TMI Tax Updates - e-Newsletter
December 19, 2023

Case Laws in this Newsletter:

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

Articles

1. Litigation on RCM on Expat Salary: Northern Operating Systems Case under GST – High Courts and CBIC Intervene

   By: Vivek Jalan

2. High Court has the power to reduce or waive the amount of pre-deposit paid at the time of filing the appeal due to financial hardship faced by the Assessee

   By: Bimal jain

3. GST on Food Items and Restaurants

   By: Law Legends

4. Interest not to be levied when delay in remitting tax is caused due to technical issues on GST Portal

   By: Bimal jain

News

1. DIFFERENCE IN PER CAPITA INCOME

2. 69% of the total 44.46 crore loans sanctioned under Pradhan Mantri Mudra Yojana, have been sanctioned to women

3. Steps taken by Government to facilitate Credit access to Farmers

4. UPI transactions grew from ₹ 1 lakh crore in FY 2017-18 to ₹ 139 lakh crore in FY 2022-23 in value, at a CAGR of 168%

5. Joint outcome statement: UK-India Round Thirteen of FTA negotiations

6. Year End Review 2023: Ministry of Statistics and Programme Implementation

7. Shri Piyush Goyal releases the “Logistics Ease Across Different State (LEADS) 2023”

8. Indian Institute of Corporate Affairs (IICA) and Partners in Change conduct capacity building of more than 150 aspiring Responsible Business Leaders in New Delhi.

Notifications

GST - States

1. 02/2023-State Tax - dated 15-12-2023 - Delhi SGST

Amendment in Notification No. 73/2017– State Tax, dated 31st January, 2018

2. 51/2023-State Tax - dated 10-11-2023 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Third Amendment) Rules, 2023

3. 50/2023-State Tax - dated 10-11-2023 - Himachal Pradesh SGST

Amendment in Notification No. 66/2017-State Tax, dated 15th November, 2017

4. 49/2023-State Tax - dated 10-11-2023 - Himachal Pradesh SGST

Seeks to notify supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of Himachal Goods and Services Tax Act, 2017

5. 47/2023-State Tax - dated 10-11-2023 - Himachal Pradesh SGST

Amendment in Notification No. 30/2023-State Tax, dated 18th September, 2023

6. 11/2023-State Tax (Rate) - dated 10-11-2023 - Himachal Pradesh SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 85/2023 - dated 26-9-2023

IECs with PFMS Account Status appearing As Rejected – reg.

Highlights / Catch Notes

Income Tax

• Assessment Order Invalidated Due to Non-Issuance of Draft Under Income Tax Act, Violating Mandatory Procedures.

  Case-Laws - AT : Validity of assessment order against appellant/foreign company without issuing a draft assessment order as mandated u/s 144C - Scope of term “eligible assessee”-  Assessment order passed by the Ld. AO in the case of the assessee is without jurisdiction and in violation of the mandatory provisions of section 144C(1) of the Act and therefore the assessment order passed u/s. 153C of the Act is null and void and unsustainable in law. - AT
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• Interest Disallowance Deleted: Personal Guarantees by Directors Deemed Business Necessity in Loan Transactions.

  Case-Laws - AT : Disallowance u/s. 40A(2)(b) - assessee company had paid interest on Unsecured loans and advances taken from Directors and relatives - Considering the fact, the above two parties were stood for the personal guarantee of the loans availed by the assessee company which is a business exigency. - Additions deleted- AT
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• Subscription and Training Services Not Taxable in India, Not Classified as Technical Services Under Tax Laws.

  Case-Laws - AT : The subscription, professional and training services rendered by the assessee does not fall within the definition of FTS both under the Act as well as under the DTAA and accordingly the same cannot be taxed in India - AT
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• Court Quashes Assessment Reopening; Finds Full Disclosure by Petitioner, Annuls Notices Based on Profit and Loss Account.

  Case-Laws - HC : Reopening of assessment - Although the petitioner has resorted to window dressing of the statement of actual of statements filed along with the Statement of Profit and Loss for the year ended 31st March 2014, it cannot be said that the petitioner has not disclosed material. There is a complete disclosure by the petitioner along with the regular returns - The reasons given for re-opening of the Assessment along with a notice issued u/s 143(2) r.w.s.147 is also based on the Profit and Loss Account - Notices and assessment order quashed - HC
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• Tax Revision Validated: Incorrect Exemption Applied for LTCG from Land Sale Instead of Residential Property.

  Case-Laws - AT : Validity of Revision u/s 263 - Allowing Exemption u/s 54 instead of 54F - Source of LTCG is not from residential house and since the assessee had earned capital gain on transfer of plot of land - Revision order sustained - AT
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• Minor Forest Products Exempt from Tax Collection at Source Under Income Tax Act, Section 206C.

  Case-Laws - AT : Non-collection of TCS u/s 206C - there is no ambiguity that the seller of forest product is required to collect tax on forest produce. But the “Minor Forest Product” are the product are not covered under the Income Tax Act u/s 206C (1), sl no-(v)which is not liable to collect tax at source. We find that there is no ambiguity in the “Minor Forest Product” which are not at all liable to collect tax u/s 206C. - AT
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• Tax Revision Case Examines Authenticity of Political Donation Loan; PCIT Questions Deduction Validity u/s 80GGC.

  Case-Laws - AT : Revision u/s 263 - deduction u/s 80GGC - Genuineness of donation to the political party - We agree with the observations made by PCIT that it is quite unusual that assessee is taking loans for making the aforesaid donations and accordingly, the Assessing Officer should have made further enquiries to ascertain whether the aforesaid loan is genuine in the first place or not. - AT
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• Assessing Officer's Rejection of TDS Credit Requires Consideration of Transactions and Evidence, Not Just Mechanical Application.

  Case-Laws - AT : Rectification u/s 154 - AO rejected TDS Credit after issuance intimation U/s 143(1) - withdrawal of TDS is a separate activity of the deductor. The mere rejection of TDS credit is not serving the purpose. The transaction, execution of works and other evidence should be considered during withdrawn of TDS credit after processing of return U/s 143(1). The execution of section 154 can not be mechanical purpose. - AT
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• Tax Penalty Overturned Due to Ambiguous Charge in Undisclosed Inventory Case; Notice Lacked Specific Allegations.

  Case-Laws - AT : Penalty u/s 271(1)(c) - non specification of clear charge - undisclosed unsold inventory - Notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. - No penalty - AT
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• Taxpayer's Cash Deposits During Demonetization Scrutinized for Lack of Justification and Unsettled Government Dues.

  Case-Laws - AT : Addition on account of cash deposit during demonetization period - the assessee glumly failed to justify the genuineness of the cash on hand viz a viz its use for payment of service tax, if the assessee was having the cash why the government dues are not discharged and kept the cash on hand and not only that the filmy reasons provided by the assessee of shifting the cash on hand from one place to another is also not justified with the corroborative evidence. - AT
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• Attempt to Change Original Tax Assessment u/s 154 Deemed Impermissible; Can't Alter Conscious Decisions.

  Case-Laws - AT : Rectification of mistake u/s 154 - deduction u/s. 10A - View taken by the Ld. AO in the proceedings initiated u/s. 154 tantamount to a change in view resulting into review of his own order which is not permissible under the provisions of section 154 of the Act. When the Ld. AO has consciously taken a view to frame the original assessment by making certain additions/disallowances, he is not empowered to take contrary view by adopting a review process for the assessment already completed. - AT
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• Unexplained Investments in Flats: Company Escapes Liability u/s 69B Due to Ongoing Litigation.

  Case-Laws - AT : Addition u/s 69B - unexplained investment - it is evident that those three flats belonging to the M/s Starlight security LLP mentioned in the Escrow agreement has ultimately not been given to those three shareholders by the assessee on anyone on behalf of the assessee and matter being under litigation before the Hon’ble Bombay High Court, no addition for unexplained investment could survive in the hands of the assessee company. - AT
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• Tax Department's Disallowance of Long Term Capital Gains on TFCIL Shares Lacks Merit; Initial Scrutiny Found Gains Genuine.

  Case-Laws - AT : Assessment u/s 153A - disallowance of bogus Long Term Capital Gain - In five scrutiny cases of the sale of shares, i.e. TFCIL, gain earned by the assessee was accepted as a genuine by the Department itself. Out of these five cases, two are in the re-assessment u/s 147 and these assessment orders have been framed after more than one year of the search. Therefore, Department was not doubting the genuineness of the transactions - Department was not possessing any details, which authorize it to doubt the claim made by the assessee. Therefore, even otherwise on merit also, no addition is sustainable - AT
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Customs

• Echo Devices Classified Under CTH 8517 for Multifunctional Capabilities Beyond Speaker Use.

  Case-Laws - HC : Classification of imported goods - Echo Family Devices - The impugned devices perform a host of functions including reception, conversion and transmission of voice or other data to produce the requisite final output warranting their classification under CTH 8517 - merely because these devices could if so chosen by the user also be used as mere speakers, the same would not justify us recognising their primordial attribute to be that of a speaker alone. - HC
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• Goods Clearance in Noida SEZ: Exemption Notification 6/2004-Cus Not Applicable for SAD, Revenue Wins Appeal.

  Case-Laws - AT : Clearance of goods from Noida SEZ - Exemption notifications applicable to SAD - Undisputedly, the exemption notification no. 6/2004-Cus was not available during this entire period. Therefore, the appellant is not entitled to the benefit of the exemption notification not available during any of the dates of the clearance - the issue is found in favour of the Revenue and against the appellant - AT
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• Provisional Release of Over 5kg Gold Dore Allowed Despite Initial Rejection, Subject to Conditions u/s 110A.

  Case-Laws - AT : Rejection of request for provisional release of the impugned goods - Gold - The goods even if there is any remote possibility of being found prohibited or restricted at the time of adjudication is there, cannot be subjected to non release in terms of Section 110A. In view of foregoing the provisional release of 26 Gold Dore weighing 5 kg plus more allowed, subject to the conditions imposed - AT
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• Importers Win Duty Exemption for Non-LTE Wireless Products; Appeals Court Affirms Exemption Eligibility.

  Case-Laws - AT : Benefit of exemption from customs duty - Import of Wireless Access Points [WAP]/ MIMO Product - WAP imported by the appellant works on technology and does not support LTE standard. Beetal Teletech was, therefore, justified in claiming exemption from the whole of the customs duty under Serial No. 13 (iv) of the notification. - AT
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Corporate Law

• West Bengal Rule on Company Management Unconstitutional for Breaching Equality Mandate under Article 14.

  Case-Laws - HC : Constitutional Validity - West Bengal Excise (Change in Management) Rules, 2009 - Changes in the Board of Directors - The inevitable conclusion must be that clause (d) of the proviso to Rule 5(1) of the 2009 Rules offends Article 14 of the Constitution in terms of equal treatment of a Private Limited Company when compared to the right conferred to a Public Limited Company. The petitioners have made out a case for a declaration that clause (d) of the proviso to Rule 5(1) of the 2009 Rules is ultra vires to the Constitution of India. - HC
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IBC

• NCLT's Broad Jurisdiction in Handling Insolvency Resolution Plans and Issuing Injunctions Highlighted.

  Case-Laws - HC : Territorial Jurisdiction - validity of declaratory decree to the effect that the purported Assignment Deed - permanent and mandatory injunction - the jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT. - HC
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Service Tax

• Notice Pay in Termination Not a Taxable Service, No Service Tax Due on Notice Pay Recovery.

  Case-Laws - AT : Demand of service tax - nature of activity - notice pay recovered from the ex-employee - Notice pay, in lieu of termination does not give rise to the rendition of service either by the employer or the employee - AT
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• Failure to Provide Documents Leads to Service Tax Demand Confirmation and Penalty Imposition.

  Case-Laws - AT : Invocation of Extended period of Limitation - It is apparent from the record that after receiving the specific information that the appellant has short paid service tax, a letter dated 11.02.2014 was served upon the appellant requiring them to produce requisite documents and to submit the reply with the said specific information. It is very much apparent from the show cause notice itself that the said information/documents were never provided by the appellant to the department. - Demand confirmed with penalty - AT
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Central Excise

• Refund Granted for Excess Duty Paid Due to Price Adjustment by Buyer, Preventing Unjust Enrichment.

  Case-Laws - AT : Refund of excess paid duty - Unjust enrichment - Admittedly Appellant have not received the full amount as per the invoices and further at the time of finalisation of the supply bill, under the contract in question, the buyer of the goods – South Central Railway, have made adjustment of both the downward revision of the price including the excise duty - Refund allowed - AT
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Case Laws:

• Income Tax

• 2023 (12) TMI 777
  Reopening of assessment against agent of the State Government - as argued Petitioner is only an agent of the State Government and as the State Government itself cannot be taxed, Petitioner also cannot be taxed - as argued in any event the income of Petitioner is restricted to Rs. 5,00,000/-, which has been offered to tax and an assessment order dated 31st March 2016 has been passed accepting the same etc, therefore, the question of any tax escaping assessment also would not arise - HELD THAT:- When the matter was carried in appeal, the Division Bench of this Court in [ 2013 (3) TMI 826 - BOMBAY HIGH COURT] came to a categorical finding that from bare reading of Sub-section 3(A) of Section 113 of the MRTP Act, it is crystal clear that Petitioner is declared as an agent of the State Government and this statutory status bestowed on Petitioner cannot be whittled down, nor can be elevated to any other position by an administrative decision. The Division Bench also came to a finding that Petitioner is getting only Rs. 5,00,000/- per annum towards administrative expenses and Petitioner on its own has pleaded before the ITAT that it was acting as an agent of the State Government and nothing more. The Court has also observed that the ITAT has accepted that contention of Petitioner and held that Petitioner was not liable to pay income tax on the income derived from the development activities. In another [ 2019 (7) TMI 2009 - BOMBAY HIGH COURT] heard by the Aurangabad Bench of this Court, the Court has accepted that the conjoint reading of the provisions under Sections 40(1)(b) 113 of the MRTP Act and the notification dated 1st June 1973 issued by the State Government, Petitioner would be acting as Special Planning Authority and as an agent of the State Government. ITAT in its order [ 2012 (9) TMI 331 - ITAT MUMBAI] while considering the issue whether Petitioner should be held to be an agent of the State or an arm of the State, working solely under the authority and guidelines issued through various notifications by the State, i.e., the Government of Maharashtra has come to a finding that the resolutions taking back to 1970 make it clear that Petitioner is an agent and functions as an arm of the State Government because Petitioner can only work under the control and supervision of the State Government meaning thereby Petitioner cannot make/take any decisions suo-motu. ITAT has also held Petitioner to be an agent of the State. ITAT has also recorded that it was aware that there is an income to Petitioner by way of remuneration received from the State Government at Rs. 5,00,000/- per annum, which has to be assessed in the hands of Petitioner. The ITAT set aside the order passed by the Commissioner of Income Tax (Appeal) and directed the Assessing Officer to decide the case on merits with regard to income of Rs. 5,00,000/- received by Petitioner after allowing deduction for any expenses incurred wholly and exclusively for the purpose of earning the said income. Even in the assessment order for Assessment Year 2013-2014, i.e., the case at hand, passed under Section 143(3) of the Act, the Assessing Officer has accepted the returned income of Petitioner to be a fixed amount of Rs. 5,00,000/- only. Thus the question of any income escaping assessment in the case of Petitioner does not and cannot arise.

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• 2023 (12) TMI 776
  Extension of the time for submission of audit report - extension of time under the proviso to Section 142(2C) - Whether the power of extension of time under the proviso to Section 142(2C) is procedural/administrative in nature and can be exercised by an authority superior to the Assessing Officer? - Whether the extension given to the Chartered Accountant appointed under the provisions of Section 142(2A) for submission of the audit report was in consonance with the proviso appended to Section 142(2C) of the Act? HELD THAT:- As per The relevant parts of the judgment [ 2023 (12) TMI 740 - DELHI HIGH COURT] as has been correctly submitted on behalf of the respondent/assessee, the decision taken to get an audit conducted under Section 142(2A) of the Act is a step in the process of assessment proceedings and, therefore, is clearly not an administrative power; as the appointment of a special auditor entails civil consequences Given that the initial exercise of the power has been explicated as one that is not administrative, the CIT(A) could not have extended the time based on the recommendation of the AO. However, the enunciation of this legal principle does not derogate from our observation above that since the discretionary power was vested in the AO (which was non-delegable), it could not have been exercised by the CIT, irrespective of the nature of the power. Thus, for the preceding reasons, the question of law, as framed, is answered against the revenue and in favour of the assessee.

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• 2023 (12) TMI 775
  Validity of assessment order against appellant/foreign company without issuing a draft assessment order as mandated u/s 144C - Scope of term eligible assessee - Reference to dispute resolution panel - HELD THAT:- It is an admitted fact that the assessee-company is a Foreign Company within the meaning of the provisions of section 144C(15)(b)(ii) of the Act. Further, the assessee-company is also an eligible assessee as defined in section 144C(15) of the Act. It is the case of the Ld. AO that the Place of Effective Management [POEM] lies in India and hence the assessee shall be subjected to tax in India as per the Indian Income Tax provisions. However, while making the assessment, the Ld. AO has not followed the procedure mandated u/s. 144C of the Act in the case of the assessee. It is a fact that the assessee is a foreign company. Therefore, as per section 144C(1) of the Act, the Ld. AO is duty bound to pass the Draft or Proposed Assessment Order and shall forward the same to the eligible assessee to enable the assessee to file the objections, if any, before the Dispute Resolution Panel. However, in the instant case, the Ld. AO has not passed the Draft Assessment Order, as mandated u/s. 144C(1) of the Act, before making the assessment and passed the Final Assessment Order. Therefore, AO has not followed the procedure laid down u/s. 144C(1) of the Act and passed the final assessment order. It was incumbent on the part of the Ld. AO to have passed a Draft Assessment Order to adhere to the mandatory requirement of section 144C(1) of the Act otherwise it would result in invalidation of the final assessment order and the consequent demand and penalty also. Failure on the part of the Ld. AO to pass a draft assessment order u/s. 144C(1) of the Act would vitiate the final assessment order as one without jurisdiction. Assessment order passed by the Ld. AO in the case of the assessee is without jurisdiction and in violation of the mandatory provisions of section 144C(1) of the Act and therefore the assessment order passed u/s. 153C of the Act is null and void and unsustainable in law. Decided in favour of assessee.

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• 2023 (12) TMI 774
  Penalty u/s 271(1)(c) - Addition of process loss and profit on sale of land/flats considered as business income instead of capital gain as claimed by the assessee in its Return of Income - HELD THAT:- Regarding the first issue of penalty namely process loss of Rs. 32,14,385/- the above disallowance is based on estimate basis. In assessee s own case for the Assessment Year 2013-14 [ 2021 (9) TMI 1526 - ITAT AHMEDABAD] deleted the penalty levied in respect of process loss charges as held that such claim in the return of income cannot amount to inaccurate particulars of income - mere making of the claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. In the light of the above facts and findings, we consider that only on the basis of not accepting the claim made by the assessee, the levy of penalty u/s. 271(1)(c) is not appropriate. Treatment of profit on sale of land/flats as business income instead of capital gains - Because of change of head of income, no penalty u/s. 271(1)(c) of the Act can be levied, the claim made by the assessee with necessary evidences, thus the assessee has not furnished inaccurate particulars of income. There is no finding by the AO that the details furnished by the assessee in the Return of Income found to be incorrect or erroneous or false, whereby invoking penalty u/s. 271(1)(c) of the Act. Mere making of a claim, which is not sustainable in law by itself will not amount to furnishing inaccurate particulars of income by the assessee. Therefore following the case of Reliance Petroproducts Pvt. Ltd [ 2010 (3) TMI 80 - SUPREME COURT] the levy of penalty on this issue is liable to be deleted. Thus we do not find any merits in the grounds raised by the Revenue. Disallowance u/s. 40A(2)(b) - assessee company had paid interest on Unsecured loans and advances taken from Directors and relatives - CIT(A) deleted addition as no loss of Revenue is caused by payment of interest @ 15% p.a. on loans and advances paid to the Chairman and Director of the company - assessee explained the Chairman and Director of the company provided personal guarantee to various banks for the loans borrowed by the assessee company, for which they did not charge any guarantee commission and loans borrowed from them are also not secured against any assets of the company, therefore both the persons bear the risk for the amounts lended to the assessee company - HELD THAT:- The assessee produced before us copy of the Returns filed by the Chairman and Director of the company disclosing the above interest paid @ 18% in their respective Returns of Income and paid taxes. Considering the fact, the above two parties were stood for the personal guarantee of the loans availed by the assessee company which is a business exigency. It is further seen that for the present Assessment Year 2015-16 the assessee claimed set off of brought forward losses of Rs. 13.75 crores and claiming Nil assessed income. Whereas the two other persons offered the interest income in their respective hands. Therefore there is Revenue neutrality and question of disallowance does not required. For the above reasons, the addition made by the Assessing Officer is hereby deleted. Decided in favour of assessee.

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• 2023 (12) TMI 773
  Income taxable in India - subscription, professional and training services rendered by the assessee - taxability of the amount as fee for technical services - HELD THAT:- We find that identical ground was taken by the assessee in A.Y. 2019-20 [ 2023 (8) TMI 1391 - ITAT DELHI] we find that the assessee had merely granted only access to software and there is no transfer of technology by the assessee. Hence we have no hesitation to hold that the services rendered by the assessee does not fall within the definition of FTS as per the Treaty. In any case, we find that the since assessee had merely granted access to software, it does not fall within the definition of FTS even as per the Act. In this regard, analogy could be drawn from the decision of Hon ble Supreme Court in the case of CIT vs Kotak Securities Ltd [ 2016 (3) TMI 1026 - SUPREME COURT] wherein it was held that service made available by Bombay Stock Exchange [BSE Online Trading (BOLT) System] for which transaction charges are paid by members of BSE are common services that every member of Stock Exchange is necessarily required to avail of to carry out trading in securities in Stock Exchange; such services do not amount to technical services provided by Stock Exchange, not being services specifically sought for by user or consumer and, therefore, no TDS would be deductible under section 194J on payments made for such services. We hold that the subscription, professional and training services rendered by the assessee does not fall within the definition of FTS both under the Act as well as under the DTAA and accordingly the same cannot be taxed in India. Accordingly, the Grounds 1 to 3 raised by the assessee are allowed.

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• 2023 (12) TMI 772
  Attribution of profits earned from Indian operations - whether the view taken by CIT(A) that 15 percent of the profits earned from Indian operations could be attributed to the respondent/assessee was sustainable? - HELD THAT:- The coordinate bench in AY 2006-07 while dealing with [ 2021 (10) TMI 1004 - ITAT DELHI ] has sustained the said conclusion and gone on to hold that no substantial question of law arose for its consideration. It is this decision which was affirmed by the Supreme Court Travelport L.P. USA [ 2023 (7) TMI 700 - SC ORDER ] considered and held against the Revenue.

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• 2023 (12) TMI 771
  TP adjustment - Advertising, Marketing and Promotion (AMP expenses) by applying the Bright Line Test was sustainable - international transaction or not? - HELD THAT:- Tribunal ruled in AY 2008-09 that the excessive AMP expenditure did not fall in the category of an international transaction and, therefore, the adjustment made qua the same was unsustainable in the eyes of law. This conclusion was based on a finding of fact that the respondent/assessee was primarily engaged in manufacturing operations and that AMP expenditure had been incurred to benefit its own operation, and not for promoting an associated enterprise (AE). Tribunal also disapproved the TPO s approach of applying the Bright Line Test in benchmarking the AMP expenses. This view was based on a judgment rendered in Sony Ericsson India Pvt. Ltd. V. CIT [ 2015 (3) TMI 580 - DELHI HIGH COURT ] and Maruti Suzuki India Ltd. v. CIT [ 2015 (12) TMI 634 - DELHI HIGH COURT ] Tribunal also highlighted the fact that before ascertaining the arms length price on an international transaction concerning AMP expenditure, the appellant/revenue would have to discharge the onus that an international transaction had occurred between the assessee and the associated enterprise. This view was also founded on the decision of the coordinate benches of this court rendered in Bausch Lamb Eye Care (India) Pvt. Ltd. [ 2015 (12) TMI 1332 - DELHI HIGH COURT ] and Honda Siel Power Products Ltd. v. Dy. CIT [ 2015 (12) TMI 1333 - DELHI HIGH COURT ] Tribunal both in the period in issue i.e., AYs 2010-11, and in 2008-09, has remitted the matter to the file of the Assessing Officer (AO).We are also informed that the appellant/revenue has lodged an appeal against the decision rendered by this court in Sony Ericsson [ 2015 (3) TMI 580 - DELHI HIGH COURT ] Therefore, this appeal is closed as according to us, a substantial question of law arises for consideration by this court.

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• 2023 (12) TMI 770
  Reopening of assessment - Foreign currency transactions - Exchange differences arising on foreign exchange transactions settled during the year are recognised in the profit and loss account for the year - HELD THAT:- There is disclosure in the Statement, Profit and Loss Account for the year ended 31.03.2014. The report of the Independent Auditor under Section 227(3) of the Companies Act, 1956, states that the petitioner company does not have any accumulated losses at the end of the financial year and also has not incurred any cash losses in the financial year and in the immediately preceding financial year. Thus, there is no case made out for reopening the Assessment that was completed earlier. Reopening of the Assessment was inspired from a review and a change of opinion by the subsequent officer. Such practice has been deprecated and frowned upon by the Courts. Although the petitioner has resorted to window dressing of the statement of actual of statements filed along with the Statement of Profit and Loss for the year ended 31st March 2014, it cannot be said that the petitioner has not disclosed material. There is a complete disclosure by the petitioner along with the regular returns filed under Section 139 of the Income Tax Act, 1961 on 28.11.2014. The petitioner has also uploaded the hard copy of the same in response to a notice issued under Section 143(2) of the Income Tax Act, 1961 on 28.08.2015. The reasons given for re-opening of the Assessment along with a notice issued u/s 143(2) r.w.s.147 of the Income Tax Act, 1961 on 05.05.2021 is also based on the Profit and Loss Account. Thus, there is no scope for re-opening of the assessment which was completed on 28.09.2018 under Section 143(3) read with section 92CA(3) and Section 144C(8) of the Act. Clearly, the reasons given for re-opening of the assessment is inspired from change of opinion. Decided in favour of assessee.

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• 2023 (12) TMI 769
  Validity of Revision u/s 263 - Allowing Exemption u/s 54 instead of 54F - Source of LTCG is not from residential house and since the assessee had earned capital gain on transfer of plot of land - Solitary contention raised by assessee was that there was no prejudice caused to the Revenue by allowing assessee s claim of exemption u/s. 54 since even in terms of section 54F assessee was eligible to the same quantum of exemption if not higher than that claimed u/s. 54 - DR contended that the calculation of exemption u/s. 54F of the Act was not as simple as contended by the assessee and needed verification by the AO HELD THAT:- We are in agreement with the DR. The contentions raised by the assessee against the order passed by the Ld.PCIT u/s. 263 of the Act, of no prejudice being caused to the Revenue by the allowance of claim of exemption u/s. 54 of the Act by the Assessing Officer, is a fresh contention raised for the first time before us. The assessee had never raised such contention before the Ld.PCIT. Besides, the said contention is subject to verification. Therefore this contention cannot be appreciated by us for arriving at any finding regarding the revisionary order passed by the Ld.PCIT. The Ld.PCIT has himself directed the AO to examine assesses eligibity to claim of exemption u/s 54F of the Act. On the basis of the facts before him and the position of law as appreciated by him correctly, the Ld. PCIT has arrived a finding error in the assessment order on account of incorrect allowance of claim of exemption u/s. 54 of the Act, which the assessee also does not deny / dispute. There is therefore no infirmity in the order of the Ld. PCIT holding the assessment order erroneous for having granted exemption u/s 54 to the assessee against the provisions of law in this regard. In the absence of any other argument made by the Ld. Counsel for the assessee before us we do not find any reason to interfere in the order of the Ld.PCIT and uphold the same. Appeal of the Assessee is dismissed.

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• 2023 (12) TMI 768
  Default for Non-collecting of TCS u/s 206C - assessee claimed that the assessee is not dealing with tendu leaf as per provision of section 206C (1) - applicability of TCS on the forest product - assessee has claimed that the assessee is the dealer of minor forest product - HELD THAT:- The categorically the minor forest product and forest product has difference in their nature. Such as, Minor Forest products (MFPs) are all the products obtainable from the forests other than wood and timber. They comprise products of vegetable and animal origin, such as grasses, bamboos, canes, tans, dyes, oils, gums, resins, fibres, flosses, leaves, drugs, spices, poisons, edible products, and animal products. On the other hand, forest products include both timber and non-timber products. The major forest products comprise pulpwood, sandalwood, social forestry that includes fuel and timber. The minor forest products include items such as tamarind, curry leaf, tendu patta, gallnut, cane, soapnut, tree moss, and now bamboo as well. AO had relied on the State Notification on 27.10.2014. But there is no ambiguity that the seller of forest product is required to collect tax on forest produce. But the Minor Forest Product are the product are not covered under the Income Tax Act u/s 206C (1), sl no-(v)which is not liable to collect tax at source. We find that there is no ambiguity in the Minor Forest Product which are not at all liable to collect tax u/s 206C. In our considered view, we set aside the appeal order and the addition made by the ld.AO is quashed. Appeal of the assessee is allowed.

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• 2023 (12) TMI 767
  Revision u/s 263 - deduction u/s 80GGC as allowed without making adequate inquiry by AO - CIT noted that assessee has claimed deduction under Section 80GGC for donation made to one political party Apna Desh Party which in the facts of the instant case, was found to be bogus - HELD THAT:- There was an evident lack of enquiry by the assessing officer, while accepting the claim of deduction of donation by the assessee, while framing the assessment order. In the instant case, certain noteworthy discrepancies emanating from facts of the case ought to have been enquired by the assessing officer, while framing the assessment, and he should not have simply accepted the version offered by the assessee. In this case, an analysis of receipts issued by Apna Desh Party it was observed that such receipts did not contain details of cheque number, bank name, date of cheque etc. issued. PCIT has also correctly observed that on perusal of website of Apna Desh Party , which provided list of donor and name-wise list, the list did not include the name of the assessee in respect of three different receipts, which also establishes the fact that the donation is bogus. It was further observed that though the assessee has given donation in cheque, same is found to be out of donation / loan received from Ranchhorbhai Tapubhai Patel. We agree with the observations made by PCIT that it is quite unusual that assessee is taking loans for making the aforesaid donations and accordingly, the Assessing Officer should have made further enquiries to ascertain whether the aforesaid loan is genuine in the first place or not. While passing the assessment order, the AO did not enquire into the details / list of donations received by such party which is available in public domain and such list does not include the name of the assessee. While framing the assessment, the Assessing Officer simply accepted the version of the assessee and did not make any attempt to verify the genuineness of the receipts issued by Apna Desh Party . Accordingly, even without considering the material which PCIT took note of pertaining to adverse material / information obtained during search proceedings, in our view the assessment order is still erroneous on account of evident lack of enquiry in respect of information available in public domain. Decided against assessee.

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• 2023 (12) TMI 766
  Penalty u/s 271(1)(c) - defective notice u/s 274 - non strike of twin charges - as argued AO has not mentioned the specific limb in the show cause notice issued u/s 274 as to whether penalty is proposed to be levied for concealment of income or furnishing inaccurate particulars of income - HELD THAT:- From the perusal of the notice issued u/s 274 r/w section 271(1)(c) of the Act, furnished during the hearing, we find that the AO did not strike off any of the twin charges i.e., concealment of particulars of income or furnishing of inaccurate particulars of income. The case of the assessee is squarely covered by the decision of the Hon ble Jurisdictional High Court in Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] wherein the Larger Bench of the Hon ble Court has held that the defect in notice by not striking off the irrelevant matter would vitiate the penalty proceedings. Accordingly, penalty order passed under section 271(1)(c) of the Act is quashed. Assessee appeal allowed.

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• 2023 (12) TMI 765
  Rectification u/s 154 - AO rejected TDS Credit after issuance intimation U/s 143(1) - HELD THAT:- The assessee filed the return alongwith the relevant documents for executing the contract with the party which enclosed in APB. The relevant payment is also reflected in the bank account. Only for filing of TDS return and withdrawing the credit, the ld. AO has acted beyond jurisdiction to execute the withdrawal of credit and reduced the refund u/s 154. We find that rectification is only related to intimation U/s 143(1) read with section 139(1) of the Act. We find that there is a lack of verification in the point of the ld. AO section 154 is only restricted to filing of return u/s 139 and processing of intimation u/s 143(1). So, withdrawal of TDS is a separate activity of the deductor. The mere rejection of TDS credit is not serving the purpose. The transaction, execution of works and other evidence should be considered during withdrawn of TDS credit after processing of return U/s 143(1). The execution of section 154 can not be mechanical purpose. AO has acted beyond jurisdiction and rejection of TDS credit after issuance intimation U/s 143(1) is not come under the purview of section 154 of the Act related rectification apparent from the record. We further find that the entire demand U/s 154 is beyond jurisdiction. Therefore, considering the above, we set aside the appeal order and the demand is quashed. Assessee appeal allowed.

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• 2023 (12) TMI 764
  Penalty u/s 271(1)(c) - non specification of clear charge - undisclosed unsold inventory - exact limb of Section 271(1)(c) not assigned - HELD THAT:- As could be seen from the above the Hon ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh v. ACIT [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s. 271(1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Notice issued by the Assessing Officer was bad in law if it did not specify under which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Appeal of the assessee is allowed.

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• 2023 (12) TMI 763
  Revision u/s 263 - partners have contributed capital but the same was not examined by the AO during the assessment proceedings - As per CIT AO did not examine whether the said contribution was from explained sources or not and did not examine the various aspects of the partnership deed - assessee submitted that the return filed by it was selected for scrutiny and various details were sought during the assessment proceedings - HELD THAT:- We find that the assessee not only furnished the copy of the income tax return and the computation of income but also furnished the bank statement of the assessee highlighting the capital contribution made by the partners during the year, the ledger account of the partners in the books of the assessee as well as bank statement of partners highlighting payment made to the assessee. Therefore it is sufficiently evident that the return filed by the assessee was selected for scrutiny, inter-alia, particularly to examine the introduction of large capital or share capital in the year under consideration. AO also examined this issue by seeking various information from the assessee, which was duly furnished by the assessee to substantiate the flow of funds from the partners account in Cimechel Electric Co. to the assessee. As some of the partners in Cimechel Electric Co. and the assessee are common. Therefore, these very partners have transferred their funds from one entity to the assessee which has been duly substantiated with the material placed on record. Assessee has also furnished a copy of partnership deed dated 26/05/2017 during the assessment proceedings, which clearly highlighted the name of the partners and the share of their profit/loss. Vide impugned order the learned PCIT though agreed that the assessee has explained the capital contribution, however, even then held the assessment order to be erroneous and prejudicial to the interest of the Revenue on the basis that no enquiry in this respect nor any submission was made during the assessment proceedings. From the record, it is evident that the AO had examined the issue of capital contribution by the partners in the assessee firm, during the assessment proceedings. From the perusal of the notices issued by the AO and the reply filed by the assessee, we find that this issue was specifically raised during the scrutiny assessment proceedings and the same was duly replied to by the assessee. Therefore, it cannot be concluded that this aspect was not examined by the AO. We find that the Hon ble jurisdictional High Court in CIT vs Reliance Communication Ltd, [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] held that the fact that the AO did not make any reference in the assessment order cannot make the order erroneous when the issues were indeed looked into. Thus, in view of the facts and circumstances of the present case, we are of the considered opinion that this issue was duly examined by the AO during the scrutiny assessment proceedings. Therefore, the impugned revision order passed under section 263 of the Act is set aside. Appeal by the assessee is allowed.

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• 2023 (12) TMI 762
  Disallowance of deduction u/s 80P(2)(d) - assessee is a cooperative bank - AO disallowed the deduction and treated interest and dividend income from other sources and added back with the total income of the assessee - HELD THAT:- The status of the cooperative bank where the investment was parked, and the income was generated was never ascertained by the revenue authorities. Here, to determine the taxability of the income of assessee from investment first to ascertain the status of the bank and assessee. DR was unable to bring any specific observation during the hearing. In our considered view, the appeal of the assessee is remanded back to the file of the ld. CIT(A) to determine the income in the light of discussion indicated above. Needless to say, the assessee should get reasonable opportunity in set aside proceeding. Appeals of the assessee allowed for statistical purpose.

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• 2023 (12) TMI 761
  Addition on account of cash deposit during demonetization period - AO made an addition because there was no sufficient evidence whatsoever on record which according to him proves that the assessee was having cash in hand at Beawar as against at Kota Head Office. - HELD THAT:- The assessee was not maintaining any separate set of books account at different locations and the argument made by the assessee that the cash in hand was available at Beawar was not accepted by the AO being no evidence on record. AO in the absence of required details and documents that the cash was deposited out of the cash in hand available with the assessee was not accepted for want of proper supporting documents/proof. AO on verification of bank statement of Beawar PNB Branch, submitted by the assessee, noted that there is no cash transaction in the said bank account which is further evidence that the assessee was not having any cash in hand in Beawar PNB Branch. Thus the AO in totality noted that the cash deposit (SBN Notes) during demonetization period cannot be from the explained and disclosed sources and the same is required to be treated as deposited of undisclosed income of the assessee. Thus the assessee glumly failed to justify the genuineness of the cash on hand viz a viz its use for payment of service tax, if the assessee was having the cash why the government dues are not discharged and kept the cash on hand and not only that the filmy reasons provided by the assessee of shifting the cash on hand from one place to another is also not justified with the corroborative evidence. Thus, we are not inclined to interfere in the order of the ld. CIT(A). Thus Ground No. 2 of the assessee is dismissed. Addition on account of difference in turnover as per financials and Form 26AS - HELD THAT:- Assessee had claimed TDS on basis of Form 26 AS and at the same time has shown less receipt from M/s Sanghi Industries. Hence, there is a substantial difference in the receipts shown as per Form 26AS. Decided against assessee. Disallowance of temporary labour charges - disallowance u/s 37(1) - HELD THAT:- Assessee as show caused on 01-12-2019 for which the assessee did not comply with this show cause. Since the assessee did not any reply on this issue which shows that the assessee has nothing to say on payment of wages made and according to the AO, the expenses appeared relating to previous year and the same could not be allowed in the year under assessment. AO made disallowance u/s 37(1) and added to the total income of the assessee and the ld. CIT(A) has confirmed the action of the AO holding that the AO had sought certain specific details pertaining to temporary labour wages and the details were not supplied by the assessee which were disallowed. The Bench feels that in the interest of equity and justice, the Ground No. 4 of the assessee is restored to the file of the AO to decide it afresh for which the assessee will produce the documents relating to labour payments (supra) and if it is found correct then the relief may be granted to the assessee. The assessee is also directed to produce the relevant bills, vouchers, and other concerning papers in order to settle the issue in question. Thus Ground No. 4 of the assessee is allowed for statistical purposes. Addition u/s 43B - Payments in respect of taxes and Government dues - HELD THAT:- As per the provisions of section 43B. Payments in respect of taxes and Government dues can be claimed as expenditure only on actual payment on or before the due date of return. This section has been enacted to enforce that taxes and Government dues are actually paid when the same is claimed as expenditure, including in respect of Assessee who maintain accounts on mercantile basis. The AO has disallowed the amount by noting that Government dues have remained unpaid hence the same was disallowed. On the other hand, the appellant has applied for Dispute Resolution Scheme under Sabka Vishwas Scheme of CBIC. In these circumstance, what is pertinent is how much expenditure has been debited in the account of the appellant. If it has debited and claimed Service Tax payment as expenditure, then the same would be allowed only if paid before the due date of filing of return. However, if the same has not been claimed in the P L account/return, then no such disallowance is required to be made. The AO may call for a reconciliation statement from the appellant and restrict the disallowance to the amount of Service Tax showed as expenditure in the P L Account, which remained unpaid before the due date of return . Bench does feel to interfere in the order of the ld. CIT(A) above as the decision of the ld. CIT(A) is based on the fact that the assessee has not placed the relevant details on record and he has already directed the ld. AO to call for the details and considered the addition accordingly. Hence, this additional ground of the assessee is dismissed.

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• 2023 (12) TMI 760
  Rectification of mistake u/s 154 - deduction u/s. 10A denied on the component of refund of service tax received by the assessee - scope of debatable issue - as contended that the issue whether service tax refund would be considered as profits/gains derived from the eligible undertaking is a subject matter of debate, in respect of which two views are possible, therefore, refund of service tax could not be a subject matter of rectification u/s 154 for the purpose of disallowing claim u/s. 10A - whether there is a mistake apparent from record in respect of refund of service tax? - HELD THAT:- From the perusal of the assessment order passed u/s. 143(3) and the queries raised by the Ld. AO and submissions made by the assessee thereon vis- -vis refund of service tax forming part of claim u/s. 10A, we note that Ld. AO had passed the original assessment order after examining the details furnished by the assessee. He did not dispute the computation made by the assessee which included refund of service tax in the claim made u/s. 10A. From the perusal of the impugned order passed u/s. 154 read with sec. 143(3) of the Act, we note that Ld. AO has formed a view after a long drawn process of reasoning passed on the decision of Hon ble Supreme Court in the case of Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] and Sterling Foods [ 1999 (4) TMI 1 - SUPREME COURT] to dislodge the claim of the assessee in respect of refund of service tax. View taken by the Ld. AO in the proceedings initiated u/s. 154 tantamount to a change in view resulting into review of his own order which is not permissible under the provisions of section 154 of the Act. When the Ld. AO has consciously taken a view to frame the original assessment by making certain additions/disallowances, he is not empowered to take contrary view by adopting a review process for the assessment already completed. We are in agreement with the submissions made on the restricted powers available u/s. 154 to rectify a mistake which is apparent from record, which cannot be otherwise resorted to under the garb of review or reconsideration of the order already passed. It is well settled law that a power to rectify a mistake does not include a power to review which can be exercised only where the statute itself grant such power. In the absence of grant of such power of review under the said section, it is not possible for the Ld. AO to review his own order. Thus, AO is not justified in adopting provisions of section 154 which deals with rectification of a mistake apparent from record which in the present case is on a technical issue i.e. allowability of exemption u/s. 10A in respect of receipt of refund of service tax. To buttress our decision, we find force from the decision of Saurashtra Kutch Stock Exchange Ltd. [ 2003 (3) TMI 70 - GUJARAT HIGH COURT] We hold that Ld. AO is not justified in resorting to rectification u/s. 154 on a debatable issue. Decided in favour of assessee.

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• 2023 (12) TMI 759
  Addition u/s 69B - unexplained investment - HELD THAT:- We find that in the share purchase agreement there is no reference of Escrow agreement and assessee has not made any compliance of the said Escrow agreement , which is under litigation before the Hon ble Bombay High Court. In such circumstances, it cannot be held that assessee has paid additional consideration for purchase of the shares. In absence of any proof of payment of additional sale consideration, particularly when owner(s) of the flat i.e M/s Starlight Systems LLP has declined request of the three shareholders for allotment of flats to them. Further documents relating to allotment of those flats to three shareholders have been observed to be defective by the Ld. CIT(A) and this fact has not been controverted by the Ld. DR. Be that as it may be, it is evident that those three flats belonging to the M/s Starlight security LLP mentioned in the Escrow agreement has ultimately not been given to those three shareholders by the assessee on anyone on behalf of the assessee and matter being under litigation before the Hon ble Bombay High Court, no addition for unexplained investment could survive in the hands of the assessee company. In our opinion order of the Ld. CIT(A) on the issue in dispute is well reasoned and accordingly, we uphold the same. In the result, the ground Nos. 1 and 2 of the appeal of the Revenue are dismissed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We have noted that Hon ble Delhi High Court in the case of M/s Joint investment [ 2015 (3) TMI 155 - DELHI HIGH COURT] has already held that disallowance u/s 14A of the Act cannot exceed dividend income. Also no disallowance u/s 14A of the Act can be made if the assessee had not earned any exempt income during the year under consideration. Since in the case assessee has already made disallowance to the extent of exempted income, therefore, respectfully following the finding of the Hon ble Delhi High Court Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] , we set aside the finding of the Ld. CIT(A) on the issue in dispute and delete the addition made by the Assessing Officer. The arguments of the ld counsel for the assessee for restricting the disallowance under rule 8D to the extent of interest corresponding to the investment in mutual funds, are rendered academic only. Revised computation of the income of the assessee in compliance of the amalgamation order - CIT(A) upholding the stand of the AO of not considering the revised computation of the income filed in compliance to the amalgamation of the order of the Hon ble High Court passed on 12.12.2012 - HELD THAT:- We find that that the Ld. CIT(A) upheld the decision of the Assessing Officer in view of the decision of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] but the Ld. CIT(A) however has mentioned that direction given and the date specified in the original order dated 17.08.2012 as well as revised order dated 10.12.2012 of Hon ble High Court will have to be complied with by the AO. Accordingly, following the finding of the Hon ble supreme court in the case of Dalmiya Power Ltd. [ 2019 (12) TMI 991 - SUPREME COURT] .we uphold the direction of ld CIT(A) to the Assessing Officer to take into consideration revised computation of the income of the assessee in compliance of the amalgamation order approved by the Hon ble Bombay High Court vide order dated 12.12.2012. The ground No. 5 of the appeal of the assessee is accordingly allowed.

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• 2023 (12) TMI 758
  Assessment u/s 153A - disallowance of bogus Long Term Capital Gain - whether any incriminating documents is available with department to make the addition? - as per DR entry operator and the directors of shell companies themselves have accepted under Oath that they are involved in providing accommodation entries during various departmental investigations which is incriminating in itself - HELD THAT:- Ideally when we explore the scope of section 153A and addition is not sustainable on legal ground, then, the inquiry on factual aspect is not required to be made. In case, a specific ground is being raised in an appeal or C.O. that has to be adjudicated. Earlier this approach was being taken on the ground that Higher Appellate Authority may concur or not with the view of the ITAT on the legal ground and in that situation, adjudication of the issue on merit would be required. But now the Hon ble Supreme Court has silenced the controversy in the case of PCIT vs. Abhisar Buildwell Pvt. Limited [ 2023 (4) TMI 1056 - SUPREME COURT] and there is no scope of disagreement on the scope of section 153A in further appeal unless Hon ble Supreme Court took a different view later on. In five scrutiny cases of the sale of shares, i.e. TFCIL, gain earned by the assessee was accepted as a genuine by the Department itself. Out of these five cases, two are in the re-assessment u/s 147 and these assessment orders have been framed after more than one year of the search. Therefore, Department was not doubting the genuineness of the transactions. It is also obsesrved that apart from Hon ble Calcutta High Court in the case of Swati Bajaj [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] the other Hon ble High Courts have accepted the claim of these alleged bogus long-term capital gains and assessee drew our attention towards the decision of Smt. Pushpa Malpani [ 2010 (11) TMI 799 - RAJASTHAN HIGH COURT] , Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] The ld. Counsel for the assessee has also drew our attention on the tabulated details submitted in his submission and pointed out how certain companies have performed so well and the change was 449% to 312%, whereas certain companies has performed very badly. Therefore, we have made analysis of these break-up in the light of the large number of decisions, namely 21 in number compiled in the written submission. We are of the view that the Department was not possessing any details, which authorize it to doubt the claim made by the assessee. Therefore, even otherwise on merit also, no addition is sustainable. - Decided in favour of assessee.

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• 2023 (12) TMI 740
  Special audit of accounts u/s 142A for the purpose of assessment u/s 153A - Power (Jurisdiction) to grant Extension lies with AO or CIT - Extension given for submission of the audit report to Chartered Accountant appointed u/s 142(2A) - HELD THAT:- It was the respondent/assessee s stand that both cooperation and information was furnished as sought by the concerned auditor. Regarding the interconnection of transactions, two separate auditors appointed in the matter had enough time to coordinate. That said, according to the respondent/assessee, without prejudice to the contention made on its behalf, one way or the other, the AO had to decide as to whether the extension of time for conducting the audit was mandated. The letter dated 08.04.2010, the extract of which was embedded in the letter dated 11.02.2020, needed to demonstrate that there was good and sufficient cause for extending the timeframe. Having noted the diametrically opposite assertions made on the aspect of delay, in our opinion, the legal tenability of the decision taken in the matter depends on which specified authority was invested with the power to extend the timeframe. As discussed above, since the legislature vested the discretion to extend the timeframe solely in the AO, he could not have abdicated that function and confined his role to only making a recommendation to the CIT. CIT had no role in extending the timeframe as the AO was in seisin of the assessment proceedings. As has been correctly submitted on behalf of the respondent/assessee, the decision taken to get an audit conducted u/s 142(2A) of the Act is a step in the process of assessment proceedings and, therefore, is clearly not an administrative power; as the appointment of a special auditor entails civil consequences. We may note that the decision relied upon on behalf of the appellant/revenue in the matter of Yum Restaurant [ 2005 (5) TMI 55 - DELHI HIGH COURT] has been disapproved in Rajesh Kumar s case [ 2006 (11) TMI 135 - SUPREME COURT] . Furthermore, the judgment in Rajesh Kumar s case has been reaffirmed by the Supreme Court in the Sahara India Firm case [ 2008 (4) TMI 4 - SUPREME COURT] with some moderation with regard to the Court s exposition concerning the scope and impact of Section 136 of the Act. Given that the initial exercise of the power has been explicated as one that is not administrative, the CIT(A) could not have extended the time based on the recommendation of the AO. However, the enunciation of this legal principle does not derogate from our observation above that since the discretionary power was vested in the AO (which was non-delegable), it could not have been exercised by the CIT, irrespective of the nature of the power. Decided in favour of assessee.

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• Customs

• 2023 (12) TMI 757
  Classification of imported goods - Echo Family Devices - classifiable under CTH 8517 and more particularly Tariff Entry 8517 62 90 thereof or under CTH 8518? - HELD THAT:- A similar question arose for the consideration of the Supreme Court in Commissioner of Customs, Central Excise and Service Tax, Hyderabad vs. Ashwani Homeo Pharmacy [ 2023 (5) TMI 191 - SUPREME COURT ]. In this case also the manufacturer had asserted that notwithstanding the product being styled as a hair oil , it was liable to be classified as a medicament where it was held that substance of the matter remains that in common parlance, the product in question would be approached essentially for its claimed medicinal qualities and not as another hair oil. It is thus evident from the aforenoted principles as enunciated by the Supreme Court that the mere description of the product as a hair oil or shampoo would not be conclusive for the purposes of classification under the CTH. The decisions in Sarvotham Care [ 2015 (8) TMI 250 - SUPREME COURT] ] and Ashwani Homeo [ 2023 (5) TMI 191 - SUPREME COURT ] thus clearly explain the legal position to be that nomenclature alone would not constitute a defining basis for the purposes of answering a question of classification. When the aforesaid principles are applied to the facts at hand, it becomes clear that merely because the appellant or others had chosen to describe the products as smart speakers, the same could have neither been accepted as being conclusive of the issue that arose nor could the description of the products detracted from the right of the appellant to urge the AAR to examine the issue of classification by applying the dominant function test. The tests evolved by courts in connection with the issue of classification such as nomenclature, common parlance, principal function, primary and incidental purpose are all aids and rules of guidance liable to be cumulatively borne in consideration in order to ascertain the true character of a product. While none of those tests are accorded preeminence, it is ultimately for the authorities to ascertain which of those rules would merit adoption and represent an accurate understanding of the nature of the product. As is evident from the explanation of the unique features of the products in question, they were principally designed to act as mediums for reception and transmission of data and could additionally and as an aside also be used as a speaker. However, since these were essentially reception and transmission devices which could analyze data and perform the varied functions noticed above, they were rightly described by the appellant as being communication devices and thus answering the requirement of machines for the reception, conversion and transmission or regeneration of voice, images or other data as contemplated under Tariff Entry 8517 62 90. The impugned devices perform a host of functions including reception, conversion and transmission of voice or other data to produce the requisite final output warranting their classification under CTH 8517 - merely because these devices could if so chosen by the user also be used as mere speakers, the same would not justify us recognising their primordial attribute to be that of a speaker alone. The eleven devices are correctly classifiable under CTH 8517 and more particularly under Tariff Entry 8517 62 90. Echo Show 5, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock are held eligible to claim exemptions in accordance with SI. No. 20 of the Notification dated 30 June 2017, as amended vide Notification dated 01 February 2021 - the impugned order set aside.

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• 2023 (12) TMI 756
  Confiscation of the goods alongwith the vehicle - Clearance of goods from Noida SEZ - demand of duty on the goods allegedly manufactured and clandestinely cleared to DTA by the appellant without paying the excise duty - benefit of notifications for CVD and SAD. Exemption notifications applicable to CVD - HELD THAT:- Entry at S.No. 171 exempts ornaments and like articles whether or not set with stones or gems or pearls which leaves no manner of doubt that diamond studded jewellery was clearly exempted under the notification. For these reasons, it is found that the appellant was entitled to the exemption from additional duty of Customs (CVD) under Notification no. 6/2002-CE (S.No. 171) which provides full and unconditional exemption - the case is found in favour of the appellant insofar as the exemption from CVD is concerned. Exemption notifications applicable to SAD - benefit of exemption notification No 6/2004-Cus dated 08.01.2004 - HELD THAT:- The appellant cannot claim the benefit of a notification applying Section 9A(5) of the Central Excise Rules, 1944 which was not even in existence at the time of the SCN and had already been superseded in 2001 and further in 2002. The appellant claimed that the date of removal was not known in the case and therefore, the benefit of the exemption notification available on the date of the SCN should be extended to it. While it is true that the exact date of removal of goods was not known, they are alleged to have been removed from 7.9.2000 and 4.10.2002. Undisputedly, the exemption notification no. 6/2004-Cus was not available during this entire period. Therefore, the appellant is not entitled to the benefit of the exemption notification not available during any of the dates of the clearance - the issue is found in favour of the Revenue and against the appellant and hold that the benefit of exemption notification no. 6/2004-Cus was not available to the appellant on the SAD to be paid. Entries in the work in progress (WIP) register - HELD THAT:- It is not found that in the first round of litigation, this Tribunal remanded the matter for the limited purpose of deciding the claims with respect to CVD, SAD and the entries in the WIP register - it is also found that it is true that the demand in this case was not based only on the WIP register but this register was used as supporting evidence only. The demand was based on the entries in the two notebooks Priya and Rishu and the some other entries and there was no separate demand on the basis of the WIP register. WIP register was only used as supporting evidence. The claim of the appellant with respect to some entries (known as contra entries by the appellant) were required to be examined by the Commissioner which he did in the impugned order. Personal penalty imposed on Shri Anand Shrivastava - HELD THAT:- Since there was no specific direction with respect to the penalty imposed on Shri Shrivastava by the Tribunal in the Final Order remanding the matter to the original authority, evidently, the only reason his appeal was also remanded was that the demand itself was being remanded. If the demand is dropped naturally the penalties would also need to be dropped. However, the appellants (including Shri Shrivastava) were also given the liberty to submit additional documents before the Commissioner in the de novo proceedings. The ground of appeal of Shri Shrivastava in this appeal is not new nor has it brought in any additional documents. This ground was taken in the original proceedings as well as in the de novo proceedings before the Commissioner. In the original proceedings, this plea was rejected by the original authority and such rejection was not interfered with in the Final Order of this Tribunal while remanding the matter. The ground taken by Shri Shrivastava that, although he was the promoter of the Global Diamonds, he was not concerned with the day-to-day affairs during the relevant period was rejected by the original authority in the original proceedings and such rejection was not interfered with by this Tribunal while remanding the matter for the limited purposes indicated. There is nothing on record to show that the order of the Tribunal was either appealed against or any application for rectification seeking modification of the order was filed by either side. The demand in the impugned order is upheld except giving the benefit of Notification No. 6/2002-CE dated 1.3.2002 (S.No. 171) for CVD - there are no reason to interfere with the penalty - appeal allowed in part.

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• 2023 (12) TMI 755
  Rejection of request for provisional release of the impugned goods - Gold - prohibited goods or not - alleged noncompliance with Notification No. 12/2012-Cus., dated 17.03.2012 - HELD THAT:- In instant case, three samples were subjected to test at various stages. Firstly, as per the requirement of the impugned notification before importing the goods from source country from the Lab of mining company which is placed at page 49 of the paper book. Secondly, we find that at the running page 56 of the paper book, Customs had drawn a sample and obtained report while granting discharge of the cargo on 24.02.2023 which found the purity to be 94.70 which was conformity with the report of mining which company is available - the last report of the CRCL obtained by DRI which is a running page 21 ( to be termed as 3rd report) indicates slightly higher percentages in three samples than the prescribed 95% but largely within the tolerance limits of /.25 indicated by the CRCL itself and its reply of RTI. Further, the report based on which seizure has been made has subjected sample to a test other then Fire Assay Method as is prescribed by BIS. It is found that out of 27 Gold Bars admittedly 1 bar below was 5kg i.e. of 4.240 kg which is claimed to be erroneously imported due to error on the part of exporter by the appellants and the same in any case shall not be allowed to be imported under the conditions of Notification No. 50/2015-Cus dated 30.06.2017 or Notification No. 96/2008-Cus. Further, we also find that the appellants had initially claimed benefit of Notification No. 96/2008-Cus dated 13.08.2008 based on the country of origin being of Republic of Rwanda. However, on the behest of Investigating Agency and under protest to get release of consignment, they paid duty under protest on TR-6 challan No. 446 dated 21.12.2022. However, the goods were not released to them detention was converted into seizure - it is found that the differential duty which was paid on the goods which were to be released but eventually not released was to the extent of 15.20 Crores (approx) which is with the department available for any appropriation, if so needed - it is further found that the another Gold Bar 4.240 which cannot be subjected to claim of exemption at present. The fate of the same whether being eligible for re-export are not has to be decided by the adjudicating authority, at the time of adjudication, the same will have a value exceeding Rs. 2.5 crores - the availability of this amount of security exceeding Rs. 17.5 crores along with execution of bond of full value of the goods should suffice to safeguard the interest of revenue. The goods even if there is any remote possibility of being found prohibited or restricted at the time of adjudication is there, cannot be subjected to non release in terms of Section 110A. In view of foregoing the provisional release of 26 Gold Dore weighing 5 kg plus more allowed, subject to the conditions imposed - appeal disposed off.

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• 2023 (12) TMI 754
  Import of Wireless Access Points [WAP]/ MIMO Product - Availability of exemption from the whole of the customs duty under Serial No. 13 of the notification dated 01.03.2005, as amended by notification dated 11.07.2014 - Classification of imported goods - classifiable under Customs Tariff Item [CTI] 8517 62 90 or not - period from 11.07.2014 to 30.06.2017 - HELD THAT:- What needs to be remembered is that MIMO is a technology and cannot be treated as an independent product. If the intention was to exclude even products having only MIMO technology, then the word products should have been used after MIMO as well as after LTE. It, therefore, follows that the scope of products excluded by entry (iv) would be products which use both MIMO and LTE. Thus, the term Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products means products which contain both MIMO and LTE. A Division Bench of the Tribunal in Ingram Micro India [ 2020 (11) TMI 9 - CESTAT CHENNAI] also confirmed the classification of identical product (i.e. WAP) under CTI 8517 62 90 and extended the benefit of the subsequent notification dated 30.07.2017. The Department has accepted the Order passed by the Tribunal. Therefore, once the benefit has been granted to Ingram Micro in the subsequent notification for an identical product, the benefit under the notification dated 01.03.2005, as amended on 11.07.2014 should also be extended to Redington. What also needs to be noted is that India is a signatory to the Information Technology Agreement [ITA] dated 13.12.1996 by the World Trade Organization. The ITA requires each participant to eliminate and bind customs duties at zero for all products specified in the Agreement. India signed the Agreement on 01.07.1997. Pursuant to ITA, India introduced the notification. At the time of introduction, all goods falling under CTH 8517 were exempted from payment of duties. In 2014, on specified telecommunication products that were not covered under the ITA, the Government imposed customs duties by notification dated 11.07.2014 - Imported WAP is a networking equipment working in LAN connecting Wi-fi enabled devices such as laptops, smartphones, tablets, etc. to a wired network. Thus also, imported WAP is entitled to the exemption from the whole of the customs duties under the ITA. Thus, WAP imported by the appellant works on technology and does not support LTE standard. Beetal Teletech was, therefore, justified in claiming exemption from the whole of the customs duty under Serial No. 13 (iv) of the notification. There is, therefore, no infirmity in the order dated 29.11.2019 passed by the Additional Director. Appeal dismissed.

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• Corporate Laws

• 2023 (12) TMI 753
  Constitutional Validity of Clause (d) of the proviso to Rule 5 of the West Bengal Excise (Change in Management) Rules, 2009 - Intelligible differentia - Changes in the Board of Directors - change in management or not - petitioners argue that clauses (d) and (e) of the proviso to Rule 5(1) of the 2009 Rules violates Article 14 of the Constitution of India since a separate mechanism has been provided for a private limited company for exemption from payment of license fees under Rule 5(1). Whether death of a Director and consequent appointment of another director to the Board would amount to a change in management under The West Bengal Excise (Change in Management) Rules, 2009? - HELD THAT:- Apointment of new directors either by reason of death of an existing director or in the usual course of business, without any impact to the shareholding pattern or membership of the Company, does not amount to any change in management since there is no transfer or movement of the shares in the company. Induction of a new director into the Board would also not fall within the meaning of the expression transferee . In other words, a change in management of a Company should be of a nature so as to determine the ordinary Excise License in terms of Rule 4(2) and result in a proposed transferee in terms of Rule 4(3). The usual fitness and eligibility criteria for holding an excise license would come with consideration only after there is a structural change in the company. The classification made under Clause (d) and (e) of the proviso to Rule 5(1) is not founded on intelligible differentia and does not have a rational nexus to the object of the 2009 Rules. Whether clause (d) to the proviso to Rule 5 of the 2009 Rules is discriminatory and offends the right of the petitioner no. 1 to equal treatment under Article 14 of the Constitution of India? - HELD THAT:- There is also no rationale disclosed for making two separate groups from the (hitherto) general head of company in clauses (d) and (e) of the proviso to Rule 5(1). The offending proviso has carved out different provisions for levy of fees and exemption from payment of license fees pursuant to change in management for private and public limited companies - Creating two distinct groups and bestowing a larger zone of exemption for one of the two groups must be supported by intelligible differentia in the creation of the two groups. The 2009 Rules does not satisfy this test. What is intelligible differentia? - HELD THAT:- The test of intelligible differentia is vital to the constitutional charter of equality since creating groups is antithetical to equality. The distinguishing markers is the differentiator which justifies classification with or without those markers. It is of utmost importance that groups or classifications promote equality by way of intervention and do not undermine the same - The State s power to take the vision of Article 14 forward cannot be done through random classifications where persons inside the class do not have homogeneous or defining features which distinguishes them from those who are outside the classification. The word intelligible differentia underscores classification which is based on comprehensible differences as opposed to arbitrary groupings without comprehensible differences. What is rational nexus to the object? - HELD THAT:- The larger zone of exemption for a Public Limited Company from payment of license fee pursuant to change of management should have had a comprehensible connection to the object of the 2009 Rules in terms of determination of the earlier Excise License and grant of a new Excise License to the proposed transferee . The disparity in the scope of exemption for a Private and a Public Limited Company or, in other words, reducing the area of exemption for a Private Limited Company does not preserve the object of the 2009 Rules. The link between the classifications created under clauses (d) and (e) of the proviso to Rule 5(1) thus snaps and is broken in the attempt to connect it to the object of the 2009 Rules - the differentia made for classifying Private and Public Limited Companies under two separate groups under clauses (d) and (e) of the proviso to Rule 5(1) does not have an intelligible basis. The differentia for the classification do not also have a rational nexus to the object of the 2009 Rules. Article 14 prohibits unequal treatment of equals and vice-versa - HELD THAT:- The proposition that Article 14 prohibits unequal treatment of persons similarly-situated is too well-settled to merit a detailed discussion. The 2009 Rules clearly indicates that private limited companies and public limited companies are similarly-situated and have been treated as such in Rule 4(2). Therefore, clauses (d) and (e) of the proviso to Rule 5(1) violates the constitutional guarantee of equality by creating two separate groups/classifications for the purpose of exemption from payment of license fees. STATE OF ANDHRA PRADESH ORS. VERSUS NALLAMILLI RAMI REDDI ORS. [ 2001 (8) TMI 1396 - SUPREME COURT ] spoke of permissible classification where the law will not be viewed as discriminatory if there is uniformity in each group. The Supreme Court made room for fortuitous circumstances arising out of peculiar situations where some persons included in a class may get an advantage over the others and a classification would thus be justified unless it is arbitrary. In the present case, of private limited and public limited companies within the context of change in management and the consequent exemption from payment of license fees is undoubtedly an instance where the differentia is neither real nor substantial and the rational nexus thereof to the object of the Rules is wholly absent. The absence of Intelligible Differentia and a Rational Nexus to the object of the 2009 Rules Impacts the Constitutional Validity of clause (d) of the Proviso to Rule 5(1) of the 2009 Rules. The inevitable conclusion must be that clause (d) of the proviso to Rule 5(1) of the 2009 Rules offends Article 14 of the Constitution in terms of equal treatment of a Private Limited Company when compared to the right conferred to a Public Limited Company. The petitioners have made out a case for a declaration that clause (d) of the proviso to Rule 5(1) of the 2009 Rules is ultra vires to the Constitution of India. Application disposed off.

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• Insolvency & Bankruptcy

• 2023 (12) TMI 752
  Territorial Jurisdiction - validity of declaratory decree to the effect that the purported Assignment Deed - permanent and mandatory injunction - HELD THAT:- This Court has no territorial jurisdiction to entertain the prayers of the plaintiff with respect to the assignment deed dated 03.02.2023, which is the fulcrum of the present suit. The contention of the plaintiff that it became aware of the assignment deed when it was filed as a document before the NCLAT, would not confer any jurisdiction for the purpose of Section 20 of the CPC. Sections 63 and 231 IBC create a bar on the jurisdiction of the civil court in respect of any matter in which the NCLT and NCLAT has jurisdiction under the IBC and the adjudicating authority under the Code is competent to pass any order. Further, clause (c) sub-Section (5) of Section 60 of the Code vests the jurisdiction in NCLT to entertain and dispose of any question of priorities or any question of law or fact, arising out of or in relation to the insolvency resolution for liquidation proceedings. Therefore, the jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT. Ex-facie, the controversy sought to be raised in the present suit is a subject matter of proceedings before the NCLT/NCLAT. As such, the bar under Section 60 and Section 231 would squarely apply to the present suit. In the circumstances, the plaint is returned, with liberty to the plaintiff to take appropriate remedies as may be available to him under law. Application disposed off.

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• PMLA

• 2023 (12) TMI 751
  Money Laundering - HELD THAT:- In course of hearing, respondent submitted on instruction that the custody of the petitioner would not be required by the Directorate of Enforcement. In such circumstances, we dispose of the present petition with a direction that in the event of arrest of the petitioner in connection with E.C.I.R. No. RPZO/09/2022 / CC No. 5956 of 2023, she shall be released on bail on such terms the Special Judge may consider fit and proper. The impugned order shall stand set aside. Application disposed off.

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• Service Tax

• 2023 (12) TMI 750
  Levy of service tax - construction of residential flats - period April 2010 to March 2011 - HELD THAT:- The service tax is not chargeable for period prior to 01.07.2010 for construction of residential property/flats as clarified by the Board vide Circular No.151/2/2010-ST. Further post 01.07.2010, it is held that service tax has been wrongly demanded under the category of Construction of residential complex service and further hold that correct classification is Works Contract service following the precedent ruling of this Bench. The Impugned Order is set aside - Appeal allowed.

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• 2023 (12) TMI 749
  Non-payment of service tax - sub contractor towards Survey and Exploration of Minerals service - wilful suppression or fraud or noncompliance on the part of this Appellant - HELD THAT:- It is an admitted fact that Appellant was registered with the Department and have been filing their returns regularly and maintained proper books of accounts. Further, judicial notice also taken that during the relevant period, it was the general understanding that service tax in case of work done by sub-contractor, is payable either by the sub-contractor or by the principal contractor and not by both. Further, the said issue was highly controversial as to liability of the sub-contractor to pay service tax, under the admitted facts that the main Contractor have discharged the tax liability. The said issue was referred to Larger Bench of this Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] wherein it was held that although service tax being a destination tax liability, is only chargeable once on a transaction; But, in view of the mechanism of Cenvat credit available under the Cenvat Credit Rules, service tax can also be demanded from the Sub- Contractor, even if Main Contractor has paid, but at the same time, the Main Contractor shall be entitled to take Cenvat Credit of the tax paid by the Sub- Contractor. Appeal allowed on the ground of limitation and the impugned order set aside.

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• 2023 (12) TMI 748
  Demand of service tax - nature of activity - notice pay recovered from the ex-employee - HELD THAT:- It is observed that the only issue in the impugned order is the taxability about the amount as has been received by the employer from its employees at the time of pre-mature termination of the contract of the employment. The issues stand already decided by this Tribunal, Principal Bench M/S RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, CUSTOMS AND CENTRAL EXCISE, JODHPUR I [ 2022 (1) TMI 909 - CESTAT NEW DELHI] , this Tribunal held compensation for failure under a cannot is NOT consideration for service under the contract and also following the law laid down by Madras High Court in GE T D that Notice pay, in lieu of termination, however, does not give rise to the rendition of service either by the employer or the employee, the impugned order upholding confirmation of a demand of service tax on the notice pay received/recovered by the appellant from its employees for premature resignation cannot be sustained. The issue involved in the present appeal is found to be exactly same which stands already decided in the above manner - there are no reason to differ with those findings - impugned order set aside - appeal allowed.

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• 2023 (12) TMI 747
  Invocation of Extended period of Limitation - whether the show cause notice served upon the appellant hits by the time bar limit? - Levy of penalty - HELD THAT:- The appellant has otherwise acknowledged the short payment of service tax during the disputed period and has not challenged the quantum of demand proposed and confirmed against the appellant. It is apparent from the record that after receiving the specific information that the appellant has short paid service tax, a letter dated 11.02.2014 was served upon the appellant requiring them to produce requisite documents and to submit the reply with the said specific information. It is very much apparent from the show cause notice itself that the said information/documents were never provided by the appellant to the department. No reason has been brought on record by the appellant nor has been submitted by making submissions even today about the said delay on part of the appellant and about the reason as to why none of those documents were never been provided, the delay for the entire period since February 2014 till April 2018 is held to be appellant s fault. Hence benefit cannot be extended in favour of the appellant for the said fault. Resultantly, it cannot be held that the impugned show cause notice has been issued by invoking the extended period of limitation. Had there been a response by the appellant to the letter dated 11.02.2014, there is nothing on record to even presume that department would have delayed issuing the impugned show cause notice. Levy of penalty - HELD THAT:- As already held that the act of appellant amounts to an act of suppression of facts, there is no infirmity in the imposition of penalty under Section 78 of the Finance Act - Though learned counsel had made another submission that the penalty imposed is disproportionate, it has been imposed 100% whereas it is on record that an amount of Rs.8,14,159/- was deposited by the appellant even prior the issuance of show cause notice. On this ground learned counsel has prayed for confining the penalty for the balance amount of Rs. 2.57 lakhs approximately. Since the findings of Para 8 and 9 of the order under challenge have been confirmed and it has been held that there is an intentional suppression on part of the appellant. The only possibility of such suppression is an intent to evade the payment of tax as has been appreciated by Commissioner (Appeals) in Para 9 of the order under challenge. There are no reason to differ from the said findings also. Appeal dismissed.

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• Central Excise

• 2023 (12) TMI 746
  Scope of appeal - Refund of excess paid duty - price variation clause - rejection on the ground of unjust enrichment - HELD THAT:- Admittedly the Adjudicating Authority found the refund admissible on merits. However, the same was rejected on the ground of unjust enrichment - it is further held that other than this issue of unjust enrichment, the Commissioner (Appeals) have travelled beyond the scope of the appeal and his other observations are by way of obiter dicta. Unjust enrichment - HELD THAT:- Admittedly Appellant have not received the full amount as per the invoices and further at the time of finalisation of the supply bill, under the contract in question, the buyer of the goods South Central Railway, have made adjustment of both the downward revision of the price including the excise duty, which is evident from the communication dated 18.08.2010 which have been annexed in the appeal paper book. Thus, it is evident that, as the buyer of the goods have paid reduced adjusted amount, the Appellant never received the amount of duty being claimed as refund, being excess duty paid, admittedly - Appellant have satisfied that it is the Appellant who have borne the burden of duty for the amount of Rs. 5,26,244/-. Accordingly, the Appellant is entitled to refund of the amount of Rs.4,77,292/-, which is not barred by limitation. The impugned order is set aside - appeal allowed.

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• 2023 (12) TMI 745
  Cenvat credit - Demand of interest raised against the appellant treating the goods as capital goods - entitlement to take the cenvat credit of 50% of duty paid in the year of procurement of the said goods and remaining 50% in the successive year - HELD THAT:- It is found that the goods used as a damping/patching material in the blast furnace to provide high voltage to the furnace and prevent hot metal from coming out during the manufacture of the ferro alloys. As these items have been used and consumed by the appellant during the manufacturing process, therefore, these are to be treated as inputs not capital goods. The appellant has correctly taken the cenvat credit on the said goods as inputs. Therefore, the proceedings against the appellant are not sustainable - the demand of interest is not sustainable against the appellant - appeal allowed.

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• 2023 (12) TMI 744
  Valuation of the goods - Appellant Assessee have cleared kraft paper to their sister concern, and also to independent buyer during the period November 2001 to September 2010 - HELD THAT:- During the period November 2001 to February 2009 appellant had both sales to independent buyers and also goods removed to their sister concern - it is found that, under such facts and circumstances, the issue is wholly covered by ruling of the Larger Bench decision of this Tribunal in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2007 (2) TMI 5 - CESTAT, MUMBAI-LB] - The issue before the Larger Bench was whether the assessable value in respect of goods which are transferred to any plant/unit of the same assessee, is required to be determined as per Rule 4 or Rule 8 of Central Excise Valuation Rules 2000, in case where some goods were also sold to independent buyers. The Larger Bench have held in the circumstances and facts as follows:- (a) the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers; (b) the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. For the period March 2009 to September 2010 admittedly there are no independent sales and all the removal of the goods are to the sister unit. Learned Counsel mentions that for this period, they have not disputed the differential duty demanded by Revenue and they have deposited the same with applicable interest. For this period, Learned Counsel states that the issue is of wholly interpretational in nature, thus penalty is not imposable. The issue herein is squarely covered by the ruling of the Larger Bench of this Tribunal in the case of Ispat Industries ltd., which have been confirmed by the Gujarat High Court in the case of Ultra Tech Cements Ltd. - the impugned order set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (12) TMI 743
  Application for condonation of delay dismissed - provisions of Section 12-B of the J K GST Act, 1962 ignored, which provide that the provisions of Sections 5 12 of the Limitation Act, Samvat 1995 shall apply to the appeals, revisions, filed under this Act before Appellate, Reviewing Authorities or the Tribunals - HELD THAT:- A conjoint reading of Section 12(D) along with first proviso shows that the maximum time within which reference could be filed by the dealer or the Commissioner should not exceed 90 days (including the grace period of 30 days) from the date of communication of appellate order. Admittedly, the order passed by the appellate authority is 22.02.2022 and indisputably the same was communicated to the Commissioner on 29.02.2022 as per the own admission of petitioners in the writ petition. Therefore, 29.02.2022 is the date which is to be taken for consideration for the purposes of calculation of period of limitation for filing reference. The Commissioner, therefore, was required to file reference within 60 days, i.e., on or before 29.04.2022 or before 29.05.2022 (including the extended/grace period of 30 days subject to sufficient cause). However, no such reference was filed within 90 days; as such it has become barred by Section 12(d) of the J K GST Act. Thus, the order passed by the appellate authority has attained finality because in view of the provisions of Section 12(d) of the J K GST Act, which is a special Act, has excluded the applicability of Section 5 of the Limitation Act. The order of learned Tribunal upheld - petition dismissed.

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• 2023 (12) TMI 742
  Refund of excess tax alongwith interest - Power to re-quantification or re-adjudication after the sanction of refund - it is contended that in spite of refunding the excess amount in terms of the order dated 22.09.2022, the refund Officer had issued the said impugned notice beyond his jurisdiction - HELD THAT:- It appears that the refund order was passed on 22.09.2022 whereby the 1st respondent had determined the excess tax amount available with them to an extent of a sum of Rs.2,06,22,234/-. Pursuant to the said refund order, the petitioner had filed a refund application before the 1st respondent. At this juncture, the respondent had once again issued a notice to the petitioner and called for the particulars, as if, he is going to revise his own order. As far as the 1st respondent is concerned, he has already assessed the excess tax amount and passed the refund order dated 22.09.2022. Having passed the same, the 1st respondent cannot issue the impugned notice dated 24.01.2023 without any provision of the law much less in terms of the Section 42(5) of the Act, and thereby the petitioner is entitled for the refund - there is no doubt that the first respondent had issued the said notice beyond the scope of his jurisdiction, since in the course of processing of the refund application, the 1st respondent is not empowered to re-adjudicate or re-quantify while passing the refund order. This Court is inclined to direct the 1st and the 2nd respondent to refund the excess tax amount lying with the department to an extent of a sum of Rs.2,06,22,234/- along with interest as per the refund order in CST No.50806/2013-14 dated 22.09.2022. The said exercise is directed to be completed on or before 05.12.2023. Post this matter on 08.12.2023 under the caption for reporting compliance .

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• Indian Laws

• 2023 (12) TMI 741
  Seeking declaration that the Conveyance Deed dated 17.12.2019 to be declared null and void - tri-partite agreement - whether the Trial Court and the High Court have rightly referred the matter to arbitration or the dispute is of such a nature that it is not liable to be referred to arbitration, as there was no arbitration clause in the Conveyance Deed dated 17.12.2019 or if there was, yet the matter in any case is such that it is not arbitrable? HELD THAT:- In the present case, therefore there is absolutely no ambiguity that both the Tripartite Agreements dated 31.03.2007 and 25.07.2008 contain an arbitration clause, which forms the basis of all subsequent agreements including the agreements sought to be declared as validly terminated by the appellants and the conveyance deed sought to be declared as null and void. Both the trial court as well as the High Court have given a correct finding on facts as well as on law - there are no scope for interference in the matter. Appeal dismissed.

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