Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 19, 2022
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Reopening of assessment u/s 147 - Notice u/s 148-A - Reason to believe - Source of information is not relevant. What is relevant is the tangible material against the appellant. The petitioner did not even submit bank statements or the books of accounts. - There is, prima facie, some material on the basis of which the Department could reopen the case. - Writ Petition dismissed - Notice sustained - HC
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MAT - Book Profit - Deemed income relating to certain companies u/s 115JA - addition of amount towards provision for doubtful advance to the book profit - The Tribunal therefore ought to have examined the issue in the light of the inserted Clause (g) to Explanation Sub-Section 2 to Section 115JA of the Act with effect from 1.4.1998 vide Finance (No.2) Act, 2009 which was relevant for the present case. - HC
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Corporate Social Responsibility (CSR) expenditure u/s 37 - Explanation 2 was inserted in Section 37 via Finance (No.2) Act, 2004 w.e.f. 01.04.2015. - the amendment would take effect from 01.04.2015 and, accordingly, would apply in relation to assessment year 2015-2016 and the subsequent years. - HC
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Refund claim - time limit for processing a return under 149(1) - A.O. must come out with reasons, as to why the case of the Petitioner has not been processed, notwithstanding the fact that the period which is available to him is yet to expire on 91st December, 2022. - HC
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Addition u/s 56(2) - method of valuation of shares - the valuation under DCF method is intrinsically based on the projections and based on the potential value of the future business. These assumptions can undergo changes for a period of time. The Ld. DR also has not demonstrated that the methodology adopted by the assessee is not correct but simply the Ld. AO rejected the valuation as it does not match with the actual results. Various Courts have held that the valuation of shares is not an exact science and therefore has to be done with some basic presumptions prevailing on the date of valuation. - AT
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Revision u/s 263 by CIT - taxation being anonymous donation received in cash u/s 115BBC - According to the provisions of Section 115BBC, on anonymous donation tax is required to be charged at the rate of 30% subject to certain deductions. The learned CIT did not invoke the provisions of Section 263 of the act for this reason. - The only reason stated by the PCIT is that the learned assessing officer has granted set off deficit of the assessee trust against the anonymous donation. - both these things are different - Revision order is not correct - AT
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Deduction of interest from rental income - loan was taken for the purpose of construction of house property - looking to the fact that the assessee took a housing loan and interest paid thereon is subject to deduction u/s. 2(24)(b) of the Act against rental income. We are of the considered view that the assessee deserves for deduction u/s. 24(b) of the Act of the interest paid on having loan - AT
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Revision u/s 263 by CIT - lack of enquiry - the matter relating to wages/labour expenses which was not subject matter of limited scrutiny cannot be raised in revisionary proceedings u/s. 263 for the first time. - AT
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Unexplained cash deposits in Bank account and undisclosed interest income - The Gift from wife was also explained by the assessee through bank statements. Regarding personal saving the CIT(A) doubted that the assessee could not save that much amount. But the assessee was working as pharmacist in Government Hospital since 1976 and received salary, therefore, personal saving of a government employee cannot be doubted for several years. - AT
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Income deemed to accrue or arise in India - interest income - In these years, the interest income has accrued on the deposits kept by the assessees in HSBC bank, Geneva and hence the said interest income cannot be said to fall under the definition of “deemed to accrue or arise in India” as given in sec. 9(1)(v) i.e., the interest income has actually accrued outside India. Hence the said interest income cannot be assessed in the hands of the assessees, since they are non-residents - AT
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Exemption u/s 11 - rejection of application for registration u/s. 12AA - Charitable activity u/s 2(15) - the issue with regard to the activity of the assessee being not that of commercial or business in nature, the issue of cash transaction cannot be gone into at the time of consideration of the application under section 12AA of the Act. - AT
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Disallowance towards ‘Project Development cost written off’ by the assessee - year of deductibility - As the assessee found the project to be lost and decided to write it off, it is this year in which the write off has to be allowed. In view of the fact that the revenue nature of the costs incurred has not been disputed by the AO, we hold that the assessee is entitled to deduction in the current year. - AT
Customs
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Import of goods - infringement of the Intellectual Property Rights of the plaintiffs - eeking impleadment in the present suit as a proper party - Infringement of trade marks - violation of paragraph 2.3 of the Foreign Trade Policy, 2015-20 - in terms of Rule 11 of IPR Enforcement Rules, the applicant cannot go into the question of infringement till the final adjudication of the present suit - The applicant is neither a necessary party nor a proper party for the adjudication of the suit. - HC
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Valuation - the grounds for rejection of transaction values in respect of some Bills of Entry were absent in the case. - The fact that DRI officers had obtained a certificate from the Chartered Engineer is irrelevant to the case. - Valuation under Rule 7 becomes relevant only if the requirements for rejection of the transaction value under Rule 12 are first met and then it is also found that the value cannot be determined as per Rules 4 and 5. - The Commissioner (Appeals) was correct in holding that the value should be determined based on contemporaneous imports and for that purpose remanding the matter to original authority. - AT
IBC
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CIRP - Recovery of dues of central excise duty form Corporate debtor - Revenue has not filed the claim when it was invited by the RP - At this belated stage no fund is available out of the kitty of the Resolution Plan which can be earmarked to the Appellant as informed by the RP and the Resolution Applicant also. Both Resolution Applicant and RP has confirmed implementation of the plan and nothing remains to be adjudicated. - AT
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Validity of approval of Resolution plan - home buyers - no opinion was obtained on feasibility and viability - when the CoC approved the Resolution Plan in its commercial wisdom, it is presumed that the approval was given to a viable and feasible plan. The Resolution Plan being approved, this Tribunal also cannot interfere with the commercial wisdom. Approval of the CoC suggest that the plan is viable and feasible. - AT
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Initiation of CIRP - Financial Creditors - allegation fraud against the Financial Creditor - Allegations of fraud and forgery are very easy to make but very difficult to prove. In event, the case of the Corporate Debtor is that the insolvency proceedings were initiated fraudulently or with malicious intent for any purpose other than for resolution of insolvency , it is always open for the Appellant to make application under Section 65 of the Code before the Adjudicating Authority and it is for the Adjudicating Authority to consider such application. - AT
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Approval of resolution plan with modification - Power of NCLT to modify the plan - Section 31 of the IBC - It is clear that mandate of legislation is either to approve the resolution plan or to reject. However, there is no provision for making alteration or modification in the resolution plan. - the learned Adjudicating Authority to some extent exceeded its jurisdiction in modifying/altering the conditions in the resolution plan - AT
Service Tax
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Refund of unutilized input tax credit - export of services - intermediary services or not - The impugned order has been passed in complete disregard of the judicial discipline. It is, ex facie, apparent that the learned Assistant Commissioner has attempted to overreach the orders passed by the superior authority - the impugned order, which proceeds on the basis that the petitioner is a provider of intermediary services, is incorrect and it is not open for the Revenue to take this stand. - HC
Central Excise
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Refund of un-utilized Cenvat Credit - The non transfer of unutilised cenvat credit is as good as reversal of cenvat. The charge of the double benefit will sustain only when the assessee in one hand claim the refund and in other hand utilise the same amount for payment of duty on their clearance of goods, which is no-body's case. Hence the allegation of double benefit of the same amount does not even exists. - AT
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Interest on the delayed refund of deposit - Mere mention of a wrong provision in the letter submitted by the appellant will not work to the prejudice of the appellant if in law the refund claimed by the appellant can be traced to section 35F of the Excise Act. Interest was, therefore, required to be paid to the appellant under the provisions of section 35FF of the Excise Act and not under section 11BB of the Excise Act. - AT
VAT
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Slump sale agreement - dues arising out of the operations and activities of the sugar unit prior to the date of acquisition - It is the UP State Sugar Corporation Limited which had collected all the dues from their customer on behalf of the State Government and they are under an obligation to deposit the collected sum in the government treasury. But for those transactions, for the period prior to 17.7.2010, the UPSSCL are trying to usurp the collected sum and are trying to pass on the burden to the appellant who was neither the dealer nor they had anything to do with the operation of the unit prior to 17.7.2010 - SC
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Levy of Entry tax - tractor trolly - ‘motor vehicle’ - the trolly cannot exist as a motor vehicle independent of the ‘tractor’ to which it is supposed to be attached. - since the tractor itself is excluded from the definition of ‘motor vehicle’ under Section 2(h) of the OET Act, the question of bringing ‘trolly’ as a stand-alone vehicle within the purview of that definition does not arise. - HC
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Stay of collection of disputed tax - Seeking deposit of 50% of the disputed tax by giving credit to the tax already deposited - it can be said that the initial pre-deposit of 25% made under Section 33(2) of the AP VAT Act, 2005 will not automatically entitle any dealer to claim stay of collection of the differential tax pending his appeal as a matter of right. - HC
Case Laws:
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Income Tax
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2022 (12) TMI 763
Reopening of assessment u/s 147 - Notice u/s 148-A - Reason to believe - HELD THAT:- Source of information is not relevant. What is relevant is the tangible material against the appellant. The petitioner did not even submit bank statements or the books of accounts. There is, prima facie, some material on the basis of which the Department could reopen the case. The petitioner had not even made an attempt to assert that the material facts relied on in the SCN is erroneous. In view of the above, we are of the opinion that no interference is called for with the order of the learned Single Judge. Accordingly, the writ petition is dismissed.
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2022 (12) TMI 762
Deduction u/s 80P(2)(b)(i) - milk procured from member-village societies and marked to the federal Society - whether the appellant was a primary society or not for the purpose of Section 80 P(2)(b)(i) ? - whether the appellant is an Apex Society or a Central Society ? - HELD THAT:- There is no dispute that the petitioner is a Co-operative society registered under the provisions of the Tamil Nadu Co-operative Societies Act, 1983. The expression Primary Society has not been defined in the Income Tax Act, 1961. Only expression - primary co-operative agricultural and rural development bank has been defined. The expression Primary Society has not been defined in the Income Tax Act, 1961. The expression Primary Society has been defined in Section 2(21) of the Tamil Nadu Co-operative Societies Act, 1983. Thus, only if the appellant is neither an Apex Society or a Central Society , as defined above, it will not be entitled to the benefit of the deduction under Section 80 P(2)(b)(i) of the Income Tax Act, 1961. There is no discussion as to whether the petitioner is an Apex Society or a Central Society . Instead, the case was argued on the strength of the G.O.Ms. No.555 dated 21.3.1980. Neither the AO nor the Appellate Commissioner or the Appellate Tribunal have examined the status of the appellant from the point of the view of the definition of a Primary Society in Section 2(21) of the Tamil Nadu Co-operative Societies Act, 1983. Since the issue as to whether the appellant is an Apex Society or a Central Society or not has not been examined by any of the lower authority, viz the Assessing Officer, Appellate Commissioner or the Appellate Tribunal, we are forced to interfere with the impugned orders. We are therefore of the view, the impugned common order passed by the Income Tax Appellate Tribunal have to be set aside and the cases be remitted back to the Assessing Officer for re-examine the issue as to whether the appellant would be Primary Society or whether the appellant was an an Apex Society or a Central Society or not. We, therefore remit the case back to the Assessing Officer to re-examine the issue in the light of the definition of the Tamil Nadu Co-operative Societies Act, 1989 and to pass a afresh order in the light of the definition contained in the Tamil Nadu Co-operative Societies Act, 1989, within a period of six months from the date of receipt of a copy of this order by the Assessing Officer. The appellant shall produce documents to substantiate its status before the Assessing Officer.
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2022 (12) TMI 761
Deemed income relating to certain companies u/s 115JA - amount towards provision for doubtful advance was not added back to the book profit, while completing the assessment u/s 143(3) r/w 147 - whether provisions of bad and doubtful debt cannot be added by the Assessing Officer vehicle computing book profit u/s 115 JA especially in view of the retrospective amendment to the explanation to Section 115 JA with effect from 01.04.1998 substituted by Finance Act, No.2, 2009? - As submitted that explanation to Section 115 JA (ii) has been amended vide finance (2) Act, 2009 with retrospective effect from 01.04.1998 and therefore on this count alone the impugned order of the Appellate Tribunal is not sustainable - HELD THAT:- Clause(g) was inserted by Finance (No.2) Act, 2009, with effect from 01.04.1998. Similarly, the phrase beginning with if any amount referred to clauses (a) to (f) is debited to the profit and loss account and as reduced by , was substituted with the phrase if any amount referred to clauses (a) to (g) is debited to the profit and loss account and as reduced by . The above amendment was not considered by the Hon ble Supreme Court when it gave its verdict in Commissioner of Income Tax vs. HCL Comnet Systems Services Ltd . [ 2008 (9) TMI 18 - SUPREME COURT] for the Assessment Year 1997-98. The above amendment vide Finance (No.2) Act, 2009 was not relevant for the Assessment year 1997-1998 which fell for consideration. The above decision is therefore not relevant. The Tribunal therefore ought to have examined the issue in the light of the inserted Clause (g) to Explanation Sub-Section 2 to Section 115JA of the Act with effect from 1.4.1998 vide Finance (No.2) Act, 2009 which was relevant for the present case. Therefore, we are of the view that the impugned order deserves to be set aside and the case should be remitted back to the Tribunal to reexamine the issue fresh in the light of the above amendment brought to the definition of Book Profit by Finance (No.2) Act, 2009 with effect from 01.04.1998. Otherwise, the above amendment would be rendered otiose. Therefore, we remit the case back to the Tribunal without answering to the substantial questions of law raised to re-examine the issue afresh in the light of the above observation, leaving all issues open to be canvassed by both the appellant and the respondent. Considering the fact that the impugned order pertains to the Assessment Year 1998-99, the Tribunal may endeavour to pass a final order in the denovo proceeding within a period of six months from the date of receipt of a copy of this order.
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2022 (12) TMI 760
Validity of reopening of assessment u/s 147 - Order u/s 148A(d) - denial of natural justice - petitioner to challenge the assumption of jurisdiction by the authorities on the ground that the precondition u/s 149(1)(b) has not been satisfied in this case - short point argued by the learned counsel for the petitioner is that the order has come to be passed without considering the request for adjournment that has been filed by the petitioner - HELD THAT:- It is incumbent upon the authority to have either accepted the same, in which case, time sought ought to have been granted, or to put the petitioner to notice that the officer is rejecting the request. Neither of this has been done and the impugned order has come to be passed unilaterally on 29.03.2022 itself. On this one ground, the impugned order stands vitiated. It is also the attempt of the petitioner to challenge the assumption of jurisdiction by the authorities on the ground that the precondition u/s 149(1)(b) has not been satisfied in this case. This is a question of fact that the petitioner will have to establish before the authorities and thus the Court says nothing further on this score. In view of the violation of principles of natural justice, order dated 29.03.2022 is set aside. The petitioner is granted two (2) weeks from date of receipt of a copy of this order to file its reply, for which purpose, the portal shall be enabled. On receipt of reply from the petitioner, the time frame set out u/s 148A(d) will stand triggered and the officer will decide on the basis of the materials available on record including the reply of the assessee whether or not it is a fit case to issue notice u/s 148 by passing a speaking order with the previous approval of the specified authority. It is made clear that if no response is filed by the petitioner within a time stipulated above, for which the liberty has been granted under this order, the impugned order will stand revived unilaterally and all consequences will flow from the same.
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2022 (12) TMI 759
Corporate Social Responsibility (CSR) expenditure u/s 37 - HELD THAT:- The Tribunal has opined, that Explanation 2 inserted in Section 37(1) was prospective in nature, and therefore was not applicable in the assessment years in issue. It is required to be noticed, that Explanation 2 was inserted in Section 37 via Finance (No.2) Act, 2004 w.e.f. 01.04.2015. Furthermore, what emerged during the course of the hearing was, that the memorandum which was published along with Finance (No.2) Bill 2014 clearly indicated that the amendment would take effect from 01.04.2015 and, accordingly, would apply in relation to assessment year 2015-2016 and the subsequent years. If there was any doubt, the same has been removed both by the memorandum issued along with the Finance Bill, as well as the aforementioned circular issued by the CBDT. It is well established that circulars are binding on the revenue. [See: Catholic Syrian Bank [ 2012 (2) TMI 262 - SUPREME COURT] ] Therefore, for the appellant/revenue to contend in the aforementioned appeals, that the Tribunal had erred in law in sustaining the deduction claimed by the respondents/assessees u/s 37(1) of the Act is an argument, which cannot be accepted. Accordingly, the question of law is decided against the appellant/revenue and in favour of the respondents/assessees.
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2022 (12) TMI 758
Refund claim - time limit for processing a return under 149(1) - Revenue states that since Section 149(1) of the Act itself provides nine months period which is to expire only on 91st December, 2022, no mandamus can be issued in exercise of powers under Article 226 of the Constitution of India, and, therefore, the Petitioner does not have any right to seek the processing of its return before the said period at this stage - HELD THAT:- While it may be true that Section 149(1) of the Act does prescribe a period of nine months for the Assessing Officer (A.O.) to process the return filed by an assessee under Section 199(1), yet in our opinion the limit so prescribed is an outer limit, which does not in any manner prevent the A.O. from processing the case of the Petitioner at an earlier date. A.O. must come out with reasons, as to why the case of the Petitioner has not been processed, notwithstanding the fact that the period which is available to him is yet to expire on 91 st December, 2022. We are making this observation considering the anxiety of the Petitioner assessee that as against the tax liability of only Rs.2,17,80,008 /-, an amount of Rs.19,70,78,266/- is lying with the Revenue, out of which according to the Petitioner, an amount of Rs.17,52,98,260/- is due and payable to it as refund. Let an affidavit be filed by Respondent No. 9 Director of Income Tax, Centralised Processing Centre, Bengaluru giving reasons as to the date the return was filed by the Petitioner assessee and whether the same is under process or not, and if not, the reasons thereof.
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2022 (12) TMI 757
Revision u/s 263 - cash as deposited into the bank account subsequent to announcement of demonetization - HELD THAT:- We find from the assessment order that the AO has verified bank account statements, VAT returns, audit report with final accounts schedules and has confirmed that the assessee has explained the cash deposits made in the bank account to the satisfaction of the Ld. AO. I In these circumstances of the case, we find that the Ld. Pr. CIT has erred in invoking the provisions of section 263 of the Act treating the order of the Ld. AO as erroneous insofar as it is prejudicial to the interest of the Revenue. We therefore are inclined to quash the order of the Ld. Pr. CIT passed U/s. 263 of the Act thereby upholding the order of the Ld. AO. Appeal filed by the assessee is allowed.
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2022 (12) TMI 756
Revision u/s 263 by CIT - default claiming deduction u/s 80IC claimed as assessee had not filed 10CCB in support of the claim during the course of assessment proceeding - HELD THAT:- We are unable to find any such document on record which could show that this issue regarding deduction of claim u/s 80IC of the Act before the AO was examined. PCIT has rightly held that the order of the ld. AO u/s 143(3) of the Act is erroneous and prejudicial to the interest of revenue. We, therefore, find no infirmity in the impugned order passed u/s 263 of the Act by the ld. PCIT setting aside the assessment order and directing the AO to frame the assessment afresh after considering the observations made in the impugned order. Thus the grounds of appeal raised by the assessee are dismissed.
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2022 (12) TMI 755
Allowability/allowable of deduction u/s. 80P(2)(d) - interest income earned on the investments held with other co-operative society - whether the assessee is eligible for deduction u/s. 80P for the interest earned on fixed deposits and recurring deposits held with Burdwan Central Co-operative Bank Ltd? - HELD THAT:- As far as section 80P(4) of the Act, it only provides that provisions of section 80P shall not be applied in relation to any cooperative bank other than agricultural credit society or any agricultural rural bank. In simple words such cooperative Bank cannot claim deduction u/s.80P(2) 80P(3) of the Act. Since the assessee is not a cooperative bank, but a Primary Agricultural Credit Society therefore, provisions of section 80P(4) of the Act is not applicable and thus, it is entitled to deduction u/s. 80P of the Act to the extent allowable as per relevant provisions. Now the alleged interest income is earned from idle funds invested in the bank and as far as deduction u/s. 80P(2)(i) is concerned, which refers to income earned from carrying on banking business or providing credit facilities to its members, thus find that the alleged interest income is not earned by the assessee from its members and therefore, not eligible for deduction u/s. 80P(2)(i) of the Act. On going through the provisions of section 80P(2)(d) of the Act the co-operative society is eligible for deduction of income in respect of any income by way of interest or dividends derived from its investments with any other co-operative society, Now the assessee has earned interest income from Burdwan Central Cooperative Bank Ltd. Though the Burdwan Central Co-operative Bank Ltd is having license under the Banking Regulation Act, 1949 to carry on Banking Business, but basically it is a cooperative society, which has been allowed to do banking business under the said Banking Regulation Act, 1949. Section 80P(2)(d) only refers to word co-operative society and it has not been specifically mentioned under the said provisions of the Act that investments made in cooperative banks are to be excluded. In my humble understanding since the cooperative banks are basically co-operative societies only therefore, the words cooperative society mentioned in Sec. 80P(2)(d) includes these cooperative societies also which are carrying on banking business as cooperative banks. Therefore, since the assessee has earned interest from other cooperative society, which in this case is a cooperative bank, is eligible for deduction u/s. 80P(2)(d), therefore, reverse the findings of the ld. CIT(A) and allow the sole issue raised by the assessee. Thus, the effective grounds on merits raised by the assessee are allowed.
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2022 (12) TMI 754
Revision u/s 263 - Unexplained source of cash investment made by the assessee in company where the assessee is also a partner - unexplained cash credits u/s 68 - HELD THAT:- Regarding the first issue, in the 263 proceedings itself, the principal CIT accepted the assessee s contention and held that so far as the issue related to increase in investment in the partnership firm by the assessee is concerned, the explanation of the assessee that a similar amount on the same date was withdrawn from another partnership firm was invested in M/s D Jewel was accepted by Principal CIT. Disallowance of interest in relation to exempt income - As from the records we know observe that so far as the issue relating to disallowance of interest in relation to exempt income is concerned, we observe that in the notice dated 13-12-2017 issued by the AO the issue of disallowance of interest for earning exempt income was specifically raised at page 2 of the said notice. In response to the same the assessee had filed reply dated 20-12-2017 in which assessee filed an explanation in response to the same - balance sheet of the assessee as on 31st March, 2015 shows that the assessee has own capital of ₹ 5.26 crores at its disposal i.e. the assessee has substantial interest-free funds available with it. Further, we also observe that in the assessment order the AO has discussed the aspect of addition under section 14A and has also made disallowance in respect of the same. We observe that this is not a case where there was an omission on part of the AO to examine this aspect of disallowance of 14A/ 36(1)(iii) of the Act at all. The AO had put a specific question before the assessee during the course of assessment and taken his reply on record. Further the assessing Officer had also discussed this aspect as part of assessment order. This is not a case where no enquiry has been made by the assessee officer during the course of assessment proceedings. It is also not the case of the Pr. CIT that the AO failed to apply his mind to the issues on hand or he had omitted to make enquiries altogether or had taken a view which was not legally plausible in the instant facts. As held by various Courts, Principal CIT cannot in 263 proceedings set aside an assessment order merely because he has different opinion in the matter. In our view, s 263 of the Act does not visualise a case of substitution of the judgment of the Principal CIT for that of the AO who passed the order unless the decision is held to be wholly erroneous. Now on the issue that the AO passed a cryptic order and did not discuss in detail regarding assessee s submissions on various queries raised vide the various notices, in our view it is a well settled position of law that if from the assessment records, it is evident that the AO has made due enquiries in response to which assessee has filed its submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. The above proposition has been upheld in the case of CIT v. Reliance Communication [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] , Smt. Anupama Bharat Gupta [ 2021 (4) TMI 1000 - ITAT AHMEDABAD] , Goyal Private Family Specific Trust [ 1987 (10) TMI 43 - ALLAHABAD HIGH COURT] , CIT v. Mahendra Kumar Bansal [ 2007 (7) TMI 149 - HIGH COURT, ALLAHABAD] - We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. The Grounds of appeal raised by the assessee are thus allowed.
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2022 (12) TMI 753
Addition u/s 56(2) - method of valuation adopted by the assessee which is in conformity with the Rules specified under 11UA - determination of the valuation under DCF method - AO has rejected the valuation under DCF method solely on the ground that the actual performance did not match the projections - contention of the Ld. DR relying on the book value adopted by the Ld. AO cannot be accepted because as per section 56(2) of the Act, the assessee has option to use either the fair market value determined as per Net Asset Value or the value determined as per the DCF method - HELD THAT:- The determination of the valuation under DCF method was carried by the valuers on the basis of information or material available on the date of valuation and the projections of the revenue provided by the management. The methodology adopted by the assessee applying the DCF method is a recognized and accepted method. In our opinion the valuation under DCF method is intrinsically based on the projections and based on the potential value of the future business. These assumptions can undergo changes for a period of time. The Ld. DR also has not demonstrated that the methodology adopted by the assessee is not correct but simply the Ld. AO rejected the valuation as it does not match with the actual results. Various Courts have held that the valuation of shares is not an exact science and therefore has to be done with some basic presumptions prevailing on the date of valuation. As decided in Cinestaan Entertainment (P) Ltd [ 2021 (3) TMI 239 - DELHI HIGH COURT ] Assessee had adopted DCF method to value its shares and the Revenue is unable to demonstrate that the methodology adopted by the assessee is not correct; AO has simply rejected the valuation of the assessee on the ground that performance did not match projections and failed to provide any alternate fair value of shares; Tribunal was therefore justified in deleting the addition made U/s. 56(2)(viib). Judicially following the above legal precedent, we are inclined to uphold the order of the Ld. CIT (A) and dismiss the appeal of the Revenue.
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2022 (12) TMI 752
Deduction u/s 80P - intimation issued u/s. 143(1) - Disallowance of deduction as assessee-society had filed its return of income belatedly, i.e., beyond the due date specified u/s.139(1) - scope of pre-amended Section 143(1)(a)(v) and post amendment - HELD THAT:- As stated by the Ld. AR, and, rightly so, the amendment in the machinery proviso i.e. Section 143(1)(a)(v) of the Act rendering the same as workable to disallow any deduction claimed by the assessee under Chapter VIA in a case return of income is furnished by him beyond the due date specified in sub-section (1) of Section 139 of the Act was made available only vide the Finance Act, 2021, w.e.f. 01.04.2021 i.e. from A.Y.2021-22 onwards. We concur with the claim of the Ld. AR that as the pre-amended Section 143(1)(a)(v) jeopardized the allowability of an assessee s claim for deduction only qua those claimed under Section 10A, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or 80-IE of the Act, and Section 143(1)(a)(v) was only post-amendment that was made available on the statute vide the Finance Act, 2021 w.e.f. 01.04.2021 been made compatible, and in fact workable, to facilitate a disallowance contemplated u/s.80P w.e.f. A.Y.2021-22, therefore, it is beyond comprehension that as to how any such adjustment could have been made by the CPC, Bengaluru vide an intimation issued u/s.143(1) of the Act, dated 25.06.2019 for the year under consideration, i.e., A.Y.2018-19. Thus find favour with the claim of the Ld. AR that as the CPC, Bengaluru had clearly traversed or, in fact exceeded its jurisdiction for disallowing u/s.143(1)(a)(v) the assessee s claim for deduction u/s.80P de hors any power vested with it at the relevant point of time, thus, the same cannot be sustained and is liable to be vacated. Accordingly, set-aside the order of the CIT(Appeals) and vacate the disallowance of the assessee s claim for deduction u/s.80P made by the A.O. Appeal of the assessee is allowed.
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2022 (12) TMI 751
Revision u/s 263 by CIT - taxation being anonymous donation received in cash u/s 115BBC - Assessee is an AOP for the impugned assessment year, but not a charitable trust - difference in recording of reasons for revision - whether the assessment order passed by the learned assessing officer, though holding that an anonymous donation is chargeable to tax u/s 115BBC of the act, can he set off the deficit claimed by the trust - HELD THAT:- In the income and expenditure account interest on fixed deposit was included which was reduced from the business income and offered to tax as interest on fixed deposit Under the head income from other sources. Accordingly, the net income was offered at rupees nil. However, in the end of the computation statement. It claimed the carry forward of the depreciation however, did not claim the carry forward of the losses. Thus according to the computation, the assessee has carried forward the depreciation comprising of depreciation for assessment year 2011 12 and pertaining to assessment year 2010 11 and a business loss pertaining to assessment year 2009 10. This is so because the due date of filing of the return of income was 30 September 2011 whereas the assessee filed its return of income only on 17/4/2012. Therefore, as per the assessee, the carry forward of losses is not allowable. The learned assessing officer has started. The computation of total income by showing the deficit of ₹ 5,30,22,672 and made an addition thereto of any anonymous donation of ₹ 55,204,903. There is no error in the computation because, the losses can be set-off for the same assessment year, even if the return of income is filed late. Therefore, to that extent. There is no error in the order of the learned AO. According to the provisions of Section 115BBC, on anonymous donation tax is required to be charged at the rate of 30% subject to certain deductions. The learned CIT did not invoke the provisions of Section 263 of the act for this reason. The only reason stated by the PCIT is that the learned assessing officer has granted set off deficit of the assessee trust against the anonymous donation. We are of the view that both these things are different. One is the manner of computation of total income and 2nd is manner of chargeability of tax on the total income. The 2nd aspect is not at all a reason stated by the ld CIT for upsetting the order of the learned AO. We do not find any reason to uphold the order of the learned PCIT passed u/s 263 of the act as there is no error which is prejudicial to the interest of the revenue pointed out in his order dated 22/3/2021. Hence same cannot be sustained and therefore, quashed. Appeal filed by the assessee is allowed.
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2022 (12) TMI 750
Unexplained cash credits u/s 68 - amount of cash deposited by the assessee in his bank account during the demonetization period - nature and source of the cash deposits being proceeds arising out of cash sales etc. was evident from the entries in the audited books of accounts of the assessee - HELD THAT:- AO neither brought any material on record to establish that the sale bills are bogus nor provided any evidence that such sales are bogus. It is also an open fact that the demonetization of Rs.500/- and Rs.1000/-note was declared by the Hon ble Prime Minister at 8 PM on 8-11-2016 and after this announcement the persons reached the jewellery shop to buy jewellery in exchange of notes. Thus all such scenario indicates that the assessee had duly substantiated its claim from the documentary evidences and also with the facts. As also observed from the assessment order that the AO had not rejected the books of account of the assesee as no contrary material was available with him to reject the books of account of the assessee. As regards the addition made by the AO by applying the provisions of Section 68 it is noted that provisions of Section 68 are not applicable on the sale transactions recorded in the books of accounts as sales are already part of the income which is already credited in P L account. There is no occasion to consider the same as income of the assessee by invoking the provisions of Section 68 of the Act. In view of the above deliberations and case laws relied upon by both the parties, we find that the AO was not justified in making an addition u/s 68 of the Act which has rightly been deleted the ld. CIT(A) and we concur with his findings. Thus the appeal of the Revenue is dismissed.
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2022 (12) TMI 749
Late fee penalty u/s 234E - late filing of TDS statements - order u/s 200A - HELD THAT:- Revenue has not brought to my notice any other binding precedence in favour of the Revenue. Therefore, respectfully following the ratio of decision of Division Bench of this Tribunal [ 2022 (3) TMI 343 - ITAT DELHI] hereby direct the Assessing Officer to delete the impugned penalty. This finding would also apply to other appeals of this bunch.
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2022 (12) TMI 748
Rectification of mistake u/s 154 - benefit of exemption u/s.5(1)(c) r.w.s 6 - HELD THAT:- Assessee individual is a non-resident Indian and the facts clearly show that the return has been filed with mistakes. These mistakes can admittedly be rectified by filing a rectification application. The rectification application admittedly is not being considered on account of the limitation provided u/s.154(7) - In view of the submissions made by both the sides and considering the Circular No.4 of 2012 dated 20.6.2012 issued by the CBDT, the issues in its appeal are restored to the file of the AO for readjudication of the rectification application on merits. AO is at liberty to examine whether the assessee was NRI during the relevant point of time and whether he is entitled to the benefit of exemption u/s 5(1)(c) r.w.s 6 of the Act. If it is found that the claim of the assessee is correct, then, the AO is to proceed to decide the rectification application on merits in accordance with the provisions of section 5(1)(c) r.w.s 6 of the Act. Appeal of the assessee is partly allowed for statistical purposes.
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2022 (12) TMI 747
Revision u/s 263 by CIT - unexplained loan transactions - PCIT s opinion the AO has carried out inadequate enquiry - AO has only accepted the genuineness of transactions on the basis of details/confirmations received in response to notices u/s 133(6) of the Act without issuing any summons to these loan creditors u/s 131 - HELD THAT:- In our view the exercise of jurisdiction by the Ld. PCIT for the reason that the AO has carried out the inadequate enquiry and the AO has taken a possible view on the of evidences filed by the assessee and also ones obtained from loan creditors u/s 133(6) with which the ld. PCIT is not agreeing with. In our opinion, where the Ld. PCIT feels that the AO has made inadequate enquiries then the PCIT is duty bound to carry out the necessary enquiry/investigation and pinpointing on the basis of such investigation/enquiry as to how the order framed by the AO is erroneous as well as prejudicial to the interest of the revenue but merely cancelling the assessment on the basis of observations that AO has carried out in adequate enquiry is not permissible under the Act. The case of the assessee finds support from the decision of D.G. Housing Projects Ltd.[ 2012 (3) TMI 227 - DELHI HIGH COURT] In the case of CIT vs. Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] as held that in order to invoke the jurisdiction u/s 263(1) of the Act there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as prejudicial to the interest of the revenue. The Hon ble court has held that an erroneous order must be an order which is not in accordance with the law or which has been passed by the AO in undue haste without making any enquiry. The Hon ble Court has further held that the order is said to be prejudicial to the interest of revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. The Hon ble Court held that such a decision of Income Tax Officer cannot be held to be erroneous simply because he has not made elaborate discussion in that regard in the assessment order. Appeal of the assessee is allowed.
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2022 (12) TMI 746
Undisclosed commission income - HELD THAT:- The assessee offered an amount as C F commission agent for FY 2008-09. During the course of hearing before the ld. AO the assessee accepted Rs. 3000 in July 08 bill and Rs. 43 in August 08 bill erroneously not accounted. Assessee has also disclosed Rs. 32,406/- as other commission under miscellaneous income. Thus total commission income has been shown at Rs.6,33,831/-. Therefore, under the given facts there was no further requirement to make addition and the same is hereby deleted. The finding of the ld. CIT(A) is reversed. Ground no. 1 is allowed. Unaccounted reimbursement expenses - HELD THAT:- The assessee claimed expenses as reimbursable being amount spent on behalf of M/s. FKIPL. These expenses were directly debited in M/s. FKIPL account and not to Profit Loss A/c. The reimbursement of expenses received from M/s. FKIPL have been treated as unaccounted expenditure by Revenue. We, however, on perusal of the submissions of the assessee made before the ld. CIT(A) find merit and hold that no such addition was called for as these are merely reimbursement of expenses, which the assessee has incurred on behalf of M/s. FKIPL and got it reimbursed but not debited to the P/L account. Thus, finding of ld. CIT(A) is reversed. Ground no.2 raised by the assessee is allowed. Addition for concealed interest - HELD THAT:- We observe that the assessee received Rs.26,984/- net of TDS during FY 2008-09, which was related to FY 2007-08. The assessee filed necessary details before the ld.AO to show that the alleged interest on security relates to FY 2007-08 and the same was duly disclosed in the P/L account in the preceding year. This submission of the assessee before the ld. CIT(A) stands uncontroverted by the ld. DR. We are, therefore, inclined to hold that the ld.AO erred in making addition - The finding of the ld. CIT(A) stands reversed. Ground no. 3 is allowed. Disallowance of interest - loan was taken for the purpose of construction of house property - HELD THAT:- As on perusal of the written submissions before the ld. CIT(A) it is discernible that the assessee had taken housing loan from B.O.I (Bank of India) as well as other credit facilities. This loan was taken for the purpose of construction of house property. The said property has been let out on rent. The assessee has filed documentary evidences before the lower authorities to prove that the loans were utilised for construction of rented property and the same is allowable u/s. 2(24)(b) - AO has also accepted the fact that the assessee has taken a house building loan from Bank of India for the property located at Thakurpukuar, Kolkata. Though the assessee has paid total interest on borrowed loans including housing loan at Rs. 6,46,390/- the ld. AO allowed only to the extent at Rs. 1,83,680/-. However looking to the fact that the assessee took a housing loan and interest paid thereon is subject to deduction u/s. 2(24)(b) of the Act against rental income. We are of the considered view that the assessee deserves for deduction u/s. 24(b) of the Act of the interest paid on having loan - We accordingly reverse the finding of the ld. CIT(A) and delete the addition of Rs.4,62,710/-. Ground no. 4 raised by the assessee is allowed
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2022 (12) TMI 745
Addition u/s 68 r.w.s 115BBE - unsecured loans - admission of additional evidences - HELD THAT:- As carefully consider the report of the AO where initially the AO objected for the admission of additional evidences and subject to his reservations on the admission of additional evidences commented on the submissions of the assessee. In the light of the above report of the AO it cannot be said that the documents / details furnished by the assessee was not verified. Considering the factual report of the AO we do not find any reason to interfere with the findings of the CIT(A). The appeal filed by the revenue is accordingly dismissed.
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2022 (12) TMI 744
Revision u/s 263 - revision order does not contain the DIN - validity of the order u/s. 263 for the reason that the order issued is a manual order and does not contain Document Identification Number [DIN] which is not in accordance with the instruction of Central Board of Direct Taxes (CBDT) issued vide circular no.19/2019 dated 14.08.2019 - HELD THAT:- From the perusal of facts and records it is clear that the order u/s.263 neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals. Therefore we are of considered view that the impugned order is not in conformity with Para 2 and Para 3 of the CBDT circular. Respectfully following the decision of Dilip Kothari [ 2022 (11) TMI 33 - ITAT BANGALORE] we hold that the order passed u/s.263 is invalid and shall be deemed to have never been issued as per Para 4 of the CBDT circular as the order is not conformity with Para 2 and Para 3. Appeal by the assessee is allowed.
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2022 (12) TMI 743
Revision u/s 263 by CIT - lack of enquiry - difference in the gross receipts declared - Labour charges are not subjected to TDS u/s. 194C and are not forming part of receipts as shown in Form 26AS - HELD THAT:- We find that it is not a case of lack of enquiry on part of the AO and rather, we find that the matter has been thoroughly examined by the AO and after going through the financial statements, tax information available on the IT portal (Form 26AS), the tax returns filed under VAT and service tax laws, the contract receipts have been accepted by the AO as duly offered by the assessee in its return of income. On perusal of the Profit and Loss account, it is noted that the assessee has declared sales/receipts from job work and as per Form 26 AS, the assessee has been shown as having receipts from three Garrison Engineers (on which TDS has been deducted) and the difference is on account of receipts on which TDS has not been deducted. There is nothing on record to support the findings of the ld. PCIT that the labour charges are not subjected to TDS u/s. 194C and are not forming part of receipts as shown in Form 26AS. The fact that the labour charges are not treated as works contracts under VAT laws doesn't take the same outside the ambit of section 194C of the Act. The receipts thus disclosed by the assessee in its profit/loss account and correspondingly, in the return of income are thus reconciling and in any case, the receipts reported in the return of income are more than disclosed in Form 26AS and thus, on this account, where the AO has accepted the receipts disclosed in the return of income, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. Also evident that the assessee has been allotted work by three Garrison Engineers under the Ministry of Defence, namely, Garrison Engineer, Chandigarh, Garrison Engineer, I R D and Garrison Engineer, Jatogh and the execution of work is spread over two states namely, Punjab, Hayana and UT Chandigarh requiring the assessee to seek separate VAT registrations and file separate VAT returns in these states/UT. As per VAT returns, the total receipts have been shown at Rs. 1,11,23,432/- which after adding receipts of Rs. 25,50,037/- towards labour charges (not subject to VAT and hence, not part of disclosure under VAT returns) equates with total receipts of Rs. 1,36,73,469/- as shown in the profit/loss account. On this account as well, we find that there is no error in the order of the AO while accepting the gross receipts as declared by the assessee in the return of income and the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. We agree with the contention of the ld. AR that the matter relating to wages/labour expenses which was not subject matter of limited scrutiny cannot be raised in revisionary proceedings u/s. 263 for the first time. It is now a settled position as held by the various Benches of the Tribunal that the matter which was not subject matter of limited scrutiny cannot be raised in revisionary proceedings u/s. 263 and thereby enlarging the scope of limited scrutiny and broadening the scope of jurisdiction that was originally vested with the A.O. Thus we are of the considered opinion that there is no justifiable basis to invoke the provisions of section 263 as the order passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue.
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2022 (12) TMI 742
Credit of foreign tax paid - delayed filing of Form 67 - authorities below denied stating that under rule 128(9) Of the Income tax Rules, 1963 assessee should have furnished the statement in Form 67 before the due date specified for furnishing the return of income under sub-section (1) of Section 139 whereas in this case, the assessee furnished such Form 67 along with the return of income filed u/s 139(5) - HELD THAT:- A lot many decisions of the Hon'ble Apex Court including the case in Union of India Vs. Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT] and reached a conclusion that since Rule 128(9) of the Rules does not provide for disallowance of FTC in the case of delay in filing Form 67 and such filing within the time allowed for filing the return of income under section 139(1) of the Act is only directory, since DTAA over rides the Act, and the Rules cannot be contrary to the Act. We find from Article 25(2)(a) of the DTAA that where a resident of India derives income which, in accordance with the provisions of the convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of the resident an amount equal to the income tax paid, paid in the United States, whether directly or by deduction. In view of this provision over riding the provisions of the Act, according to us, Rule 128(9) of the Rules has to be read down in conformity thereof. Rule 128(9) of the Rules cannot be read in isolation. Rules must be read in the context of the Act and the DTAA impacting the rights, liabilities and disabilities of the parties. We are of the considered opinion that the decisions relied upon by the assessee are applicable to the facts of the case on hand while respectfully following the same, we allow the appeal, and direct the Learned Assessing Officer to verify the details of the foreign tax paid by the assessee on the earnings at foreign source and take a view inconformity with the established law discussed above. Appeal of the assessee is allowed.
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2022 (12) TMI 741
Deduction u/s 80P(2)(d) - assessee had received interest income from the deposit made with the aforesaid Co-op. Bank - HELD THAT:- We note that the issue is no longer res-integra; and the Tribunal in a recent decision in the case of Palm Court M. Premises Co-operative Society Ltd [ 2022 (9) TMI 650 - ITAT MUMBAI] held after considering the decision of PCIT Vs. Totagar s Co-operative Sales Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] has held in favour of assessee as concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with cooperative banks - Decided against revenue.
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2022 (12) TMI 740
Computation of income - Denying the claim of exclusion of Sales Tax Incentive availed in respect of units situated in the state of Himachal Pradesh and Rajasthan being capital in nature - HELD THAT:- In the Special Bench decision in the case of Reliance Industries Ltd [ 2003 (10) TMI 255 - ITAT BOMBAY-J] what came up for consideration was specifically the sales tax subsidy, and that decision, as we seen in the elaborate analysis of the coordinate bench- as extracted above still holds good in law. In the case of CIT Vs Chaphalkar Brothers [ 2017 (12) TMI 816 - SUPREME COURT] Hon ble Supreme Court has held that where the object of respective subsidy schemes of State Governments was to encourage the development of Multiple Theatre Complexes, incentives would be held to be capital in nature and not revenue receipts, and, following the same logic, the sales tax subsidy schemes, which are admittedly to encourage industrial growth in the specific areas and the overall scheme in all the sales tax subsidy and exemption schemes unambiguously indicate so, are capital receipts in nature. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee that the amount added to the income of the assessee must stand deleted, and reject the grievance of the Assessing Officer against the grant of relief by the CIT(A). Disallowance of prior period expenditure debited to Profit and Loss Account of the instant year - HELD THAT:- We are of the considered view that the assessee deserves to succeed as for the three immediately preceding assessment years, i.e. the assessment years 2002-03,2003-04 and 2004-05, the coordinate benches, in assessee s own case, have decided the same issue in favour of the assessee. In any case, there is no dispute that the expenses are otherwise admissible in nature and have not been claimed or allowed as deduction in any other assessment year. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee, and direct the Assessing Officer to delete the impugned disallowance. Exclude gain on account of foreign exchange rate fluctuation from the computation of total income - HELD THAT:- Respectfully following the views of the coordinate benches in assessee s own cases for the two immediately preceding assessment years. we reject the plea of the assessee. Disallowanceu/s 14A - Addition made u/s 14A, @ 2% in respect of expenses incurred on earning of the tax-exempt dividend by the assessee - HELD THAT:- We are of the considered view that disallowance @ 1% of tax-exempt income will meet the ends of justice for the reason that the period pertains to the pre-amendment law and rule 8D does not, therefore, has any application in the matter, and that, in accordance with a series of coordinate bench decisions, it has been consistently held so far as the pre-amendment period is concerned, a disallowance of 1% is reasonable- particularly when the assessee has made investments entirety out of his own funds and when there are no borrowings costs involved. It is an undisputed position, on the facts of this case, that the assessee has made the investments entirely out of his own funds. The disallowance is thus restricted to 1% of the tax-exempt income. Unutilized MODVAT credit (net of unadjusted MODVAT credit on the first day of the year) deleted. Rejecting the value of export of cement to its Associated Enterprise (AE) - whether CIT (Appeals) was not justified and grossly erred in not directing the A0/TPO to make appropriate adjustments under Rule 10B to account, inter-alia, for difference in quality, quantity, make, grade and other relevant factors in order to make the data of other companies comparable to that of the appellant? - HELD THAT:- As the entire volume of exports is around 3% of the tested party transaction in one case and around 13% in another. Once it is an accepted position that the relationship between the price and volume, when variations in the volume are significant- around 30 times in one case and around 8 times in another, a significant variation in price is inevitable, and, for this reason, alone, the independent transactions cease to be comparable. That leaves us with only one case, and that is the export of 2,79,100 MTs of cement by Ultratech Cements Ltd, and the FOB rate, going by the TPO, in this case, is US $ 30.45. That is well within the permissible 5% range of the transaction value at US $ 28.98, as 95% of the comparable transaction price in that case, which can be taken as a valid CUP, is US $ 28.92 per MT - as against the transaction price of US$ 28.98 per MT. Therefore, even going by the data gathered by the TPO, to the extent such data can meet our approval in the light of the observations above, the transaction entered into by the assessee for exports of cement to its AE in Sri Lanka was at an arm s length price. We, therefore, uphold the plea of the assessee for this short reason alone and direct the Assessing Officer to delete the impugned ALP adjustment of Rs 4,73,21,572. The assessee gets the relief accordingly. As we have upheld the assessee's plea for the short reason as elaborated upon, we see no need to deal with other contentions raised before us. Interest paid by the appellant under Bare Boat Charter cum Demise Arrangement entered with its Associated Enterprise as not at arm's length - HELD THAT:- As noted that the payments under the BBCD arrangements were made with specific regulatory approval prescribed by the RBI, and there are coordinate bench decisions, such as in the case of ACIT Vs Dow Agrosciences India (P.) Ltd. [ 2016 (12) TMI 936 - ITAT MUMBAI] holding that when such regulatory approvals are duly obtained, that approval can also be viewed in support of the transaction price as an arm s length price. In any event, the total ALP adjustment is less than Rs 20 lakhs, and the relevant financial period is almost 20 years ago, it may not even be appropriate to even remit the matter for fresh consideration at the TPO stage. Keeping in all these factors, as also the entirety of the case, in mind, we deem it fit and proper to delete the impugned ALP adjustment - The assessee gets the relief accordingly. MAT computation u/s 115JB - We direct the Assessing Officer to exclude the sales tax incentive subsidy for computing book profit under section 115 JB of the Act. Allowability of expenditure grouped under the nomenclature Community Welfare Expenses as a business expenditure. - HELD THAT:- Right from the assessment years 1988-89 to 1994-95, the coordinate benches have allowed appeal of the assessee on this point, and from the assessment years 1995-96 to 2004-05, in which the first appellate authority has deleted similar disallowance, the coordinate benches have rejected the grievances of the AO, against the reliefs so granted by the CIT(A). Learned Departmental Representative does not dispute this position but relies upon the stand of the AO nevertheless. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches all along. Respectfully following the same, we uphold the relief granted by the learned CIT(A) and decline to interfere in the matter. Ground no. 2 is thus dismissed. Allowability temple expenses, Pooja/Function expenses, consultancy charges as a business expenditure confirmed. Allowing service charges, expenditure incurred on roads, entrance fees paid to club and mines prospecting expenses as revenue expenditure. Allowing deduction u/s. 35 D being 1/5th of the expenditure incurred in A.Y. 2001-02 and 2002-03 on issue of FCCB. Allowing expenses incurred towards earning dividend income U/s. 14A and reduced from the amount of income exempt U/s.14A and reduced from the amount of income exempt u/s. 10(34)/10 (35) of Income tax Act in computing book profit U/s. 115JB.
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2022 (12) TMI 739
Unexplained cash deposits in Bank account and undisclosed interest income - AR submitted that during the said assessment year, the assessee s son was planning to go to USA for higher education and as per the norms of respective college or university, the student or his parents shall have minimum balance of Rs. 15,00,000/- in the bank account. Therefore, during the year, the assessee started arranging the fund and the same was sourced by loan from bank withdrawal from Provident Fund and Teachers credit society, Gift from father-in-law, Loan from sister-in-law, Gift from wife and remaining balance was managed from his personal savings - HELD THAT:- It is pertinent to note that the assessee during the assessment proceedings has explained the reasons for which the assessee collected the cash deposits as well as the arrangement for the money. The assessee submitted evidence related to amount withdrawn from Teachers society which was accepted by the AO. Besides this the confirmations from sister-in-law regarding the loan and gift from father-in - law were also on record. The same were not doubted by the AO. The Gift from wife was also explained by the assessee through bank statements. Regarding personal saving the CIT(A) doubted that the assessee could not save that much amount. But the assessee was working as pharmacist in Government Hospital since 1976 and received salary, therefore, personal saving of a government employee cannot be doubted for several years. Thus, AO as well as the CIT(A) both failed to take cognizance of the evidences produced by the assessee during the assessment proceedings as well as before the CIT(A). The appeal of the assessee is allowed.
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2022 (12) TMI 738
Income deemed to accrue or arise in India - interest income assessed in the hands of these assessees, being non residents, in all the three years cannot be brought to tax in India - HELD THAT:- Case of the assessing officer is that the interest income is deemed to accrue or arise in India . If any income is deemed to accrue or arise in India, then the same could be taxed in the hands of non residents also. There is no dispute on this proposition. However, the expression deemed to accrue or arise in India has been explained in Section 9 of the Act, which lists out the income, which are deemed to accrue or arise in India . It is a settled proposition of law that the deeming provisions are legal fiction created by the statute and hence they have to be construed strictly. There should not be any dispute that the issue in dispute in the hands of both these assessees has to be tested in terms of sec. 5(2) and sec. 9(1)(v) - No doubt that the income deemed to accrue or arise to a non resident in India is liable to be taxed in India. The question is whether the interest income accrued on a deposit kept in a foreign bank account can be considered as deemed to accrue or arise in India . Sec. 9(1)(v) of the Act lists out three situations in which an interest income could be deemed to accrue or arise in India . In these years, the interest income has accrued on the deposits kept by the assessees in HSBC bank, Geneva and hence the said interest income cannot be said to fall under the definition of deemed to accrue or arise in India as given in sec. 9(1)(v) i.e., the interest income has actually accrued outside India. Hence the said interest income cannot be assessed in the hands of the assessees, since they are non-residents. Accordingly, we do not find any infirmity in the decision rendered by CIT(A) in all the three years in the hands of both the assessees. Appeals filed by the revenue are dismissed.
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2022 (12) TMI 737
Exemption u/s 11 - rejection of application for registration u/s. 12AA - Charitable activity u/s 2(15) - whether the purpose of Trust or Institution involves the carrying on of any activity of profit? - as in the present case of the assessee Trust where the objects of the Trust comprise of relief of the poor, education or medical relief, etc.- HELD THAT:- From conjoint reading of the Trust Deed, it is axiomatic that primary purpose/objects of the assessee enumerated in the Trust Deed are charitable in nature - The other clauses of the Trust Deed had to be necessarily read in the context of the aforesaid clauses. Even otherwise, the activities of the assessee as set out in the Trust Deed are covered within the ambit of charitable purpose being primarily for medical help and relief to poor besides imparting value addition to general public through spiritual teaching and education from madrasa and masjids. The aforesaid activities in consonant to objectives of the trust has not been disproved by the Ld. CIT(Exemption). Therefore, the issue with regard to the activity of the assessee being not that of commercial or business in nature, the issue of cash transaction cannot be gone into at the time of consideration of the application under section 12AA of the Act. Thus we hold that the order of the CIT(E) is perverse to the facts on record. We further hold that there was no material on record to hold that objects of the trust were either not charitable in nature or its activities were not genuine. Therefore, CIT(Exemption), Chandigarh is directed to grant the registration u/s. 12AA of the Act to the appellant trust from the date of application. Appeal filed by the assessee is allowed.
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2022 (12) TMI 736
Disallowance towards Project Development cost written off by the assessee - year of deductibility - AO is of view was that such expenditure could not be allowed as deduction by writing it off during the year under consideration - HELD THAT:- AO in the present case, going with the amount of expenses incurred in earlier years, has decided that the project ought to have been written off in earlier year. Even though the assessee incurred 93% of the project costs in earlier years, it can be seen that it incurred further costs of Rs.16.63 lakh on the project in the immediately preceding year, which divulges that the project was still going on up to the end of the preceding year. It was only in the current year that the assessee realized that the project cannot be continued and hence wrote off the costs incurred on it. In our considered opinion, no exception can be taken to the assessee s point of view of deciding the year in which the project became unviable so as to write off the revenue costs incurred on it. As the assessee found the project to be lost and decided to write it off, it is this year in which the write off has to be allowed. In view of the fact that the revenue nature of the costs incurred has not been disputed by the AO, we hold that the assessee is entitled to deduction of Rs.7.15 crore in the current year. The impugned order is overturned pro tanto to this extent. Appeal is allowed.
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Customs
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2022 (12) TMI 735
Import of goods - infringement of the Intellectual Property Rights of the plaintiffs - Seeking impleadment in the present suit as a proper party - Infringement of trade marks - violation of paragraph 2.3 of the Foreign Trade Policy, 2015-20 - HELD THAT:- The Supreme Court in MUMBAI INTERNATIONAL AIRPORT PVT. LTD. VERSUS REGENCY CONVENTION CENTRE HOTELS PVT. LTD. ORS. [ 2010 (7) TMI 1159 - SUPREME COURT ], has observed that the general rule with regard to impleadment of parties is that the plaintiff in a suit, being dominus litis, may choose the persons against whom he wishes to litigate and cannot be compelled to sue a person against whom he does not seek any relief. No relief has been sought against the applicant. The entire case of the plaintiff is based on the infringement of the trademarks of the plaintiffs by the defendant. Therefore, it cannot be said that an effective decree cannot be passed in the present suit in the absence of the applicant. It is not even the case of the applicant that the applicant is a necessary party, as the present application seeks impleadment only on the basis of the applicant being a proper party - In terms of the legal position, for a person to be a proper party to a suit, it is to be seen whether the presence of such person would enable the Court to completely, effectively and properly adjudicate upon the issue in the case. The applicant has the jurisdiction to determine if the seized goods are infringing the Intellectual Property Rights of the plaintiffs, only in the event of no legal proceedings being pending in relation to such determination. However, the present suit is such a legal proceeding in which a determination is to be made whether the goods imported by the defendant are infringing or not. Therefore, in terms of Rule 11 of IPR Enforcement Rules, the applicant cannot go into the question of infringement till the final adjudication of the present suit - In the event, this Court comes to a finding that the defendant has not infringed the trademarks of the plaintiffs, the said determination shall be binding on the applicant and there cannot be any question of destruction of the infringing goods. On the other hand, if a final determination is made by this Court that the goods have infringed the trademarks of the plaintiffs, appropriate orders shall be passed with regard to the aforesaid goods. The applicant is neither a necessary party nor a proper party for the adjudication of the suit. There is no merit in the present application and the same is dismissed.
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2022 (12) TMI 734
Grant of immunity to Respondent No.1 towards the interest liability - it is submitted that the order passed by the Settlement Commission is without any jurisdiction or power as the Settlement Commission has completely omitted the amendment to section 127H(1) of the Act of 1962 - HELD THAT:- The show-cause-notice is dated 4 September 2008. The application for settlement filed by Respondent No.1 is dated 16 December 2009. The assertion in the petition that after the amendment and post 1 June 2007, the Settlement Commission would not have power in respect of prosecution and penalty has gone uncontroverted. Neither the Respondent No.1 has filed reply controverting this position nor has given any instruction to his advocate. Therefore, we set aside the the complete immunity granted to Respondent No.1 in respect of interest. The impugned order of the Settlement Commission to the extent that it grants complete immunity to Respondent No.1 as regards interest, is quashed and set aside - Application disposed off.
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2022 (12) TMI 733
Confiscation of imported goods - imposition of redemption fine - penalty under Section 112 (a) of Customs Act, 1962 - jurisdiction prescribed in Section 128 A of Customs Act - allegation is that there is no opportunity to defend itself before the adjudicating authority owing to the circumstances which were beyond its control, and that the respondent did not receive any Show Cause Notice or even the notice of personal hearing - HELD THAT:- Section 110 (2) ibid mandates issuance of show cause notice under Section 124 (a) within a period of six months and if not issued within six months, then it prescribes that the seized goods should be returned back to the person from whom the goods were seized - the first appellate authority has only partially remanded while sustaining the duty liability and the interest thereon and hence, if the prayer of the Commissioner in the appeal is to be sustained whereby the Commissioner has prayed interalia for upholding the appellate authority s order, for the reason that the order of the first appellate authority did not appear to be proper and just and that the order of the Commissioner (Appeals) merits rejection, then the entire order of the Commissioner (Appeals) has to be set aside. With regard to the order of confiscation, what was imported under advance authorization was only raw materials which were subsequently converted into final products and hence, the order of confiscation could only to be restricted to the raw materials alone, which perhaps is the reason for the first appellate authority to have remanded the matter with the direction to re-examine partially, which according to me appears to be correct. There are no reasons to interfere with the partial remand order of the first appellate authority, for which reason, the appeals of the Revenue are dismissed.
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2022 (12) TMI 732
Valuation - Was the Commissioner (Appeals) correct in upholding the acceptance of the declared assessable value by the Adjudicating authority in respect of some Bills of Entry? - determination of value based on contemporaneous imports instead of determining it on the basis of the Chartered Engineer s certificate under Rule 7? - HELD THAT:- If the officer has reason to doubt the truth and accuracy of the transaction value, he can call for information including documents and evidence. If the information and evidence is presented and after examining it or if no information or evidence as called for is presented, if the proper office has reasonable belief then it shall be deemed that the value cannot be determined as per Rule 3 (i.e., based on transaction value with additions, if necessary). While the officer can, in the first place call for information and evidence if he has reason to doubt, at the second stage, he should have not just some reason to doubt but a reasonable doubt. If he has such reasonable doubt, then the transaction value can be rejected. The grounds on which the proper officer may raise doubts about the truth and accuracy of the transaction value have been illustrated in explanation 1 (iii) to Rule 12. The list is inclusive and not exhaustive. Thus, if the proper officer has reasonable doubt about the truth or accuracy of the value declared, it can be rejected. If this threshold is crossed or is undisputed, then we need to examine which of the Rules 4, 5, 7, 8 or 9 should be applied and if the sequence in which these Rules must be applied has been correctly followed. Both the lower authorities have found that the grounds for rejection of transaction values in respect of some Bills of Entry were absent in the case. We do not find anything in the appeal which convinces us that there was indeed not only a reason to doubt but also reasonable doubt which would warrant rejection of the transaction value under Rule 12. The fact that DRI officers had obtained a certificate from the Chartered Engineer is irrelevant to the case. The Chartered Engineer s certificate determines value through Deductive method (as per Rule 7). Valuation under Rule 7 becomes relevant only if the requirements for rejection of the transaction value under Rule 12 are first met and then it is also found that the value cannot be determined as per Rules 4 and 5. It is found strange that the Customs department which has access to all the import data in its system requires the importer, who has no such access to provide contemporaneous import data. We also find it extremely unlikely that nobody else in the country has imported the goods either identical or similar to the goods imported in these Bills of Entry which include such common items as multi-cable chargers and laptop bags. The submission of the Revenue that there were no contemporaneous imports of either identical goods or of similar goods as no evidence has been produced before us, such as, say, a report from the Customs EDI system that the disputed goods including such common goods such as laptop bags , chargers , etc. or similar goods were not imported by anyone else except the respondents in these appeals, cannot be accepted - Therefore, there was no ground to not follow Rules 4 and 5 and directly move to Rule 7 in the factual matrix of this case. The Commissioner (Appeals) was correct in holding that the value should be determined based on contemporaneous imports and for that purpose remanding the matter to original authority. The impugned orders in both these appeals must be sustained. The impugned orders are upheld and Revenue s appeals are rejected.
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Corporate Laws
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2022 (12) TMI 731
Powers to impose monetary as well as non-monetary sanctions - online intermediation services - HELD THAT:- This Court has perused the order dated 6th December, 2022 passed by the NCLAT, as also, the order dated 19th October, 2022 passed by the CCI. Various directions have been issued by the CCI vide order dated 19th October, 2022, which were challenged before the NCLAT. One of the components of the said order dated 19th October, 2022 is the aspect relating to penalty. The total amount, which has been fixed as penalty in the case of the Petitioner herein, is to the tune of Rs.223.48 crores. The appeal before the NCLAT is a first appeal challenging the order passed by the CCI. Thus, in the opinion of this Court, a pre-deposit of 10% of the penalty amount could not have been made for mere admission of the appeal. It is obvious that the intention, which may not be explicitly made clear in the entire order dated 6th December, 2022 passed by the NCLAT, is against the recovery of the remaining 90% of the penalty amount. It is directed that subject to the deposit of 10% of the total penalty amount of Rs.223.48 crores, in accordance with the order of the CCI, as directed by the NCLAT, no recovery shall be effected in respect of the remaining 90% of the penalty amount. The said deposit shall be without prejudice to the rights and contentions of the parties - Petition disposed off.
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2022 (12) TMI 726
Restoration of the name of the Company in the Register maintained by the Registrar of Companies (the RoC) - Section 252 of the Companies Act, 2013 - HELD THAT:- The Appellant Company is in litigation therefore, the Company has not filed the financial statements and also without giving opportunity of hearing, the Respondent No. 1/Registrar of Companies struck off the name of the Appellant Company's from the Register maintained by him, but in view of the fact and also the Bank Statements of the Appellant Company from 2015 -2018 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (Court-V, New Delhi) as well as Registrar of Companies, NCT Delhi Haryana is not sustainable in law. Appellant shall pay costs of Rs. 50,000/- to the Registrar of Companies, NCT Delhi Haryana within 08 (Eight) weeks from passing of this Judgment - after restoration of the Company's name in the Register maintained by the RoC, the Company shall file all their Annual Returns and Balances Sheets. The Company shall also pay requisite charges/fee as well as late fee/charges as applicable within 08 (Eight) weeks thereafter. Appeal allowed.
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Insolvency & Bankruptcy
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2022 (12) TMI 730
CIRP - Recovery of dues of central excise duty form Corporate debtor - Revenue has not filed the claim when it was invited by the RP - non-provisioning for outstanding statutory dues of the Corporate Debtor (CD) plus interest at applicable rate in the Resolution Plan etc - HELD THAT:- It is not in dispute that the Appellant/ Commissioner of Custom and Excise, Jaipur -I has not filed the claim while it was so notified by the RP. Even the claim has not been filed at the belated stage prior to approval of Resolution Plan by the CoC. The Appeal has been filed after the plan has been approved by the Adjudicating Authority. As a result of which the Appellant has not complied with the provisions of Section 13 15 of the Code - At this belated stage no fund is available out of the kitty of the Resolution Plan which can be earmarked to the Appellant as informed by the RP and the Resolution Applicant also. Both Resolution Applicant and RP has confirmed implementation of the plan and nothing remains to be adjudicated. It is very much clear that Section 238 of the Code provides very clearly that provisions of this Code to override other laws as also section 14 of the Code provides for moratorium during CIRP. Appeal dismissed.
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2022 (12) TMI 729
Validity of approval of Resolution plan - home buyers - Authorized Representative who is said to have voted has not obtained instructions and approval of the home buyers with regard to different items of the Agenda. - It is submitted that in the 6th CoC meeting several items were deferred without obtaining any opinion of the home buyers which has vitiated the entire process. - no opinion was obtained on feasibility and viability. HELD THAT:- The judgment of PIYA PURI, PRADEEP ARORA, SATYADEEP BISHNOI VERSUS MR. DEBHASHISH NANDA RESOLUTION PROFESSIONAL OF VENTA REALTECH PRIVATE LIMITED, ADANI INFRASTRUCTURE DEVELOPERS PVT. LTD., MR. G. SATYA NARAYANA GUDDETI AUTHORISED REPRESENTATIVE OF FINANCIAL CREDITORS IN CLASS OF VENTA REALTECH PRIVATE LIMITED [ 2022 (8) TMI 1111 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] which is was relied by the Adjudicating Authority was also judgment of this Tribunal where one set of home buyers were challenging the various procedures adopted while approving the Resolution Plan and objections were raised by the home buyers. This Tribunal relying on the judgment of Hon ble Supreme Court in JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION ORS. VERSUS NBCC (INDIA) LTD. ORS. [ 2021 (3) TMI 1143 - SUPREME COURT] has held that the democratic principles of the determinative role of the opinion of the majority have been duly incorporated in the scheme of the code and the minority homebuyers have to necessarily sail with the majority within the class. When the majority has approved the Resolution Plan which approval was sought to be challenged by one set of home buyers that has been repelled by this Tribunal in Priya Puri s case, the objection raised in the present Appeal are another set of objections raising similar issues regarding voting and other issues. Regarding the issue of viability and feasibility of the resolution plan, when the CoC approved the Resolution Plan in its commercial wisdom, it is presumed that the approval was given to a viable and feasible plan. The Resolution Plan being approved, this Tribunal also cannot interfere with the commercial wisdom. Approval of the CoC suggest that the plan is viable and feasible. Appeal is dismissed.
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2022 (12) TMI 728
Initiation of CIRP - Financial Creditors - requirement of filing of statutory certificate as required by Section 65B(4) of the Evidence Act, 1872 - NCLT admitted the application - It is submitted that application under Section 7 was incomplete, hence, deserved rejection. - HELD THAT:- The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 provides for filing of Section 7 application in Form1 accompanied with the documents and records required therein - The Part V also contemplates other documents in order to prove the existence of Financial Debt, the amount and date of default, on basis of which the Adjudicating Authority has come to the conclusion that the Financial Creditor has successfully proved the debt and default. The most important factor to be taken into consideration is that the Corporate Debtor in its reply has neither denied debt nor the default. What is contended by the Corporate Debtor is that it was not proved by the documents as envisaged by Section 7 application. Section 7 application envisage other documents also to prove the debt and default. The Corporate Debtor has also made allegations against the Financial Creditor that the Financial Creditor itself is undergoing insolvency resolution and there are serious allegations of fraud and concealing information. Allegations of fraud and forgery are very easy to make but very difficult to prove. In event, the case of the Corporate Debtor is that the insolvency proceedings were initiated fraudulently or with malicious intent for any purpose other than for resolution of insolvency , it is always open for the Appellant to make application under Section 65 of the Code before the Adjudicating Authority and it is for the Adjudicating Authority to consider such application. Appeal dismissed.
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2022 (12) TMI 727
Initiation of CIRP - whether pre-existing dispute is discernible or not? - whether payment of operational debt the threshold limit to the Operational Creditor/Respondent No.1 had become due and payable? - NCLT admitted the application - HELD THAT:- Sub-section (2) of Section 8 obligates the Corporate Debtor who has been delivered a Demand Notice under Section 8(1) by Operational Creditor to bring to the notice of the Operational Creditor the existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute . There is a statutory purpose for requiring a Corporate Debtor for bringing into notice of the Operational Creditor about the existence of a dispute in its reply to Section 8(1) notice. The purpose is that if there is a dispute in existence, the same be immediately communicated to the Operational Creditor so that he charts out his next actionable step. If no mention of existence of dispute is made by the Corporate Debtor, the Operational Creditor can go ahead and file an application under Section 9(1). In the present case the demand notice has been served on Respondent No.2 on 12.03.2018 to which no reply has been furnished by Respondent No.2 and therefore the Respondent No.1 was well within its rights to file the Section 9 application. It is a well settled proposition that for a pre-existing dispute to be a ground to thwart an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) or at the time of filing the Section 9 application. In the present case, we notice that no reply was framed in response to the demand notice at all. In such circumstances the Adjudicating Authority is only required to look into the substance of the pleadings to find out whether a real dispute is discernible from the stated facts. It is an undisputed fact that the notice of demand was issued on 12.03.2018. Hence, we proceed to examine from the material on the record to find out was to whether there was any dispute raised by the Corporate Debtor regarding inferior quality of coal supplied by Respondent No.1 prior to 12.03.2018 being the date on which Demand Notice was issued - This lends credulity to the stand taken by the Learned Counsel for Respondent No.1 that had genuine disputes been in existence, the Respondent No.2 would have articulated these disputes by responding to the demand notice and not remained silent. We are inclined to agree with the Respondent No.1 that the coal test reports appear to be an after-thought which is validated by the fact that these reports were submitted as additional documents before the Adjudicating Authority by Respondent No.2 only after the Section 9 application had been filed by Respondent No.1. The findings of the Adjudicating Authority that the defence raised by the Respondent No. 2 is an after-thought and a moonshine defence do not appear to be misplaced - the Adjudicating Authority did not commit any error in admitting the Section 9 application filed by Respondent No.1. Appeal dismissed.
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2022 (12) TMI 725
Approval of resolution plan with modification - Power of NCLT to modify the plan - Section 31 of the IBC - HELD THAT:- There is no doubt that if a resolution plan is submitted before the Adjudicating Authority which is in compliance with sub-section (1) of Section 31 as well as in consonance with the provisions of Section 30 of the Code such resolution plan has to be approved by the Adjudicating Authority since in Section 31 word shall has been incorporated with proviso that the Adjudicating Authority must be satisfied that the resolution plan has provisions for its effective implementation. Sub-section (2) of Section 31 of the IBC further empowers the Adjudicating Authority to reject the resolution plan, if he is satisfied that resolution plan is not in conformity with the requirements as referred to in sub-section (1) of Section 31 of the IBC. It is clear that mandate of legislation is either to approve the resolution plan or to reject. However, there is no provision for making alteration or modification in the resolution plan. In view of the statutory provisions as contained in Section 31 of the IBC we are satisfied the learned Adjudicating Authority to some extent exceeded its jurisdiction in modifying/altering the conditions in the resolution plan - Appeal disposed off.
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PMLA
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2022 (12) TMI 724
Seeking grant of Anticipatory bail - money laundering - proceeds of crime - reimbursement of forged medical claim - HELD THAT:- In the present case, during PMLA investigation, it is found that Shri Shiv Narayan Joshi has transferred an amount of Rs.36 lakhs in the account of Lokesh Paliwal on the direction of Shri Kanhaiya Lal Kumawat and this amount came out of proceeds of crime amounting to Rs.2,65,96,086/- which Shri Shiv Narayan Joshi has received as reimbursement of the forged medical claims. Out of the aforesaid amount of Rs.36 lakhs, Rs.22 lakhs were given to Shri Kanhaiya Lal Kumawat by Shri Lokesh Paliwal in cash and Rs.14 lakhs were kept by Shri Lokesh Paliwal himself. Investigation has been completed. Complaint has also been filed. The petitioner has no criminal antecedents. Allegation made against the petitioner- Lokesh Paliwal in the instant case is of Rs.36 lakhs, Rs.22 lakhs were given to Shri Kanhaiya Lal Kumawat by him in cash and Rs.14 lakhs were kept for himself. Property identified of petitioner Lokesh Paliwal is 50% area of Plot No.123, Verma Colony, Sector-9, Hiran Magri, Udaipur and the total value of the said property is Rs.28,23,600/- (attached upto Rs.14 lakhs). This anticipatory bail application is allowed and it is, hereby, ordered that in case of arrest of the petitioner, namely Lokesh Paliwal son of Shri Ramesh Chandra Paliwal, in the aforesaid F.I.R. by the concerned Investigating Officer, he shall be released on bail provided he furnishes a personal bond in the sum of Rs.2,00,000/- together with two sureties in the sum of Rs. 1,00,000/- each to the satisfaction of concerned Investigating Officer on the conditions imposed - application allowed.
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Service Tax
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2022 (12) TMI 723
Refund of unutilized input tax credit - export of services - intermediary services or not - judicial discipline - period of October, 2015 to December, 2016 and January, 2017 to June, 2017 - HELD THAT:- A plain reading of the impugned order indicates that the learned Assistant Commissioner rejected the petitioner s claim by questioning the decision of the learned Commissioner (Appeals) to allow the petitioner s appeal and reject the Revenue s appeals. The learned Assistant Commissioner held that the learned Commissioner (Appeals) has erred in following the decision of this Court in VERIZON COMMUNICATION INDIA PVT. LTD. VERSUS ASSISTANT COMMISSIONER, SERVICE TAX, DELHI III, DIVISION-XIV ANR. [ 2017 (9) TMI 632 - DELHI HIGH COURT] , on the ground that the Special Leave Petition against the said decision is pending before the Supreme Court. The impugned order has been passed in complete disregard of the judicial discipline. It is, ex facie, apparent that the learned Assistant Commissioner has attempted to overreach the orders passed by the superior authority - Since the respondent was seeking to defend the impugned order, this Court had called upon Mr. Raghupathy Ramachandran, Senior Standing Counsel, Central Board of Indirect Taxes and Customs (CBIC), to also file written submissions even though he was not appearing in the present petition. He has fairly submitted that the impugned order, which proceeds on the basis that the petitioner is a provider of intermediary services, is incorrect and it is not open for the Revenue to take this stand. The Revenue would necessarily have to wait for the outcome of the appeals preferred by the learned CESTAT (which have since been dismissed as well). The learned counsel appearing for the respondent fairly states that the impugned order be set aside - Petition allowed.
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2022 (12) TMI 722
CENVAT Credit - input services - Restaurant services - Accommodation services - Internet Cafe services - Cab Operations services - Health Club and Fitness Centre - Beauty Parlor - Dry Cleaning - Outdoor Catering - cryptic and non-speaking order - violation of principles of natural justice - HELD THAT:- The impugned order nowhere discusses about the reply and the document furnished by the Petitioner to the show-cause notice. Respondent No.2 proceeded on the premise that the joint venture exists and earlier show-cause notice was issued to the Petitioner along with the joint venture and therefore, the demand made by the department is justified. There was no service provider or service receiver contract between the parties justifying the levy of service tax. The impugned order further failed to take into account the order passed by the Appellate Tribunal dated 5 March 2019 (Exh.I) wherein a demand of the department for the earlier period from October 2007 to March 2013 was negated. It therefore clearly revealed that there is non-application of mind while passing the impugned order. Similarly, it is clear from the reasonings in the impugned order that Respondent No.2 failed to take into account reply and the document produced by the Petitioner to the show-cause notice, which now compelled us to quash and set aside the impugned order and to remand the matter for fresh consideration by taking into account the reply and the documents to the show-cause notice as well as the orders passed by the Appellate Tribunal with regard to the earlier show-cause notices. The impugned order is set aside by remanding it to the said authority to decide it afresh by considering reply filed by the Petitioner to the show-cause notice, documents attached to it and also by giving personal hearing - petition disposed off.
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Central Excise
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2022 (12) TMI 721
CENVAT Credit - import of capital goods cleared under N/N. 54/2003-Cus. dated 01.04.2003 by debiting the countervailing duty (CVD) amounting to Rs. 18,37,92,521/- - amount of CVD paid as debit in Served From India Scheme (SFIS) - HELD THAT:- It is undisputed that as per Rule 3 of the Cenvat Credit Rules, any duty paid under Section 3 of the Customs Tariff Act is eligible to an assessee as Cenvat credit. It is also undisputed that the appellant in this case has paid the CVD by a debit in the SFIS. Appellant had imported capital goods under Notification No. 54/2003-Cus dated 01.04.2003 and Notification No. 94/2004-Cus dated 11.09.2004. These imports took place in 2005, 2006 and 2007. During the period 2004-05 to 2006-07. In the Foreign Trade Policy there is specific provision to allow Cenvat Credit in respect of scheme like VKGUY, Target Plus, Focus Products Scheme but no such provisions was made for SFIS and during the period from 2007-08 onwards, a general provisions at para 3.12.1 (2007-08 to 2008-09) and para 3.17.6 (2009-10 onwards) was made. During the relevant disputed period, in the Foreign Trade Policy, there was neither an express provision to allow Cenvat credit of the CVD paid through debit in the SFIS scrip nor to disallow the Cenvat Credit of the CVD paid through SFIS. In such situation, admissibility of Cenvat Credit should be decided as per the provisions of Cenvat Credit Rules 2004, applicable during the relevant period. Cenvat Credit Scheme is a special scheme where an assessee can avail credit of the duty paid on the inputs /capital goods/ input services as CENVAT credit under certain conditions. Therefore, this issue requires re-adjudication. The case is remitted to the Adjudicating authority with the direction to decide the admissibility of cenvat credit on disputed imported Capital Goods afresh in accordance with provisions of Cenvat Credit Rules, 2004 and pass a speaking order after giving the assessee a reasonable opportunity of being heard - Appeal allowed by way of remand.
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2022 (12) TMI 720
Refund of un-utilized Cenvat Credit of Input Services used in or in relation to the manufacture of export goods - it is alleged that Appellant have taken double benefit in as much as they have taken refund of Rs. 45,35,610/- and they did not debit/reverse the said amount from Cenvat account - HELD THAT:- Originally when the appellant filed the refund claim under Notification No. 5/2006, the same was allowed by refund sanctioning authority. The revenue has challenged the sanction of refund claim on the ground that as per Notification No. 27/2012-CE (NT) dated 18.06.2012, which is issued in suppression of Notification No. 5/2006-CE(NT) dated 14.03.2006, the amount that is claimed as refund under Rule 5 of the Cenvat Credit Rules shall be debited by the claimant from his cenvat credit account at the time of making the claim . In the impugned orders the Commissioner (Appeals) has wrongly considered the claim under Notification No. 27/2012 instead of Notification No. 5/2006. The reliance made upon the provisions of Notification No. 27/2012- CE (NT) dated 18.06.2012 is absurd and illegal since the refund claim was admittedly filed in the present matter under the provisions of Notification No. 5/2006-CE (NT) dated 14.03.2006. it is pertinent to note that under Notification No. 5/2006, the requirement for debiting the refund claim amount did not exist. It is found from the refund order that all the claims were sent to Range offices for verification and the same have been duly verified by the Range officers. The charge of double benefit made by the revenue is absolutely incorrect on the face of the records in as much as the appellant even though did not carry forward and debit the refund amount in their cenvat account. However it is the case of the revenue that such cenvat credit was never utilised. The non transfer of unutilised cenvat credit is as good as reversal of cenvat. The charge of the double benefit will sustain only when the assessee in one hand claim the refund and in other hand utilise the same amount for payment of duty on their clearance of goods, which is no-body's case. Hence the allegation of double benefit of the same amount does not even exists. In this undisputed fact, the Learned Commissioner (Appeals) has erred in rejecting the appellant's claim for refund. Interest on delayed refund - HELD THAT:- The issue has been settled by various decisions. Hence by following the ratio of the decisions, mainly RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] wherein the Hon'ble Supreme Court has held that interest on delayed refund is payable under Section 11BB of Central Excise Act, 1944 on the expiry of period of three months from the date of receipt of application under Section 11B(1) ibid - the appellant is entitled for the interest as per the Apex Court decision in Ranbaxy Laboratories Ltd. Appeal allowed - decided in favor of appellant.
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2022 (12) TMI 719
Interest on the delayed refund of deposit - whether the appellant had deposited Rs.3,23,09,687/- under section 35F of the Excise Act because if it was such a deposit then the appellant would be entitled to interest under the provisions of section 35 FF of the Excise Act? - HELD THAT:- Section 11B of the Excise Act deals with claim for refund of duty and interest, if any, paid on such duty. Sub-section (1) of section 11B of the Excise Act provides that any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest to the Assistant Commissioner of Central Excise before the expiry of one year from the relevant date. It is, therefore, clear that section 11B of the Excise Act would only apply for claim of refund of duty and interest, if any. It would have no application in a case where the applicant seeks refund of the pre-deposit amount. The Commissioner (Appeals) rejected the claim by treating the refund to have been claimed by the appellant under section 11B of the Excise Act and consequently making applicable the provisions of section 11BB of the Excise Act that deals with interest on delayed refunds. The claim of the appellant was under section 35F of the Excise Act and not under section 11B of the Excise Act. Mere mention of a wrong provision in the letter submitted by the appellant will not work to the prejudice of the appellant if in law the refund claimed by the appellant can be traced to section 35F of the Excise Act. Interest was, therefore, required to be paid to the appellant under the provisions of section 35FF of the Excise Act and not under section 11BB of the Excise Act. The Supreme Court in UNION OF INDIA VERSUS TATA SSL LTD. [ 2007 (10) TMI 16 - SC ORDER ] also relied upon its earlier judgment in COMMISSIONER OF CENTRAL EXCISE, HYDERABAD VERSUS ITC. LTD. [ 2004 (12) TMI 90 - SUPREME COURT ] and the Circular dated 08 December, 2004 to hold that pre-deposit made as a condition for hearing the Appeal has to be refunded to the assessee with interest when the assessee becomes successful. In view of the provisions of section 35FF of the Excise Act it has to be held that since the amount deposited by the appellant under section 35F of the Excise Act was not refunded to the appellant within three months from the date of communication of the order of the Tribunal, the appellant would be entitled to interest after the expiry of three months from the date of the order of the Tribunal till the date of refund of such amount at the rate of six percent per annum - Appeal allowed in part.
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CST, VAT & Sales Tax
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2022 (12) TMI 718
Slump sale agreement - dues arising out of the operations and activities of the sugar unit prior to the date of acquisition - to be borne by the seller or otherwise - subsisting dues arising out of transactions occurring on dates prior to the sale - to be characterized as contingent or conditional liability or is it an accrued liability which may be computed or discharged at a subsequent date - Whether a purchaser of a sugar mill could be treated as a dealer or service provider as an entity liable for discharging dues even if they had not been acting as a dealer or service provider or otherwise as an entity on whom, liability could be fastened? - speaking order is vitiated, due to conflict of interest or not - principles of natural justice. HELD THAT:- There is no dispute that the liability towards the duty in question for the Amroha unit are in respect of business transactions for the period anterior to the signing date of the Slump Sale Agreement. Moreover assessment orders and recovery citations have been issued by the taxing authorities in the name of the UPSSCL. Therefore, can such liability for transactions prior to the Slump Sale Agreement dated 17.7.2010 be fastened on to the purchaser. In the case in hand, the business liability for the Amroha unit had definitely arisen out of the operation of the unit during the period before the same was sold to the appellant, although the liability is to be quantified and discharged at a future date. When the liability is capable of being estimated with reasonable certainty, the liability is not to be treated as a contingent one and should be considered as a liability which may be discharged at a future date. Such being the position in law and the liability in question not being a contingent one, the same cannot in our view be fastened on the purchaser who were not operating the unit, prior to the Slump Sale Agreement dated 17.7.2010. The liability of the purchaser for the dues relating to activities and operations of the unit for the period anterior to 17.7.2010, could not therefore have been fastened on the appellant in view of the clear provisions made in clause 9 of the Sale Deed read with Clause 12.1 and 12.2 of the Slump Sale Agreement as both are specific in nature. In the same context, the clause 2.6 which speaks of contingent liabilities and legal cases pending in respect of the unit, to be fastened on the purchaser and the seller being absolved of such liability, are generic conditions provided under clause 2.6 of the Slump Sale Agreement and we are not impressed by those - clause 9 of the sale deed being specific, will govern the parties and will override anything contrary, contained in the Slump Sale Agreement. It is the UP State Sugar Corporation Limited which had collected all the dues from their customer on behalf of the State Government and they are under an obligation to deposit the collected sum in the government treasury. But for those transactions, for the period prior to 17.7.2010, the UPSSCL are trying to usurp the collected sum and are trying to pass on the burden to the appellant who was neither the dealer nor they had anything to do with the operation of the unit prior to 17.7.2010 - the rejection of the representation of the appellant appears to be arbitrary and the speaking order could not therefore have been sustained by the High Court in the impugned judgment. In view of the foregoing, the liability in question, not being a contingent liability, cannot be fastened on the shoulders of the appellant. The appeal is accordingly allowed by setting aside the impugned judgment leaving the parties to bear their own cost.
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2022 (12) TMI 717
Levy of Entry tax - tractor trolly motor vehicle - Section 2 (h) of the Orissa Entry tax Act, 1999 (OET Act) - HELD THAT:- It is evident from a comparison of both the definitions that while Section 2(h) of the OET Act adopts the definition of the Motor Vehicle as contained in Section 2(28) of the MV Act, it excludes from that definition any tractor, earth mover, excavator, bulldozer or road-roller . Interestingly, Section 2 (28) of the MV Act includes trailer whereas Section 2(h) of the OET Act does not. Section 2 (28) of the MV Act envisages trailer being attached to the vehicle. There is no exclusion of tractor from the definition of motor vehicle under the MV Act. However, there is such exclusion under Section 2(h) of the OET Act. A trailer attached to a tractor by itself cannot be classified as motor vehicle . It is nobody s case that the trolly has any motor so as to attract such a definition. The Court notes that the impugned order of the Tribunal while noticing Section 2(h) of the OET Act stops short of noticing what was excluded from the definition. The conclusion of the Tribunal that trolly is comprehended in the definition completely misses the point that the trolly cannot exist as a motor vehicle independent of the tractor to which it is supposed to be attached. In fact, the Tribunal notes that under Section 2(46) of the MV Act trailer has been separately defined to mean any vehicle drawn or intended to be drawn by a motor vehicle - As far as the OET Act is concerned, since the tractor itself is excluded from the definition of motor vehicle under Section 2(h) of the OET Act, the question of bringing trolly as a stand-alone vehicle within the purview of that definition does not arise. This Court answers the question framed in the negative i.e. in favour of the Petitioner Assessee and against the Department, sets aside the impugned order of the Tribunal and restores the order of the 1st Appellate Authority - the revision petition is allowed.
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2022 (12) TMI 716
Seeking deposit of 50% of the disputed tax by giving credit to the tax already deposited - grant of stay of collection of disputed tax pending appeal filed by petitioners before the VAT Appellate Tribunal - it is alleged that the petitioners have not produced the Foreign Buyer Purchase Agreements to claim exemption under export sales - HELD THAT:- As can be seen, under Section 33 of the AP VAT Act, 2005, a dealer aggrieved by the order passed by the revisional authority under Section 32 of the AP VAT Act, 2005 can file an appeal before the VAT Appellate Tribunal. Then the second proviso to Section 33(2) of the AP VAT Act, 2005 says that no appeal against the order passed under sub-section (2) of Section 32 shall be admitted unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due and 25% of the difference of the tax. Thus, it is mandatory that while preferring appeal a dealer shall make a pre-deposit of admitted tax plus 25% of the differential tax to admit the appeal. In the instant case, the petitioners have admittedly fulfilled the said condition. An appeal can be filed before the Appellate Tribunal under Section 33(1)(a) or (b). In the instant case, appeal is preferred under Section 33(1)(b) as against the order of the revisional authority. Then following Section 33(6) of the AP VAT Act the petitioners prayed the 3rd respondent for stay. As per Section 33(6)(a), the said authority is vested with the discretionary power of granting stay subject to such terms and conditions as he may deem fit. As has been observed by the Division Bench in ACT Digital Home [ 2021 (9) TMI 1149 - ANDHRA PRADESH HIGH COURT] , if the mandatory deposit of 25% of the disputed tax as prescribed under the second proviso of Section 33(2) of the AP VAT Act, 2005 is sufficient to obtain stay of payment of the differential tax pending appeal, certainly the provision under Section 33(6) will become nugatory and otiose. Therefore, following the ratio in the ACT Digital Home, it can be said that the initial pre-deposit of 25% made under Section 33(2) of the AP VAT Act, 2005 will not automatically entitle any dealer to claim stay of collection of the differential tax pending his appeal as a matter of right. Petition dismissed.
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2022 (12) TMI 715
Validity of assessment order - reversal of Input Tax Credit (ITC) - mismatch of particulars set out in the annexures accompanying the petitioner's returns and the other dealers' returns of turnover - it is alleged that the procedure dealing with mismatch as set out by the Principal Secretary/Commissioner, Commercial Taxes in Circular No.5 of 2020-2021 dated 24.02.2021, not followed - HELD THAT:- There is merit in the challenge to the impugned orders of assessment and hence the same are set aside. Yet another issue that arises relates to non-maintenance of books of accounts. According to the petitioner, this issue has been explained before the Assessing Authority who was not taken proper note of the same. Insofar as the larger issue is set aside, this issue is also set aside. Matter to be adjudicated do-novo. Petition closed.
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2022 (12) TMI 714
Benefit of concessional rate of tax - Form 'C' filed - original order of assessment had come to be revised under impugned notice dated 04.12.2020 without notice or a pre-assessment proposal having been issued to the petitioner - recomputation of turnover - violation of principles of natural justice - HELD THAT:- Mr.Kumaran, (respondent-Revenue) would also confirm that there is no challenge to order dated 12.09.2022 as on date. This is recorded. In light of the admitted position, the observations and conclusions in order dated 12.09.2022 would apply on all force to the present case as well. Hence, the impugned orders are quashed. Petition allowed.
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2022 (12) TMI 713
Rectification of mistake - error apparent on the face of record or not - petitioner sought rectification of the assessment by way of an application under Section 84 of TNVAT Act - reversal of input tax credit (ITC), on interstate sales against C declaration Forms - HELD THAT:- The contents of para 8 run counter to the records and, in fact, only tantamount to the position that the impugned order has been passed based on the petitioner's written request for rectification - Despite repeated opportunities granted to the learned counsel for the respondent to produce a copy of the personal hearing notice or at least the date on which personal hearing was conducted, there is no response forthcoming leading to the unambiguous view that there was no personal hearing that has been granted to the petitioner prior to passing of the impugned order. The impugned order is set aside. The petitioner will appear before the respondent on Monday, the 5th of December, 2022 at 10.30 a.m. without expecting any further notice in this regard along with complete particulars in respect of the request for rectification. Petition disposed off.
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