGST on goods sold by it to authorized customers? - N/N. 6/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- N/N. 6/2017-Central Tax (Rate) dated 28.06.2017 which clearly specifies that the CSD i.e. Canteen Stores Department, Unit Run Canteens of the CSD and the authorized customers of CSD are under the Ministry of Defence, Government of India. It is an admitted fact that the applicant is a subsidiary canteen of the Central Police Force Canteen System (CPFCS), under the Ministry of Home Affairs, Government of India, formed in terms of permission granted vide letter No. DA-VII/SC-CP/2013 dated 28.11.2013. Further, para 4(h) of the said letter specifies that VAT as applicable in conformity with orders of State Government will be paid unless specifically exempted by notification of concerned State Government . Furthermore, the Central Police Force Canteen System (CPFCS) does not mention/use the terms 'Canteen Stores Department, Unit Run Canteens of the CSD and the authorized customers of CSD' in the aforesaid letter dated 28.11.2013. Thus the applicant is not covered under the Unit Run Canteen as they are a subsidiary canteen of CPF canteen under the Ministry of Home Affairs. Therefore the applicant is not entitled to claim the exemption provided under the Notification No. 7/2017-Central Tax (Rate) dated 28.06.2017. Whether similar exemption can be availed under State GST also? - HELD THAT:- The applicant is not entitled for exemption provided under the Notification No. 7/2017-Central Tax (Rate) dated 28.06.2017. Since similar exemptions are issued by State GST on subject issues, it is found that the applicant is not entitled for any exemption even under the Notification issued by the State GST. Is the applicant eligible to claim refund of CGST and SGST paid by it on goods purchased till date? - HELD THAT:- It is evident from above that the Notification No. 6/2017-Central Tax(Rate) dated 28.06.2017, specifies that the Canteen Stores Department under the Ministry of Defence, as a person who shall be entitled to claim refund of fifty percent of the applicable central tax paid by it on all inward supplies of goods received by it for the purpose of subsequent supply of such goods to the Unit Run canteens of the CSD or to the authorized customers - In view of the foregoing it is very clear that the notification is applicable only to the Canteen Stores Department under the Ministry of Defence, and not to any other Canteen Stores. In the instant case, the applicant canteen is formed under the orders of Ministry of Home Affairs and thus the notification No. 6/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the applicant and thereby they are not entitled to claim the benefit of the said notification. Income Tax 2023 (12) TMI 659 Unrealized gains on revaluation of forward contracts as the bank accounts - Tribunal setting aside claim of assessee relating to unrealized gains on revaluation of forward contracts as the bank accounts were admittedly prepared on accrual basis and revenue was recognized following mercantile method except for certain items which were accounted on cash basis - depreciation in value of investment in HTM Securities - disallowances made u/s 36(1) (viia) - disallowance made u/s 14A - disallowances on account of AFS and HFT category of investments - HC 2023 (1) TMI 291 - KARNATAKA HIGH COURT] concluded two appeals do not survive for consideration - Revenue has filed these two appeals challenging the findings recorded by the ITAT, Income Tax Appellate Tribunal in Revenue's appeals and those issues were not under consideration before the ITAT. Therefore, these appeals are superfluous and unnecessary There is a gross delay of 261 days in filing this special leave petition. HELD THAT:- The explanation offered for condonation of delay is not satisfactory. Hence, the application seeking condonation of delay in filing this petition is dismissed. Consequently, the special leave petition is dismissed on the ground of delay. The questions of law, if any, which arise in this special leave petition are kept open. 2023 (12) TMI 658 Scope of of Sections 44BB(1) and 44BB(2) - amount paid or payable for the purpose of computation of the presumptive taxable income - whether the service tax collected by the assessees in the course of provision of services and facilities in connection with, or supply of plant and machinery on hire, in the prospecting for, or extraction or production of, mineral oils in India, was liable to be included in the amount paid or payable for the purpose of computation of the presumptive taxable income of the assessee? - as decided by HC [ 2022 (11) TMI 385 - UTTARAKHAND HIGH COURT] amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in Clauses (a) and (b) of sub-section (2) of Section 44 BB of the Income Tax Act. HELD THAT:- We are not inclined to interfere in the matter. The special Leave Petition is dismissed 2023 (12) TMI 657 Validity of order passed u/s 143(3) r.w.s.144(b) - high income from agricultural activities - as argued petitioner's request for personal hearing through video conference was not at all considered which is vital opportunity - as argued denial of said opportunity amount to violation of principles of natural justice - respondents have filed a counter stating that the petitioner has an effective, alternative statutory appellate remedy to file statutory appeal before the Commission - assessee claims that he was given only two days time, the proceedings were open upto 26.09.2022, during which the assessee ought to have responded HELD THAT:- In the present case, the respondents have issued notice under Section 143(2) on 29.06.2021. Thereafter eight notices were issued to the petitioner on various dates. Since the petitioner has not responded properly by giving details, the same cannot be considered as violation of principles of natural justice. The respondents further submitted the petitioner has not sought for video conference hearing and relied on the submission of the petitioner dated 22.09.2022. But the learned Counsel appearing for the petitioner brought to the knowledge of this Court that the petitioner has sought for video conference hearing through E-mail. In the said Email communication is clearly mentioned that since it is high pitch assessment the petitioner has sought video conference hearing. Therefore this Court is of the considered opinion that it is clearly violation of principles of natural justice. In view of the same, the impugned order is liable to be quashed. The next contention of the petitioner is that the petitioner had submitted Village Administrative Officer s certificate wherein it is mentioned the petitioner is the owner to some of the lands and the petitioner is having lease rights to some of the lands. However the Village Administrative Officer had issued the certificate in Tamil but the respondent is insisting to submit documents either in English or Hindi. It is the practice in the State of Tamil Nadu that the VAO would to issue certificate in Tamil. If need by the respondent may direct the petitioner to submit translation copy. For the reasons stated supra the impugned assessment order is quashed. The respondents are directed to grant video conference hearing to the petitioner. The petitioner shall submit the certificates issued by the Village Administrative Officer and also submit the translation copy. The said assessment shall be completed within a period of eight weeks (8) from the date of receipt of a copy of this order. WP allowed. 2023 (12) TMI 656 Addition u/s 69A - respondent/assessee is a Non-Resident Indian and his source of income in India being from interest on bank accounts and interest on income tax refund - HELD THAT:- Section 69A of the Act lays down that where in any financial year, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money etc. is not recorded in the books of account, if any maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the said money etc., or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, the said money may be deemed to be the income of the assessee for such financial year. Admittedly, in the present case, the respondent/assessee is a Non-Resident Indian and his source of income in India being from interest on bank accounts and interest on income tax refund, he is not obliged to maintain any books of account in India. It appears to us prima facie that the expression if any specifically used in Section 69A of the Act amplifies that where books of account are not maintained, it would not be possible to invoke this provision. But as mentioned above, learned counsel for appellant/revenue requested to keep this question open to be agitated in some better case. We accede to this request. The money in question can also not be treated as unexplained money insofar as the respondent/assessee gave specific explanation of a split up of the money in question as enumerated above. In the impugned order, the Tribunal meticulously examined and elaborately discussed the documentary record in support of the said explanation of money ingress in the bank account of the respondent/assessee. In the absence of a stand taken by the appellant/revenue alleging perversity, this court while acting under Section 260A of the Act cannot enter into the arena of appreciation of facts and documents. ITAT is justified in holding that Section 69A is not applicable to the present case - No substantial question of law. 2023 (12) TMI 655 TP Adjustment - exclusion of certain comparables - whether three comparables namely Infosys BPO Ltd., Actopetal Technologies Ltd. and e-Clerx Services Ltd. were wrongly rejected as comparables by the Tribunal by way of the impugned order? - HELD THAT:- Admittedly assessee is engaged in providing ITeS to its AE through the use of information technology infrastructure including online software, live information services and research on international database. It is also not disputed that in the present case, the most appropriate method for determination of Arms Length Price would be TNMM. Infosys BPO Ltd - Admittedly, in the respondent/assessee s own case for subsequent assessment year AY 2010-11, the said entity Infosys BPO Ltd. was rejected as comparable in view of the aforesaid dissimilarities. These and various other aspects related to the Infosys BPO Ltd. were considered by a co-ordinate bench of this court in the case of PCIT vs M/s Sanvih Info Group Pvt. Ltd., [ 2019 (5) TMI 1211 - DELHI HIGH COURT] in which after examining the judgment in the case of Chryscapital [ 2015 (4) TMI 949 - DELHI HIGH COURT] it was observed that none of the remaining comparables involved in the said case was a giant corporation like Infosys. Same is in the present case as well, in the sense that none of the said nine comparables is of the size of Infosys. Besides, Infosys BPO Ltd. is even functionally dissimilar to the respondent/assessee in the sense that it is largely engaged in the area of software development, assuming all risks leading to higher profits, which is not in the case of respondent/assessee. That being so, we find no error in decision of the Tribunal in rejecting Infosys BPO Ltd. as a comparable. Acropetal Technologies Ltd. TPO took segmental information for income from engineering design services and treated it as IT enabled services. The Acropetal has high on-site development expenses whereas the respondent/assessee is engaged only in offshore activities, therefore, the two are not comparable on functional level. The TPO failed to analyse as to how the engineering design services of Acropetal can be compared with low end IT enabled services of the respondent/assessee. Even the segmental detail of Acropetal has not been discussed by the TPO. Therefore, we find no error in the decision of the Tribunal in rejecting Acropetal Technologies Ltd. as a comparable. E-Clerx Services Ltd. company, as per record, is a leading Knowledge Process Outsourcing (KPO) company, founded in the year 2000, providing data analytics and data process solutions to some of the largest brands in the world. Over the years, e-Clerx consistently achieved profitable growth and by the year 2008-09, it reached employee strength of about 2000. The eClerx has made an inherent niche high-end, KPO data analytics business, scalable - by combining people, process re-engineering and automation in a potent mix to build proprietary, platform based services. The e-Clerx focuses on automation and process re-engineering in order to eliminate wasteful steps, and to automate repetitive ones, so as to minimize the need for human intervention and present their clients costs savings, which exceed those from simple wage arbitrage, which in turn reduces the need for costly, high skilled resources and gives it ability to scale solutions quickly, both for existing clients and also for new ones. In contrast, as detailed above, the respondent/assessee has employed fresh young graduates, engaged in simply punching in the data. Another significant aspect is that e-Clerx carries out its substantial business on outsourcing model, which makes it different from the respondent/assessee. The high end KPO services provider cannot be compared with the ITeS, which fall under the category of BPO services provider, as explained by a coordinate bench of this court in the case of Rampgreen Solutions [ 2015 (8) TMI 931 - DELHI HIGH COURT] Therefore, as regards rejection of e-Clerx as comparable in the present case, we find no error in the decision of the Tribunal. Addition u/s 40A(ia) - As no arguments were advanced. Perhaps that was for the reason that regarding this issue the CIT(A) had given direction to the Assessing Officer to verify whether the copies of deduction of tax at lower rate were filed before the Assessing Officer before passing of the assessment order and if that be so, then no disallowance could be made. Before the Tribunal the counsel for revenue stated that the Assessing Officer would give effect to the order of the CIT(A). Accordingly, this ground was treated as infructuous by the Tribunal. This question thus does not arise for our consideration. 2023 (12) TMI 654 Recovery of income-tax accrued prior to Insolvency procedures - Tribunal approved the final Resolution Plan and that order was communicated by the petitioner/assessee to the respondents/revenue - whether the respondent/ revenue can justifiably claim and recover from the petitioners any amount of money towards income tax that accrued prior to approval of Resolution Plan under Section 31 of the Code. - HELD THAT:- In the present cases the admitted factual matrix is that the notices and orders impugned in these writ petitions pertain to the income tax claims of the respondents/revenue pertaining to the period much prior to the date of approval of the Resolution Plan. The impugned notices and orders were issued by the respondents/revenue admittedly subsequent to the public announcement under Section 15 of the Code regarding CIRP process pertaining to the petitioner/assessee. As noted here public announcement under Section 15 of the Code called for submission of claims by 21.01.2019, but the respondents/revenue did not file any claim till that date or even thereafter; it is only subsequent to approval of the Resolution Plan vide order dated 05.11.2019 of the Tribunal, (which order was communicated to respondents/revenue on 02.12.2019) that the respondents/revenue issued the impugned Assessment Order and Demand Notice both dated 12.12.2019. Similarly, in the other writ petition the impugned notices and orders were issued by the respondents/revenue much subsequent to the public announcement dated 30.09.2019 of commencement of CIRP under Section 13 of the Code; vide order dated 21.02.2022, the Tribunal approved the final Resolution Plan and that order was communicated by the petitioner/assessee to the respondents/revenue, calling upon the latter to withdraw the earlier notices, but to no avail. Thus as the Resolution Plans qua the petitioners/assessees having been approved by the National Company Law Tribunal on 05.11.2019 and on 21.02.2022 respectively, the tax claims pertaining to the Assessment Year 2017-18 and Assessment Year 2014-15 stood extinguished. 2023 (12) TMI 653 Validity of orders passed by the Designated Authority under the Direct Tax Vivaad se Vishwas Act, 2020 - Scope of the power of the CBD to issue clarification / circular - said authority has rejected the declaration filed by the deceased assessee on the ground that the condition regarding pendency of appeal as on 31.01.2020 is not satisfied - what is the meaning of the word pending in Section 2(1)(a) of the Act of 2020? - HELD THAT:- When a section contemplates pendency of an appeal, what is required is that an appeal should be pending and in such a case there is no need to introduce the qualification that it should be valid, competent or admitted. In Raja Kulkarni v. The State of Bombay [ 1953 (11) TMI 17 - SUPREME COURT] the Supreme Court has held that whether an appeal is valid, competent or admitted is a question entirely for the appellate court before whom the appeal is filed to decide and this determination is possible only after the appeal is heard but there is nothing to prevent a party from filing an appeal which may ultimately be found to be incompetent, e.g. when it is held to be barred by limitation. From the mere fact that such an appeal is held to be unmaintainable on any ground whatsoever, it does not follow that there was no appeal pending before the Court . To the same effect is the law laid down by the judgments of the Supreme Court in the cases of Tirupati Balaji Developers (P) Ltd. v. State of Bihar Ors [ 2004 (4) TMI 575 - SUPREME COURT] and Commr. of Income Tax, Rajkot Versus Shatrusailya Digvijaysingh Jadeja [ 2005 (9) TMI 362 - SUPREME COURT] In the said cases, it has been held that an appeal does not cease to be an appeal though irregular and incompetent. Though Section 10 of the VSV Act gives power to the CBDT to issue directions, yet this Court is of the view that the said Section is similar to Section 119 of the Act, 1961. Consequently, the CBDT under Section 10 of VSV Act cannot issue circulars adverse to the assessee. It is also settled law that when the Supreme Court or High Court declare the law on a question arising for consideration, then the view expressed by the Supreme Court or the High Court has to be given effect to and not the circular issued by the CBDT. Consequently, the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent it contemplates a condition of admission of appeal before filing of declaration as a condition precedent in order for the appeal to be treated as pending and to be eligible for settlement under the VSV Act is contrary to law, and accordingly the word admission needs to be ignored. In our view, appeal would be pending as soon as it is filed and up untill such time it is adjudicated upon and a decision is taken qua the same. The orders of rejection dated 31.03.2021 and 15.04.2021 are bad in law and therefore, the same are accordingly set aside. The respondent No. 1 is directed to process the claim of the petitioner under the provisions of the 2020 Act. 2023 (12) TMI 652 TDS u/s 195 - non deduction of TDS on management fees paid by assessee [to its Associated Enterprises (AEs)] - whether can be regarded fee for technical services (FTS)? - tribunal deleted addition - HELD THAT:- Tribunal [ 2022 (9) TMI 1538 - ITAT DELHI] had sustained the order of the CIT(A) as held that the findings of the CIT(A) had not been rebutted. Tribunal further held that the AO had failed to list out the highly technical services that the AEs provided to the petitioner/assessee and that the AO failed to allude to the relevant clause of the agreement which demonstrates that expertise available with the AEs was made available to the petitioner/assessee. Finally, it was also observed that this issue had been decided by the CIT(A) in favour of the petitioner/assessee in matters concerning AYs 2010-11 and 2014-15 decisions that were not challenged before the Tribunal. As revenue, says that the appeal against the aforementioned order of the Tribunal was not preferred because of low tax effect. It is also not in dispute that in any event, as of today, the appeal is time-barred. Tribunal has deleted the addition on merits. Decided in favour of assessee. 2023 (12) TMI 651 Reopening of assessment u/s 147 - Time limit for notice - Scope of amended provisions u/s 148 and 148A - HELD THAT:- Undisputedly, the provision u/s 148 came to be amended w.e.f. 01.04.2021 and notice u/s 148 was issued on 09.06.2021 ie., the notice was issued after the amended provisions u/s 148 came into force and insertion of Section 148A. In the case at hand, the Parliament amended the provisions u/s 147 to 149 and 151 of the Act of 1961 and the substituted provisions u/s147 to 149 and 151 came into force w.e.f. 01.04.2021. The notice u/s 148 was issued on 09.06.2021. On the date of issuance of notice u/s 148 the respondents are under obligation to comply with the provisions u/s 148A which provide for conducting an enquiry if required by prior approval of the specified authority, providing an opportunity of being heard to assessee by serving him a show-cause notice, to consider the reply, if any, of the assessee to the show-cause notice and thereafter to take decision on the basis of material available on record including the reply whether or not it is a fit case to issue notice u/s148 and to pass order in this regard. Only after passing an order u/s 148A(d) notice u/s 148 is to be issued. By amending the Act of 1961 u/s 147 to 149 and 151 certain safeguards are provided to the assessee. In the case at hand, procedure as provided u/s 148A is not followed by the respondents before issuing notice u/s 148 of the Act, the notice issued u/s 148 is in violation of principle of natural justice and therefore the entire proceedings initiated of passing of an order of assessment is in violation of principle of natural justice and entire proceeding is vitiated in the eyes of law. Even the application seeking material and documents referred in the reasons were not supplied and the said application was dismissed relying upon the decision which was not applicable to the facts of the case at hand on the date of consideration of application, in view of the dictum of the Supreme Court in the case of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] wherein as ordered to provide the respective assessee the information and material relied upon by the Revenue so that the assessee can reply to the show-cause notice within the specific time frame. In the aforementioned facts of the case and the decisions in the case of Harbanslal Sahnia [ 2002 (12) TMI 564 - SUPREME COURT] and Commercial Steel Limited [ 2021 (9) TMI 480 - SUPREME COURT] the submission for respondent that the writ petition is not maintainable in view of the existence of alternate remedy u/s 246A is not sustainable. This Court is of the considered view that in the facts of the case petition under Article 226 of the Constitution of India is maintainable. The decisions relied upon by the learned counsel for respondents are on different facts. Writ petition is allowed and the order of assessment is set aside. Matter is remitted back to the respondents-authorities for deciding the case afresh treating the notice issued under Section 148 to be a notice u/s 148A and to proceed complying the provisions under Section 148A of the Act of 1961 keeping in mind the decision of Hon ble Supreme Court in the case of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] and to pass the orders afresh. 2023 (12) TMI 650 Reopening of assessment - notice has been received after expiry of four years - Reason to believe - capital gain of the sale of property - HELD THAT:- In our view, the notice impugned as well as the order of disposing objections have to be quashed and set aside. We are in agreement with the submissions made by assessee. Admittedly, assessment was completed under section 143(3) of the said Act and assessment order came to be passed assessing Petitioner s income at Rs. 82,07,933/- against disclosed income at Rs. 81,23,993/-. The entire basis for reason to believe is accessed from Petitioner s record and there is nothing to indicate that there was any failure on the part of Petitioner to disclose fully and truly all material facts necessary for his assessment. Assessing Officer has made bald allegations that even though the assessee has produced books of account, profit and loss account balance sheet and other evidence, no requisite material facts, as noted in the reasons for reopening, were embedded in such a manner that material evidence could not be discovered. In our view, this has been made only to get over the fetters as held in Calcutta Discount Co. Ltd. V. Income-Tax Officer [ 1960 (11) TMI 8 - SUPREME COURT] . Moreover undisputedly query was raised during the assessment proceedings and Petitioner has provided the details vide letter dated 31.10.2014 on capital gain of the sale of property. Just because the same is not referred to in the assessment order, it does not mean that the query raised was not the subject matter of consideration while completing the assessment. As held by the Division Bench of this Court in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] it is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of query raised. This is a clear case where the reopening of the assessment is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceeding. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Decided in favour of assessee. 2023 (12) TMI 649 Validity of reassessment proceedings - Scope of new regime u/s 148A - non consideration of reply of petitioner before passing the order u/s. 148A(d) of the Amended IT Act and non compliance of order passed by the Apex Court in Union of India and Ors. Vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] - contention of petitioner that pursuant to receipt of legible copies on 07.06.2022, petitioner submitted reply on 18.06.2022 is denied by the Revenue by contending that neither soft nor hard copy of any reply to show-cause notice dated 19.05.2022 was received in the office of respondents, and therefore, the Assessing Officer was well within his rights to pass the impugned order u/s. 148A(d) and issue the consequential notice u/s. 148 of amended IT Act. HELD THAT:- At first blush, this contention of petitioner appears to be tenable. However, looking from the angle of concept of affording reasonable opportunity which is the foundational object behind Sec. 148A, it is seen that presently proceedings u/s. 148 have commenced in which the petitioner is being afforded reasonable opportunity of being heard. Pertinently, amendment to the IT Act w.e.f. 01.04.2021 introduced an additional opportunity for being heard by prescribing issuance of show-cause notice u/s. 148A before commencing proceedings u/s. 148 of amended IT Act. Thus, after introduction of Sec. 148A under the amended IT Act, the assessee is vested with statutory right of being heard by way of issuance of notice followed by affording of reasonable opportunity to submit reply and corresponding obligations on the part of Assessing Officer to consider reply and thereafter pass orders u/s. 148A(d). What comes out loud and clear is that the Assessing Officer either did not receive the reply filed by petitioner to show-cause notice dated 19.05.2022 after receiving legible copies of documents from the Revenue, or the petitioner did not successfully upload the reply on the website of Revenue. To resolve the aforesaid dispute, the traditional way out is to quash the impugned order and notice (Annexures P/12 and 13) and remand the matter to the Assessing Officer for considering the reply filed by petitioner to show-cause notice dated 19.05.2022 and thereafter pass fresh order. However, doing so would delay and prolong the proceedings which have commenced by issuance of show-cause notice u/s. 148 of IT Act. This Court thus, deems it appropriate and in fitness of things to adopt middle path for the sake of expediency by directing the AO to consider the reply of petitioner to show-cause notice dated 19.05.2022 and only thereafter proceed with the case u/s. 148 of IT Act. This petition stands disposed of in the following terms:- (i) The Assessing Officer is directed to consider the reply of petitioner to show-cause notice dated 19.05.2022, submitted after receiving legible copies and on consideration if it is found that reply is satisfactory, then the Assessing Officer is directed to drop proceedings u/s. 148A and recall the order u/s. 148A(d). (ii) In case, the reply to Sec. 148A is not found satisfactory, then the Assessing Officer will be well within his powers to proceed u/s. 148 of amended IT Act. (iii) While complying with the aforesaid direction No.1, the Assessing Officer shall not be influenced or prejudiced by the impugned order u/s. 148A(d) and impugned notice issued u/s. 148 of amended IT Act. 2023 (12) TMI 648 Order u/s 154 denying Exemption of income u/s. 10 - dividend received was claimed to be exempt from taxation - claim of the assessee was not allowed by the AO and an order / intimation u/s 143(1) was passed making addition / adjustment - In appeal, against the order u/s 154 assessee submitted that the aforesaid income is actually interest income instead of dividend income and the aforesaid interest income was received from investments made in Government Companies - HELD THAT:- We observe that in the case of DCIT vs. Justice Dilip Kumar Seth [ 2005 (9) TMI 239 - ITAT CALCUTTA-B] ITAT held that the AO is well competent to rectify any mistake in the intimation u/s.143(1) of the Act which was brought to his notice by the assessee. Also in the case of Pawan Kumar Aggarwal vs. CIT [ 2014 (5) TMI 449 - DELHI HIGH COURT] has held that from bare reading of section 154 of the Act, it is apparent that the power of rectification extends to amendment of an intimation or deemed intimation u/s.143(1) of the Act. The Hon ble High Court further held that this power of rectification enures even after the matter has been considered and decided in any proceedings by way of appeal or revision. It was held that necessarily this power extends even at the stage of the appeal and further appeal to the ITAT. In the case of Zen Tobacco (P.) Ltd. v ACIT [ 2015 (7) TMI 729 - ITAT AHMEDABAD] assessee had filed its return of income declaring certain income and the same was processed under section 143(1). Subsequently, on verification of assessee's record, it was noticed that the provision of deferred tax assets of certain amount, which ought to have been deducted from total income, was not deducted but added back to amount of profit and, thus, taxable income was overstated. Therefore, the assessee filed an application under section 154 seeking for rectification of mistake along with the revised statement of income and claimed a refund. AO rejected the application observing that the assessee should have filed a revised return rather than taking recourse to section 154, which was not permissible under the Act. On appeal, the Commissioner (Appeals) dismissed the appeal. On second appeal, the Ahmedabad ITAT held that from the provisions of sections 139(1), 139(5) and 143(1) it is evident that it is not the case that revenue authorities have to accept whatever has been stated in the return and compute the taxable income mechanically. As per provisions of section 143(1), the concerned revenue authority has to examine whether any claim as made by the assessee is correct or not. This includes understatement and overstatement of the income. If the revenue authority failed to take note of any incorrect claim with regard to total income of the assessee, such failure would necessarily mean mistake apparent from the record. Thus the matter is being restored to the file of the Ld. CIT(A) to carry out necessary verifications and if the claim of the assessee is found to be correct, may be allowed relief to the assessee in accordance with law. 2023 (12) TMI 647 Reopening of assessment - notice beyond period of four years - reason to believe - HELD THAT:- It is a well settled law that re-assessment proceedings cannot be initiated after beyond a period of four years unless the Department is able to demonstrate that such proceedings have been initiated on account of any failure on part of the assessee to truly and fully disclose all the material facts at the time of framing the assessment. In the instant case re-assessment proceedings were initiated on the ground that remuneration and interest are not allowable to the assessee in view of the provisions of Section 184(5) of the Act. In the case of CIT vs. Bhanji Lavji [ 1971 (1) TMI 6 - SUPREME COURT] held that when primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. In the case of CIT vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] held that the concept of 'change of opinion' must be treated as an in-built test to check abuse of power by AO - The Hon ble Supreme Court held that Assessing Officer has no power to review. In this case it was held that the AO can re-open the case only when there is tangible material would come to the conclusion that there is escapement of income from assessment. In the case of Jindal Photo Films Ltd. [ 1998 (5) TMI 20 - DELHI HIGH COURT] held that when between the date of orders of assessment sought to be reopened and the date of forming of opinion by the AO, nothing new had happened, there was no new material which had come on record or no new information had been received by the AO, it was held that this was a case of mere change of opinion which did not provide jurisdiction to the Assessing Officer to initiate proceedings under Section 147 of the Act. In the case of CIT vs. Soh Kisan Cold Storage [ 1993 (4) TMI 20 - PATNA HIGH COURT] held that since the AO had initiated re-assessment proceedings on the same set of facts which were present before him while making the original assessment and therefore, it was not permissible for him to initiate re-assessment proceedings u/s 147 of the Act. In the instant facts we observe that re-assessment proceedings have been initiated beyond the period of four years from the end of the relevant assessment year. Further, it has also not the case of the Department that any fresh or new material had been unearthed which would lead to the conclusion that income had escaped assessment in the original assessment proceedings on account of failure on part of the assessee to fully and truly disclose all material facts during the course of original assessment proceedings. In this case, it is observed that the Assessing Officer is only seeking to make a disallowance on account of re-appreciation of law with respect to the same set of facts which were present before him during the course of original assessment proceedings. This is a case of mere change of opinion, which is not permissible in law. Accordingly, we are of the considered view that the 147 proceedings are liable to be set-aside, looking into the instant facts. Decided in favour of assessee. 2023 (12) TMI 646 Bogus LTCG - capital gains arising on sale of shares cannot be regarded as sham profit - addition u/s 69A - unexplained transaction expense u/s 69C - HELD THAT:- As pointed out on behalf of the assessee, the transaction of existence of purchase and sale of CCL Ltd. giving rise to LTCG claimed to be exempt under section 10(38) of the Act is fully corroborated by the documentary evidences. The shares have been credited in the demat account and transferred out of demat account at the time of sale. Both purchase and sale transactions are carried out through banking channel and by transfer of shares. The prima facie bonafides of existence of transaction executed cannot thus be doubted. It is not the case of the revenue that the capital gain arising to Assessee in not in the nature of LTCG. The case of revenue is that such transactions is an accommodation entry and thus sham. The abnormal increase in prices of share has led to suspicion on bonafides of transaction and was treated as accommodation entry of sham nature. As decided in the case of Karuna Garg [ 2022 (12) TMI 858 - DELHI HIGH COURT] as well as Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] has held that an astronomical increase in the share price of a company in itself is not a justifiable ground for holding the LTCG to be an accommodation entry. As pointed out on behalf of the assessee large number of decisions pronounced by Co-ordinate benches holds the field in favour of the assessee in respect of same scrip of CCL International Ltd. . AO in another case namely Parth Yadav has framed the reassessment order without making any additions on account of LTCG derived from sale of CCL Ltd. Shares despite reopening the assessment on such ground. Thus, the Revenue itself, in other case, broadly accepted the view point canvassed. On the substratum of the company financials, the assessee has also demonstrated that CCL Ltd. is engaged in substantial business with significant turnover and fixed assets base. We are of the view that the addition is not justified based on conjecture and surmise and the assessee is discharged primary onus which lay upon it. The Revenue, on the other hand, could not dislodge the perception that apparent is not real. We see potency in the plea of the assessee that such capital gains arising on sale of shares cannot be regarded as sham profit and consequently, additions u/s 69A of the Act is not justified. AO has not provided anything on record to justify additions under section 69C of the Act either. The modus operandi spelt by itself is not a adequate ground to impeach the transactions. Decided in favour of assessee. 2023 (12) TMI 645 Addition u/s 56(2)(viib) - excess share premium recorded by the assessee - Revenue has controverted the action of the CIT(A) on the touchstone of Section 56(2)(viib) of the Act towards allotment of equity shares to the subscriber KV Aromatics Pvt. Ltd. which is the existing shareholder, holding 51% of the equity share of the assessee-company - CIT(A) deleted addition - HELD THAT:- The effect of issues of shares to holding company at a premium has been examined by the Co-ordinate Bench of Tribunal in the case of BLP Vayu (Projects-1) Pvt. Ltd. [ 2023 (6) TMI 209 - ITAT DELHI] essentially observed that where the allotment has been made to existing shareholders, the deeming provisions of Section 56(2)(viib) would not ordinarily be applicable. This apart, the assessee, in the instant case, has also dislodged the observation of the AO that the net worth at the time of issuance of shares were in negative by adducing valuation report. As per the valuation report, the FMV has been determined at Rs. 14.815 per share which is at par with the FMV at which shares have been issued to the holding company. Thus the premium charged is supportable by the valuation report and the premium charged is quite negligible and charged to existing shareholder. Thus effectively, the benefit if any arising to the company in turn benefits to the subscriber having pre-existing right in the company. Thus, in our view, the conclusion drawn by the CIT(A) cannot be faulted either on facts or in law. Revenue appeal dismissed. 2023 (12) TMI 644 Rectification application u/s. 154 - Period of limitation - DR submitted that the assessee did not file rectification application before the AO as per section 154(7) of the Act which is within four years from the date of intimation u/s.143(1) - HELD THAT:- Relying on the judgment of the Hon ble Supreme Court in the case of Hindware Industries Ltd. [ 1995 (1) TMI 415 - SUPREME COURT] we uphold the order of the CIT(Appeals) that the rectification application filed by the assessee is within time as per section 154(7) of the Act. For determining the limitation period u/s. 154(7), the AO has adopted the date of the order u/s. 143(1) as his starting point. He has however ignored the fact that the final response from the CPC is dated 04-12-2018 which was in turn in response to objection raised by the assessee against the demand. We further note that the CIT(Appeals) has remitted the issue back to the AO for verifying the claim of assessee of brought forward losses and allow the same. We find no infirmity in the order of the CIT(Appeals). Appeal by the revenue is dismissed. 2023 (12) TMI 643 Penalty u/s 271(1)(c) - sale of land was not disclosed in the original return of income - as per DR if case of the assessee not be selected for scrutiny, then the assessee would not have disclosed the capital gains on account of sale of assets - AO was of the view that the assessee had purchased the aforesaid property for a consideration which was less than the Fair Market Value for the purpose of stamp duty valuation, thus AO added the difference to the total income of the assessee u/s 56(vii)(b) - HELD THAT:- No penalty is leviable u/s 271(1)(c) looking into the facts of the instant case as at the time of sale of aforesaid immovable property the assessee had already made payment of taxes on 26.12.2014 (including tax deducted at source under Section 194 IA of the Act). Accordingly, it is evident that there was no intention of evading payment of taxes on short-term capital gain arising from sale of aforesaid property. Secondly, it is observed that the additions have been made by the AO by adding the difference by invoking the deeming provisions of Section 56(2)(vii)(b) of the Act by holding that the purchase price of the property was lower than the FMV of the property for stamp duty valuation purposes. Therefore, the addition was made by invoking the deeming provisions under Section 56(2)(vii)(b) of the Act and nothing has been brought on record to demonstrate that the assessee had concealed the particulars of income or had deliberately furnished inaccurate particulars of income. It would be useful to refer to the case of PCIT vs. Sun on Peak Hotel (P.) Ltd. [ 2018 (6) TMI 1055 - GUJARAT HIGH COURT] wherein the assessee had sold immovable property for a declared sale consideration of Rs. 2.75 crores. During the course of assessment proceedings, the Assessing Officer observed that for purpose of stamp duty valuation, the competent authority had valued the property at Rs. 3.40 crores. The assessee initially opposed the valuation adopted by the stamp valuation authorities but later on accepted liability to pay capital gains on the basis of stamp valuation and in fact filed a revised return of income. AO passed order of assessment in which, besides making appropriate additions, he also levied penalty under Section 271(1)(c) of the Act. In appeal, the Ahmedabad Tribunal opined that merely because assessee agreed to addition on the basis of valuation made by the stamp valuation authority, this could not be a conclusive proof that sale consideration as per sale agreement was deemed to be incorrect. The Tribunal thus held that penalty cannot be levied on the basis of deeming provision. In further appeal, the Gujarat High Court held that application of sub-Section (1) of Section 50C cannot automatically give rise to penalty proceedings. The Gujarat High Court held that whether once the assessee initially disputed stamp valuation and later on gave up the challenge and offered additional deemed income to tax, the impugned order passed by Ahmedabad Tribunal deleting penalty was to be upheld. Accordingly, we are of the considered view that penalty under Section 271(1)(c) of the Act is liable to be deleted in the instant set of facts. - Decided in favour of assessee. 2023 (12) TMI 642 Set off of the assessee s net loss against the addition made u/s 68 - NFAC/Ld.CIT(A) after setting off the net loss of the assessee, the balance amount addition sustained by ld CIT(A) - as submitted balance amount is a very small addition, which is covered by the exempted limit i.e., maximum amount which is not chargeable to tax of Rs. 2.50 lakh , as the assessee did not file the return of income - HELD THAT:- NFAC/Ld.CIT(A) has sustained the addition - further note that maximum amount which is not chargeable to tax is to the tune of Rs. 2.50 lakh and after deducting this amount of Rs. 2.50 lakh, there is hardly any addition remains. Also find that assessee has submitted sufficient evidences to prove the genuineness of the transaction. The whole exercise is to be based on facts and it is the duty of the assessing officer to marshal all the facts and come to a logical conclusion about the income of the assessee for the year under consideration. For this reliance is placed on the Judgment of Hon'ble Supreme Court in case of Sreelekha Bannerjee [ 1963 (3) TMI 47 - SUPREME COURT] wherein it was held that before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence, which it has in possession Therefore, considering the above facts and circumstances, we delete the balance addition - Decided in favour of assessee. 2023 (12) TMI 641 Addition u/s 14A r.w.r. 8D - AO categorically noted that as assessee has investment in mutual funds such investment cannot be made without incurring any expenditure - HELD THAT:- Merely, the dividend income is received in the bank account of the assessee but the disallowance of investment also requires expenditure. In view of this, we find that the AO has recorded satisfaction before invoking the provisions of Rule 8D of the Rules about the correctness of claim of the assessee. However, we agree with the assessee that the disallowance cannot be exceeded the exempt income earned by the assessee. In the present case, it is also claimed by the assessee that it has interest free funds available with it in the form of share capital and free reserve, which are far in excess of the amount of investment made in Mutual Fund. For A.Y. 2016-17, assessee has fund of ₹81 crores as share capital and free reserves whereas the investment in Mutual Funds is only ₹15.60 crores. Therefore, there cannot be any disallowance of interest expenditure under Rule 8D (2)(ii) of the Rules. Accordingly, interest disallowance made by the learned Assessing Officer for A.Y. 2016-17 of ₹21,92,534/- is not sustainable. Further, the administrative expenditure disallowed of ₹7,28,155/- is far more excess than the amount of exempt income earned by the assessee of ₹53,873/-. Therefore, we direct the learned Assessing Officer to restrict the disallowance u/s 14A of the Act for A.Y. 2016-17 to only ₹53,873/-. Coming to the A.Y. 2017-18, it apparent that assessee has earned exempt income of ₹7,59,432/-. Assessee has also issued suo moto disallowance of Demat charges and security transaction tax. However, the learned Assessing Officer computed annual average of monthly averages of the investment made at ₹11,09,38,464/- and therefore, disallowed at 1% thereof at ₹11,09,300/-.We direct the ld AO to compute the disallowance u/r 8 D considering only the on the investment which yielded exempt income during the year. Further, the computational error stated by the Ld AR also needs to be verified. Further disallowances in total including demat charges and STT paid cannot exceed the exempt income. We direct the LD AO to recompute the disallowance accordingly. Applicability of Amendment made by the Finance Act 2022 , we respectfully following the decision of Honourable Delhi high court in Era Infrastructure limited [ 2022 (7) TMI 1093 - DELHI HIGH COURT] hold that Amendment made by Finance Act, 2022 to section 14A by inserting a non-obstante clause and Explanation will take effect from 1-4-2022 and cannot be presumed to have retrospective effects. We allow both the appeals of the assessee and direct the ld AO to recompute disallowance. 2023 (12) TMI 640 Rectification intimation issued by CPC Bangalore u/s 154 denying exemption u/s. 11 - Audit Report in Form No.10B was not filed by the assessee along with return of income - HELD THAT:- The undisputed fact that emerges is that the assessee has filed Audit Report much before the processing of return of income by CPC u/s 143(1). Audit Report was very much available at the time of processing of return of income. The CPC have not taken the same into account while processing return of income u/s 143(1) as well as while dealing with 154 rectification application filed by the assessee. CIT(A) merely upheld the rectification intimation on the ground the rectification application filed by the assessee would not fall within the ambit of Sec.154 of the Act overlooking the fact that the grievance of the assessee was not even looked into by CPC in the rectification application. Apparently, the applicable exemption has been denied due to the fact that the assessee did not furnish details of audit in the return of income and Form No.10B was uploaded after filing of return of income. The facts of the present case are covered by the decision of Ahmadabad Tribunal in the case of Shree Charitable Trusts[ 2023 (7) TMI 282 - ITAT AHMEDABAD] as relying on ASSOCIATION OF INDIAN PANELBOARD MANUFACTURER [ 2023 (3) TMI 1374 - GUJARAT HIGH COURT] held that filing of Form No.10B would be directory in nature, as such the Assessing Officer are not powerless to allow an assessee to file Audit Report, it not filed along with return, at any time before completion of assessment. Aslo in SHRI CHANDRAPRABHUJI MAHARAJ JAIN JUNA MANDIR TRUST [ 2019 (8) TMI 363 - MADRAS HIGH COURT] filing of Form No.10 for accumulation of income u/s 11(2) which was filed beyond due date could not disentitle the trust from exemption claimed u/s 11. Thus we direct jurisdictional AO to verify the Form 10B filed by the assessee and allow the claim of exemption uls.11 of the Act. Appeal stand allowed for statistical purposes. 2023 (12) TMI 639 Undisclosed cash deposits in bank account - agricultural income declared in the ITR as submitted by assessee to support of source of cash deposits - HELD THAT:- It is not in dispute that the assessee along with his mother owns agriculture land measuring 38 bighas where apple orchards are grown and cultivated by the assessee. The land holdings records have been submitted before the lower authorities. Further, agriculture produce records have now been submitted which shows production of apples. The assessee has also availed cash credit limit from the bank based on joint land holding and the amount has been transferred in his bank account. It is the claim of the assessee that all expenditure and receipts from agriculture operations are undertaken through his bank account. Therefore, taking into consideration the land holding and apples production and the fact that all transactions are routed through the assessee s bank account, the explanation so submitted by the assessee in support of source of cash deposit of Rs 4 lacs out of agriculture produce is accepted. Also not in dispute that the assessee has worked as a contractor for HP Forest Corporation and has reported gross receipts u/s 44AD of the Act and which has been accepted by the AO. All the transactions in terms of receipts of money from HP Forest Corporation are credited in the assessee s bank account and corresponding expenditure are undertaken by way of withdrawals from time to time by way of cash and cheque payments. As submitted by the assessee that the work is being undertaken in remote far flung areas and given the nature of work, it is essential to keep certain cash in hand which is withdrawn from the bank from time to time and where certain cash so withdrawn is not required, the same is deposited back in the bank account. It has thus been submitted that source of cash deposit of Rs 3.20 lacs is out of earlier withdrawals and which has not been accepted by the AO merely for the reason that there is a time gap of two months in terms of withdrawal and subsequent deposits. In our view, the nature of assessee s activities and the business exigency of keeping cash in hand has to be considered instead of just looking at the entries in the bank account on a standalone basis. The entries in the bank account are reflection of the business activities so undertaken by the assessee and unless the nature of the business is considered, the entries on standalone basis won t provide a realistic picture of the transactions so undertaken by the assessee. Further, where the revenues from contract activities and corresponding expenditure are not disputed and there are regular deposits and withdrawals from the same bank account, the explanation of the assessee is found to be reasonable and merely for the reason that there is time gap of two months, the explanation so furnished cannot be rejected. The assessee has duly explained the nature and source of cash deposits in his bank account. Appeal of the assessee is allowed. 2023 (12) TMI 638 Assumption of jurisdiction u/s. 154 by AO - denial of deduction on account of Sumptuary Allowance for computing the income from Salary - assessee is an individual and is an employee under the West Bengal Judicial Services - HELD THAT:- AO has referred to the CBDT instruction dated 24.09.1966 in order to treat sumptuary allowance as entertainment allowance and made the said adjustment. Since the facts relating to sumptuary allowance is appearing in the revised return itself and it was not any new information but for computing the correct income and also for rectifying the apparent mistake committed while framing the assessment, ld. AO has made the said adjustment u/s 154 of the Act. We are therefore, of the view that legal issue raised by ld. Counsel for the assessee has no merit and hence, ground nos. 1 2 are accordingly dismissed. Merits of the case as observed that assessee has relied on the decision of Shri Ajay Godara vs. ITO [ 2018 (6) TMI 1845 - ITAT JAIPUR] wherein similar issue of sumptuary allowance was for consideration and this Tribunal held that sumptuary allowance is exempt from payment of tax - Thus we are inclined to hold in favour of the assessee and delete the addition. Assessee appeal is partly allowed. 2023 (12) TMI 637 Deduction u/s 80IA(4)(iii) - Correct head of income - lease rental earned from the leasing of units in industrial park qualifying for deduction u/s 80IA(4)(iii) - AO classified the rental income and treated the rental income from notified buildings under the head Profits or gains from business and profession as against income from house property thereby resulting in adjustment of claim of deduction u/s 80IA - AR submitted that the ld AO had accepted the taxation of lease income earned from non- SEZ buildings under the head income from house property and dispute is only with reference to lease income from SEZ buildings as notified u/s 80IA - HELD THAT:- As the rental income from the very same buildings having been assessed and accepted under the head Income from House Property in the past, the mere fact that in the year under consideration, the assessee has claimed deduction u/s 80IA in respect of notified buildings, there is absolutely no justification or basis for changing the head of income and same is self-contradictory and inconsistent. It is worthwhile to clarify that the observation of the ld. AO that the usage of terms 'profits and gains derived from such business' in section 80IA(1) means that eligible income must be assessable under the Profits or gains of Business and Profession' is irrational and misconceived as deduction is in respect of income from notified project and not head specific. It may be appreciated that that the benefit of deduction u/s 80IA of the Act is available in respect of income derived from industrial park which may be assessable under any head of income and as such the interpretation of the ld. AO is highly restrictive and contrary to the purpose and spirit of incentive provision. In fact, the bare language of the section 80IA of the Act does not even talk about any specific head of income and the entire emphasis is that the income must be derived from development, operation or maintenance of industrial park. In any case, we find that the very same issue of claiming deduction u/s 80IA of the Act for the lease rental income assessable under the head income from house property came up for adjudication before the coordinate bench of this Tribunal in the group concern of the assessee in ACIT vs DLF Assets Ltd [ 2022 (5) TMI 676 - ITAT DELHI] . It is not in dispute that the assessee had furnished the Chartered Accountant Certificates in Form 10CCB for claiming deduction u/s 80IA of the Act and that these certificates are enclosed together with detailed workings. Similarly, the claim of the assessee for AYs 2018-19 and 2020-21 were accepted by the ld AO in the scrutiny proceedings u/s 143(3) of the Act. For AY 2019-20, the case of the assessee was not selected for scrutiny. Hence, respectfully following the aforesaid decision of this tribunal and also the subsequent stand of the ld AO in the case of the assessee and also the decision of the ld AO in the immediately preceding year i.e. 2010-11, the ground No. 2 raised by the assessee is hereby allowed. Excluding signage income from the eligible income qualifying for deduction u/s 80IA - assessee has derived income from the tenants occupying the notified industrial park and the same duly forms part of the income taxable under the head Income from House property - AO sought to treat the said signage income to be in the nature of income from other sources and as such not eligible for claim of deduction u/s 80IA of the Act, which action was upheld by the ld CIT(A) - HELD THAT:- The signage income is derived from tenants occupying the notified industrial park and thereby partake the same character of the lease rental income so as to make it taxable under the head Income from house property . We find that this issue is squarely covered by the decision of this tribunal in assessee s own case for AY 2010-11 - It is not in dispute that the signage income is derived from the tenants occupying the building forming part of the notified industrial park. Hence, the same becomes inextricable connected with building connected with the notified industrial park and partakes the same character of lease rental income derived from the tenants thereon. In view of the aforesaid observations and respectfully following the judicial precedent relied upon herein above, the ground no. 3 raised by the assessee is hereby allowed. Deduction u/s 80IA in respect of amount forfeited on properties, promotion income, Miscellaneous-sale of scrap by treating the aforesaid income as Income from other sources as against the assessee s claim being eligible income eligible for deduction u/s 80IA of the Act under the head facilities management services - HELD THAT:- The aforesaid incomes have direct nexus with leasing and maintenance of the industrial park and must be construed as income derived from business and developing, operating or maintaining the industrial park which is notified by the Central Govt. We find that the lower authorities had sought to exclude the same on technical ground that such income are taxable under the head Income from other sources and as such not eligible for deduction u/s 80IA of the Act. This aspect has already been addressed above wherein, it has been held that for the purpose of claim of deduction u/s 80IA of the Act, the income must be derived from such notified industrial park irrespective of head of income under which it had been taxed. Accordingly, we have no hesitation in directing the ld AO to grant deduction u/s 80IA of the Act in respect of the aforesaid three items totaling to Rs. 2,08,66,023/-. Accordingly, ground raised by the assessee is allowed. Denying deduction u/s 24(a) - Assessee company has derived the signage income from the tenants from the space owned by the assessee and not from the outsiders as it allowed tenants to use the space at the atrium/ different floors for putting signage, the signage income has to be treated as income from house property' and as such is eligible for deduction u/s 24(a) of the Act @ 30% of such income. Allocation of expenses to eligible and non-eligible income without any cogent reason while computing the income eligible for deduction u/s 80IA - It is not in dispute that the assessee has placed on record the audit certificate in Form 10CCB for supporting the claim of deduction u/s 80IA of the Act together with the detailed workings thereon. The direct expenses incurred have been allocated between the eligible and non eligible units on actual basis and indirect expenses have been apportioned between these units in the ratio of turnover. The ld AO in his order had not given any rational basis for re-allocating the expenses and simply proceeded to reduce the claim of deduction u/s 80IA of the Act thereon. This action of the ld AO was also upheld by the ld CIT(A) without any basis and by ignoring the fact that the audit certificate containing the detailed workings of claim of deduction u/s 80IA have already been filed by the assessee before the ld AO. In any case, we find that the issue would be consequential in nature pursuant to the decision given by us in the aforesaid grounds. Accordingly, we direct the ld AO to accept the basis of allocation and apportionment of expenses as given by the assessee. Accordingly, ground raised by the assessee is allowed. TDS u/s 195 - Disallowance u/s 40(a)(i) - payments were made towards sponsorship renewal fee to Coronet Global Inc (USA Based company) and that the said party does not have Permanent Establishment in India - HELD THAT:- The lower authorities without considering this submission and without countering this fact stated by the assessee had summarily rejected the plea and proceeded to make disallowance u/s 40(a)(i) of the Act. We find that the assessee had duly placed on record the audit certificate in Form 15CB together with the invoices raised by the payee from where it has been categorically stated by the auditor that the payments made by the assessee constitutes business profits in terms of Article 7 of the Indo-US DTAA and in view of the fact that the payee does not have a PE in India, the assessee is not bound to deduct tax at source while making the said payment. Further, we find that the sponsorship fee paid by the assessee is related to the events carried out outside India. The payment of membership fee to overseas organization and the sponsorship fee cannot be said to accrue or earned in India in the absence of business connection with PE in India. This fact has not been controverted by the revenue before us with cogent evidences. Accordingly, we hold that the payments made by the assessee are not liable for deduction of tax at source and consequentially, the disallowance made u/s 40(a)(i) of the Act is hereby directed to be deleted. Workings of budgeted cost of construction on estimation basis for the construction project under Percentage Of Completion Method (POCM) - assessee contended before the ld CIT(A) that computation of percentage of completion and revenue recognition done by the ld AO is based on incorrect figures taken in the assessment order - HELD THAT:- CIT(A) concluded that the estimated budgeted cost of construction arrived by the ld AO is incorrect. The ld CIT(A) also observed that the assessee further revised budgeted cost of construction including project management consultancy and interest as on 31.03.2013 of Rs. 780.41 crores and as on 31.03.2014 to Rs. 784.64 crores which had been duly accepted by the ld AO and no disallowance on account of revised budgeted cost of construction has been made in those years. With these observations, CIT(A) deleted the addition made by the ld AO for the year under consideration. The factual findings given by the ld CIT(A) as stated herein above were not controverted by the revenue before us. Hence, we do not find any infirmity in the order of the ld CIT(A) granting relief to the assessee. Accordingly, the ground raised by the revenue is dismissed. AO denied relief u/s 80IA in the income in the form of costing recovery - We have already held that the income in the form of facility management service would be liable for deduction u/s 80IA of the Act irrespective of head of income in which it is offered to tax by the assessee. In simple terms, the income in the nature of costing recovery is nothing but recovery of charges towards maintenance and allied services which could be ascertained only at the end of the year and hence, they form intrinsic part of the facility management services . Disallowance of interest expenses pertaining to non SEZ unit amalgamated with the assessee - HELD THAT:- It is not in dispute that borrowings reflected in the erstwhile balance-sheet of non SEZ unit of M/s. Caraf Builders and Construction Pvt. Ltd were utilized for the purpose of investment in property which had yielded rental income to the assessee. The nexus of borrowed funds and the investment in property are established beyond doubt and not disputed by the revenue before us, hence the interest expenditure paid on lease borrowings would become squarely allowable as deduction in full while computing the Income from house property as the assessee had duly offered rental income from the said property under the head income from house property and taxed as such by the ld AO. Merely because the assessee itself had bifurcated the net interest component of Rs. 66.11 crores partly under house property and partly under the head income from business, the legal position for allowability of interest cannot be compromised. Since the borrowings have been utilized for investment in property; that the said property had yielded rental income to the assessee which had been offered to tax as income from house property and assessed as such by the ld AO, the interest paid on the aforesaid borrowings becomes fully allowable under the head income from house property itself. Hence, we direct the ld AO to allow the entire interest expenditure under the head income from house property and recompute the income accordingly. Hence, ground raised by the assessee is allowed. 2023 (12) TMI 636 TP Adjustment - selection/rejection of certain comparables - assessee has to be treated as low end BPO service provider - HELD THAT:- Acropetal Technology Ltd. - As per the information available in the annual report, the foreign exchange earning activity involves export in software services. Further, in the Note to Accounts it is stated that the company is engaged in the development of computer software. The segmental break-up at page 109 of the paper-book, though, mentions three segments, however, there is no ITES segment. Thus, keeping in view the factual position, as discussed above, we are of the opinion that this company, being functionally different from the assessee, is not comparable. The decisions relied upon by learned counsel for the assessee support our view. Accordingly, we direct the Assessing Officer to exclude this company. Infinity.com Financial Securities Ltd. - Undisputedly, in the fee income segment, the company has earned revenue from research services in relation to financial markets. Thus, in our view, the company is similar to the assessee, as the assessee is also involved in research services. As regards the other contentions of the assessee that forex filter of 75% should be applied and as far as lack of information regarding nature of foreign exchange earnings is concerned, we do not find merit in them. Accordingly, we uphold the selection of this comparable. Eclerx Services Pvt. Ltd. - We are convinced that it is engaged in high end KPO services, hence, under no circumstances, can be comparable to the assessee. Having noticed material difference in the functional profile, the Tribunal in assessee s own case in assessment year 2007-08 [ 2017 (12) TMI 1731 - ITAT DELHI] , has held that it cannot be a comparable to the assessee. There being no difference in the factual position involved in the current assessment year, we hold that this company cannot be treated as comparable to the assessee. Accordingly, we direct the Assessing Office to exclude it. Genesys International Corporation Ltd. is functionally different from the assessee as the nature of services provided are distinct and highly specialized. Considering this aspect, the Tribunal in assessee s own case in assessment year 2008-09 passed in [ 2018 (6) TMI 1844 - ITAT DELHI] has excluded it as comparable. ICRA Techno Analytics Ltd. - On going through the annual report of the company placed in the paper-book, we have observed that it provides wide spectrum of services including software development services and engineering design services. However, revenue has been reported without providing any segmental break-up. Thus, in our view, complete information relating to the service segment of the company is not available. That being the factual position on record, the company cannot be treated as a comparable. In this regard, we are supported by the decisions relied upon by learned counsel for the assessee. Accordingly, we direct the Assessing Officer to exclude this company. R Systems International Ltd. (BPO Segment) - Departmental authorities have rejected this company primarily for the reasons that sufficient data relating to the company is not available in public domain and it is a loss making company. However, before us, the assessee has submitted that the annual report of the company for the assessment year under dispute is available in public domain and it has not incurred loss in the current year and in the previous two assessment years, hence, it cannot be considered to be a persistent loss making company. In our considered opinion, the aforesaid contention of learned counsel for the assessee requires factual verification. Accordingly, we restore the issue to the Assessing officer for examining assessee s claim and decide it after providing reasonable opportunity of being heard to the assessee. Working capital adjustment - assessee has submitted that in assessment years 2007-08, 2008-09, 2009-10 and 2012- 13, the TPO himself has allowed working capital adjustment - HELD THAT:- We direct the Assessing Officer to examine assessee s claim, and in case, it is found that similar adjustment was allowed in assessment years 2007-08, 2008-09, 2009-10 and 2012-13, the same may be allowed to the assessee after examining the relevant facts. Needless to say, the assessee must be provided an opportunity of being heard before deciding the issue. TDS u/s 195 - Disallowance u/s 40(a)(i) - assessee has paid the amount to its AE towards management fee - whether payments made, being in the nature of Fees for Technical Services (FTS)? - HELD THAT:- As decided in own case [ 2022 (10) TMI 159 - ITAT DELHI] the services received by the assessees are general managerial services, hence, do not qualify the test of technical/consultancy services to satisfy the definition of FIS under Article 12(4) of the Tax Treaty. Thus, while considering the nature and taxability of corresponding receipts at the hands of the payee, the Tribunal has held that the amount is not taxable in India, in our considered opinion, there is no legal obligation on the assessee to withhold tax at source under Section 195 of the Act while remitting the management fee to the AE. This is so, because, section 195 itself is quite explicit in its language while providing withholding of tax in respect of any payment, which is chargeable to tax in India. Since, the management fee paid by assessee is not chargeable to tax in India in terms with Article 12(4) of India-USA DTAA, as held by the Co-ordinate Bench in case of the payee, the assessee was not required to deduct tax at source while making such payment - disallowance made under Section 40(a)(i) unsustainable - Decided in favour of assessee. 2023 (12) TMI 635 Challenging the authority of Additional Commissioner of Income-tax Act in passing the assessment order - DR has submitted that though the notices issued u/s 143(2) of the Act are available on the assessment record but the relevant notifications authorising the Additional Commissioner of Income tax as AO or the order of elevation of the Joint Commissioner to the post of Additional Commissioner of Income-tax are not available on assessment record because same were part of administrative procedure and therefore were not placed on the assessment record. He submitted that despite making thorough search of all record of the relevant authorities, those notifications / promotion orders could not be traced after a lapse of substantial period of more than 14 years. HELD THAT:- We find that in the case of Stock Traders P Ltd case the assessee had placed reliance on the decision of the Tribunal in the case of Tata Sons Ltd [ 2017 (12) TMI 297 - ITAT MUMBAI] and Tata communication limited [ 2019 (8) TMI 1446 - ITAT MUMBAI] but the Tribunal after considering the submission of the parties, rejected the additional ground challenging the authority of the Additional Commissioner of income-tax, in passing the assessment order. Thus, we dismiss the additional ground raised by the assessee. Deduction u/s 80IA - Taxability of renovation and modernization levy collected by the assessee from customers - HELD THAT:- We find that the issue in dispute is squarely covered by the decision of the Coordinate Bench of Tribunal in the case of the assessee in [ 2007 (4) TMI 396 - ITAT MUMBAI] . Since the issue of de-commissioning levy being different from the present levy of Renovation and modernization, which is covered against the assessee, thus, to maintain judicial discipline, we are not following the precedent in the case of decommissioning levy and prefer to follow the finding of the Tribunal (supra) on issue of renovation and modernization levy only. We also note that the assessee in assessment years i.e. 2004-05, 2005-06 and 2006-07 has admitted the collection of different levies as its income and claimed deduction on the same for the purpose of section 80IA of the Act. Once the assessee itself has admitted the receipt as income in subsequent years, we do not find any justification on the part of the assessee in contesting those receipts as not taxable. Research Development levy collected by the assessee - research and development levy has been discussed by the AO along with the renovation and modernization levy and added the same as income of the assessee - CIT(A) on the other hand, following the finding of his predecessor in assessment year 1997-98 upheld the order of the Ld. AO - HELD THAT:- We also note the assessee in assessment years i.e. 2004-05, 2005-06 and 2006-07 has admitted the collection of different levies as its income and claimed deduction on the same for the purpose of section 80IA of the Act. Once, the assessee itself has admitted the receipt as income in subsequent years, we do not find any justification on the part of the assessee in contesting those receipt as not taxable The issue in dispute in the year under consideration being identical to the issue in dispute raised in assessment year 1997-98, therefore, respectfully following finding of the Tribunal(supra), the ground Nos. 3 4 of appeal of the assessee are accordingly dismissed. De-commissioning levy collected by the assessee - HELD THAT:- We find that Hon ble High Court and the Tribunal has given finding on the issue of claim of interest expenditure for utilisation of the funds out of the decommissioning fund on the ground that said interest was credited to the decommissioning fund and when said fund has been utilized for the purpose of the business of the assessee, interest in respect of use of fund was eligible for deduction. The Hon ble High Court has observed that the situation is akin to the assessee borrowing fund from the market and utilising such borrowed funds for the purpose of the business and paying interest to the creditors. Thus, as far as the issue of disallowance of interest expenditure of ₹ 1836.71 lakhs is concerned, the issue is squarely covered in favour of the assessee and therefore the finding of the Ld. CIT(A) to that extent is set aside and matter is restored to the AO for following the decision of the Hon ble Bombay High Court [ 2019 (1) TMI 868 - BOMBAY HIGH COURT] and verify whether interest income credited has already been taxed, then claim of interest expenditure has to be allowed to the assessee. But as far as the issue of receipt collected by way of decommissioning charges and credited separately to decommissioning fund is identical to collection of the levy of renovation and modernisation fund, which we have upheld following the decision of the Tribunal in earlier years in preceding Para, and therefore to have consistency in our view, we uphold the addition treating the receipt of decommissioning charges as income in the hands of the assessee. We also note that the assessee in assessment years i.e. 2004-05, 2005-06 and 2006-07 has admitted the collection of different levies as its income and claimed reduction on the same for the purpose of section 80IA of the Act. Once the assessee itself has admitted the receipt as income in subsequent years, we do not find any justification on the part of the assessee in contesting those receipts as not taxable. The ground No. 5 of the appeal of the assessee is accordingly dismissed, whereas the ground No. 6(six) of the appeal of the assessee is allowed for statistical purpose. Considering the interest income, consultancy receipt and other income under the head income from other sources rather than adjusting the same against the expenditure incurred on construction of plants during the year under consideration - During the course of hearing, the learned counsel for the assessee was asked to justify as how the interest received from employees for mobilization advances was connected to the construction of project. Similarly, he was asked to justify as how the consultancy receipts were connected with the construction of plants. Similarly, regarding other receipts under the head other income reported as premium received on bonds, the ld Counsel was asked to justify as how same was connected with the construction expenditure. However, the Ld. Counsel for the assessee failed to file any documentary evidence in support of claim that those incomes were having nexus with the construction of the plants and therefore the plea of the assessee is accordingly rejected. We do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. Disallowance of prior period expenses - assessee submitted that total turnover of the assessee was around Rs. 1447.72 crores, whereas the total prior period expenses are only ₹ 11.55 crores, which is approximately 0.80%, which being normal and a small percentage, considering the size of organization and the locations, it should be allowed to the assessee - HELD THAT:- Before us, also no such detail of the legal expenses amounting to Rs. 7 lakhs has been filed and therefore, we do not have any option other than to uphold the disallowance made by the Assessing Officer. Disallowance of employee state insurance (ESI) and provident fund (PF) u/s 43B - HELD THAT:- Since, the issue in dispute of payment of employees contribution to ESI/PF after the due date under the relevant Act has been finally settled by the Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] and therefore employee s contribution ESI/PF paid after due date under the relevant is not allowable. Before us, the Ld. Counsel for the assessee claimed that said amount of disallowance include employee s as well as employer s contribution, however no such breakup of the amount has been given before us,, therefore, we remit this matter back to the Assessing Officer for verification and if this amount include any employer s contribution to ESI/PF, then the same may be allowed subject to provisions of section 43B of the Act i.e. paid before the due date of filing of the return of income and employee s contribution should be considered Applicability of section 115JA over the assessee who is an entity incorporated by the Government of India - HELD THAT:- As decided in Kerela State Electricity Board Vs DCIT reported in [ 2010 (11) TMI 127 - KERALA HIGH COURT] has firstly, held that the assessee was required to maintain its books of accounts in a manner specified by the Central Government, but not in the manner specified in the Companies Act, 1956, which is the requirement of provisions of section 115JA of the Act, thus section 115JA should not be applicable over government companies. Secondly, referred to the CBDT Circular (supra) and observed that Companies engaged in business of electricity generation were stated to be exempted from the provision of section 115JA of the Act and such an understanding was binding on the Income-tax authorities. Further, held that assessee or body similar, who are totally owned by the Government, have no shareholders, thus profit would be for the benefit of the public at large and taxation being meant for the welfare of the people, the mischief sought to be remedied by way of amendment (i.e. introduction of section 115JA/115JB becomes irrelevant, therefore, the fiction of section 115JB( in our case section 115JA) cannot be pressed into service against the assessee. The assessee before us being a company wholly owned by the Government of India, therefore, in view of the decision of the Hon ble Kerala High Court (supra), as upheld by the Hon ble Supreme Court [ 2022 (10) TMI 363 - SC ORDER] we hold that the assessee is not liable to be taxed under the provisions of section 115JA of the Act. Accordingly, the ground of appeal of the assessee is allowed. Disallowance of provision for the loss/obsolete stock - HELD THAT:- If a wrong claim has been allowed in the earlier year same cannot be ground for allowing in the year under consideration also. The Hon ble Supreme Court in the case of Distributor (baroda) Private Limited [ 1985 (7) TMI 1 - SUPREME COURT] held that there is no heroism in continuing the error and it should be corrected when pointed out. Though the learned counsel of the assessee has relied on various decisions cited, but the factual information of the list of such stock and how same became obsolete was not submitted before the lower authorities. Before us also no such evidences have been submitted to establish that relevant stock became obsolete. Unless properly identified the obsolete stock or a scientific way of making provision for such an obsolete stock is produced with documentary evidence, the claim of the assessee cannot be allowed. Therefore, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute, and accordingly, we uphold the same. The ground of the appeal of the assessee is dismissed. Not allowing the deduction for expenditure incurred in respect of income which has held to be income assessable under the head income from other sources - HELD THAT:- We are of opinion that under the provisions for assessment of the income under the head income from other sources , the assessee is eligible for expenses incurred for earning such income. Accordingly, we restore this ground to the file of the Assessing Officer for verification of the claim of the assessee and decide in accordance with law. Crystallisation of the expenses - HELD THAT:- CIT(A) has given detailed bifurcations of the such expenses claimed by the assessee. In case of TAPS and RAPS, the assessee failed to file any evidence to show that expenses crystallised during the year under consideration and therefore the CIT(A) has upheld the disallowance. Out of the expenses related to MAPS CIT(A), deleted the repayment of electricity charges recovered from the employees, but upheld the disallowance of repair and maintenance expenses and reconciliation adjustment entry for material received in earlier years due to to lack of documentary evidence to support crystallisation of expenses in the year under consideration. Similarly in respect of KAPS, the Ld. CIT(A) has deleted the addition for trade tax and bonus, whereas in respect of repair and maintenance and leave salary and pension contribution, the assessee failed to justify crystallisation of expenses in the year under consideration. Similarly the Ld. CIT(A) has disallowed the miscellaneous expenses and corporate office expenses due to lack of evidence supporting crystallisation of expenses in the year under consideration. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is justified and we do not find any error in the same, accordingly we uphold the same. Assessee has claimed for setting off of prior period expenditure against prior period Income. In our opinion, when the items of the prior period income are different than the nature of the expenditure, same cannot be allowed to be set off against the prior period income, which has been declared by the assessee on accrual basis. As far as claim of the assessee for allowing the said prior period Expenses in respective financial years, we are of the opinion that it is open for the assessee to avail remedy provided under statutory provisions of the Act for claim of such expenses in relevant financial /assessment years. Disallowance of extraordinary items written off - HELD THAT:- We find that Ld. CIT(A) has observed that no explanation or documentary evidence in respect of the claim of the expenditure was filed before the lower authorities. The Ld. CIT(A) has also observed that any amount incurred on account of current repairs to the premises can be allowed as revenue expenditure whereas the amount incurred has been claimed by the assessee for construction of a capital asset. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned, and therefore we uphold the same. The ground of the appeal of the assessee is accordingly dismissed. Disallowance of provision for loss /obsolete stock - We note that neither itemised detail of obsolete stock was filed nor any evidence was filed to show that any of those items had been disposed off being below cost in succeeding years. In absence of any documentary evidence filed by the assessee before the lower authorities, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly uphold the same. The ground of the appeal of the assessee is accordingly dismissed. Denial of deduction u/s 80IA in respect of the interest income and miscellaneous income - deduction on interest income earned from giving loans to staff working at undertaking namely KAPS u/s 80IA - HELD THAT:- The activity of providing loans or advances to the employees working at the eligible unit, is not part of the business activity of the undertaking. It might be a welfare activity on the part of the assessee but interest earned on such loans and advances to a staff cannot be any income derived from the operation of the power plant. In our opinion finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same, accordingly we uphold the finding of the Ld. CIT(A) on the issue in dispute. Regarding the deduction in respect of the miscellaneous income, no details have been submitted by the assessee before the lower authorities, therefore Ld. CIT(A) is justified in rejecting the claim of deduction under section 80IA in respect of miscellaneous income. The ground No. nine of the appeal of the assessee is accordingly dismissed. Exclusion of net interest income from the profit of the business for the purpose of section 80IA instead of gross interest income excluded by the lower authorities - HELD THAT:- The interest income earned from loans and advances to the staff has been excluded by the lower authorities for the purpose of deduction under section 80IA of the Act. In this ground, the assessee is claiming that interest expenditure should be adjusted against the interest income earned. The assessee has not given the details of the interest expenditure incurred in respect of the borrowing. If the borrowings were made for the purpose of extending loans and advances to the staff, then same could be netted off against the gross interest income, but in absence of any such nexus of the interest expenditure with the interest income earned, claim of netting off cannot be allowed. Disallowance of prior period expenses - CIT(A) has analysed all the expenses under the prior period Expenses and consider the expenses on the basis whether the same were crystallised in the year under consideration or not. Wherever the assessee failed to file any evidence in support of crystallisation of the expenses in the year under consideration, he upheld the disallowance. Before us no documentary evidence supporting crystallisation of those expenses in the year under consideration has been filed. Therefore, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the finding of the Ld. CIT(A). Disallowance of expenditure of research and development levy fund - HELD THAT:- The fact that expenditure was incurred for capital asset, which was installed at BARC, has not been disputed by the assessee. Evidently said expenditure is in the nature of the capital expenditure and not allowable as revenue expenditure u/s 37 of the Act. Accordingly, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and we uphold the same. The ground of the appeal of the assessee is accordingly dismissed. Apportionment of research and development expenditure to the units which were eligible for deduction u/s 80IA - CIT(A) has observed that research and development expenses have been incurred by the office. Before us the assessee has not provided details of specific R D activity carried out by the head office and whether same was not related to the electricity production activity of the plant eligible for deduction under section 80IA of the Act. In absence of any such information, the action of the lower authorities in allocating the said R D expenditure towards the profit from the undertaking eligible for deduction under section 80IA is justified and we do not find any error in the order of the Ld. CIT(A) in upholding the allocation of the R D expenditure to the eligible units. Disallowance u/s 14A - HELD THAT:- Prior to assessment year 2008-09, rule 8D of Income-tax Rules, 1962 (in short the rules) was not in operation and it was discretion of the AO to disallow expenses corresponding to earning of exempted on a reasonable basis. In the case, the AO has disallowed the administrative expenses in proportion to the ratio of exempted income to the total turnover of the assessee. But as per the submission of the assessee, assessee is receiving tax-free interest income on bonds invested in state electricity board, and no efforts except depositing the cheques of the interest were deposited in the bank. In such circumstances, we are of the opinion that disallowance proportional to the receipt of interest is too excessive. At maximum, some percentage of administrative expenses on salary, office establishment expenses etc would be sufficient to cover expenses corresponding to earning of exempted income. Accordingly, we set aside the finding of the CIT(A) on the issue in dispute and restore the matter to the file of the Assessing Officer for making disallowance on some reasonable basis . The assessee is directed to provide details of expenses including office establishment expenses related to employees engaged in work related to earning of exempted income so that Assessing Officer after verification of the same may be in position to decide the quantum of disallowance on reasonable basis. Depreciation on a reactor building at higher rate being classified as plant and machinery - CIT(A) has not given a specific finding on the issue of classification of the building under the category of plant and machinery by the assessee. But as far as facts related to the issue in dispute as whether the building which is part of the reactor could be termed as plant and machinery , available on record, therefore, both parties argued before us to decide the issue on merit. In our opinion, the ld. Assessing Officer has followed the ratio of the Hon ble Supreme Court in the case of M/s Anand theatre [ 2000 (5) TMI 4 - SUPREME COURT] and referred to the relevant provisions of the Act, we do not find any error on the part of the Assessing Officer in restricting the depreciation at the rate of the 10% of written down value of the building under reference. No other decision contrary to the decision cited by the Assessing Officer has been brought to our knowledge; therefore, we uphold the finding of the Assessing Officer. The ground of the appeal of the assessee is accordingly dismissed. Direction given by the Ld. CIT(A) for verification of the supplementary tax audit report in respect of the claim of the additional depreciation - HELD THAT:- The reason for difference was explained as misclassification of the asset and arithmetical error while computing the written down value. Before the Ld. CIT(A) the assessee filed engineer s certificate for valuation of plant and machinery eligible for depreciation at the rate of the 80% and 100 % (hundred percentile). It was submitted by the assessee that the above errors were identified during the tax audit for assessment year 2008-09. A copy of the relevant annexure to tax audit report for assessment year 2008-09 was also submitted during the course of the appeal before ld CIT(A). As further submitted that assessee obtained supplementary tax audit report from the tax auditor in which revised claim of the depreciation was certified by the auditor and reason for the claim of additional depreciation were stated. In view of the additional supplementary tax audit report, the Ld. CIT(A) directed the AO to verify and allow the ground of the appeal. In our opinion, there is no error in the finding of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The ground No. 30 of the appeal of the assessee is accordingly dismissed. Reduce of expenses from business profits for the purpose of 80-IA deduction - HELD THAT:- We find that Ld. CIT(A) considered the submission of the assessee that each unit of the assessee is a profit centre and all the expenses relating to the unit are captured at the respective unit and only unidentifiable head office expenses are allocated to power stations and projects in the ratio of annual net sale of electrical energy and annual capacity outlay. In our opinion, the assessee has allocated head office expenses not identified to particular unit on the basis of a reasonable allocation key. Accordingly the Ld. CIT(A) has held that no portion of said administrative expenses ought to be directed in the computation of the deduction under section 80IA of the Act. In our opinion, there is nowhere in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. 2023 (12) TMI 634 TP Adjustment - Global Corporate Client Management Fees by the assessee to its associate enterprise - Partial adjustment in respect of international transaction upheld by TPO-DRP - TPO commented that the services received by the assessee towards GCC charges were not specific in nature for which any separate charge need to be paid by the assessee to its associate enterprise - DRP has restricted the disallowance to the extent of 50% of the amount received by the AE - HELD THAT:- Since, during the year under consideration also the TPO/DRP has not followed any method u/s 92(1) of the Act for making adjustment in respect of international transaction pertaining to payment of Global Client Management Fees and similar to the earlier year [ 2022 (4) TMI 1574 - ITAT MUMBAI] the same was done merely on adhoc basis, therefore, following the decision of coordinate bench as referred above the TPO is directed to delete the impugned transfer pricing adjustment in respect of payment Global Client Management Fees. Therefore, these ground of appeal of the assessee are allowed. Disallowance of Travelling and conveyance expenses - AO on analysis of excel format of ledger A/c of travelling and conveyance observed duplication in the claim of expenses under the head transportation, thus disallowed 20% of expenses - HELD THAT:- In the profit and loss account both the items have been separately debited and assessee claimed that it had not claimed same expenditure twice and both the expenditure were claimed under the respective head with different nature and purpose. After considering the material placed on record we consider that the assessing officer has only mentioned in respect of duplication of expenses under the head transportation without giving any reference of such expenses already claimed by the assessee under the head travelling expenses. Therefore, we direct the AO to decide this issue afresh after verification/examination of the specific supporting detail maintained by the assessee in respect of claim of expenditure separately made in travelling and transportation head. Therefore, this ground of appeal of the assessee is allowed for statistical purposes. Disallowance of miscellaneous expenses - AO after analyses of the material submitted by the assessee observed that assessee has claimed expenses of capital nature under the head miscellaneous expenses, thus disallowed 20% of expenses - HELD THAT:- We find that assessing officer has made adhoc disallowance without specifically referring the exact amount of capital expenditure debited to the profit and loss account. Therefore, we restore this issue to the file of the assessing officer for deciding afresh to determine the exact amount of expenditure of the nature of capital expenditure, after verification of relevant documentary evidences maintained by the assessee. Therefore, this ground of appeal is allowed for statistical purposes. Short grant of TDS credit tax - This ground of appeal of the assessee is restored to the file of the assessing officer for deciding after verification of the relevant supporting material to be furnished by the assessee. Therefore, this ground of appeal is allowed for statistical purpose 2023 (12) TMI 633 TP Adjustment - Comparable selection - whether huge profit or a huge turnover, ipso facto lead to company's exclusion? - HELD THAT:- As following the foot prints of Obopay Mobile Technology India Private Ltd [ 2018 (7) TMI 2129 - KARNATAKA HIGH COURT] , Avaya India (P.) Ltd [ 2019 (7) TMI 1279 - DELHI HIGH COURT] and in the case of Cadence Design Systems (I.) (P.) Ltd [ 2018 (4) TMI 1574 - ITAT NEW DELHI] we hold that the turnover and brand name are relevant criteria for choosing companies as comparables in determining the ALP in Transfer Pricing cases. We, therefore, direct the learned Assessing Officer/learned TPO to exclude the entities[Infosys BPM Services Pvt. Ltd., and eClerx Services Ltd] from the list of comparables as per above criteria. Denial of working capital adjustment - As in view of the fact that for the assessment years 2009-10 and 2011-12, working capital adjustment is said to have been granted to the assessee apart from in sister concern s case of Parexel International Clinical Research Private Limited [ 2023 (3) TMI 1429 - ITAT BANGALORE] we set aside this issue to the file of the learned Assessing Officer/learned TPO to decide the issue afresh in the light of the above, after obtaining necessary information from the assessee. Grounds are accordingly treated as allowed for statistical purposes. 2023 (12) TMI 632 Appeal of the assessee ex-parte decided by CIT(A) - non compliance of the notices issued and not furnishing the documentary evidences - Addition of unexplained credits u/s 68 - HELD THAT:- Since the impugned order of the ld. CIT (A) was passed ex parte for non compliance of the notices issued and not furnishing the documentary evidences, by upholding the assessment order passed under section 143(3) read with section 147 of the IT Act, whereby the AO made addition on account of unexplained credits under section 68, therefore, in the totality of facts and circumstances of the case and in the interest of justice, we are of the view that it will be reasonable to provide one more opportunity to the assessee. We, thus, set aside the ex-parte order of the ld. CIT (A) and restore the matter back to the file of the ld. CIT (A) for fresh adjudication after providing a reasonable opportunity of being heard to the assessee. The assessee is granted one more opportunity to represent his case before the ld. CIT (A) and directed to file necessary documents/evidences as required by the ld. CIT (A). In case the assessee fails to appear before the ld. CIT (A), he may decide the appeal on the basis of the material available on record.Appeal of the assessee is allowed for statistical purposes. 2023 (12) TMI 631 Depreciation on goodwill claimed on acquisition of its subsidiary - claim of depreciation u/s 32(1)(ii) thereon @25% was made in return of income filed by the assessee was disallowed by the Ld. AO while framing regular scrutiny assessment u/s 143(3) - in view of AO, since under approved scheme of arrangement the subsidiary company had no intangible assets to be transferred to the assessee company, therefore the question of accounting for cost of goodwill in terms of explanation 7 to section 43(1) no longer arise - HELD THAT:- Basically, goodwill comes into existence in two scenarios i.e., either acquired or purchased and more specifically (1) Acquisition: when a company (acquirer/transferee) acquires any other company (transferor) which has goodwill in its books prior to its acquisition by acquirer, and (2) Purchased: when a company (acquirer/transferee) acquires any other company (transferor) at a payment consideration in excess of net assets value of transferor. Under Income tax laws it is a settled proposition that, acquirer/transferee company subject to provisions of section 43 r.w.s 32 of the Act is entitled to claim depreciation u/s 32(1)(ii) of the Act on goodwill which is either acquired or purchased by an excess payment of consideration over net asset value taken over or by former combined modes. In the instant case, we note that, the assessee company was holding 95% of total equity share capital of its subsidiary RMIPL prior to execution of scheme of arrangement. It remained an undisputed fact that, the subsidiary company RMIPL had no goodwill in its books of accounts as on the date of its acquisition by its holding company, the appellant. Therefore, the question of transfer of any such amount of goodwill while recording assets of subsidiary company into its books in first place uncloudly failed. That is to say there was no acquisition of goodwill by the assessee while acquiring its subsidiary RMIPL. Consequently, on this issue, both the tax authorities came to a rightful conclusion that, when RMIPL had no goodwill in its books of account, then the question of recording the same in its books doesn t arise and resultant claim of depreciation thereagainst was baseless. This being the factual position, we see no reasons to hold otherwise in the absence of any deprecative material placed and brought to our notice by the appellant company. Whether the assessee company purchased any goodwill by an excess payment consideration over and above the value of net asset of its subsidiary company RMIPL acquired under approved scheme? - total value of purchase consideration under the approved scheme of arrangement payable was to be worked out with reference to 3,125 equity share @ price of ₹142.08/per share. The resultant consideration paid/payable by the appellant under approved scheme, as rightly submitted by the Ld. AR that, was even much less than the value of net assets acquired by it. This being the factual admitted position, there was no scope of purchase of goodwill by excess payment of purchase consideration. The wholesome findings Ld. CIT(A) remained flawless to the effect that, the amount of goodwill supposedly claimed by the assessee can be traced into accounting entries passed by the assessee, which reveals that the appellant company has simply recognised the balancing figure i.e., excess of its cost of investment in RMIPL over Net Assets taken over by it as goodwill purchased. This treatment however, in our considered view is neither in accordance with the approved scheme of arrangement nor in consonance with the mandatory AS-14 issued by the Institute of Chartered Accountant of India. In nutshell, the material placed on records and the argument advanced beyond an iota of doubt establishes that, the appellant did neither acquired any goodwill from its subsidiary RMIPL nor it has made any excess payment towards purchase consideration over and above value of net asset acquired under the scheme. Therefore, it gave rise to no goodwill in the hands of the appellant assessee, resultantly no claim of depreciation thereagainst could arise. In these facts and circumstances, we countenanced the disallowance for foregoing reasons. All the grounds of appeal stand adjudicated accordingly. Decided against assessee. 2023 (12) TMI 630 Disallowing expenditure on account of gratuity representing amount actual paid to an approved gratuity fund of employer's contribution - assessee s case is that an amount has been paid as gratuity before the due date in filing of return of income to approved gratuity fund accordingly the said amount was allowable u/s 36(1)(v) r.w.s 43B - HELD THAT:- As per clause (b) of section 40A(7) of the Act allows deduction any provision made by assessee/employees for the purpose of payment of a sum by way of contribution towards and Approved Gratuity Fund. It is noted that assessee s case is that it has made contribution towards approved gratuity fund and therefore prima-facie the claim of the assessee need to be allowed since there is no fetter u/s 40A(7). DR brought to our notice that no verification of the fact has been under-taken by AO as to whether the assessee has made the actual payment on or before the due date of filing of return of income as well as whether the assessee has made payment to the approved gratuity fund which need to be verified by the AO. Thus we set aside the impugned order of Ld. CIT(A) and restore this issue back to the file of AO for the limited purpose of verification whether sum paid to the approved gratuity fund on or before the due date of filing of return; and the AO after verification find the claim to be correct to allow it. Disallowing deduction u/s 80G - CSR expenditure - HELD THAT:- Since the facts have not been verified by the AO (whether donees enjoyed certificate u/s 80G of the Act, the amount of donation etc need to be verified), the AO to do so and after the ratio of the aforesaid judicial precedent (supra) is applied to the facts of the case, to allow the same in accordance to law. Appeal of the assessee is allowed for statistical purposes. 2023 (12) TMI 629 Disallowance of Royalty paid u/s 37(1) - assessee is a franchisee bottler for the brand Aquafina owned by the franchisor PepsiCo India Holdings Pvt. Ltd. (erstwhile Pepsi Foods Private Ltd.) - non-compliance of notice issued under section 133(6) of the Act to Pepsi Foods Private Ltd and non-production of the party for verification by the assessee, for proving the genuineness of the transaction - HELD THAT:- It cannot be disputed that Pepsi Foods Private Ltd. now merged with PepsiCo India Holdings Pvt. Ltd. is well-known beverage and soft drink Company, having a presence across the globe. Therefore, mere non-compliance with the notice issued under section 133(6) and non-production of the said entity by the assessee before the AO cannot lead to the conclusion that the said entity is a non-existent entity and the transaction is not genuine. No material has been brought on record by the Revenue to show that the assessee did not manufacture and sell Aquafina bulk packaged drinking water in Mumbai as agreed under the aforesaid agreement dated 09/06/2003 during the year under consideration and the Royalty was paid to Pepsi Foods Private Ltd without usage of the trademark. It is also relevant to note that usage of the trademark without the consent of the owner is a violation of the provisions of the Trade Marks Act, 1999. Therefore accepting the submission of the Revenue that there was no agreement during the year under consideration will also lead to the conclusion that the assessee used the trademark of Pepsi Foods Private Ltd without any license, which is not the facts of the present case, as there is no material available on record to show that the assessee has infringed the trademark registered in the name of PepsiCo Inc. No basis in the submissions of the Revenue in denying the claim of deduction of Royalty paid by the assessee to Pepsi Foods Private Ltd during the year under consideration. Accordingly, AO is directed to allow the claim of Royalty paid by the assessee in the year under consideration. Decided in favour of assessee. 2023 (12) TMI 628 Revision u/s 263 - CIT noticed that AO had not properly examined the issue of suspicious sale transaction in shares and exempt LTCG claimed by the assessee - whether the AO has carried out the required examination and verification of the transaction of sale of shares, yielding long term capital gain claimed as exempt which is one of the reasons for selection of the case of the assessee for scrutiny assessment? - HELD THAT:- From the factual matrix of the issue raised by the ld. PCIT, we find that he has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act. We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issue raised through the show cause notice by the PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 both the conditions that the order must be erroneous and prejudicial to the interest of revenue, needs to be satisfied. Hon ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Their Lordships held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit Loss account of the assessee, copies of contract notes, DEMAT account and order sheet entries reveal the correct state of affairs in respect of the issue raised in the impugned revisionary proceedings for which both, ld. PCIT and the ld. CIT, DR could not bring any material on record to controvert the verifiable factual position. In cases where there is inadequate enquiry but not lack of enquiry, again the Ld. Pr.CIT must give and record a finding that the order/enquiry made is erroneous. This can happen if an enquiry and verification is conducted by the Ld. Pr. CIT and he is able to establish and show the error or mistake made by the AO, making the order unsustainable in law. The matter cannot be remitted for a fresh decision to the AO to conduct further enquiries without a finding that the order is erroneous, the condition or requirement which must be satisfied for exercise of jurisdiction u/s 263 of the Act. In such matters, to remand the matter/issue to the AO would imply and mean that the Ld. Pr. CIT has not examined and decided whether or not the order is erroneous but has simply directed the AO to decide the aspect/question. Assessee appeal allowed. 2023 (12) TMI 627 Addition u/s. 69B r.w.s. 115BBE - difference of value of stock of Gold and Silver - assessee has not shown the correct figures of opening and closing stock and suppressed the figure in audited balance sheet or auditor has failed to do audit correctly and truly - HELD THAT:- AO ought to have considered the data filed by the assessee before GST Authorities namely the monthly return in Form 3B and Annual return in Form 9 and 9C. As claimed that the AO failed to appreciate that the valuation of the stock has a cascading effect, the assessee will get higher value on carry forward of stock as opening stock in the succeeding year. Thus, it is claimed that the addition made by the A.O.is against the provisions of law. As observed that the tax-audit report filed by the assessee does not carry the details of purchases as well sale of Gold and Silver. The assessee was asked by the authorities below to file revised tax-audit report, but the assessee failed to file the same. The purpose and purport of tax- audit report is to assist the authorities to compute correct tax liabilities in framing assessment. The tax-audit report is certified by qualified Chartered Accountant, and if any discrepancies are found in the tax-audit report, it is incumbent on the assessee to obtain and file Revised Tax-Audit Report. AO also asked assessee to file documents for preceding years, which the assessee did not file. We have observed that the assessee has filed voluminous paper book containing 688 pages, and the claim made by the assessee requires verification by the authorities below. Thus, it will be appropriate, if the matter is restored to the file of the AO for consideration of the claim of the assessee afresh and frame denovo assessment. The assessee is directed to co-operate with AO and file all necessary and relevant details called for by the AO during set aside/remand assessment proceedings - AO shall give proper opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. Estimating profit @ 0.15% being the difference of STR report and turnover wherein the STR report was not provided to the assessee - We deem it fit to set aside the matter back to the file of the Assessing Officer with a direction to pass fresh assessment order by giving adequate opportunity to the assessee to explain its case. Needless to say, the assessee should cooperate with the Ld. A.O. in completing the fresh assessment. 2023 (12) TMI 626 Addition u/s 41 - cessation of liability - as alleged by assessee AO not discharged preliminary onus before making addition - HELD THAT:- As canvassed before the CIT(A) by the assessee that the Assessee was having running accounts with the above parties and has furnished the ledger accounts for previous and subsequent years to prove the transactions with those parties. A.O. did not confront anything to the assessee after preliminary details were furnished and A.O. has also not made any independent enquiry. The assessee had filed copies of the assessment orders for Assessment Years 2013-14 to 2015-16 in which the transactions with all the parties have been duly accepted, further in the absence of the A.O. bringing any material or reasons before making any addition, simply added back the opening balances of the trade payables without making any verification from the parties. A.O. has also ignored the fact that part of the payment have been made in current/subsequent year and there is a running account with these parties held by the assessee. CIT(A) has relied on various decisions of Apex Court as well as various High Courts and ultimately deleted the above addition. Considering the fact that the A.O. has failed to discharge the preliminary onus and has made the addition in summary manners, in our considered opinion, the CIT(A) has committed no error in deleting the addition of Rs. 20,00,37,558/- made u/s 41 of the Act. Accordingly, we dismiss the Ground No. 1 of the Revenue. Disallowance of 50% of handling charges - Since the opening outstanding was added by the A.O., he was of the opinion that the amount is not being paid to party expenses during the year are also treated as not genuine and 50% of the same has been disallowed - CIT(A) deleted addition - HELD THAT:- Since, the Assessee was following Mercantile System of Accounting and not on cash basis, the expenses cannot be disallowed merely on the basis of nonpayment to the vendors. It has been observed by the CIT(A) that the A.O. has not brought on record any material or evidence to show that the expenses claimed are not genuine or the expenses have not been incurred for the purpose of business. Further, the A.O. has not made any enquiry also from the assessee on this regard. The A.O. without rejecting the books of account which was duly audited made the above disallowance of 50% of handling charges which has been rightly deleted by the CIT(A). We dismiss the Ground No. 2 of the Revenue. Addition u/s 68 on account of unsecured loans - DR relying on the assessment order, submitted that the assessee has only submitted the acknowledgement of return and confirmation of amount outstanding at the yearend but not submitted the copy of the bank account to prove that the said amount has been repaid - CIT(A) deleted addition - HELD THAT:- It is the case of the assessee that the bank statement has been duly uploaded on the e-portal and also furnished the copy to the A.O. which has not been considered by the A.O. during the assessment proceedings. It is not clear as to whether the CIT(A) while deleting the addition has actually verified the bank statement or not, the order of the CIT(A) is non speaking and the same is cryptic. We restore the issues to the file of the A.O. for de-novo adjudication with a direction to the assessee to submit the bank statement of Shri Naveen Rao to substantiate the claim of the assessee. Accordingly, we partly allow the Ground No. 3 of the Revenue for statistical purpose. Disallowance of PMS fees and interest on TDS - HELD THAT:- As disallowance has been correctly deleted by the CIT(A) on the ground that the assessee shown the shares in the balance sheet as stock-in-trade, therefore, the expenses are allowable as business expenses. The interest on TDS is also compensatory in nature and is not penal and therefore, the same is allowable - Thus order of the CIT(A) in granting the relief to the assessee by deleting the addition accordingly confirmed , we dismiss the Ground No. 4 of the Revenue. Disallowance u/s 14A - HELD THAT:- The assessee earned exempt income of Rs. 2,52,128/- in the form of dividend income and the amount of disallowance u/s 14A cannot exceed the total exempt income, therefore, we find no error or infirmity in restricting the disallowance u/s 14A of the Act to the amount of dividend income i.e. Rs. 2,52,128/- and the balance disallowance has been rightly deleted by the CIT(A). Thus, we find no merit in Ground No. 5 of the Revenue, accordingly Ground No. 5 of the Revenue is dismissed. Addition u/s 40A(2)(b) - increase of Director s remuneration - A.O. on perusal of employees benefit expenses found that there is increase in expenses from Rs. 4,72,44,155/- to Rs. 5,15,49,744/- while there was a reduction in total revenue of the assessee from 71.09 crore to 45.39 crore - HELD THAT:- It is found that the assessee had given no explanation before the A.O. regarding increasing the remuneration of Directors but during the first appellate proceedings, the assessee made elaborate submission and the CIT(A) observed that there is an increase of Directors remuneration as the Directors have been given rent free accommodation and the landlord has increased the rent during the year and the perquisite value of the land free accommodation has been duly shown in ITR filed by the Directors. The said fact has not been brought to the notice of the A.O. and the same has been left without examining by the A.O. Therefore, we remand the issue involved in Ground No. 6 to the file of the A.O. for fresh adjudication with a direction to the assessee to substantiate its claim by providing the evidence. 2023 (12) TMI 625 Unexplained investment - scribbling/notings/jottings on loose papers found during the course of search relied concluding assessee has made expenditure out of books for purchase of land and construction of the factory thereon - HELD THAT:- The Hon'ble Delhi High Court in the case of Praveen Juneja [ 2017 (7) TMI 1102 - DELHI HIGH COURT] held that addition cannot be made on the basis of a document which is silent as to the payer and payee of the amount in question and does not disclose that the payment was made by cheque or cash nor it is proved that the document is in the handwriting of the assessee or at least bears his signature. Also in Common Cause Others Vs. UOI [ 2017 (1) TMI 1164 - SUPREME COURT] has held that loose sheet of papers are wholly irrelevant as such evidence is not admissible u/s 34 of the Act. These transactions mentioned therein have no evidentiary value. If we consider the entire factual matrix relating to the impugned additions apart from the impugned loose sheets, there is no further corroborative evidence suggesting undisclosed investment was available on record. As A.Y 2014-15 is the first year of incorporation. Therefore, by no stretch of imagination it can be said that the assessee company has brought in its own unaccounted funds for making the unaccounted purchases. Since the business has not even commenced in the subsequent A.Y. i.e. 2015-16 also, the assessee company had no funds on its own, whether accounted or unaccounted from revenue operation. There is nothing on record to suggest that the Assessing Officer has taken any action against the promoters/directors of the assessee company. Similar view was taken by the Hon'ble High Court of Allahabad in the case of Lal Mohar [ 2017 (12) TMI 133 - ALLAHABAD HIGH COURT] wherein as held that since it was the first year of business of the AOP, and no business activity having shown to have been conducted by it that could lead to generation of unaccounted income on the first day of relevant accounting period itself, the Tribunal has not committed any error in deleting the impugned addition. No merit in the additions made by the Assessing Officer. Appeal of assessee allowed. 2023 (12) TMI 624 Netting of interest income - Interest Income earned from the Investment made in the sister concern - real income concept - Earning of interest income out of borrowed funds - nexus as established between Interest paid and Interest earned - assessee that assessee follows Project Completion Method for recognition of revenue and has not recognized any revenue for taxation during the year - HELD THAT:- As in the present case the question is not whether the Interest Income is to be taxed Under the Head Income from Other Sources or Income from Business and Profession - The fundamental question is of netting off. In the earlier paragraphs we have elaborately discussed and observed that the Interest Earned by the assessee has direct nexus to the Interest paid by the assessee. Once this fact is established that the Interest earned have Direct Nexus to Interest Paid, then applying the concept of Real Income and applying the proposition of law laid down by Hon ble Delhi High Court Triumph Reality Pvt. Ltd. [ 2022 (4) TMI 1233 - DELHI HIGH COURT] we agree with the assessee that Only Net Interest shall be capitalised. Therefore, we direct the AO to delete the addition - grounds of appeal raised by the assessee are allowed. 2023 (12) TMI 623 Unexplained investment in two watches - same were not included in the valuation report taken at the time of opting for VDIS Scheme - CIT(A) deleted addition as agreed to the submissions of assessee that said two watches being part of declared watches in the Wealth Tax Return cannot be taken as unexplained investment of assessee - HELD THAT:- CIT(DR) could not rather did not controvert a factual position discernable from the document submitted by the assessee which is reconciliation statement of watches during the course of search with the watches declared in the Wealth Tax Return show that the watches at serial no. 1 6 were part of valuation report as on 31.03.2013 and these were listed at item no. 48 50 respectively in the valuation report no. 1 and the watches at serial no. 1 6 were taken in exchange of these two watches already shown in the Wealth Tax Return. In such a factual position we are of the view that the ld. CIT(A) has granted relief to the assessee on the basis of correct appreciation of facts and circumstances and by considering the Wealth Tax Return, valuation report and reconciliation statement which clearly reveals that the watches at serial no. 48 50 declared in the wealth tax return were exchanged and listed at serial no. 1 6 of reconciliation statements with the all details of exchanged watches. Therefore the ld. CIT(A) was right in granting relief to the assessee. Accordingly ground no. 1 2 of revenue are dismissed. Unexplained Jewellery found from the locker - CIT(A) deleted addition - HELD THAT:- The locker was last operative on 28.06.2012 and thereafter it was operative on 21.01.2020 during course of search seizure operation which was conducted on 19.01.2020 on Bharat Hotels Group including the assessee. From the date of search i.e. 19.01.2020 the block period of six years is AY 2014-15 to 2019-20 and the subsequent year 2020-21 is the year of search. Thus the jewellery purchased or acquired before 28.06.2012 cannot be stretched and taken into consideration as unexplained jewellery in the hands of assessee neither in the year of search i.e. present AY 2020-21 nor even in the six block assessment years. We are unable to see valid reason to interfere with the findings arrived by the ld. CIT(A) and thus we uphold the same. Our conclusion also gets support from various judgment of CIT vs. Vivek Kumar Aggarwal [ 2015 (2) TMI 590 - DELHI HIGH COURT] .Therefore ground no. 3 of Revenue is also dismissed. Unexplained foreign currency found during the search - CIT(A) has granted relief to the assessee - HELD THAT:- we note that the Assessing Officer made addition by observing that the foreign currency found seized during the course of search seizure operation whereas the ld. CIT(A) after considering the explanation of assessee concluded that the foreign currency was found seized from the resident of Mrs. Ritu Suri and she signed the inventory of seized material including the foreign currency. It is also pertinent to mention that the ld. CIT(A) further noted that on conclusion of assessment proceedings Mrs. Ritu Suri filed an application u/s. 132B of the Act before the authorities concerned requesting the returned the seized movable properties including the foreign currency. This factual position has not been controverted neither by the Assessing Officer nor by the ld. CIT(DR) before us. Revenue ground no. 4 5 of revenue are also dismissed. 2023 (12) TMI 622 Revision u/s 263 - exemption u/s 11(2) - as per CIT purpose of accumulation u/s 11(2) not mentioned - HELD THAT:- It is observed that issue relating to accumulation under section 11(2) of the Act has been specifically enquired by the Assessing Officer and duly responded by the assessee also. We do not see any lack of enquiry at the end of the Assessing Officer and justification of the same at the end of the assessee. The only objection of the learned Commissioner of Income-tax (Exemptions) is with regard to this accumulation is that exact purpose not specified. The assessee has placed on record form 10 furnished before the AO specifying the purpose, amount and period of accumulation. The purpose for accumulation has been specified as charitable purpose . In any case, the purpose of accumulation cannot be beyond the objects of the assessee. In this regard, the legal position is in favour of the assessee, i. e., the assessee is not suppose to mention the exact purpose of accumulation. Thus it can be safely concluded that all the technical requirements were duly fulfilled by the assessee along with satisfactory response to the queries raised through notice under section 142(1). The only objection raised by the learned Commissioner of Income-tax (Exemptions) through notice issued u/s 263 was that the assessee has not specifically mentioned the purpose of accumulation, is not a valid objection for which proceedings u/s 263 cannot be carried out. As the facts discussed above and considering various judicial pronouncements, we find the merits in contentions of the assessee. We find no error in order passed under section 143(3) of the Act. In view of this ground Nos. 2 and 3 raised by the assessee are allowed and order passed under section 263 of the Act is set aside. Decided in favour of assessee. Benami Property 2023 (12) TMI 621 Prohibition of Benami Property Transaction - Initiating Officer issuing provisional attachment of the property order u/s 24(3) of the PBPT Act - Petitioner submitted that despite repeated requests by the petitioners, no material has been supplied to them and no opportunity of personal hearing was provided before passing of the order under Section 24(4) of the PBPT Act - as argued petitioners to the effect that the provisional attachment order passed by the Initiating Officer under Section 24(3) of the PBPT Act is illegal as the petitioners were asked to submit response/reply to the notice under Section 24(1) and (2) of the PBPT Act up to 15.05.2023 but without waiting for reply, the Initiating Officer passed the provisional attachment order on 01.05.2023 HELD THAT:- From bare perusal of the provisions of Section 24 of the PBPT Act, it is clear that the Initiating Officer is not required to wait or consider the response/reply filed pursuant to the notice under Section 24(1) (2) of the PBPT Act before passing the provisional attachment order. The only requirement for the Initiating Officer is to seek approval of the approving authority before passing the provisional attachment order under Section 24(3) of the PBPT Act and from the provisional attachment order dated 01.05.2023, it is clear that prior approval of the approving authority was obtained by the Initiating Officer. Hence, the said argument of the learned counsel for the petitioner being bereft of merits is rejected. So far as argument of the learned counsel for the petitioners that the Initiating Officer, at the time of issuance of show cause notice under Section 24(1) (2) of the PBPT Act, did not record any reason to believe, is concerned, it is to be noticed that the Initiating Officer in the show cause notice dated 28.04.2023 has specifically recorded the reasons to believe. In such circumstances, we do not find any merit in the above argument of the learned counsel for the petitioners. Section 2(9)(A)(a) of the PBPT Act provides that where a property is transferred or held by a person and the consideration for such property is paid by another person, then the said transaction means Benami transaction. The stand of the respondents is that the petitioner-company is a shell company, however, immovable properties are purchased in its name not from company s funds or its capital but from the funds made available by the petitioner No.2 from the income earned through other businesses. The Initiating Officer, after taking into consideration the material available with it and the response filed on behalf of the petitioners, recorded its prima facie opinion in the order dated 28.07.2023 passed under Section 24(3) of PBPT Act. Having gone through the above reasons recorded by the Initiating Officer, we are of the opinion that submissions of learned counsel for the petitioners referring to Section 2(9) of the PBPT Act are without any basis, hence rejected. The judgment rendered in M/s Shri Kalyan Building s case [ 2021 (10) TMI 343 - RAJASTHAN HIGH COURT] is of little help to the petitioners because in that case the petitioners approached this Court after passing of the order by the adjudicating authority under Section 26(3) of the PBPT Act and the appellate tribunal, where the petitioners had remedy to prefer appeal, was not functional, however, no such situation exists in the present case. Apart from that, the findings recorded by the learned Single Judge in M/s Shri Kalyan Building s case is based on that facts and, therefore, the same are not binding. As per the provisions of Section 24 of the PBPT Act, the Initiating Officer is required to record its prima facie satisfaction before referring the matter to the adjudicating authority. Considering the provisions of Section 24 of the PBPT Act, the Division Bench in Dinesh Chand Surana Vs. Deputy Commissioner of Income Tax (Benami Prohibition) Chennai Ors [ 2022 (9) TMI 1134 - MADRAS HIGH COURT] as held that part, it is important to note that the proceedings under section 24 only require a recording of prima facie opinion as to the benami nature of the transaction and the respondent is required As decided in Abhay Nigam Ors. vs. Union of India Ors., [ 2021 (6) TMI 1044 - MADHYA PRADESH HIGH COURT] If Scheme ingrained in Sec. 24 and 26 of the Act of 1988 is compared with the PML Act, it will be clear that the Scheme is almost pari materia. For this reason also, we deem it proper to hold that adjudicating authority is best suited and statutorily obliged to consider the validity of provisional attachment order and the case put forth by the present appellants. No case for interference made. Hence, all these writ petitions fail and are hereby dismissed. 2023 (12) TMI 620 Prohibition of Benami Property Transaction - Applicability of provisions of Section 5 of the Amended Act, 2016 - funds infused into the shell companies by multiple layering in the guise of share capital or loan from other Marg Group of Companies had actually flown only from Marg Limited directly and finally, one of the shell companies would re-invest the funds so routed in immovable properties - Initiating Officer had reasons to believe that the arrangements made by the respondent with various shell companies is a benami transaction within the meaning of Section 2 A (9) of the Prohibition of Benami Property Transactions Act, 1988 - as contended on the side of the appellants that Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 will have retrospective effect and therefore, the common order passed by the Tribunal, to the contrary, is liable to be interfered with. HELD THAT:- In view of the above, this court is of the opinion that as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd [ 2022 (8) TMI 1047 - SUPREME COURT] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced. It is to be noted that in the Review Petition [ 2023 (1) TMI 1327 - SC ORDER] filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd [ 2022 (8) TMI 1047 - SUPREME COURT] delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd , cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals. Customs 2023 (12) TMI 619 Seeking permission to withdraw this Special Leave Petition - waiver of the pre- deposit requirement as placed in terms of Section 129E of the Customs Act, 1962 - HELD THAT:- The Special Leave Petition is dismissed as withdrawn. 2023 (12) TMI 618 Seeking condonation of delay of 526 days in filing appeal - no explanation whatsoever for the huge delay - Classification of imported goods - Antenna for base station imported by the appellant - HELD THAT:- The Civil Appeal is hence dismissed on the ground of delay, keeping open the questions of law which arise, to be agitated in any other appropriate case. 2023 (12) TMI 617 Seeking grant of bail - illegal smuggling of gold from Dubai - prohibited goods or not - HELD THAT:- It is a settled law that while granting bail, the court has to keep in mind the nature of accusation, the nature of the evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, the circumstances which are peculiar to the accused, his role and involvement in the offence, his involvement in other cases and reasonable apprehension of the witnesses being tampered with. Taking into account the totality of facts and keeping in mind, the ratio of the Apex Court's judgment in the case of State of Rajasthan v. Balchand @ Baliay [ 1977 (9) TMI 126 - SUPREME COURT ], Gudikanti Narasimhulu And Ors., v. Public Prosecutor, High Court Of Andhra Pradesh, [ 1977 (12) TMI 143 - SUPREME COURT ], Ram Govind Upadhyay v. Sudarshan Singh Ors., [ 2002 (3) TMI 945 - SUPREME COURT ], Prasanta Kumar Sarkar v. Ashis Chatterjee Anr., [ 2010 (10) TMI 1199 - SUPREME COURT ] and Mahipal v. Rajesh Kumar Anr., [ 2019 (12) TMI 1461 - SUPREME COURT] , the larger interest of the public/State and other circumstances, but without expressing any opinion on the merits, I am of the view that it is a fit case for grant of bail. Hence, the present bail application is allowed. Let applicant, Umesh Agrawal, be released on bail on his furnishing a personal bond and two reliable sureties each in the like amount to the satisfaction of the court concerned subject to the conditions imposed - bail application allowed. 2023 (12) TMI 616 Provisional release of goods - Constitutional Validity of Circular No. 35/2017-Cus dated 16.08.2017 - ultra vires and violative of Section 151A of the Customs Act, 1962 - HELD THAT:- A plain reading of the impugned order indicates that the said conditions were imposed in the light of paragraph 2.1 and 2.2 of the impugned Circular issued by the Central Board of Excise and Customs. Paragraph 2 of the impugned Circular, which indicates the conditions on which the provisional release of the goods can be granted, was declared as void by a Coordinate Bench of this Court in ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) VERSUS M/S. ITS MY NAME PVT. LTD. [ 2020 (6) TMI 72 - DELHI HIGH COURT] . In view of the above, since the impugned order has been passed on the basis of paragraph 2 of the impugned Circular, the same is liable to be set aside. The impugned order is set aside and the matter is remanded to respondent no. 6 to decide afresh and the petitioner s application for provisional release of the goods is restored before respondent no. 6 - Petition allowed. 2023 (12) TMI 615 Classification of imported goods purchased on High Seas Sale - waste paper printed waste books - classifiable under RITC 49011010 or under RITC 47079000? - HELD THAT:- The condition of the goods at the time of import, which is the taxable event, is the material factor for the purpose of classification and that end use to which the goods are put to by itself cannot be determinative of the classification of the product. However, it is noticed that at times post import procedures of goods to suit policy guidelines have been permitted by the department. CBEC vide Circular No. 33/2016-Customs dated 22/07/2016 at Para 1.5.2 of Section 1 prescribes certain relaxations for importers of AEO-T2 including affixation of MRP label at their premises. The appeal is disposed off by way of remand for a decision afresh, within 90 days of receipt of this order. 2023 (12) TMI 614 Classification of coal - HELD THAT:- The Larger Bench of the CESTAT in a batch of appeals in the case of TAMIL NADU GENERATION DISTRIBUTION CORPN. LTD. VERSUS C.C., TUTICORIN [ 2017 (8) TMI 765 - CESTAT CHENNAI] wherein an identical issue was involved, vide common Order dated 16.01.2017 had remanded the matter to the file of the adjudicating authority to await the decision of the Hon ble Apex Court in the case of M/S. MARUTI ISPAT AND ENERGY PVT LTD VERSUS THE COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX [ 2017 (11) TMI 1629 - SUPREME COURT] . Thus, no purpose would be served in holding these appeals since most of the other appeals have been remanded to the file of the original authority and hence, this matter is also remanded to the adjudicating authority to await the decision of the Hon ble Apex Court. The appeals are disposed of by way of remand. 2023 (12) TMI 613 Imposition of penalty u/s 114A of the Customs Act, 1962 equivalent to the duty short-paid - personal penalty of other appellants under Section 112(b) of the Customs Act, 1962 - tax amount has been paid with interest before issuance of show-cause notice - HELD THAT:- The mis-declaration of the assessable value by the appellant resulted into short-payment of Rs.14,97,179/-, hence imposition of penalty equivalent to the said differential duty of Rs.14,97,179/- under Section 114A of the Customs Act, 1962 on the appellant is justified. There are no error of facts or in application of law in arriving at the said conclusion by the learned Commissioner when the allegation of gross undervaluation of the product and transferring the suppressed amount later through non-banking channels have been accepted in the statements of the Managing Director and other persons of the appellant-company; consequently, the penalty imposed on the appellant-company is hereby upheld. There are no reason to interfere with the findings of the learned Commissioner on the personal penalties imposed on each of other appellants who were actively involved in the gross undervaluation. However, considering the gravity of offence committed and the facts and circumstances of the case, the penalty imposed on Shri T. Gopi, Managing Director is reduced to Rs.2,00,000/- (Rupees Two Lakhs Only) and the penalty imposed on Shri D. Madan Raj, Marketing Director is reduced to Rs.1,00,000/- (Rupees One Lakh Only) under Section 112(b) of the Customs Act, 1962 to meet the ends of justice. The appeal filed by the appellant-company is dismissed and the appeals of other appellants are partially allowed. 2023 (12) TMI 612 Refund of Excess Customs Duty paid - application for refund filed beyond the period of limitation prescribed under Section 27 of Customs Act, 1962 - HELD THAT:- This Court finds that the decision relied upon by learned AR in the matter of Cummins Technologies India Pvt. Limited vs. UOI [ 2023 (9) TMI 199 - BOMBAY HIGH COURT] pertaining to not pursuing remedies or due diligence was in that matter pertained to statutory period of filing appeal before the Hon ble Bombay High Court having expired and the question therefore of entertaining writ was refused. Additionally the mistake was not considered bonafide and due care and diligence was found lacking therefore the Hon ble Court viewed that claim was correctly rejected on the ground of limitation as per applicable Section 27 read with Section 128 of Customs Act, 1962. As against this, Hon ble Gujarat High Court considered two years a reasonable period when the duty was paid by mistake. In the instant case, this court finds that payment was made twice due to technical glitch in the Customs payment system. The appellants to file refund pursued the matter with bank to get confirmation of double payment, as well as taking certification from Chartered Accountant on the basis of accounts to indicate such double payment and therefore, lack of diligence is not indicated on the face of record. Appeal allowed. 2023 (12) TMI 611 Request to amend the shipping bill for converting free shipping bill to DEPB shipping bill denied - time limit prescribed for amendment of the shipping bill or not - HELD THAT:- While considering the issue the Tribunal in the matter of M/S. CARBOLINE INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2022 (2) TMI 745 - CESTAT CHENNAI] , observed that the exporter realise the mistake in two shipping bills dated 18.04.2018 and 02.05.2018 and request was made for amendment vide letter dated 19.08.2020. In the above circumstances the Tribunal held that When the statute does not prescribe any time limit for filing an application for conversion of a shipping bill, the department cannot rely upon a circular to frustrate the provisions contained in the statute. When there is a conflict, the statute will definitely prevail over the Board circular. Though it is admitted that the circular No.36/2010 dated 23.09.2010 fixing time limit of 3 Months is not proper, as held by Hon ble High Court of Delhi in the matter of COMMISSIONER OF CUSTOMS (EXPORT) VERSUS E.S. LIGHTING TECHNOLOGIES (P) LTD. [ 2019 (11) TMI 736 - DELHI HIGH COURT] , merely because no time limitation is prescribed under Section 149 for the purpose of seeking amendment/conversion, it does not follow that a request in that regard could be made after passage of any length of time. The request by the appellant was to convert shipping bill from free to advance license shipping bill. The Respondent cannot entertain such request for conversion without examination of the records. It is not fair to expect the department to consider the request for such amendment after 5 long years. Thus there is no infirmity in the impugned order rejecting the request for amending shipping bill for converting free shipping bill to DEPB shipping bill 6 years after export of goods. The appeal is rejected. 2023 (12) TMI 597 Seeking provisional release of the goods imported by the petitioner albeit on furnishing a bond equivalent to the value of seized goods and a bank guarantee/security deposit equivalent to 120% of the said amount - Constitutional Validity of Circular bearing No. 35/2017-Cus dated 16.08.2017 - HELD THAT:- Paragraph 2 of the impugned Circular to the extent it curtails the discretion accorded to the adjudicating authority is set aside as being contrary to the Customs Act - The impugned order is set aside and the petitioner s application for the provisional release of the goods is restored before respondent no. 6. Considering that the goods involved are perishable, respondent no. 6 is directed to decide the matter afresh and pass a speaking order within a period of four working days from date after hearing the petitioner - The petitioner shall appear before respondent no. 6 on 11.12.2023 at 10:30 a.m. Application disposed off. Insolvency & Bankruptcy 2023 (12) TMI 610 Admission of claim by Resolution Professional - fixation of rent amount with 5% increase - HELD THAT:- In so far as the fixation of rent amount at Rs.1,09,448/- per month with 5% increase, it was decided in terms of the agreement and we see no ground to interfere with the said decision and the claim of the amount of Rs.1,71,875/- on the basis of the market value of the premises in question, the Corporate Debtor being in CIRP and the Corporate Debtor continuing being in occupation of the premises, the direction of the Adjudicating Authority to determine the rent as per the Agreement cannot be faulted. Due to mere fact that no invoices were issued by the Appellant after April, 2018, the claim could not have been reduced, now the Adjudicating Authority has itself found the amount to Rs.1,09,448/- per month, the claim for the months in which Corporate Debtor was in occupation of the premises may be determined. In view of the order of the Adjudicating Authority the claim filed by the Appellant in Form B may be admitted by the Resolution Professional and the Resolution Professional shall modify the claim as per the direction of the Adjudicating Authority in Clause (b), Para 4 of the impugned order. The appeal allowed in part to the extent that the claim in Form B is to be modified accordingly. 2023 (12) TMI 609 Maintainability of Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - whether there is a pre-existing dispute on the basis of the submissions of both the parties and this has been dealt in detail by the Adjudicating Authority in his impugned order? - HELD THAT:- AA concluded that the respondent after the receipt of the statutory demand notice dated 11.02.2022 replied on 03.03.2022 raising a dispute. The Adjudicating Authority has gone into the circumstances of their business dealings, which was mainly basis oral arrangements and which cannot be fully substantiated and accordingly have come to the conclusion that the dispute raised by the respondent is plausible and not a patently feeble legal argument. Thus, when the Appellant received the reply to Section 8 demand notice raising a dispute, the Section 9 petition could not have been proceeded under I B Code against the respondent. The Adjudicating Authority concluded, that to determine the contention of the respondent that the Sale Order dated 02.03.2019 was placed by the Petitioner in pursuance to an oral agreement dated 05.04.2018, to decide whether private mediation was held and settlement was arrived therein and whether petitioner agreed to forfeit Rs. 4 crores security deposit by the respondent and to decide the genuineness of the invoices and Sale Orders relied by the respondent requires, further investigation is required which can be decided only after examining the witnesses. Accordingly, AA concluded that in this scenario pre-existing dispute is existing. The inference by the Adjudicating Authority that there is a pre-existing dispute, cannot be faulted - there are no grounds to interfere in the order of the Adjudicating Authority for not allowing proceedings under Section 9 of I B Code, 2016 - appeal dismissed. 2023 (12) TMI 608 Rejection of claim by the Resolution Professional - true nature and content of Agreement dated 29.03.2019 - Agreement is a contract of guarantee under Section 126 of the Indian Contract Act, 1872 or not - Submission of the Appellant is that mere fact that the document dated 29.03.2019 is containing heading Agreement is not decisive and its nomenclature is not decisive - HELD THAT:- There can be no dispute to the preposition that nomenclature is not decisive. To find out the nature of the document, it requires to be noted that the Agreement dated 29.03.2019 in light of Debenture Trust Deed which is the genesis of Agreement dated 29.03.2019 - the Debenture Trust Deed defines the Corporate Guarantee which was to mean that the Deed of Guarantee was to be executed by the Developer in favour of the Debenture Trustee in a form and manner acceptable to the Debenture Trustee - Security Provider can also be any other person apart from Obligors and Security Document include Corporate Guarantee and such other documents for creating such other Security as may be required by the Debenture Trustee from the Obligors. Security Documents, thus, both includes Corporate Guarantee, which has already been defined and other document for creating such other security as may be required. There is no averment in the entire agreement that RIHPL is undertaking to guarantee to repayment of secured obligations by the Company. It is to be noted that Corporate Guarantee was already executed on 03.08.2018 on which date the Debenture Trust Deed was executed and in event the RIHPL was taking on its folds the entire lability of Principal Borrower as a Guarantor there ought to have been some indication in the Agreement. The Resolution Professional having not admitted the claim of the Appellant and communicated its rejection, it is not necessary for us to enter into the submission of the Appellant that Committee of Creditor s decision prima facie not accepting the claim of the Appellant was without jurisdiction. In any event, an application has already been filed by the Appellant before Adjudicating Authority questioning the decision - There can be no doubt that it is the Adjudicating Authority who is entrusted with jurisdiction to adjudicate all issues which arise out of the resolution process of a Corporate Debtor. On reading the Agreement dated 29.03.2019 and look into the Clauses, it is clear that said Agreement was executed in reference to Clause 7.5(b) of the Debenture Trust Deed and the Agreement was only of for the purpose of creating additional security. The RIHPL being party to the Agreement dated 29.03.2019, the additional security as given under the Agreement can be enforced as per Clause 6 of the Agreement. Giving of additional security by Agreement dated 29.03.2019 cannot be read to mean that the Corporate Debtor has given any guarantee in reference to the secured obligations of the Obligors under the Debenture Trust Deed. The Agreement dated 29.03.2019 cannot be read as guarantee within the meaning of Section 126 of the Contract Act. The claim filed by the Financial Creditor was not limited to the extent of RIHPL security but entire amount under the Debenture Trust Deed was sought to be claimed in the claim form submitted by the Appellant. The Resolution Professional did not commit any error in refusing to admit the claim of the Appellant - there are no good ground to interfere with the order of the Adjudicating Authority - appeal dismissed. Service Tax 2023 (12) TMI 606 Irregular availment of CENVAT Credit - invoices were issued more than one year prior to the date of taking such credit - Short payment of service tax on OLIDAR service - suppression of facts - irregularly availing exemption in terms of Notification No.01/2006-ST - Demand towards security service and consultancy service under RCM - Extended period of limitation - Penalties. Irregular availment of CENVAT Credit - invoices were issued more than one year prior to the date of taking such credit - HELD THAT:- It is found that the Appellants have regularly taken Cenvat credit and no case is made out of having taken credit after more than one year from the date of invoice. In this view of the matter, this ground is allowed in favour of the Appellant. Short payment of service tax on OLIDAR service - suppression of facts - HELD THAT:- Evidently Appellants have not disputed the amount of turnover as calculated by the Revenue and the same is matching with their financial records for the period April 2011 to March 2016 - It is already held herein above that the Cenvat credit availed by the Appellant is legal and proper and the same is not irregular. Thus, Appellants have rightly discharged the service tax and there is no case of escaped service tax. Accordingly, this ground is allowed in favour of the Appellant and the demand is set aside. Short payment of service tax - suppression of facts - HELD THAT:- It is found that the Appellants have got matching turnover for sales of goods, which is not exigible to service tax during the period of dispute. Accordingly, this ground is allowed in favour of the Appellant and set aside the demand. Irregularly availing exemption in terms of Notification No.01/2006-ST - HELD THAT:- The Appellants have simply provided multimedia presentation, website hosting and domain registration services which are not taxable under the category of OLIDAR service. Accordingly, this ground is allowed in favour of the Appellant and set aside the demand. Demand towards security service and consultancy service under RCM - HELD THAT:- The expenses in question, incurred by the Appellant, have not been received from Advocate or a firm of Advocates towards legal services. Accordingly, it is held that no service tax demand is attracted under RCM. Accordingly, this ground is allowed and the demand is set aside. Extended period of Limitation - HELD THAT:- As the returns of the Appellant were in arrears almost for a period of two and half years, the returns were filed during the course of investigation. Accordingly, extended period of limitation is rightly invokable. It is the statutory duty of the Appellant to file their returns in time. Penalties - HELD THAT:- It is found that no case of suppression of any facts is made out, save and except the delay in filing the returns. Further, all the grounds are allowed on merits and no demand survives. In this view of the matter, all penalties imposed on the Appellants also set aside. The impugned order set aside - appeal allowed. 2023 (12) TMI 605 Delay in filing of appeal or not - service of the order - time limitation - appeal rejected on the ground of being filed much after a period of 60 + 30 days from the date of receipt of the Order-in-Original - Recovery of service tax alongwith interest - HELD THAT:- The Order-in-Original dated 28.07.2020 was served upon the appellant by two different modes one by speed post which apparently has not returned back undelivered ; two that the order was delivered to one of the employee of appellant namely Shri Prateek Rao. He admittedly is the employee of appellant as service supervisor. It is opined that issuance of copy of order by speed post does not amount to service thereof as such because it will be mere dispatch of the order - No doubt in section 37C, speed post is the mode of service but proof of dispatch is still mandatory. In the absence of proof of receipt of the O-I-O to the appellant sent by speed post, the same cannot be held to have been served. Shri Prateek Rao, who admittedly received the order is an employee of the appellant in their workshop. In addition, ld. CA has placed on record an affidavit of Shri Prateek Rao, wherein he deposed that he received notice but he failed to bring it to the notice of the appellant. The contents of said affidavit are fully corroborated by partner of the appellant, Shri Abbas Ali Ghasswala - It gets clear from the affidavits that the Order-in-Original could never be brought to the notice of the appellant. It is only from the recovery notice dated 23.02.2023, the appellant acquired knowledge about the Order-in-Original dated 28.07.2020. On the very next day, appellant applied for the copy of the said order and not in later than 10 days of getting the copy of the impugned order, appeal has been filed. The present appeal shall not be thrown at the threshold and shall be decided on the merits of the case - this is a fit case to be remanded to the Commissioner (Appeals) with the direction to decide the appeal on merits of the case after giving reasonable opportunity of hearing to the appellant - appeal is allowed by way of remand. 2023 (12) TMI 602 Valuation of service - inclusion of freight charges in the taxable value for C F service - invocation of extended period of limitation - penalty - HELD THAT:- The facts show that in respect of C F services provided by appellant to M/s Ultra Tech Cement Ltd. the appellant had entered into two separate agreements. One for C F services and the other for providing GTA services. It is asserted by the Ld. Counsel that the appellant is a proprietary concern and when M/s. Ultra Tech Ltd informed them that they wanted a separate agreement for GTA services and that they would discharge the service tax, the appellant agreed accordingly. The letter issued by M/s Ultra Tech Ltd dated 27.06.2013 establishes that the service tax has been paid on freight charges by M/s Ultra Tech Ltd. However, they are discharging service tax only as service recipient Further it is also brought out that the appellant has collected mark up on the freight charges - Further it is also brought out that the appellant has collected mark up on the freight charges. They have also used their own trucks to provide transportation of goods. From these facts it would require to remand the matter to verify such details and to quantity the demand on such basis - there is short payment of tax as the appellant has to include the freight charges in the taxable value for the reason that appellant had provided such services as part of Clearing and Forwarding Agency services. The issue on merits is answered against the appellant and in favour of Revenue. Time Limitation - HELD THAT:- Apart from the allegation that the appellant had bifurcated the contracts there is no positive act, of suppression alleged in the show cause notice. As already discussed, even though the contract is bifurcated, the appellant has not suppressed this fact from the department. The appellant had collected the freight charges by a separate invoice and this was properly accounted. So also they were under the bonafide belief that as M/s. Ultra Tech Cement Ltd was discharging the service tax under GTA, and that appellant is liable pay service tax on freight charges under C F services - appellant has made out a strong case on the ground of limitation. The show cause notice issued invoking the extended period is cannot sustain. Penalty - HELD THAT:- The penalties imposed requires to be set aside invoking Section 80 of the Finance Act, 1994 as it stood during the disputed period. The impugned order is modified to the extent of the setting aside the demand and interest and penalties for the extended period. The demand of service tax and interest payable (if any) for the normal period is sustained. The penalties are entirely set aside - Appeal allowed in part. Central Excise 2023 (12) TMI 604 Maintainability of appeal - concession in case of sale in favour of industrial or institutional consumers - HELD THAT:- In view of the order in COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. MADRAS CEMENTS LTD. [ 2019 (11) TMI 1784 - SC ORDER] , no case of interference is made out, where it was held that The appeals/SLP, being devoid of any merit, are liable to be dismissed and, are dismissed accordingly. The civil appeals are dismissed accordingly. 2023 (12) TMI 603 CENVATCredit - rolled products/ rounds and HR coil/ sheets - denial on the ground that they are not inputs but were final products in themselves - procuring only Cenvatable invoices from their suppliers, like M/s Kailash Steel and Alloys without commensurate movement of goods - penalties - HELD THAT:- The learned Commissioner failed to appreciate that HR Coils can be used as inputs in the manufacture of ingots/ billets in an induction furnace. The Revenue s allegation that the appellant did not have equipment to cut the coils and manufactured formers for captive consumption is not based on any evidence like Panchnama. The appellant s claim that they have borrowed the equipment from other manufacturers cannot be ignored. Obtaining only the invoices from his suppliers, without receiving the material - HELD THAT:- Revenue has not undertaken any investigation into the aspect of actual transportation and the receipt of the material; no statement of transporter/ driver was recorded; no enquiries with the banks was made to ascertain whether the transactions were genuine and are not just temporary adjustments with flow back of money. Under such circumstances, the Department has not made out any case against the appellants. Mere allegation without any evidence to substantiate cannot hold. Penalties - HELD THAT:- The appellants are eligible for the disputed CENVAT credit. When the credit is held to be admissible, penalties impose on both the appellants do not survive. Appeal allowed. 2023 (12) TMI 601 CENVAT Credit - input service - after sales services - denial on the ground that the said services were allegedly not used in or in relation to manufacture of products and hence could not be covered in the definition of input service as provided under Rule 2(l) of the CCR, 2004 - HELD THAT:- This issue has also been considered by this Tribunal recently in the case of JCB India Ltd. [ 2023 (5) TMI 133 - CESTAT CHANDIGARH] wherein this Tribunal on identical facts has considered various decisions rendered on the issue of cenvat credit of service tax paid on repair and maintenance service during the warranty period and has also considered the definition of input service prior to 01.04.2011 and after 01.04.2011 and held appellant has correctly availed cenvat credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant. Further, it is found that this Tribunal in various decisions relied upon by the appellant on identical issues has consistently held that the assessee is entitled to cenvat credit of service tax paid on Repair and Maintenance during the warranty period as the same fall within the ambit of Input Service as provided in Rule 2(l) of CCR, 2004. The impugned order is not sustainable in law - Appeal allowed. 2023 (12) TMI 600 Levy of oil cess under section 15(1) of the Oil Industry (Development) Act, 1974 - condensate - period from March 2016 to September 2016 - HELD THAT:- The Joint Commissioner, by order dated March 09, 2018, has confirmed the demand with interest and penalty but the Commissioner (Appeals), following the order of the Tribunal rendered in the case of the respondent itself M/S FOCUS ENERGY LTD. OTHERS VERSUS C.C.E. JAIPUR [ 2018 (12) TMI 1168 - CESTAT NEW DELHI] for an earlier period, has dropped the demand holding that condensate emerging out during the processing of natural gas is not crude oil and, therefore, not chargeable to oil cess. In the said decision, the order dated December 29, 2014 passed by the adjudicating authority was set aside and the appeal was allowed. This decision in the case of the respondent was followed by the Tribunal in another case for a different period, in M/S FOCUS ENERGY LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX AND CENTRAL EXCISE [ 2019 (7) TMI 900 - CESTAT NEW DELHI] . The impugned order has relied upon three decisions of the Tribunal which have not been set aside - there are no merit in this appeal - appeal dismissed. CST, VAT & Sales Tax 2023 (12) TMI 607 Levy of penalty u/s 86 of the Delhi Value Added Tax Act, 2004 - case of appellant is that the Tribunal has not only misconstrued the earlier orders of remit as framed by this Court, it has also proceeded in complete ignorance of the ambit of the penalty provision - principles of natural justice - HELD THAT:- A reading of the order dated 26 September 2016 clearly establishes that the Court had not only accepted the contention of the appellant that the levy of penalty was unjustified since the question of taxability itself was contentious, but also that imposition of penalty at 200% was unjustified and disproportionate. It was in the aforesaid backdrop that it was pertinently observed that since the point had remained arguable, the levy of penalty at 200% would not sustain. It was on an overall conspectus of the aforesaid conclusions that the Court ultimately proceeded to remit the mater for the consideration of the Tribunal - It is opined that the order of 26 September 2016 cannot possibly be interpreted or understood as confining the challenge of the appellant to the issue of proportionality alone. There are other sub-sections of Section 86 which embody the principles of a statutory penalty. For instance, sub-section (5) deals with the contingency of an assessee failing to comply with Section 21(1). The aforesaid provision obliges a registered dealer to apprise the Commissioner of circumstances which may warrant amendments in its registration. A similar example of a statutory penalty stands embodied in sub-section (6) and which authorises the levy of a penalty in case a dealer violates Section 22(2). An assessee becomes liable to be penalized under Section 86(9) consequent to a failure to furnish a return or failing to append requisite documents with a return or its refusal to comply with a direction to revise a return. As would be manifest from a close scrutiny of sub-sections (5), (6) and (9) of Section 86, those provisions envisage the levy of penalties consequent to a failure on the part of a registered dealer to discharge certain obligations or a failure on the part of an assessee to comply with statutory duties as imposed. In such situations, the Act envisages penalty to be imposed as a necessary corollary. The aforenoted provisions do not vest the Assessing Officer with any discretion in the matter of imposition of a penalty. Sections 86(10), (14) (15) of the Act cannot by any stretch of imagination be construed or viewed as provisions pari materia to Sections 45(6) and 47(4A) of the 1969 Act, which formed the bedrock for the ultimate decision rendered by the Supreme Court in STATE OF GUJARAT AND ANR. VERSUS M/S SAW PIPES LTD. (KNOWN AS JINDAL SAW LTD.) [ 2023 (4) TMI 761 - SUPREME COURT] - the conclusion of the Tribunal cannot be sustained to the contrary and when it proceeded to observe and interpret Sections 86(10), (14) (15) of the Act as provisions embodying the principles of statutory penalty. Turning then to the merits of the imposition of penalty itself, it is found that the same is not based on any false, misleading or deceptive statement or disclosure made by the appellants. The appellants had while furnishing their returns proceeded on the bona fide belief that revenues generated from the sale of reprocessed vehicles would not be exigible to tax under the Act. In fact, the invocation of the Proviso placed in Section 34(1) lends further credence to our conclusion that the order of the Court dated 26 September 2016 cannot possibly be interpreted as restricting the scope of inquiry to the question of proportionality alone. Accepting such a contention as advanced by the respondents would compel to construe the aforesaid decision as intending to empower the respondents to levy a penalty even though the same may not find sanction under the provisions of the Act. This too leads to the irresistible conclusion that the order of 26 September 2016 did not detract from the right of the appellant to question the very basis for invocation of the penalty provisions. The question of law as framed is answered in favour of the appellant/assessee and against the Department - appeal allowed. 2023 (12) TMI 599 Rebate claim - purchase of food grains from the State agency on which 4% trade tax was paid - Notification dated 21.05.1994. Tribunal while rejecting the said revision has noticed that the revisionist could not produced any document to indicate that the wheat sold to the roller flour mills was from the wheat on which tax had already been paid and merely on the said basis rejected the revision preferred by the revisionist. HELD THAT:- The goods supplied to the roller flour mills were in fact goods on which tax had already been paid tax @ 4%. This fact is also evident from the order of assessing authority, but relevant documents could not be produced by the revisionist before the assessing authority. In the said situation, it would be in fitness of things that an opportunity is given to him to demonstrate that the goods supplied to the roller flour mills is covered by Notification dated 21.05.1984 and the conditions made therein are fulfilled. With a view to giving opportunity to the revisionist to demonstrate the fulfillment of the conditions prescribed in the aforesaid order, the matter is accordingly remitted to the Trade Tax Tribunal. In the remand proceedings, the Tribunal if thinks proper may further remit the matter for the limited purpose to the assessing authority or may call for a report from the assessing authority to satisfy himself that the conditions mentioned in the Notification dated 21.05.1994 are either fulfilled or not. In case the revisionist is able to demonstrate that all the conditions of notification dated 21.05.1994 are fulfilled then the Tribunal shall proceed to pass orders accordingly. Considering that much time has lapsed since pendency of the present revision, it is provided that necessary orders may be passed expeditiously, say, within a period of six months from the date of a certified copy of this order is produced before him. Revision allowed. 2023 (12) TMI 598 Default assessments - recovery of demand was stayed upon the payment - HELD THAT:- Considering the time gap between the hearing of the petitioner and the passing of the impugned order, the same is liable to be set aside. It is also liable to be set aside on the ground that the concerned officer, who had passed the impugned order, had not heard the petitioner. The present petition has been pending as the petitioner also seeks to resist an order remanding the matter to the concerned authority for considering it afresh. It is the petitioner s contention that the impugned order was void and, therefore, now the option of the Department to proceed against the petitioner stands foreclosed by lapse of time. However, the learned counsel does not press this issue. The impugned order is set aside and the matter is remanded to the OHA to decide afresh. The concerned OHA shall pass a speaking order uninfluenced by the impugned order, after affording the petitioner, sufficient opportunity to be heard - Petition allowed.
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