TMI Tax Updates - e-Newsletter
December 21, 2024

Case Laws in this Newsletter:

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

Articles

1. Taking Flight: How ITAT's Ruling on Code-Sharing Reshaped Aviation Taxation

   By: Eshaan Singal

2. OFFICER’S ROLE IN ACCESS TO BUSINESS PREMISES IN GST LAW

   By: Dr. Sanjiv Agarwal

3. Common Mistakes to Avoid While Filing the Spice+ Form

   By: Ishita Ramani

4. ARBITRATION PROCEEDINGS FOR WAGES DISPUTE – POSSIBLE?

   By: DR.MARIAPPAN GOVINDARAJAN

5. High Court has power to condone delay in filing appeal

   By: Bimal jain

News

1. Integration of industry with Government digital platforms to improve logistics sector: Shri Piyush Goyal

2. 2nd round of Sensitization cum review meeting of Statistical Advisers in Central Ministries/Departments to be held on 23rd December, 2024 in New Delhi

3. Commerce and Industry Minister holds video conference with Mr Maros Sefcovic, European Commissioner for Trade and Economic Security; Interinstitutional Relations and Transparency

4. 2024 Year End Review for Department for Promotion of Industry and Internal Trade

5. Government of India and Asian Development Bank (ADB) sign $42 million loan to strengthen coastal protection to help boost community resilience in Maharashtra

Notifications

Income Tax

1. 128/2024 - dated 18-12-2024 - IT

Deduction of tax at source - no deduction in certain cases - Specified payment under section 197A (1F) - if payment is made to Credit Guarantee Fund Trust for Micro and Small Enterprises as referred to in clause (46B) of section 10 of income tax, 1961

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-RAC-1/P/CIR/2024/179 - dated 20-12-2024

Simplification of Offer Document

2. SEBI/HO/DEPA-II/DEPA-II_SRG/P/CIR/2024/178 - dated 20-12-2024

Policy for Sharing Data for the Purpose of Research / Analysis

3. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2024/177 - dated 20-12-2024

Industry Standards on Reporting of BRSR Core

4. SEBI/HO/CFD/PoD2/CIR/P/0155 - dated 11-11-2024

Master circular for compliance with the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 by listed entities

DGFT

5. Trade Notice No. 24/2024-25 - dated 20-12-2024

Rescheduling of Launch Date for Preferential eCoO 2.0 System

Highlights / Catch Notes

GST

• Demat accounts frozen despite director resignation, violating natural justice. HC ordered relief, quashed freezing before due process.

  Case-Laws - HC : Petitioner's demat accounts were attached/frozen despite ceasing to be director of company, violating natural justice principles. HC held prima facie petitioner's liability u/s 89 of MGST Act requires compliance with natural justice before attachment/freezing action. Relief granted quashing attachment/freezing of demat accounts, without precluding respondents from proceeding per law, issuing notices u/s 89 MGST Act and adhering to natural justice if action against petitioner proposed. Application disposed.
  Visit to Get Source

  ---

• Misclassification Show Cause Notice: Exhaust Adjudication First, Says HC Dismissing Challenge on Lower GST Rate Interpretation.

  Case-Laws - HC : HC dismissed petition challenging show cause notice issued for alleged misclassification of product under incorrect HSN code attracting lower GST rate. HC held alternate remedy of adjudication had to be exhausted before approaching HC as no jurisdictional issue or violation of natural justice was involved. Petition dismissed with no order on costs.
  Visit to Get Source

  ---

• Delay in filing GST returns & appeal costs GST registration cancellation.

  Case-Laws - HC : HC dismissed petitioner's appeal challenging cancellation of GST registration. Petitioner filed appeal after 17 months delay, beyond 3-month limitation u/s 107 CGST Act. HC held petitioner's lethargic approach in not filing returns for 6 months and inordinate delay in filing appeal rendered it disentitled to relief. Petitioner failed to provide justification for condonation of delay.
  Visit to Get Source

  ---

• Orissa High Court quashes untimely order for penalty under GST Act, cites violation of statutory time limit.

  Case-Laws - HC : The HC held that the impugned order u/s 129 of the Odisha GST Act, 2017 was not timely. Despite the petitioner's appeal mentioning 27.09.2024 as the order date, the HC found the order was made on the 8th day from the notice specifying penalty, violating Section 129(3). Consequently, the order was set aside and quashed, and the petition was disposed of.
  Visit to Get Source

  ---

• Tax credit blocked for fake invoices from non-existent firms; provisional action upheld but final order awaited.

  Case-Laws - HC : The HC upheld the blocking of account and Input Tax Credit u/s 74 of the CGST Act, 2017 for wrongful availment of ITC showing fake invoices as the concerned firms were found non-existent. Section 86-A was rightly exercised based on prima facie view without issuing show cause notice to protect revenue. However, the HC directed respondents to pass final order expeditiously, preferably within one month, and allowed petitioner to operate account as over 1.5 years elapsed since blocking.
  Visit to Get Source

  ---

• Taxpayers can claim input tax credit by rectification application before 15.04.2025 as per special procedure notified.

  Case-Laws - HC : HC allowed taxpayers to move application for rectification to avail input tax credit under CGST Act within six months from 15.10.2024 i.e. upto 15.04.2025 as per special procedure u/s 148 notified vide notification No. 22/24 dated 08.10.2024. Petitioner permitted to move application accordingly. Petition disposed of.
  Visit to Get Source

  ---

• Tax fraud accused gets bail relief; HC scraps Rs. 1 cr deposit condition, asks to submit passport instead.

  Case-Laws - HC : The HC allowed the petition filed u/s 482 CrPC. It set aside the trial court's condition directing the petitioner, accused of fraudulently availing Input Tax Credit under the CGST Act, to deposit Rs. 1 crore for bail. The HC held that while courts can accept cash security when the accused cannot furnish sureties, directing deposit of a substantial sum should be avoided. Considering the gravity of the Rs. 8 crore offence, the HC directed the petitioner to submit his passport to the trial court and not leave India without its permission, instead of depositing Rs. 1 crore.
  Visit to Get Source

  ---

• Contradictory findings on goods ownership quashed; fresh order to determine if KIIFB funds are govt grant and if 'supply' sans consideration.

  Case-Laws - HC : HC quashed the order and restored the adjudication of show cause notice to the respondent authority. Petitioner is entitled to relief. Adjudicating authority's findings on ownership of goods were contradictory. It failed to properly consider the effect of notification treating amounts obtained through KIIFB as grant from government. Respondent directed to pass fresh order after hearing petitioner, considering whether absence of consideration precludes 'supply' u/s 7 of CGST Act, and whether KIIFB amounts should be treated as government grant under the notification.
  Visit to Get Source

  ---

• Bail denied in massive fraud case involving fake firms, misused IDs.

  Case-Laws - HC : The HC rejected the bail applications of the accused involved in large-scale GST fraud, money laundering and corruption by registering fictitious firms using misused Aadhaar and PAN cards. The accused were charged with offences u/ss 420, 467, 468, 471, and 120-B IPC. Considering the grave economic offences impacting society, the money trail of crores, the accused's influential position, and the likelihood of tampering with evidence or witnesses, the HC denied bail, upholding the principle that bail is an exception in such cases affecting the economic fabric. The relevant part of the accused's statement leading to the discovery of laptops, mobiles, SIM cards and fake invoices is admissible u/s 27 of the Indian Evidence Act.
  Visit to Get Source

  ---

Income Tax

• Loans from SBH & PNB, Rs. 5 cr transferred to Tripoli Mgmt; interest deduction allowed on Rs. 5 cr loan from 20/06/2016 to 31/03/2017.

  Case-Laws - AT : Nexus between loans taken from SBH and PNB initially advanced to Nandan Corporation and subsequently transferred Rs. 5 crore from Nandan Corporation to Tripoli Management on 20/06/2016 established. Assessee entitled to claim Rs. 36,58,096/- deduction for interest payment on Rs. 5 crore loan from 20/06/2016 to 31/03/2017 subject to AO's verification. Disallowance of interest claim on LIC policy loan upheld. Appeal partly allowed.
  Visit to Get Source

  ---

• Income tax calculation row: CPC wrongly withdrew assessee's 115BAA option without giving opportunity.

  Case-Laws - AT : Assessee exercised option u/s 115BAA to compute tax liability at lower rate. CPC accepted option for AY 2020-21 but for current year, rectified under s.154 without opportunity to assessee and computed tax at normal rate instead of s.115BAA rate. ITAT held rectification order invalid as assessee didn't violate any provision for s.115BAA. Grounds 1-4 allowed. On TDS issue, ITAT upheld CIT(A)/NFAC order restoring matter to AO for verification, dismissing assessee's ground.
  Visit to Get Source

  ---

• US Company's Liaison Office in India Not a Permanent Establishment, Income from Abroad Not Taxable in India.

  Case-Laws - HC : The HC held that the Liaison Office (LO) of the US company engaged in Money Transfer Services did not constitute a Permanent Establishment (PE) in India under the India-USA DTAA. The activities undertaken by the LO were preparatory or auxiliary in nature as per Article 5(3)(e) of the DTAA. The LO did not meet the criteria for a Fixed Place PE under Article 5(1) or a Dependent Agent PE under Article 5(4). The software deployed merely enabled Indian agents to communicate with US servers and did not create a PE. The premises of independent Indian agents could not be regarded as a PE of the US company. Thus, the income earned from customers outside India was not taxable in India. The HC ruled in favour of the assessee.
  Visit to Get Source

  ---

• Tax re-assessment disputed over inadequate time allowed to reply on new facts.

  Case-Laws - HC : Petitioner challenged validity of re-assessment u/s 148A. HC quashed impugned order and notice initiating re-assessment proceedings issued by 3rd Respondent. HC held short time of two days given to petitioner to reply after receiving Investigation Report violated principles of natural justice. Order passed in undue haste smacking arbitrariness, not following statutory provision of Section 148A. When new facts introduced in notice on 20.03.2024, at least seven days' time should have been granted to petitioner to reply, but proceedings conducted hurriedly violating natural justice.
  Visit to Get Source

  ---

• Dismissal of writ against reassessment order; interim stay during appeal.

  Case-Laws - HC : HC dismissed petitioner's writ challenging assessment order u/s 147 r/w 144B, holding petitioner failed to make out case for interference. Petitioner filed appeal before Appellate Commissioner and secured interim stay u/s 220(6). HC directed: (i) Appeal to be disposed expeditiously, preferably within 6 months; (ii) Interim stay to continue till appeal disposal; (iii) Commissioner (Appeals) may call remand report from AO and pass final orders, considering bank statements filed by petitioner.
  Visit to Get Source

  ---

• Bank's expenses/amortization upheld; 14A inapplicable on stock-in-trade shares.

  Case-Laws - HC : AO disallowed expenses u/s 14A r.w.r. 8D for shares held as stock-in-trade, but HC held section 14A inapplicable to assessee bank following Maxopp and South Indian Bank. HC upheld amortization of premium on HTM securities and loss from shifting securities from AFS/HFT to HTM portfolio relying on Oriental Bank of Commerce. HC allowed section 43B deduction for contributions to employees' pension fund based on actuarial valuation. HC rejected Revenue's appeal on goodwill from amalgamation following earlier dismissals. No substantial question of law arose.
  Visit to Get Source

  ---

• Symbolic sale deed & stated amount not actual income - no penalty.

  Case-Laws - AT : ITAT held that the sale deed was symbolic for transfer of ownership rights and the stated amount was merely the market value for stamp duty purposes. No evidence of cash receipt by the assessee was found to invoke penalty u/s 271D. Assessee's appeal allowed.
  Visit to Get Source

  ---

• No permanent establishment in India for US entity; No tax withholding required on payments.

  Case-Laws - AT : TEC does not have a permanent establishment in India in terms of Article 5(2)(k) of the India-USA Tax Treaty. The assessee did not have an obligation to withhold taxes at source on payments made to TEC, USA. Assessee's appeal allowed.
  Visit to Get Source

  ---

• Tax Exemption Denied for 2012-13 Due to Late 12A Registration; Depreciation on Infrastructure Allowed.

  Case-Laws - AT : The ITAT held that the assessee organisation cannot be granted exemption u/s 11 for the preceding assessment year 2012-13 as the registration u/s 12A was obtained in 2019, after the assessment was completed, and the relevant proviso stood omitted from 01.04.2023. The expenditure incurred on infrastructure creation is capital in nature, while maintenance and administration expenses are revenue expenses. The assessee is entitled to claim depreciation on infrastructure assets. The notional interest expenditure booked by treating the government grant as a loan is not allowable. The grant should be treated as income, and the assessee can claim depreciation on assets. The assessee was given an opportunity to rectify its accounts. The revenue's appeal was partly allowed.
  Visit to Get Source

  ---

• Assessee wins on TP adjustment for interest on AE receivables, amalgamation expenditure; Interest relief under 234B, 234C.

  Case-Laws - AT : The ITAT allowed the assessee's grounds regarding TP adjustment for interest on outstanding receivables from AEs and deduction u/s 35DD. It held that no separate interest on receivables is required to be imputed as the assessee is a debt-free company and working capital adjustment was granted, relying on the decisions in Boeing India and Kusum Health Care. On deduction u/s 35DD, it directed the AO to allow 1/5th of amalgamation expenditure based on the Supreme Court's decision in Goetze India. The ITAT also held that interest u/s 234B is consequential, and u/s 234C should be charged only on returned income, not assessed income.
  Visit to Get Source

  ---

• Incentive subsidy & carbon credits treated as capital; deduction on rail system revenue; valuation of internal transfer justified.

  Case-Laws - AT : The ITAT upheld that the subsidy received by the assessee under the new package scheme incentive of 1993 was capital in nature, computed on the basis of fixed capital investment, and hence not taxable. Income from sale of carbon credit was treated as capital and not liable to tax. The deduction u/s 80IA was allowed for the rail system developed by the assessee, computing revenue by savings approach over road freight cost. The assessee was justified in valuing internal transfer at landed cost by obtaining quotation from erstwhile foreign supplier.
  Visit to Get Source

  ---

• Tax Tribunal Upholds DCF Method for Share Valuation, Rejects NAV and Deletes Unwarranted Additions u/ss 56(2)(viib) & 68.

  Case-Laws - AT : AO rejected DCF method for valuation of shares issued as rights issue to existing shareholders. Instead, AO applied NAV method u/r 11UA determining FMV at Rs.3.07 per share and made addition u/s 56(2)(viib). ITAT held DCF is recognized valuation method based on future projections considering various factors. AO cannot tinker with DCF method adopted by assessee and apply NAV method. When law provides two methods, AO cannot reject one method for another without substantial reasons. Following Cinestaan, DCF valuation by assessee accepted. No addition u/s 56(2)(viib) upheld. Regarding addition u/s 68, assessee companies had sufficient reserves, revenue, borrowings to explain source. Onus of proving source discharged. Addition u/s 68 deleted. Assessee's appeal allowed.
  Visit to Get Source

  ---

• Supreme Court: Additions Based on Third-Party Material Not Permissible u/s 153A Without Incriminating Evidence.

  Case-Laws - AT : Assessments u/s 153A for AYs 2012-13, 2013-14 & 2014-15 were made based on statement of third party and material from search of third party, without any incriminating material found in assessee's case. As per SC ruling in Pr. CIT v. Abhisar Buildwell, such additions are impermissible u/s 153A. For abated AYs 2015-16 onwards, AO's powers aren't limited to incriminating material from search. However, where AO accepted assessee's explanation on source of funds based on documentary evidence in remand report, CIT(A) erred in brushing it aside without substantive reasons. Additions sustained by CIT(A) despite AO's findings in remand report are unsustainable.
  Visit to Get Source

  ---

• Interest paid on funds invested in partnership firm allowed as deduction.

  Case-Laws - AT : The ITAT allowed the assessee's appeal and held that the disallowance of interest expenditure claimed as a deduction against interest income from the partnership firm was not sustainable. The assessee had sourced funds from both interest-bearing loans and non-interest-bearing funds, which were majorly invested in the capital of partnership firms for business purposes. The revenue contended that since the investment did not earn any income except from one firm, the interest paid u/s 36(1)(iii) was not allowable. However, the ITAT observed that the commercial expediency must be considered for allowability u/s 36(1)(iii), and the revenue did not raise any contention in this regard. The ITAT noted that without establishing a one-to-one match, it cannot be said that the borrowed funds were used for giving interest-free loans and advances. As some loans extended were earning interest, the disallowance u/s 36(1)(iii) was not sustainable.
  Visit to Get Source

  ---

• Tax Deductions Approved: Verified Payments, Employee Expenditure, Software License Fees, Export Income, and Hedging Losses.

  Case-Laws - AT : Disallowance of deduction on account of payment to L&T Ltd. for reimbursement of employee related option scheme was rejected as the payments were not doubted by the AO/CIT(A), TDS was deducted, and no contrary evidence was provided. The expenditure incurred on a cost-to-cost basis for deputed employees was held allowable u/s 37(1). Regarding software license fees, the ITAT held that short-term licenses facilitating business operations qualify as revenue expenditure as no new asset was created. Deduction u/s 10A for the STP unit's first year was allowed as the assessee exported computer software in convertible foreign exchange per CBDT Circular 2/2013 and the Karnataka HC ruling. Loss on forward contracts was treated as a regular business loss u/s 43(5) as the assessee was not a forex dealer but an exporter hedging against losses through forward contracts related to export services.
  Visit to Get Source

  ---

• Tax reassessment quashed on procedural lapses - no proof of income escapement.

  Case-Laws - AT : AO reopened assessment beyond 4 year period without establishing assessee failed to truly disclose material facts. ITAT quashed reopening, holding AO merely changed opinion without tangible belief of escaped income. PCIT's revision u/s 263 to assess other income was rejected as show-cause didn't specify impugned order date, making action time-barred. Further, PCIT couldn't conclude assessment erroneous for non-consideration of information already possessed by AO while forming reopening belief. Assessee's appeal allowed by ITAT.
  Visit to Get Source

  ---

Customs

• Smuggling foiled: Gold bars, cash seized; no natural justice violation. Petitioners' contradictions exposed smuggling conspiracy from Dubai.

  Case-Laws - HC : HC upheld orders of Commissioner (Appeals) confiscating gold bars and cash from petitioners. Petitioners were given adequate opportunity, no violation of natural justice principles. Findings based on material on record indicating conspiracy to smuggle gold from Dubai. Contradictions in petitioners' stances. No intention to declare gold to Customs. Attempted evasion and smuggling. No interference warranted in impugned orders.
  Visit to Get Source

  ---

• Tax authorities' decade-long delay in adjudicating show cause notices quashed by High Court.

  Case-Laws - HC : The HC quashed and set aside the show cause notices dated 20 October 2011 and 6 August 2012 issued to the Petitioner. The HC held that there was an unexplained delay of more than 10 years by the Respondents in adjudicating the show cause notices, and the Respondents failed to provide any justification for such inordinate delay. Consequently, following the decisions of the Coordinate Benches, the HC allowed the Petition and quashed the show cause notices due to the unreasonable delay in adjudication.
  Visit to Get Source

  ---

• Importers win anti-dumping duty case over lack of evidence on "embroidery threads" classification.

  Case-Laws - AT : CESTAT allowed the appeal filed by the appellants against the impugned order. The Tribunal held that the Department failed to discharge its burden of proving that the imported goods, described as "embroidery threads", attract anti-dumping duty under Notification No. 23/2012-Cus. The classification of the goods as "embroidery yarn" or "embroidery thread" required a physical scrutiny, product literature, examination report, or expert opinion, which were lacking. Consequently, the Tribunal set aside the impugned order due to the absence of evidence to support the allegation made in the Show Cause Notice.
  Visit to Get Source

  ---

• Company paid duty with interest under Amnesty Scheme, avoiding penalty for duty exemption violation.

  Case-Laws - AT : The appellant availed duty exemption under EPCG authorization for import of goods. Subsequently, the appellant remitted customs duty along with interest on 27.03.2024 under the Amnesty Scheme. The CESTAT held that since the appellant had remitted the duty and interest as per the Amnesty Scheme, there was no scope to confirm the penalty imposed for the alleged violation. Although the appellant disputed the leviability of penalty u/s 112(a), the CESTAT found that the Amnesty Scheme did not specify anything about the penalty. Consequently, the CESTAT set aside the impugned order and allowed the appeal.
  Visit to Get Source

  ---

• Imported goods seized, heavy penalties for export obligation violation.

  Case-Laws - AT : The CESTAT upheld the duty demand, confiscation of imported goods for non-fulfilment of export obligation u/s 111(o), imposition of redemption fine u/s 125, and penalties of Rs.5,00,000/- on Appellant 1 and Rs.2,00,000/- each on Appellants 2 and 3 of the Customs Act, 1962. The duty quantified, redemption fine and penalties imposed in the impugned order were found correct and sustainable. The appeal was dismissed.
  Visit to Get Source

  ---

• Customs duty exemption denied due to subsequent notification amendments.

  Case-Laws - AT : The appellant was denied the benefit of Nil CVD under N/N. 30/2004-CE as amended, on the ground that the notification was not available due to subsequent amendments vide N/N. 34/2015-CE and N/N. 37/2015. Following the CESTAT Chennai ruling in HLG Trading, Aditya International Ltd. vs Commissioner of Customs (Chennai IV) and Commissioner of Customs vs Aditya International Ltd., M/s. Microweb Enterprises Pvt. Ltd., the appellant's claim for the benefit under the amended N/N. 30/2004-CE was held untenable. The CESTAT upheld the denial of Nil CVD benefit, finding no irregularity by the lower authorities. Consequently, the appeal was dismissed.
  Visit to Get Source

  ---

IBC

• Financial debt established, forgery claim rejected. NCLT dismissal set aside, CIRP initiated against Corporate Debtor.

  Case-Laws - AT : The NCLAT held that the amount advanced by the Appellant qualifies as a financial debt u/s 5(8) of the IBC. The confirmation of accounts, TDS deduction, and other material on record established the debt and default. The Respondent's claim of forgery of confirmation of accounts was unsubstantiated. The Petition was not barred by limitation as the latest acknowledgment of debt was in FY 2020-21, extending the limitation period. The dismissal of the Section 7 Petition by the Adjudicating Authority was unsustainable. The NCLAT set aside the order and directed initiation of CIRP against the Corporate Debtor u/s 7.
  Visit to Get Source

  ---

• Creditor's claim rejected in Resolution Plan gets dismissed by NCLAT due to failure to raise objections timely.

  Case-Laws - AT : The NCLAT dismissed the appeal challenging the order approving the Resolution Plan. The appellant's claim was not admitted by the Resolution Professional, who published four updated lists of creditors reflecting the appellant's claim as not admitted. The appellant did not raise any grievance or file an application before the Adjudicating Authority challenging non-admission of the claim. The Resolution Plan treated the claim of statutory authorities as 'nil'. The appellant failed to agitate its claim before the Adjudicating Authority at the relevant time. The Resolution Plan was fully implemented, and no ground was made out to interfere with the Adjudicating Authority's order approving it.
  Visit to Get Source

  ---

• Corporate insolvency process: NCLAT upholds liquidation, allows objections on valuation.

  Case-Laws - AT : The NCLAT dismissed the appeal filed by the appellant against the NCLT order rejecting the application for recall of the liquidation order dated 13.12.2023 and continuation of the auction process by the liquidator. The NCLAT held that the grounds raised by the appellant did not fall within any recognized grounds for recalling a judgment. However, the appellant was granted liberty to file objections regarding the auction conducted by the liquidator before the NCLT while considering the application for confirmation of the auction, including issues of inappropriate valuation of assets. The NCLAT found no error in the NCLT orders and disposed of the appeals accordingly.
  Visit to Get Source

  ---

Indian Laws

• Huge delay condoned as applicant showed lethargic attitude in filing appeal.

  Case-Laws - HC : HC dismissed the application for condonation of delay of 404 days in filing the appeal. The applicant exhibited a lethargic attitude and negligence in filing the Letters Patent Appeal despite being aware of the period for filing. Sufficient cause was not shown to condone the huge delay.
  Visit to Get Source

  ---

• Dues from Rice Millers for unaccounted rice qualify as 'public demand' recoverable by State's nodal agency despite lack of due process.

  Case-Laws - SC : The SC held that the recovery by the Civil Supplies Corporation qualifies as a 'public demand' under the Act and Rules. The definition of 'public demand' is broad, encompassing arrears mentioned in Schedule I and loans/advances payable to the State Govt. The Civil Supplies Corporation, as the State's nodal agency, can initiate recovery proceedings against Rice Millers for unaccounted rice at FCI depots. However, the initiation violated principles of natural justice. The Rice Millers can avail statutory remedies to challenge the recovery certificate within 30 days, without limitation period being an issue. The appeal is dismissed.
  Visit to Get Source

  ---

• Arbitral award sum carries 18% interest from date of award to payment unless stated otherwise - inclusive of pre-award interest.

  Case-Laws - SC : The SC held that u/s 31(7) of the Arbitration and Conciliation Act, 1996, the 'sum' awarded by the arbitral tribunal, whether inclusive of interest or not from the date of cause of action to the date of award, would carry further interest at 18% from the date of award to the date of payment, unless the award directs otherwise. The arbitral tribunal has power to grant pre-award, pendente lite, and post-award interest. The 'sum' directed to be paid u/s 31(7)(b) is inclusive of interest pendente lite. The appellant's contention that the arbitrator became functus officio and lacked jurisdiction to issue clarification was rejected as the SC had permitted the respondent to seek clarification. The appeal was dismissed, upholding the HC order.
  Visit to Get Source

  ---

• Supreme Court Restores Full Insurance Payout, Rejects National Commission's Reduction; Justifies Delay in Notification.

  Case-Laws - SC : The SC set aside the National Consumer Disputes Redressal Commission's order reducing the insurance amount payable to the appellant. The SC held that the District and State Commissions had concurrent findings that the delay in intimation to the insurer was justifiable and not fatal to the insurance claim. The damage occurred in two phases - when the vehicle fell into a ditch and capsized, and when short-circuiting occurred due to the vehicle remaining in that state. The National Commission could not interfere with the factual findings arrived at by the lower fora while exercising revisional jurisdiction. The State Commission had examined the surveyor's report and discarded it for lack of evidence, relying instead on the police report. It directed the insurer to pay the entire insured sum, giving reasons. The SC relied on its previous decision that delay in intimation may be condoned if properly explained.
  Visit to Get Source

  ---

PMLA

• Money laundering case accused granted bail after 20-month incarceration pending trial.

  Case-Laws - HC : The HC has allowed the bail application of the accused in a money laundering case under the Prevention of Money Laundering Act, 2002. The allegations pertained to illegal appointment of ineligible candidates in lieu of extraneous consideration. The court noted that while incriminating articles/documents suggesting proceeds of crime were seized, the truth and veracity of the co-accused's statement u/s 50 needs to be weighed during trial. Considering the prolonged incarceration of around 20 months without trial, the likelihood of further delay, the accused being a first-time offender, and the overarching right to life and personal liberty under Article 21, the HC granted bail to the accused subject to stringent conditions.
  Visit to Get Source

  ---

VAT

• Taxpayer granted relief from high-pitched ex-parte assessment on paying 15% disputed tax within 30 days.

  Case-Laws - HC : Condonation of delay: The HC allowed the writ petition and set aside the impugned orders, including the Senior Joint Commissioner's order dated 06.07.2018, subject to the petitioner paying 15% of the disputed tax u/s 84(1) within 30 days. Considering the high-pitched ex-parte assessment where the government could not recover any tax till date, the HC granted one opportunity to the petitioner to pursue their appeal before the Senior Joint Commissioner after complying with the pre-deposit condition.
  Visit to Get Source

  ---

Service Tax

• Tax refund on ocean freight allowed despite limitation period.

  Case-Laws - HC : The HC held that the claim for refund of service tax paid on ocean freight during April 2017 to June 2017 was not barred by limitation u/s 17(1)(c) of the Limitation Act. As the levy of service tax on ocean freight was declared unconstitutional, the refund claim fell outside the purview of the Central Excise Act, 1944. Relying on the Supreme Court's decision in Mafatlal Industries, the HC excluded the period from 15 March 2020 to 28 February 2022 for computing limitation. The respondents were directed to dispose of the refund claims forthwith. The petition was allowed.
  Visit to Get Source

  ---

• Reliance paid service tax on services from US firm, wrongful demand on Indian subsidiary quashed.

  Case-Laws - AT : UTS-USA provided support services to Reliance Infocom Ltd. located in taxable territory. Reliance Infocom was liable to pay service tax under reverse charge mechanism on the amount paid to UTS-USA during the disputed period, which it discharged. UTS-India, a subsidiary of UTS-USA, was wrongly alleged as the service provider. The demand against UTS-India was set aside by CESTAT as the show cause notice was issued based on wrong presumption and invoking extended period of limitation was incorrect since Reliance Infocom had already paid the service tax. The appeal by UTS-India was allowed.
  Visit to Get Source

  ---

Central Excise

• Pure coconut oil sold as edible oil classified under 'Coconut (Copra) oil' category, not 'hair oil' preparations.

  Case-Laws - SC : The SC held that pure coconut oil, packaged and sold in small quantities ranging from 5 ml to 2 litres as 'edible oil', is classifiable under Heading 1513 'Coconut (Copra) oil, etc.' in Section III-Chapter 15, and not under Heading 3305 'Preparations for use on the hair' in Section VI-Chapter 33 of the Central Excise Tariff Act, 1985, unless the packaging satisfies all requirements of Chapter Note 3 in Chapter 33 read with Explanatory Notes under corresponding Chapter Note 3 of the Harmonized System of Nomenclature, whereupon it would be classifiable as 'hair oil' under Heading 3305. The appeals were dismissed.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2024 (12) TMI 1088
  Challenge to order whereby demand has been raised against the present petitioner - petitioner was completely denied opportunity of oral hearing before the Assessing Authority - violation of principles of natural justice - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified No in the column meant to mark the assessee s choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created - Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The impugned order dated April 16, 2024 is set aside. The matter is remitted to the respondent no.3 Assistant Commissioner, State Tax, Sector-1, Balia to issue a fresh notice to the petitioner within a period of two weeks from today - Petition allowed by way of remand.

  ---

• 2024 (12) TMI 1087
  Maintainability of writ petition without exhausting appeal remedy under Section 107 of GST enactment - Levy of penalty u/s 129 (1)(a) of the respective GST enactment - discrepancy in consignment details - HELD THAT:- The GST registration, as per the extract from the GST portal, and the invoice raised by the consignor / seller, namely, M/s.M.R.Industrial Services, are one and the same. The e-Way Bill also indicates the same, except that the name of the consignee has been given as that of the petitioner. This Court has, in several cases, come to the rescue of the assessee, where, errors are marginal and were not major or motivated with a view to evade tax. Since, the address of the consignee, namely, M/s.Athish Engineering Systems, as in the GST Registration certificate and the address in the tax invoice dated 25.02.2022 raised on the petitioner by the seller / consignor, namely, M/s.M.R.Industrial Services, are one and the same, minor discrepancy in the name can be condoned. However, this would require a proper determination by the respondent, although the petitioner has paid the penalty amount and has taken delivery of the consignment that was detained by the respondent. The impugned order is set aside and the case is remitted back to the respondent to pass fresh orders on merits. The penalty paid by the petitioner, with a view to take delivery of the detained consignments may be refunded and shall be subject to the final outcome of the order that may be passed - Petition allowed by way of remand.

  ---

• 2024 (12) TMI 1081
  Challenge made to section 16(2)(c) of the GST Act, 2017 - bona fide purchaser having paid his tax in hands of the original supplier who may have defaulted in not paying of the taxes - HELD THAT:- Counsel for the petitioner orally prays for allowing him to implead the Union of India as a party. He may file his amended memo of parties. Said prayer of the petitioner is allowed. List again on 06.03.2025.

  ---

• 2024 (12) TMI 1080
  Challenge made to section 16(2)(c) of the GST Act, 2017 - fate of a bona fide purchaser having paid his tax in hands of the original supplier who may have defaulted in not paying of the taxes - HELD THAT:- Counsel for the petitioner orally prays for allowing him to implead the Union of India as a party. He may file his amended memo of parties. Said prayer of the petitioner is allowed. List again on 06.03.2025.

  ---

• 2024 (12) TMI 1079
  Attachment/freezing of demat accounts even though ceased to remain the director of the company - violation of principles of natural justice - HELD THAT:- At least prima facie, if the petitioner is held liable after the action in terms of Section 89 of the MGST Act, which will essentially involve compliance with principles of natural justice and fair play, only then could action for attachment/freezing of the petitioner s demat accounts have been initiated. In terms of the statement, relief in terms of prayer clauses (a) and (b) of the petition stands granted. This will, however, not preclude the respondents from proceeding in accordance with law, including issuing notices in terms of Section 89 of the MGST Act and complying with principles of natural justice if any precipitative action is proposed against the petitioner. All contentions of all parties are left open should any action be proposed to be taken in terms of Section 89 of the MGST Act. Application disposed off.

  ---

• 2024 (12) TMI 1078
  Maintainability of petition - Exhaustion of alternate remedies before approaching the High Court - Jurisdiction of the Central Government to levy GST on alcoholic liquor for human consumption - HELD THAT:- The impugned show cause notice is not restricted only to the issue of production overhead charges. The Petitioner has classified their product as DDGS, Husk Cattle Feed (Spent Grain) under HSN 1104 instead of HSN 2303 and clearing/supplying the same on `Nil GST rate while HSN 2303 attracts GST @5%. There is a serious issue with this classification. The show cause notice alleged that this is nothing but misclassification. Detailed though tentative reasons have been given in support of this allegation. Indeed, this is a matter that requires a thorough investigation. In Whirlpool Limited [ 1998 (10) TMI 510 - SUPREME COURT ] the Hon ble Supreme Court has held that alternate remedy would not operate as a bar in at least three contingencies, namely where the Writ Petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the present case, there is no question of enforcement of any fundamental rights. This is also not a case of violation of principles of natural justice. The show cause notice is quite clear and provides the basis for issuing the same. This is also not a case where the proceedings are wholly without jurisdiction. Recently, in Oberoi Constructions Ltd. [ 2024 (11) TMI 588 - BOMBAY HIGH COURT ], this Court surveyed the precedents about exhaustion of alternate remedies. By adopting the reasoning therein, no case is made to interfere with the impugned show cause notice or issue a declaration sought by the Petitioner without verifying the crucial factual aspects. Thus, no case is made to interfere with the impugned show-cause notice - petition is liable to be dismissed, and it is hereby dismissed with no costs order.

  ---

• 2024 (12) TMI 1077
  Challenge to order in Appeal and consequential summary of the demand - time limitation - appeal preferred by petitioner has been rejected on the ground of being filed after expiry of period of limitation as prescribed under Section 107 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- It appears that a show cause notice was issued to the petitioner (Annexure-3) for not filing returns for a continuous period of six months. Thereafter, the petitioner duly filed its reply on 07.04.2022, however, the same was not considered for the reasons mentioned in the order for cancellation of registration (Annexure-4). Thereafter, petitioner, after a lapse of almost 17 months from the date of passing of impugned order of cancellation of registration filed an appeal and the appellate authority rejected the appeal on the ground of limitation. It appears that under Section 107 of CGST Act, 2017, there is a period of limitation of 3 months prescribed, however, the petitioner, as stated hereinabove, filed the appeal not only beyond the period of limitation of few days; rather he filed the application after a delay of almost 17 months and no reasons have been assigned. There are no hesitation in holding that the petitioner Firm is not entitled for any relief on the ground of being lethargic in approach, inasmuch as, on the one hand, the petitioner did not file its return for a continuous period of six months and on the other hand, petitioner-Firm filed appeal before the appellate authority after a delay of almost 17 months which is admittedly beyond the period of three months for filing appeal as prescribed under Section 107 (1) of the CGST Act, 2017. The instant writ application stands dismissed.

  ---

• 2024 (12) TMI 1076
  Timeliness of the order u/s 129 of Odisha Goods and Services Tax Act, 2017 - HELD THAT:- The print of sent mail is doubtful because petitioner filed appeal on Form GST APL-01 giving date of order as 27th September, 2024. The appeal was successfully uploaded. There is also said letter dated 18th October, 2024 written by Assistant Commissioner of State Tax to petitioner, in which there is clear mention of 27th September, 2024 as date of the order. Furthermore, sub-rule (5) in rule 142 of Odisha Goods and Services Tax Rules, 2017 requires summary of the order issued, inter alia, under section 129, to be uploaded electronically in Form GST DRC-07. There is no dispute that this was done on 27th September, 2024. The impugned order is found to have been made on the 8th day from date of service of the notice specifying penalty. It does not meet the requirement under sub-section (3) of section 129. It is therefore liable to be and is set aside and quashed - petition disposed off.

  ---

• 2024 (12) TMI 1075
  Blocking of account and Input Tax Credit under Section 74 of the Central Goods and Services Tax Act, 2017 - wrongful availment of ITC showing fake invoices - concerned firms were found to be non-existent - HELD THAT:- The provisions of Section 86-A of the Act have been rightly exercised after receiving information of there being fake income tax credit claims claimed by the petitioner. It is the prima facie view which is required to be taken up by the respondents before taking action under Section 86-A of the Act and at that stage, there is no occasion for issuing any show cause notice or for affording of any opportunity of being heard as the said aspect is to be only dealt at the stage show cause notice has been issued under Section 74 of the Act. It is to protect the revenue that the provisions of Section 86-A have been provided. However, since the entire provisions of the Act are for the purpose of bringing a harmonious conduit between the businessmen and taxing authorities, it is all the more necessary that if any proceedings are to be initiated or are taken up against any of the businessmen, the same should be decided expeditiously. Here it is found that the order was passed of blocking the input tax credit on 20.02.2023 and after one year, again the blocking order has been issued, but at the same time, so far as the proceedings under Section 74 of the Act are concerned, they are yet to culminate the final order. The respondents are directed to pass the final order expeditiously, preferably within one month from today, and so far as the petitioner is concerned, it should be allowed to operate its account as by now, more than one and a half year have elapsed since the account of the petitioner was blocked - petition disposed off.

  ---

• 2024 (12) TMI 1074
  Legitimacy of the applicant s involvement in the alleged crime - Applicability of Sections 420, 467, 468, 471, and 120-B IPC - fictitious firms - nucleus of the entire issue is that there is a Press Reporter, who says that his PAN Card was misused and on the basis of his PAN Card two Firms were registered - offences under Sections 420, 467, 468, 471, 120-B IPC - HELD THAT:- Section 27 of the Indian Evidence Act, 1872 deals with the relevancy of information received from a person accused of any offence while in the custody of the police officer. The Section provides an exception to the general rule that confessions made to the police officers are inadmissible in evidence. From the aforesaid, the scope of Section 27 of the Act, 1872 is that it applies to any information given by the person accused of an offence, which leads to the discovery of a fact - The exception to rule of admissibility is that normally confessions made to a police officer or while in police custody are inadmissible under Sections 25 and 26 of the Indian Evidence Act, however, Section 27 allows for an exception where information received from the accused leads to discovery of a fact. The Section makes only that part of the statement relevant, which directly leads to the discovery of facts. It does not make the entire statement of the accused inadmissible. The condition for applicability of the aforesaid Section is that the person giving the information must be an accused in police custody. The information provided must lead directly to the discovery of the material fact and only that portion of information which directly leads to the discovery is admissible. For example, if an accused, while in custody, reveals the location of a weapon used in the crime and upon searching that location, the weapon is indeed found, the part of statement where accused described the location of weapon is admissible in courts as evidence. In the present case, after registration of the FIR when forgery had been done by using the Aadhaar Card and PAN Card of the informant, fake GST firms were registered, Investigating Officer proceeded on the information as provided by a secret informer and arrested two accused who disclosed about the office where work of the firm was being done. On the aforesaid information of the arrested accused persons, the Investigating Officer reached the office premises, wherein he found other persons working for the firm of the arrested accused persons. Laptops, mobiles, SIM Cards, fake invoices were recovered, thus, discovering such fact which connected them with the main accused who had got registered the fake firms and the consequential forgery or theft of GST was found. Thus, that part of the discovery of fact is admissible as per Section 27 of the Act. The principal of bail is the rule, jail is the exception is a fundamental concept in criminal law, where the criminal justice system recognizes the importance of personal liberty and the presumption of innocence until proven guilty. This principal emphasizes that an accused should ordinarily be granted bail unless there are compelling reasons to detain him in custody - The present case relates to economic offences, such as large scale fraud, money laundering and corruption, are often viewed seriously because they affect the economic fabric of the society. The Courts may deny bail in such cases especially if the accused holds a position of influence or power. In the present case, money trail of crores, which affects the society at large scale, is involved which started from registration of fake firms by using Aadhaar and PAN Cards of the informant who had not applied for such registration. Hon ble Apex Court in the case of Directorate of Enforcement v. M. Gopal Reddy [ 2023 (2) TMI 1045 - SUPREME COURT ] has held that in the economic offences which are having great impact on the society, the court must be slow in exercising discretion under Section 438 of Cr.P.C. In the case of Tahir Hussain v. The Assistant Director Enforcement Directorate [ 2022 (11) TMI 1231 - DELHI HIGH COURT ], the Court has observed that the accused Tahir Hussain was involved in the acts of cheating/ falsification/ forgery of documents which resulted in fraudulent removal of money from the accounts of the three companies (M/s SEAPL, ECPL and EGSPL) - Tahir Hussain was ultimate beneficiary of the laundered money which he used for fulfilment of ulterior motives. Fake and bogus invoices were created to cover the money trail. The Apex Court in the case of Prahlad Singh Bhati v. NCT, Delhi and another [ 2001 (3) TMI 1053 - SUPREME COURT ], has held that while granting bail, the court has to keep in mind nature of accusations, nature of evidence in support thereof, severity of punishment which conviction will entail, the character, behaviour, means and standing of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, larger interest of the public or State and similar other considerations. Law on consideration of the Court to grant or refusal of bail has been settled by the Apex Court in a catena of decisions. In the case of Kalyan Chandra Sarkar v. Rajesh Ranjan [ 2004 (3) TMI 763 - SUPREME COURT ], the Supreme Court has held that the court granting bail should exercise its discretion in a judicious manner and not as a matter of course. The Apex Court has, in the case of P. Chidambaram v. Directorate of Enforcement [ 2019 (12) TMI 186 - SUPREME COURT ], held that precedent of another case alone will not be the basis for either grant or refusal of bail though it may have bearing on principle and the consideration will have to be on caseto- case basis on facts involved therein and securing the presence of the accused to stand trial. Having gone through the submissions of learned counsel for the parties, nature of accusation of offence, role of the applicants, it is opined that this is not a fit case for granting bail - The bail applications preferred by the applicant, is rejected.

  ---

• 2024 (12) TMI 1073
  Extension of time limit to avail input tax credit under CGST Act retrospectively - implementation of the provisions of sub-Sections (5) and (6) of Section 16 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As per the special procedure laid down under Section 148 of the Act as notified vide notification No. 22/24 dated 08.10.2024, the taxpayers would be allowed to move application for rectification within six months from the date of issuance of notification i.e. 15.10.2024, thus, upto 15.04.2025 rectification application can be moved. The petitioner is allowed to move an application accordingly - petition disposed off.

  ---

• 2024 (12) TMI 1072
  Seeking relaxation of condition No. 1 imposed by the trial court whereby direction for release on bail was given - fraudulent availment of Input Tax Credit (ITC) - offences punishable under Sections 122 and 132 of the Central Good and Services Tax Act, 2017 - HELD THAT:- The plain reading of Section 437 of Cr.P.C. makes it evident that the condition which are required to be imposed are to make sure that the presence of accused be secured so that he should face the trial and also prevent him from committing any offences and also prevent him from threatening and tampering him with the witnesses. Though these provision does not specifically prohibit directing the accused to deposit cash security, Section 445 of Cr.P.C. gives an indication to this effect. It provides that where any persons is required by any Court or officer to execute a bond with or without sureties, such Court or officer may (except in case of a bond for good behaviour) permit him to deposit a sum of money or Government promissory notes to such amount as the Court or officer may fix in lieu of executing such bond. There may be cases where the accused is not in a position to furnish sureties and offer to deposit a certain sum of money which convince the Court that he may not abscond or else, the amount in deposit would be forfeit to the State. Thus, the general rule is that the accused be released on bail on his executing personal bond as well as furnishing sureties. Only when he is unable to furnish surety and offers cash security the Court may accept the same and impose condition to that effect. In RAMESH KUMAR VERSUS THE STATE OF NCT OF DELHI [ 2023 (7) TMI 1516 - SUPREME COURT] , the Hon ble supreme Court has held that the direction to deposit certain sums for granting bail should not be resorted to. It also clarified that when in cases of misappropriation, the accused makes an offer to deposit the whole or part of public money allegedly misappropriated by him, it would be open to the Court to impose such a condition - In the present case, despite the fact that the amount involved is nearly 8 crores, still the trial Court is not justified in directing the petitioner to deposit Rs. 1 crore. Therefore, this condition is required to be relaxed. However, having regard to the gravity of the offence committed by the petitioner, in order to ensure that he shall not leave the jurisdiction of the Court, it would be necessary to direct him to submit his passport before the trial Court and not to leave India without the permission of the trial Court. This Court is of the considered opinion that the condition to deposit Rs. 1 crore is liable to be relaxed. Instead of the said condition, the petitioner is directed to produce his passport before the trial Court and he shall not leave India without permission of the trial Court - The condition imposed by the trial Court directing the petitioner to deposit a sum of Rs. 1 crore is set aside - Petition filed under Section 482 of Cr.P.C. is allowed.

  ---

• 2024 (12) TMI 1071
  Challenge to impugned order passed by the second respondent relating to the assessment year 2018-2019 - excess claim of input tax credit under reverse charge mechanism - impugned order is challenged on the premise that neither the show cause notice nor the impugned order of assessment has been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal - violation of principles of natural justice - HELD THAT:- The impugned order dated 16.03.2024 is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the second respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. Petition disposed off.

  ---

• 2024 (12) TMI 1070
  Liability of petitioner to pay GST - petitioner is effecting a composite supply of goods and services to the schools - supply for the purposes of Section 7 of the CGST/SGST Acts - HELD THAT:- The petitioner is entitled to relief. A reading of Ext.P1 order does not lend to conclude that there is a coherent and principled approach to the contentions taken by the petitioner before the adjudicating authority. The learned Senior Counsel for the petitioner is right in contending that there are contradictory findings in Ext.P1. While the adjudicating authority accepts that the petitioner is the owner of the goods in paragraph 44, he proceeds to hold in paragraph 55 that the ownership of the goods vests in the General Education Department. These findings are clearly contradictory. There are no attempt to set out in detail the other contradictions in Ext.P1 as this is not necessary for the purposes of this case. The adjudicating authority has not properly considered the effect of Ext.P10 notification. It is the specific case of the petitioner that the petitioner was a special purpose vehicle for the purposes of implementing a specific project of the Government of Kerala and it had procured the goods on the basis of the terms of the tripartite agreement entered into between the petitioner, the KIIFB and the General Education Department. The adjudicating authority has taken the view that since the goods were purchased by utilising the funds of KIIFB, the same cannot be treated as a grant for the purposes of Ext.P10 notification. This is a rather myopic view of the notification, in the facts and circumstances of this case. There are no hesitation to quash Ext.P1 and direct that the adjudication of Ext.P22 show cause notice be restored to the file of the 3rd respondent who shall pass fresh orders after affording an opportunity of hearing to the petitioner and specifically considering the question as to whether in the absence of consideration, there could be any supply of goods or services as defined in Section 7 of the CGST Act and also specifically considering the question as to why the amounts obtained through the KIIFB for the implementation of the project which was entrusted to the petitioner should not be treated as grant from the Government (considering the fact that the KIIFB is a statutory body completely within the control of the Government of Kerala) for the purposes of Ext.P.10 Notification read with the terms of Notification No.2/2017- Central Tax (Rate) New Delhi, dated 28.6.2017. Ext.P1 is quashed and the adjudication of Ext.P22 is restored to the file of the 3rd respondent who shall pass fresh orders as directed above and taking into consideration the above points and any other points that may be raised by the petitioner before the 3rd respondent - petition disposed off.

  ---

• 2024 (12) TMI 1069
  Challenge to impugned order passed by the respondent relating to the assessment year 2021-2022 - neither the show cause notices nor the impugned order of assessment has been served by tendering to the petitioner or by registered post, instead it was uploaded in the common portal - violation of principles of natural justice - HELD THAT:- The impugned order dated 01.03.2024 is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. Petition disposed off.

  ---

• Income Tax

• 2024 (12) TMI 1086
  Seeking directions to the respondents to release the jewellery seized from its bank locker as per panchnama prepared by respondents - HELD THAT:- The respondents have acted in an arbitrary, illegal and unjustified manner in seizing the stock in trade of the petitioner company. Any jewellery recovered from the locker belonging to the company, would have to be presumed to be that of the company and it cannot be allowed to contend that the jewellery belongs to any individual director. If such an attempt is allowed to be accepted, dispute would arise regarding the stock of the company itself. The company s assets cannot be claimed by any individual director. However, the action of the respondent-department would result in the company s assets being claimed by the individual director also, which cannot be allowed. We find that the action was being initiated against the Oasis Group and the petitioner company. The respondents, therefore, were wholly unauthorized to withhold the stock in trade after the same was already demanded. Additionally, keeping in view the provisions of Section 132B (1) (i) and the proviso thereto, the respondents were obliged to pass orders for releasing the jewellery. In this case, no orders were passed, therefore, the petitioner company was entitled to release of the assets of the company which had been seized. We agree with the counsel for the respondents of the stock in trade of different value as on 17.05.2023 in comparison to the stock in trade as on 31.03.2023. However, the same would have no relevance keeping in view the statement of the concerned director, who admits that the stock in trade may be more apart from the gold seized from the premises as well as the gold and jewellery lying in the locker. Such excuse could not be a ground to withhold the stock in trade, which has been seized from the locker as there was no such power available with the respondents in terms of the proviso to Section 132 - WP allowed.

  ---

• 2024 (12) TMI 1085
  Deduction u/s. 57 - Disallowance of interest expenses claimed u/s 57 - nexus between loans taken and loans advanced for earning interest income - HELD THAT:- Nexus of the loan amounts from SBH and PNB, which was initially advanced to Nandan Corporation and subsequently transferred from Nandan Corporation to Tripoli Management, is established to the extent of Rs. 5 crore advanced on 20/06/2016.Since the assessee had offered the interest derived from Tripoli Management to tax, it is entitled to claim deduction in respect of interest payment on loan amount of Rs. 5 crores for the period from 20/06/2016 to 31/03/2017. The assessee has submitted the working of interest on this loan of Rs. 5 crores for the period from 20/06/2016 to 31/03/2017 which works out to Rs. 36,58,096/-. We deem it proper to set aside the matter to the file of Jurisdictional AO with a direction to verify the working of interest on loan ofRs. 5 crores for the period from 20/06/2016 to 31/03/2017 and thereafter allow the deduction to the assessee. In case of any variation in the amount of interest, than the amount as worked out by the assessee, the AO should allow an opportunity of being heard to the assessee. The finding of the CIT(A) in respect of LIC policy loan has not been controverted by the assessee. This loan was advanced to Nandan Corporation and we have already considered the transfer of a sum of Rs. 5 crore from Nandan Corporation to Tripoli Management and given our finding and direction in this regard earlier. The claim for separate deduction in respect of interest on LIC policy loan cannot be entertained. The disallowance of interest claim on LIC policy loan, as confirmed by Ld. CIT(A), is upheld. Appeal of the assessee is partly allowed for statistical purpose.

  ---

• 2024 (12) TMI 1084
  Rectification u/s 154 - computation of tax liability u/s 115BAA - Rectification order passed by the CPC without giving any opportunity to the assessee and without assigning any reason for rejection of the option exercised by the assessee to compute its tax liability as per provisions of section 115BAA is invalid in law HELD THAT:- We find the assessee in the instant case has exercised the option u/s 115BAA of the Act to tax its income at lower rate. The CPC for the assessment year 2020-21 has accepted the option exercised by the assessee and the assessee was taxed at lower rate as per provisions of section 115BAA. For the current year in the original intimation, the CPC has accepted the computation made by the assessee, according to which, net tax payable was computed at Rs. 26,83,53,229/-. However, since the CPC had given short credit, the assessee filed an application u/s 154 of the Act. We find the CPC without assigning any reasons and without giving opportunity to the assessee enhanced the tax liability by determining the tax at normal rate as against u/s 115BAA. Since the assessee has not withdrawn its option and not violated any of the provisions, therefore, the CPC in our opinion, was not justified in raising the demand by taxing the assessee at normal rate as against the provisions of section 115BAA. Since all the details were available before the CIT(A) / NFAC, therefore, CIT(A) / NFAC, in our opinion, should not have restored the matter to the file of the AO without deciding the issue himself especially when the AO did not respond to four reminders issued by him for submission of the remand report. We, therefore, hold that the rectification order passed by the CPC u/s 154 of the Act was invalid in law to the extent of taxing the assessee at normal rate as against the provisions of section 115BAA of the Act. Thus, the grounds of appeal No.1 to 4 raised by the assessee are allowed. Short grant of TDS - order of the Ld. CIT(A) / NFAC in restoring the matter to the file of the Assessing Officer for verification of the TDS claim - HELD THAT:- Since it requires verification at the level of the Assessing Officer, therefore, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC in directing the AO to verify the claim and give necessary credit of TDS. We accordingly uphold the order of the Ld. CIT(A)/NFAC on this issue. The ground raised by the assessee is accordingly dismissed.

  ---

• 2024 (12) TMI 1083
  Reopening of assessment u/s 147 - reason to believe - Notice beyond four years - wilful act of assessee in order to reduce its taxable income for payment to non-resident without deduction of tax at source - HELD THAT:- If notice u/s. 148 is to be issued after expiry of four years, the assessee should have failed to disclose material facts and the ld. AO should have alleged and based his reasons to believe on that fact of non-disclosure by the assessee. If the AO does not state or allege that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the said assessment year, any other authority cannot infer or improve up on such reasons so recorded, therefore absence of such necessary jurisdictional facts mentioned in reasons, such reopening of the assessment cannot be upheld. Merely because the AO has mentioned that non-disallowance of payment to non-resident without deduction of tax at source is a wilful act of assessee in order to reduce its taxable income is also an allegation that assessee has failed to disclose fully and truly all material facts, we do not find any reason to compare these findings of the AO for allegation of failure on the part of assessee for disclosure. Therefore, on this solitary ground, we quash the reassessment order passed by the ld. AO. When the dispute is settled for a particular assessment year involving same point in VSV 2020, the learned assessing officer could not have reopened the assessment on the same issue - in this case originally additions were made for non-deduction of tax at source with respect to the payment made to the resident Indian, whereas the issue involved in the reopening of the assessment is with respect to payment made to the non-resident. According to provisions of section 5 of VSV 2020 Act on matters stated in the application for settlement of disputes are covered therein. In this case, the matter settled in the VSV Act and the matter for which reopening is made are two different issues and therefore there is no infirmity in the action of the learned assessing officer in not considering that the matter settled in VSV 2020 is the same as involved in the reopening. The judicial precedents cited before us are in fact related to section 263 of the income tax act, but those decisions have quashed the revisionary proceedings only for the reasons not the matter settled in that scheme and the matter for which the revisionary proceedings are initiated are same. Therefore, we dismiss this argument of the learned authorised representative. Decided in favour of assessee.

  ---

• 2024 (12) TMI 1068
  Proceedings u/s 153C - issuance of the notice was preceded by the drawl of a Satisfaction Note by the jurisdictional AO - Distinction between Section 153A and Section 153C - Period of limitation - Nature of the incriminating material that may be obtained and the years forming part of the block which would merit being thrown open As decided by HC [ 2024 (4) TMI 461 - DELHI HIGH COURT] abatement of the six AYs or the relevant assessment year would follow the formation of that opinion and satisfaction in that respect being reached. We come to the firm conclusion that the incriminating material which is spoken of would have to be identified with respect to the AY to which it relates or may be likely to impact before the initiation of proceedings under Section 153C of the Act. A material, document or asset recovered in the course of a search or on the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs immediately preceding the AY corresponding to the year of search or the relevant assessment year would not justify a sweeping or indiscriminate invocation of Section 153C. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments. HELD THAT:- As there is a delay of 124 and 127 days in filing the Special Leave Petitions respectively, which has not been satisfactorily explained. Even otherwise, we have gone through the Special Leave Petition and do not find any merit in the same. Special Leave Petitions are, therefore, dismissed on the ground of delay as well as on merits.

  ---

• 2024 (12) TMI 1067
  Income deemed to accrue or arise in India - income earned from customers outside India is liable to tax in India under DTAA with USA - Fixed Place PE or not? - a non-resident company registered in USA and has been engaged in the business of rendering Money Transfer Services [MTS] - Whether the activities of the Liaison Office (LO) in India were preparatory or auxiliary in nature.? - HELD THAT:- Since the activities undertaken were far removed from the core business of the Western Union Financial Services enterprise, it is the tests of preparatory and auxiliary as embodied in Article 5 (3) (e) which stand met and satisfied. Thus we hold since it is by now well settled that activities such as market research, promotional activities, training or deployment of software would clearly not breach the threshold of auxiliary functions as are envisaged under the DTAA. For the purposes of being held to be a dependant agent, it was incumbent for the appellants to establish that such an entity habitually exercised an authority to conclude contracts. It could have also been proved by the appellants that the LO habitually secured orders for Western Union Financial Services. However, none of these conditions are met in the facts of the present case. In the absence of these conditions being found to exist, it would be wholly incorrect in law for the LO to be classified as a DAPE. Software only constituted a medium of communication and which enabled the Indian agents to talk and communicate with the servers of Western Union housed in USA. The Voyager software merely enabled the Indian agents to verify details and correlate data relevant to the remittance. There was no installation of hardware in the premises of those agents or for that matter a placement of their premises or a part thereof at the disposal of Western Union. We are thus unconvinced that the deployment of the software is entitled to be viewed as having resulted in the creation of a PE. This issue in any case stands answered against the appellants by our Court in E-Funds. On an overall conspectus of the various decisions handed down by this Court as well as the Supreme Court insofar as Fixed Place PE and DAPE are concerned as well as the language of Article 5, we have no hesitation in holding that the LO failed to meet the threshold requirements so as to constitute a PE. In summation, we come to the firm conclusion that the LO did not meet the criteria established in sub-paras 1 and 2 of Article 5, so as to constitute a fixed place of business or meet the tests of virtual projection, a takeover of the premises as well as the precepts of control and disposal in order to be a Fixed Place PE. The activities undertaken by the LO even otherwise were clearly auxiliary in character and would thus clearly fall within Article 5 (3) (e) of the DTAA. The LO also did not meet the requirements of a DAPE as per of clauses (a), (b) and (c) of para 4 of Article 5. Furthermore, the software utilised for the purpose of connecting the Indian agents to the mainframe, being intangible property, would invariably be excluded from the threshold of PE. The argument of the premises of the Indian agents constituting a PE is clearly misconceived since these were independent third parties having their own business portfolio. Their premises, in any case, would not satisfy the test of virtual projection. Accordingly and for all the aforesaid reasons, we find ourselves unable to sustain the arguments of the appellants and who had commended us to upset the conclusions rendered by the Tribunal. In our considered opinion, the Tribunal rightly came to the conclusion that the LO of the respondent-assessee did not constitute a PE in India, there was no DAPE and that the software did not result in the creation of a permanent establishment. Decided in favour of assessee.

  ---

• 2024 (12) TMI 1066
  Validity of re-assessment u/s 148A - short time of two days was given to the petitioner to submit its reply after receipt of the Investigation Report, petitioner - HELD THAT:- Having considered the rival submissions of learned counsels and on perusal of the record, we are of the opinion that order passed by 3rd Respondent initiating re-assessment proceeding against the petitioner is not only in utter violation of the principles of natural justice, but the same has been passed in undue haste which smacks of arbitrariness, as statutory provision of Section 148A has not been followed by 3rd Respondent. It is well settled principles of law that anything done in undue haste can also be termed as arbitrary and cannot be condoned in law. From the facts of the case, it is clearly evident that, initially, show cause notice was issued on 24.02.2024, wherein there was mention about enclosure of an Investigation Report, but said Investigation Report was not supplied to the petitioner and, as per the petitioner, said Investigation Report was supplied on 17.03.2024. Respondents, in their Counter Affidavit, admit that, probably, on account of technical error, enclosures were not contained as attachment to the notice dated 24.02.2024, but it has been stated that subsequently Investigation Report was duly sent to the petitioner through ITBA system vide letter dated 12.03.2024 and through Departmental e-mail dated 13th March, 2024 at 1.06 P.M. In the present case since new facts were introduced in the notice on 20th March, 2024, at least seven days time should have been granted to Petitioner for replying to the same, but in a hurried manner, entire proceedings were conducted and impugned order dated 29.03.2024 was passed by 3rd respondent in utter violation of the principles of natural justice and contrary to statutory provisions contained u/s 148A of the Act. Impugned order and Notice initiating re-assessment proceeding u/s 148 both issued by the 3rd Respondent, are hereby, quashed and set aside.

  ---

• 2024 (12) TMI 1065
  Rectification of mistake in impugned order u/s 147 r/w 144B - Department has solely relied on the information gathered from the DCIT (OSD)(Inv.) CBDT, New Delhi, however, particulars have not been furnished to the petitioner regarding the five transactions which is disputed by the petitioner - HELD THAT:- It is admitted that the petitioner sought information from the Department, however, the same was not furnished, yet the impugned order was passed on 23.03.2022. It is submitted that the petitioner also made some attempts to get the details of the documents under the Right to Information Act, 2005, from the Sub-Registrar Office, Neelankarai, however, no information has come from the SRO as well. This Court is not convinced that the petitioner has made out a case for interference with the impugned Assessment Order dated 23.03.2022. Petitioner has also filed an appeal before the Appellate Commissioner and has also secured an interim stay u/s 220(6) up to September, 2022. Considering the fact that the petitioner has furnished the bank statements before the Local Authority, vide Annexure VI to the application dated 22.06.2022, this Court is inclined to dispose of these writ petitions with the following directions: (i) The appeal, that has been filed before the Appellate Authority under Section 246A of the Income Tax Act, 1961, is directed to be disposed of, as expeditiously as possible, preferably within a period of six months from the date of receipt of a copy of this order. (ii) The stay, that was earlier granted on 28.06.2022, shall continue to operate till disposal of the appeal pending before the Appellate Commissioner against the impugned order dated 23.03.2022. (iii) Since the petitioner has also filed the bank statement with the Local Authority, the Commissioner (Appeals) or the Appellate Authority under the new regime, may call for the remand report from the Assessing Officer and proceed to pass final orders.

  ---

• 2024 (12) TMI 1064
  Disallowance of expenses u/s 14A r.w.r. 8D - AO applied Rule 8D of the Rules and quantified the disallowance - HELD THAT:- Though not the dominant purpose of acquiring the shares is a relevant for the purpose of invoking the provisions u/s 14 A of the Act, the shares held as stock in trade stand on a different pedestal in relation to the shares that were acquired with an intention to acquire and retain the controlling interest in the investee company. Further, it is brought to our notice that in assessee s own case in [ 2018 (12) TMI 50 - ITAT DELHI] for the assessment year 2012-13, a coordinate bench of this Tribunal considered the arguments on either side and reached the conclusion that, insofar as the assessee bank is concerned section 14A of the Act has no application in view of the above law laid down by the Hon ble Apex Court in the case of Maxopp investments Ltd, [ 2018 (3) TMI 805 - SUPREME COURT] We, therefore, while respectfully following the above decision, hold that no addition in case of the assessee under section 14-A is sustainable. Also see South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] Amortization of premium on securities held maturity (HTM) - HELD THAT:- The securities under HTM category are those that are held till its redemption /maturity. Clearly, if any premium is paid for acquiring the said securities over and above the face value or the redemption value of those securities, it would be apposite to amortize the same during the holding period. The market value of the fixed interest-bearing securities fluctuates on the basis of the market rate of interest. The differential amount between the coupon rate and the market rate is reflected by the premium or discount on which such securities are available. Illustratively, the securities being a coupon rate which is lower than the market rate of interest would be available on discount while securities with a higher coupon rate would be available at a premium. We find no infirmity with the Assessee amortizing the premium paid on such securities over the holding period. Loss claimed by the Assessee bank from shifting of securities from AFS (Available for Sale) / HFT (Held for Trading) to HTM (Held Till Maturity) portfolio - AO disallowed the loss holding that transfer of securities from one portfolio to another is not a financial transaction and the loss was notional - HELD THAT:- Concededly, the said question is covered by the earlier decision of this court in M/s Oriental Bank of Commerce [ 2016 (5) TMI 1514 - DELHI HIGH COURT] disagreed with revenue contention that where the Assessee invested in securities for the purpose of complying with RBI instructions, such investments could not be termed as investment in the form of security ready for sale. Section 43B deduction qua contributions made by the Assessee to PNB Employees Pension Fund - AO rejected the said claim as the same was made on the basis of actuarial valuation while the government notification permitted only annual contribution - HELD THAT:- There is no dispute that the contributions made by the Assessee were in respect of the Employees Pension Fund (EPF) and wholly and exclusively related to its business. Additionally, the quantum of contributions, does not in any manner, detract from the nature of the said payments. No substantial question of law arises in this regard as well. Goodwill arising from amalgamation of the erstwhile Nedungadi bank with the Assessee bank and is stated to be a recurring issue from AY 2003-04 onwards - CIT(A) deleted the addition holding that the very same treatment was required to be given in the present year also - HELD THAT:- We find that the same question was projected by the Revenue before this court in [ 2024 (3) TMI 1386 - DELHI HIGH COURT] was dismissed and the question as projected was not entertained in [ 2024 (3) TMI 1386 - DELHI HIGH COURT] . The learned counsel for the Assessee points out that the said issue is also covered by the judgment of this court in PCIT v. Eltrek SGS (P) Ltd. [ 2023 (8) TMI 681 - DELHI HIGH COURT] and Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] No substantial question of law arises in the appeal

  ---

• 2024 (12) TMI 1063
  Exemption u/s 11/12 denied - audit report was not filed alongwith Form No. 10B with the return of income - HELD THAT:- The undisputed fact is that the audit report alongwith Form 10B was signed prior to filing of return of income. It is true that while denying exemption u/s 11/12 of the Act, no intimation was given to the assessee. As mentioned elsewhere, this issue is squarely covered by the Circular F. No. 173/193/2019 dated 23.04.2019. However, for the sake of verification, we direct the AO to verify the details and decide the issue accordingly after affording reasonable and adequate opportunity of being heard to the assessee.

  ---

• 2024 (12) TMI 1062
  Penalty u/s 271D - violation of provisions of Section 269SS - assessee had made transactions for sale of immovable property and had accepted cash - HELD THAT:- Deed mentions that the assessee has received all the sale proceeds. Though the exact dates when sale consideration was paid to the owners/assessee, is not explicitly written in the sale document, it is highly improbable that sales consideration for a property, whose possession was given to the vendee in 2007, would remain pending till 2016. We are therefore, of the considered view that the said sale deed was symbolic and for transfer of ownership rights in the property to the vendee. The deed was drawn only for the purpose of Registration of the property and the amount of Rs 33,80,000/- is only the market value of the assessee share in the said property for the purpose of payment of stamp duty. We do not find any evidence of receipt of cash by the assessee for invocation of penalty under the provisions of section 271D. Assessee appeal allowed.

  ---

• 2024 (12) TMI 1061
  Taxability of income in India - Business receipts taxable as fees for technical services under Income Tax Act, 1961 as well as India UK Double Taxation Avoidance Agreement ( DTAA ) - taxability of income in hands of the assessee for providing license for right to use of the cloud based platform i.e. the E-Invoice Portal - Assessee a non-resident having income in India is liable for tax if the source is in India. HELD THAT:- Section 5(2) read with section 9 of the Act deals with source rules for non-resident under the provisions of Income-tax Act. In the event and income i.e. sourced in India is not characterized under the heads provided in the DTAA, the income would be taxable under the residual clause provided taxing right is allocated to source country in this case to India under the relevant DTAA. The source Rule was further explained by the Apex Court in GVK Industries case [ 2011 (3) TMI 1 - SUPREME COURT] where in the Apex Court has held that the income of receipt to be charged or chargeable in the country where the source of payment is located, to clarify, where the payer is located. Under the primary source rule under section 5(2), the income received by the assessee company accrues or arises in India. As a result, further reference to deeming provisions under section 9 of the Act is undesirable for ascertaining of chargeability of income of the assessee under the provisions of Income-tax Act. Alternatively, only when the primary sourcing rule under section 5(2) of Act fails to establish the chargeability, a reference to deeming rules under section 9 of the Act is necessary. In view of above material facts i.e. the process of providing technical services by the assessee and receiving payments having source in India as per above principles deserves to be held liable to tax.

  ---

• 2024 (12) TMI 1060
  Penalty order u/s 271(1)(c) - addition on undisclosed rental income - HELD THAT:- As quantum addition on undisclosed rental income has not been contested by the appellant and rather admitted, the consequent penalty cannot be challenged. We do not find any force in the argument of the Ld. Counsel that the quantum order was not challenged because of smallness of tax involved. Quantum of tax is not material it is the conduct of the assessee which is at the top consideration. The impugned concealed or undisclosed rental income was detected on account of search proceedings and the same has been accepted by the assessee qua the assessment order. The penalty order which follows the quantum addition therefore is a natural corollary. Penalty u/s 271(1)(c) for under statement of income - period of limitation - Penalty order has been hit by limitation prescribed in section 275(1)(a) and cannot survive. Accordingly, the penalty order u/s 271(1)(c) dated 25.10.2021 for AY-2013-14 and AY 2014-15 qua addition in respect of under statement of income is quashed. The order of lower authorities on the issue set aside and the Ld. AO is directed to recompute the quantum of penalty payable by the assessee after removing the penalty component qua addition of in respect of under statement of income.

  ---

• 2024 (12) TMI 1059
  Addition u/s 56(2) (viib) - method adopted for determination of FMV of the equity share by the assessee is not as per the method prescribed under Rule 11UA of the IT Rules - rejection of the valuation report by AO based on comparison with one-year actual figure - CIT(A) deleted addition - HELD THAT:- Valuation was done by the assessee as per DCF method, which was backed by a report of the Chartered Accountant. If the AO was not satisfied with the correctness of the valuation report of the Chartered Accountant, he should have referred the matter to another Registered Valuer/Merchant Banker to work out the valuation on the basis of DCF method. The AO on his own was not correct in rejecting the valuation of the assessee as per DCF method, nor he was correct in adopting NAV method to determine the FMV of shares. AO can certainly scrutinize the valuation report submitted by the assessee but for determination of a fresh valuation he has to obtain a report from an independent Registered Valuer / Merchant Banker. Further, the basis had to be DCF method and he cannot change the method of valuation which was opted by the assessee. CIT(A) had, therefore, rightly held that the AO cannot adopt his own valuation unless there was an enabling provision in the Act giving powers to the AO to tinker the valuation report obtained from an independent valuer as per the prescribed method under Rule 11UA(2)(b) of the IT Rules. Hon ble Delhi High Court in the case of PCIT-2 Vs. Cinestaan Entertainment Private Limited [ 2021 (3) TMI 239 - DELHI HIGH COURT] has categorically held that if law provides the assessee to get the valuation done from a prescribed expert as per prescribed method, then the same cannot be rejected because neither AO nor the assessee have been recognized as expert under the law . Therefore, the suo moto rejection of the valuation report of the assessee by the AO was not correct and can t be upheld. Other contention of the assessee is that the provision of Section 56(2)(viib) of the Act was not applicable in the case of issue of shares to the holding company - In the case of BLP Vayu (Project-1) Pvt. Ltd. [ 2023 (6) TMI 209 - ITAT DELHI] has held that the provision of Section 56(2)(viib) of the Act is wholly inapplicable for transactions between the holding and its subsidiary company where no income can be said to accrue to ultimate beneficiary i.e. holding company. We are of the considered opinion that the AO was not correct in rejecting the DCF method of valuation adopted by the assessee to determine the FMV of its shares on its own without obtaining report from any other Registered Valuer/Merchant Banker. Therefore, the order of the Ld. CIT(A) deleting the addition in respect of addition u/s. 56(2)(viib) of the Act is upheld. Appeal of the Revenue is dismissed.

  ---

• 2024 (12) TMI 1058
  Taxability of payment made to company in USA[Tec] in India - Validity of order passed by CIT(A) holding that the assessee has a PE in India - Whether construction / installation permanent establishment can be said to exist looking into the facts of the instant case? - HELD THAT:- In terms of Article 5(2)(k) of the India-USA Treaty construction / installation permanent establishment would come into existence in case installation / assembly or supervisory activities in connection therewith would continue in India for a period of more than 120 days in any 12 month period. The issue for consideration is whether the period of stay of the employees exceeded this threshold provided under Article 5(2)(k) of the India-USA Tax Treaty. TEC does not have a permanent establishment in India in terms of Article 5(2)(k) of the India-USA Tax Treaty. Further, in our considered view, the details of payment by the assessee to TEC would not have any bearing on the presumed date of commencement and conclusion of the installation activities, since the payment dates may have no relevance or bearing on the date of commencement and completion of the project. Accordingly, since we have held that TEC does not have an installation PE in India in terms of Article 5(2)(k) of the India-USA Tax Treaty, the assessee did not have an obligation to withhold taxes at source of payments made to TEC. Accordingly, we hold that the assessee was not under an obligation deducted taxes at source with respect of contractual payments made to TEC, USA. Assessee appeal allowed.

  ---

• 2024 (12) TMI 1057
  Exemption u/s. 11 - assessee organisation is doing all the infrastructure development/creation work on behalf of the government - HELD THAT:- As per the proviso to section 12(2) of the Act, it has been specifically written that the benefit of exemption can be granted for the preceding year, if on the date of grant of registration u/s. 12A to an institution, the assessment for a preceding year was pending before the AO and the objects and activities of such trust or organisation remained the same for such preceding year. The assessment year under consideration is AY 2012-13. The assessee organisation for the first time applied for registration u/s. 12A of the Act in the year 2019, the assessment for the AY 2012-13, by then, stood completed and was not pending before the AO. Secondly, the said provision stood omitted as on 01.04.2023. As on today, when we are adjudicating upon this appeal and claim of the assessee for grant of benefit of proviso to section 12(2) of the Act, the said proviso is no more on the statute. It is settled law that the effect of omission of a provision from the said statute is that it never existed on the statute. Nevertheless, the said proviso is not in existence in the statute as on today. Hence, in our view, the assessee organisation cannot be granted benefit of the said provision by us while adjudicating upon appeal of the assessee in the year 2024, when such proviso already stood omitted w.e.f. 01.04.2023. Action of the AO in treading the expenditure incurred by the assessee organisation as capital in nature is concerned, we do not find any infirmity in the order of the Assessing Officer to the extent that expenditure incurred on creation of infrastructure would be capital in nature. However, expenditure incurred on maintenance of the infrastructure would be revenue in nature. Office Administration expenditure would also be revenue in nature. The assessee will be entitled to claim depreciation as per law on the infrastructure, which, has been, admittedly booked as asset by the assessee in the balance sheet. So far as the flaws in accounting method applied by the assessee are concerned, it is to be noted that the assessee organisation is regularly booking notional interest expenditure payable to the government on the first/initial grant received by it by treating the same as a loan in its account. As per assessee, it was not a loan but a grant only. He has submitted that due to some advise given at that time, the assessee has treated it as a loan in its account and has also booked the notional interest expenditure upon it. The same, however, has never been paid to the government. If this contention of the assessee is to be accepted then, certainly, any interest expenditure booked by the assessee is not an allowable expenditure. However, the fact on the file is that the said amount was wrongly treated by the assessee as loan in its account whereas the claim of the assessee organisation is that the said amount was a grant received from the government prior to 1992 and that has been incurred by the assessee organisation on infrastructure projects, and that the said projects are booked as assets in the Balance sheet of the assessee. Under this scenario, the said grant is required to be treated as income of the assessee and the assessee, of course, would be entitled to claim depreciation on such assets as per law. However, in fairness to the assessee organisation, we give an opportunity to the assessee organisation to correct/rectify its account and show the clear picture of accounts to the Assessing Officer and the Assessing Officer to decide the issue accordingly after considering the submissions of the assessee in this respect. Appeal of the revenue is treated as partly allowed.

  ---

• 2024 (12) TMI 1056
  TP adjustment - interest on outstanding receivables from the Associated Enterprises (AEs) - HELD THAT:- We find that the decisions relied upon by the Learned AR squarely applies to the facts of the instant case before us. On perusal of financials of the assessee, it is seen that there is no interest expenditure expended by the assessee, which goes to prove that the assessee company is a debt free company. The reliance on the decision of Boeing India Pvt limited [ 2022 (10) TMI 498 - DELHI HIGH COURT] is well placed wherein it was held that where Assessing Officer had made adjustment in hands of assessee-company on account of interest on outstanding receivables, since assessee-company was a debt free company and no interest was paid to creditor/supplier nor any interest had been earned from unrelated party, question of receiving any interest on receivables did not arise. DRP had directed the Learned TPO to grant working capital adjustment on the provision of services segment, which was not given by TPO, which results in violation of provisions of section 144C(10) of the Act. In any event, once the same is granted, there is no need to separately impute interest on outstanding receivables as it would get subsumed in the working capital adjustment itself. This proposition has been accepted in Kusum Health Care Private Limited [ 2017 (4) TMI 1254 - DELHI HIGH COURT] Hence we hold that there is no need to impute any interest on outstanding receivables separately in the peculiar facts and circumstances of the case of the assessee company herein. Accordingly, the Ground Nos. 1 2 raised by the assessee are allowed. Rejection of claim made towards deduction of expenditure u/s 35DD based on the assessment order for Assessment Year 2017-18 - assesee sought to claim one-fifth as eligible for deduction under section 35DD of the Act vide letter dated 2-8-2021 as time limit for filing revised return for Assessment Year 2018-19 had already expired - HELD THAT:- We find that the last paragraph of the said Supreme Court decision in Goetze India Limited [ 2006 (3) TMI 75 - SUPREME COURT] clearly specifies that the restriction does not apply to appellate authorities especially the Tribunal. Hence, we direct AO to grant deduction under section 35DD of the Act for 1/5th portion of amalgamation expenditure while giving effect to this order. Accordingly, the Ground No. 3 raised by the assessee is hereby allowed. Levy of interest u/s 234B is consequential in nature. Levy of interest u/s 234C should be charged only on the returned income and not on the assessed income.

  ---

• 2024 (12) TMI 1055
  Addition of suppressed sales - estimation of income - direction of the CIT(A) to treat 20% of suppressed sales as undisclosed investment - whether only gross profit on suppressed sales can be treated as income - onus to prove that any expenses were incurred outside books of accounts against such suppressed sales - HELD THAT:- The assessee has before us filed a detailed list of parties to whom the sales were made during the year. The list includes names of parties for whom consignment sales are also made. We find that the parties to whom sales are made are also the same parties for whom consignment sales are made. There is, however, no details of any commission receipt from such parties for whom consignment sales are made. Assessee has explained the non-charging of commission from such parties stating that such parties are small and petty agriculturalist belonging from unorganized trade and the assessee as a matter of routine had received material from such consignors at its premises to make sales on their behalf. We find from the list of sales produced to parties to whom such kind of sales are being made without charging commission, can not be considered as small and petty agriculturalist. AO and the CIT(A) that proper evidence of consignment sales were not produced before the AO or the CIT(A). We therefore are of the opinion that the assessee explanation is too specious and are devoid of any cogent or documentary evidence. CIT(A) rightly rejected the explanation of the assessee and held the consignment sales as suppressed sales. We also endorse the findings of the CIT(A) that the entire sales, claimed as consignment sales, cannot be treated as income of the assessee and only gross profits on the suppressed sales of Rs 3,71,75,141/- can be treated as income of the assessee. We also uphold the direction of the CIT(A) to treat 20% of suppressed sales as undisclosed investment made in the purchase for such sales. Accordingly, the ground 1 and 2 of the revenue is dismissed.

  ---

• 2024 (12) TMI 1054
  Nature of expenses - software expenses related to the website portal - HELD THAT:- As decided in own case [ 2018 (2) TMI 730 - ITAT MUMBAI] CIT(a) allowed the appeal of the assessee by following the earlier allowed for A.K. 2007-08 which has attained finality. We have observed that order of Ld. CIT(A) is correct and does not suffer from any infirmity as it has been passed after considering the facts of the case in the light of the similar issue decided in A.Y. 2007-08 which attained finality. Also on merit the issue has been correctly decided as the expenses are of revenue nature and therefore we are inclined to uphold the same. Addition on valuation of inventory by accepting the LIFO method followed by the assessee - CIT(A) deleted addition - HELD THAT:- Issue stands covered by the decision of Hon ble High Court in assessee s own case [ 2012 (2) TMI 739 - BOMBAY HIGH COURT] that was rendered for A.Y. 1997-98 as considering the fact that LIFO method was consistently upheld by this Tribunal from A.Y. 1982-83, consistent view which has been taken by the Tribunal is to accept the LIFO method. This is an accepted method for valuation of stock. The method has been regularly followed by the Assessee. This is not a case where the AO was not satisfied with the completeness of the accounts of the Assessee or where the method of accounting has not been regularly followed or does not comply with the accounting standards. This is not a case where the AO was not satisfied with the completeness of the accounts of the assessee or where the method of accounting has not been regularly followed or does not comply with the accounting standards. Respectfully following the earlier years order, the AO is not justified in applying FIFO method for valuation of inventory. Ground is allowed. Disallowance u/s. 14A r.w.r. 8D of the rules - assessee made suo moto disallowance in respect of the exempt income earned during the year under consideration - HELD THAT:- Disallowance under Rule 8D (2) (ii) was made without having regards to the accounts of the assessee for the year under consideration. The disallowance therefore recomputed by the AO under Rule 8D (2)(ii) deserves to be deleted respectfully following the decision of Reliance Utilities Pvt. Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] Disallowance made under the third limb of Rule 8D (2), section 14A (2) makes it a mandate to apply the formula as per rule 8D for the year under consideration. AO disallowed 0.5% of investment. However we restrict the disallowance under the third limb of Rule 8D (2) to such investments that yielded exempt income for the year under consideration. See Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] and Corrrtech Energy Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] We also direct the AO to consider the fact that, in the event the disallowance computed as per the directions herein above is less than the disallowance u/s. 14A may be restricted to the suo moto disallowance made by the assessee.

  ---

• 2024 (12) TMI 1053
  Characterization/Nature of receipt - Sales Tax/ VAT subsidy received by the assessee - revenue or capital receipt - as argued subsidy received by the assessee is purely linked to production of goods and not to capital expenditure undertaken by the assessee - HELD THAT:- Tribunal in [ 2021 (1) TMI 732 - ITAT MUMBAI ] for AYs 2012-13 2011-12 held that subsidy received by the assessee under the new package scheme incentive of 1993, was solely for the purpose of setting up of SSI unit in the backward area for which it has received special capital incentive computed on the basis of fixed capital investment actually made by the assessee and, therefore, the same is capital in nature and hence, not taxable. Thus, the finding and conclusion given by the Commissioner (Appeals) is upheld and, accordingly, ground no.1, raised by the Revenue is dismissed. Income from sale of carbon credit should be treated as capital in nature therefore not liable to tax. Decided in favour of assessee. Deduction u/s 80IA certified in Form 10B in respect of rail system developed, operated and maintained by the assessee - The undisputed fact is that, if the assessee had not transported its goods through Railways then, it had to transport the same by road thereby incurring higher cost. The cost of road freight shown at Rs. 48 Crores is based on the actual expenditure incurred in earlier year when the goods were transported by road. It is also an admitted fact that in order to curtail transport and logistics cost incurred for transportation of raw materials as well as furnished goods being cement, the assessee has developed an integrated rail system for Unit-I at Satna, M.P. The deduction u/s 80IA of the Act has been computed by following the savings approach wherein the revenue of the Rail System was computed by taking excess of the road freight handling charges payable for transportation of goods by road to the nearest rail head, over the tariff payable for transportation of goods from the railway siding to the rail head, determined as per the tariff notified by the Indian Railways, proportionate to the actual distance upto the nearest rail head. A perusal of the chart exhibited elsewhere shows that the assessee has computed the revenue calculating the difference between the cost of transporting the goods by road and by India Railways. Also see Jindal Steel and Power Ltd. [ 2023 (12) TMI 417 - SUPREME COURT ] We find that in the case of Assam Carbon Products [ 2005 (12) TMI 212 - ITAT CALCUTTA-A ] assessee was completely justified in valuing the internal transfer for captive consumption of NH coke (i.e., transfer of NH coke to Unit-II) at the landed cost. For arriving at such price, the sole way out was to obtain the quotation from the company s erstwhile foreign supplier - Decided against revenue.

  ---

• 2024 (12) TMI 1052
  Disallowance u/s 14A - disallowance of interest and administrative expenditure - HELD THAT:- Hon ble Gujarat High Court, in assessee s own case, for AY 2009-10 2010-11 [ 2018 (8) TMI 922 - GUJARAT HIGH COURT] , [ 2019 (6) TMI 1006 - GUJARAT HIGH COURT] held that where interest free own funds substantially exceed the investment in exempt income yielding securities, there was no justification in making disallowance of interest expenditure. Disallowance of administrative expenditure, Hon ble Gujarat High Court has deleted the disallowance computed in accordance with Rule 8D and has restricted the disallowance of administrative expenditure to Rs. 15,00,000/-. Thus, we hold that no disallowance on account of expenditure on interest is called for. With regard to the disallowance on account of administrative expenditure, when pointed out, the Ld. AR fairly submitted that there has been slight rise in the administrative expenses owning to the rise in the salary of staff, the administrative expenses disallowable could be Rs. 17,50,000/-. The Ld. DR could not controvert the proposition. Hence, the disallowance is restricted to Rs. 17,50,000/-. Capitalization of interest-WIP - computed the amount of capitalization of interest expenditure in excess of actual interest by taking into account notional interest rate 12% on the closing balance of CWIP - CIT(A) upheld the disallowance made by the AO on account of disallowance of interest debited treating the same as capitalization of interest attributable to Capital Work in Progress - HELD THAT:- We find that the assessee had term loan of External Commercial Borrowing (ECB) taken for acquisition of shares of a foreign company, namely, Kamalyte Resources Inc., Canada and the loan is secured by pledge on shares of the said company. The Assessee also had as short-term loan from Gujarat State Financial Services Ltd. for a period of 90 days for the purpose of financing working capital.It can be found from the record that the assessee had cash credit account, overdraft facility, commercial paper, buyers credit, bill discounting, etc. for the purpose of financing working capital. From the detailed examination of the borrowings of the assessee and payment of interest since no loan amount has been raised and utilized for the purpose of Capital Work in Progress, no addition is called for in this account. The notional interest calculated by the AO computing 12% on the closing balance of CWIP cannot stand test of legal scrutiny. Disallowance of CSR Expenses - Disallowance on the grounds that the provisions of Income-tax Act, section 37(1) cannot be invoked for claiming such expenses - HELD THAT:- We have gone through the facts of the issue and the legal position thereof. The Explanation 2 to section 37(1) provides that, any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purpose of the business or profession. It states that, CSR expenses shall not be deemed to be expenditure for the purposes of business. The language of the Act is very clear and unambiguous hence does not call for any interpretations of the statute or inferences contrary to the legislative intention. Disallowance u/s 35(2AB) - AO disallowed the amount the difference between the revenue expenditure and the expenditure approved by the DSIR - HELD THAT:- AR pertained to the period before the amendment brought with effect from 01.07.2016. Hence cannot be considered to be applicable to the present case as it pertains to AY 2016- 17. In the case of Mrs. Manjula Sood [ 1997 (2) TMI 85 - PUNJAB AND HARYANA HIGH COURT] held that where there are any amendments or alterations in procedural law in course of assessment proceedings, altered procedural law would be applicable. It is held that the appellant is not entitled to claim weighted deduction and the addition made by the AO is hereby confirmed. The ground raised by the appellant is hereby dismissed. GSFC Donation 80G / 37(1) - HELD THAT:- A donation cannot be treated as business expenditure and the business expenditure do not partake the character donation . The donations under 80G, the CSR expenses and the business expenses u/s 37(1) operate under different arena. Hence, we hold that the assessee is rightly eligible for claim of deduction under 80G as claimed and accounted in the books of accounts as per the final accounts drawn. Re-computation 115JB and 14A - By now it has been settled by the order in the case Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] that the disallowance made u/s 14A cannot be considered for calculating book profit u/s 115JB of the Act. Hence, the appeal of the Revenue on this ground is dismissed.

  ---

• 2024 (12) TMI 1051
  Addition of securities premium u/s 56(2)(vii)(b) - shares were issued to existing shareholders as Right issue - AO rejected the DCF method - AO suomoto applied Net Asset Value (NAV) method invoking Explanation (a)(2) below Section 56(1)(viib) and determined the fair market value and the share @Rs.3.07. Thus, he applied one of the method under Rule 11UA - Addition made u/s. 68 also - HELD THAT:- DCF is one of the recognized methods wherein the value is based on estimated future projections and these projections are based on various factors like projection made by the management and the valuation like growth of the company, economic/market conditions, business conditions, expected demand and supply, cost of capital and catena of other factors. These factors are considered based on some reasonable approach and they cannot be evaluated purely based on arithmetical precision as value is always worked out based on approximation and catena of underline facts and assumptions. AO cannot tinker with the method adopted by the assessee and simply applied his own NAV method. In one hand ld. AO adopting DCF method showing that the valuation report is prior to introduction of Rule 11UA but still he proceeds to make his own valuation under one of the method prescribed under Rule 11UA. When the law provides two valuation methods, i.e., NAV and DCF, then AO cannot say one method should be applied for another and reject the valuation adopted by the assessee. DCF is always based projections based on current data and future market and economic condition for a particular industry and can t be equated with actual. Thus, respectfully following the judgment of Cinestaan Entertainment P. Ltd [ 2021 (3) TMI 239 - DELHI HIGH COURT] we hold that ld. AO cannot reject the DCF method and the valuation report as per DCF method cannot be tinkered with ld. AO without giving substantial reasons and not based on his own premise. Accordingly, the valuation done by the assessee is accepted and no addition u/s. 56(1)(viib) can be upheld. Additions u/s. 68 alternatively - From the perusal of the balance sheets it is seen that these companies had huge reserves and surplus and Revenue from operations and borrowings. Thus, once these parties have sufficient funds in the balance sheet and they have given all the details at the time of assessment proceedings, the onus to prove the source of the source also stands discharged. Thus, under the provision of Section 68 also, the additions cannot be made. Accordingly, addition u/s. 68 is also deleted. Appeal of the assessee is allowed.

  ---

• 2024 (12) TMI 1050
  Assessment u/s 153A - assessment years were pending on the date of search and thus stood abated - HELD THAT:- It is the case of the assessee that so-called incriminating material referred to in the assessment order are in the shape of statements recorded of third person i.e. Shri Pawan Agarwal much prior to search and material found in the case of other person. On perusal of the assessment orders and the first appellate order, it is observed that there does not appear to be any reference to any incriminating material found in the course of search of the assessee per se. Alleged incriminating material referred are primarily in the nature of statement of third person prior to search and material found in the course of search of the third person. This being so, the additions made in assessment years 2012-13, 2013-14 2014-15 are outside the ambit of jurisdiction u/s 153A - In view of the judgement rendered in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] relied on behalf of the assessee, the additions made in unabated assessment are not permissible u/s 153A of the Act. Additions made u/s 153A in the absence of incriminating material - Additions made u/s 153A in the absence of incriminating material is not justified do not appear to be in consonance of law governing the field, since the AYs 2015-16 and subsequent AYs were pending at the time of search and stood abated. In the abated assessments, the power of the AO is not limited to incriminating material found in the course of search alone. The plea of the assessee is thus rejected. We however find merit in the plea of the assessee that in view of the averments made in the remand report obtained by CIT(A) for different assessment years under appeal, the impugned additions retained by the Ld.CIT(A) is not justified. Where the AO has categorically observed that explanation offered in respect of funds received by the assessee on account of sale of investments held by the assessee in preference shares is substantiated by documentary evidences, the Ld.CIT(A) ought not have brushed aside such view without substantive reasons. Where the AO himself has accepted veracity on source of funds in question, the action of the Ld.CIT(A) confirming the original assessment in ignorance of remand report is not justified without showing how the AO has committed error in such findings in Remand Report. The additions sustained by the CIT(A) despite categorical observations of the AO in the remand proceedings is thus not sustainable in law in the facts of the case.

  ---

• 2024 (12) TMI 1049
  Disallowing interest expenditure claimed as deduction against interest income from partnership firm - interest free investments were made out of interest-bearing borrowed funds - HELD THAT :- Assessee has sourced funds from both interest bearing loans and non-interest bearing funds and that the same is majorly invested in the capital of the partnership firms. There is no dispute that the investment made by the assessee in partnership firms is for the purpose of business. AO in assessment order has observed that the investment in partnership firms is not earning any income to the assessee except one firm, and therefore the claim of interest paid u/s 36(1)(iii) is not allowable. In this regard it is relevant to consider the following observations in the case of Suresh Sreeram [ 2021 (2) TMI 169 - ITAT BANGALORE] wherein held reasoning of the CIT(A) that the interest expense would be expenditure incurred for the purpose of earning income from the partnership firm in the form of share income and therefore the expenditure would be not allowable in terms of sec.14A of the Act is incorrect because admittedly the firm incurred loss and the assessee did not receive any exempt income in the form of share of profits from the firm. For the purpose of allowability of interest under section 36(1)(iii), the commercial expediency has to be looked into as has been held in various judicial pronouncements. In assessee s case, there is no contention in this regard is raised by the revenue and the reason for disallowance is that the assessee is not earning any interest income from the investment made in the partnership firms. This in our considered view is not correct reason for making the disallowance under section 36(1)(iii) in assessee s case. Further from the perusal of the above funds flow statement, it is noticed that the loans and advances given during the year is coming out of the pool of funds which includes capital withdrawn from partnership firms, and without a one-to-one match being established by the revenue, it cannot be said that the borrowed funds are used for giving interest free loans and advances. As submitted during the course of hearing that some of the loans extended are earning interest and not the entire loans and advances are interest free - we are of the view that the disallowance made under section 36(1)(iii) is not sustainable - Appeal of the assessee is allowed.

  ---

• 2024 (12) TMI 1048
  Disallowance of deduction on account of payment made to L T Ltd. in respect of reimbursement of such Employee related option scheme - HELD THAT:- The payments made by the assessee has never been doubed by the AO/Ld. CIT(A). It is also not case of the revenue that, the same has not been subjected to the TDS by the assessee or by the holding company. The confirmation of L T in respect of treating the reimbursed cost received from assessee under the head other income has never been questioned. There is no contrary evidences/documents placed by the revenue on record before us to doubt the evidences filed by the Ld. AR. Under such circumstances we do not find any reason to doubt the expenditure incurred by the assessee on cost to cost basis. It is also not the case of the revenue that the mark-up has been charged by the assessee has these documents are made by the assessee in respect of those employees who were deputed by the parent company to assist the assessee. It has to be therefore considered to have been incurred for the purposes of business. We therefore of the opinion that this expenditure is allowable u/s. 37(1). Nature of expenditure - Software License Fee - HELD THAT:- Admittedly, the assessee capitalised such software that are purchased on perpetual license model. However there is no denial of the fact that, there are certain software purchased by the assessee which are useful only for short period of time or that requires regular update, for which subscription fee is to be paid. Revenue has not doubted the fact that, software is used by the assessee depending upon the project and therefore cannot be treated as being held by the assessee for enduring benefit. In fact it is noted that, in respect of such software the assessee is not acquiring any right embedded therein. As noted that such short term license software basically facilities for effective running of the assessee s business, and is not in the nature of profit-making apparatus. It is also noted that assessee has not been benefited by bringing into existence any new asset to these software licenses purchased and therefore purely qualifies for being considered as revenue expenditure. Deduction u/s 10A - as submitted that assessment year 2002-03 being the 1st year of the deduction u/s 10A and claim was disallowed by the AO holding that the STP unit was set up in the portion of the same premises where the assessee was already carrying on its business and that it constituted spitting up of the existing business - HELD THAT:- It is an admitted position that assessee is a sophisticated hardware/software to produce and export engineering designs, drawings, plans, analysis reports et cetera. Assessee is governed by the directorate of software technology Parks of India being the STP registered unit. It is not doubted that the assessee has received consideration in convertible foreign exchange and has made declaration before the exchange control for conversion of the foreign exchange into Indian currency. We refer to the decisions of coordinate bench of Outsourcing Services Pvt.Ltd [ 2011 (5) TMI 594 - ITAT, DELHI] wherein, it has been held that export of customised electronic data as required by the definition of computer software would make an assessee eligible to claim the deduction under section 10A of the act. Further the CBDT issued circular no. 2/2013 dated 17/01/2014, wherein more has been clarified that as regards the issue relating to export of computer software, direct tax benefit under section 10 A, 10AA and 10 B of the act is available. As regards the primary conditions based on which the Ld.AO denied the claim, we note that, Hon ble Karnataka High Court [ 2020 (9) TMI 1019 - KARNATAKA HIGH COURT] upheld the observations of Hon ble Bangalore Tribunal for assessment years 2008-09 to 2010-11 allowing the claim No infirmity in the view taken by the Ld.CIT(A) in allowing the claim of assessee. Treatment of loss arising on forward contracts to be held as regular business loss by the CIT(A) as against speculation - HELD THAT:- Under section 43 (5) of the act, speculative transaction has been defined to mean a transaction in which a contract for the purchase or sale of commodities settled otherwise than by the actual delivery or transfer of such commodity. However in the present facts of the case, assessee being neither a dealer in foreign exchange or the any, other commodities, but was an exporter of the software services, in order to hedge against any losses, booked foreign-exchange in the forward market with the bank. As some of the contracts entered into by assessee for export of services failed in some cases loss was earned. Thus in our opinion the loss so earned by the assessee was in the course of rendering its services outside India and has to be treated as a business loss. See Vishindas Holaram [ 2014 (9) TMI 788 - BOMBAY HIGH COURT]

  ---

• 2024 (12) TMI 1047
  Disallowance u/s 14A r.w.r.8D - Appellant had made suo-moto disallowance u/s 14A and had furnished the computation and the basis of making such computation during the assessment proceedings - AO recorded his dissatisfaction as regards the correctness of the voluntary disallowance made by an assessee u/s 14A that the provisions contained in Rule 8D of the IT Rules can be invoked - HELD THAT:- We hold that the AO has failed to record requisite dissatisfaction in terms of Section 14A(2) before invoking the provisions contained in Rule 8D of the IT Rules. Therefore, the additional disallowance made by the AO as per Section 14A read with Rule 8D of the IT Rules cannot be sustained and is, therefore, deleted. Decided in favour of assessee.

  ---

• 2024 (12) TMI 1046
  Validity of reopening of assessment - notice beyond period of four years - addition u/s 68 - HELD THAT:- As per proviso appended to section 147 interdiction provided in it puts an embargo upon the powers of AO to reopen an assessment, in cases where scrutiny assessment was passed u/s 143(3) and four years have expired. AO could reopen such assessment only in the situation if assessee fails to disclose fully and truly all material facts necessary for his assessment for that assessment year. A perusal of the above reasons, AO has nowhere alleged which particular part was not disclosed fully and truly by the assessee. It is pertinent to observe that the assessee has not received any share application money or share premium which was credited to the accounts of the assessee, rather it was holding certain assets in the shape of investment in shares. Those assets have been liquidated in this year. The reason for reopening is totally silent. Whether any asset was possessed by the assessee or not, if possessed when it was acquired, whether the investment made by the assessee in the scrips of certain companies, those were genuine or not in the year of investment. No such things were doubted. Scrutiny assessment has already taken place where all these aspects have been gone into. All such things are totally silent in the reasons recorded by the ld. AO As evaluate the other parts of the reasons recorded by the ld. AO has made reference to a credible information received from the DDIT (Investigation). He has not highlighted either in the reasons or in the assessment order, what is the nature of credible information inspite of the standard operating procedure laid down by the CBDT for supplying details of such information. There is no interweaving of circumstances, which can demonstrate a complete chain of events and such chain of circumstances would goad the ld. Assessing Officer to form a belief that income has escaped assessment. He has narrated all these circumstances vaguely and without interconnecting the circumstances with each other. Whether a man of prudent knowledge can believe on those circumstances that income has escaped assessment. A perusal of the reasons would indicate that no such circumstances have been highlighted, more so it is the ld. Assessing Officer, who has to establish which fact was not disclosed by the assessee during the scrutiny assessment proceedings. The assessee has disclosed that these are the sale of investment which has been credited in the books of account of the assessee. Where is failure? it was the duty of the Revenue to examine whether these sales were bogus. But this was to be done in the regular assessment proceedings carried out under section 143(3) for this assessment year. Therefore, we are of the view that ld. Assessing Officer has reopened the assessment only on the basis of change of opinion and he was not possessing any tangible material to form the belief - We allow the first-fold of contentions raised by the assessee and quash the reopening of assessment. Revision u/s 263 - We find that in the show-cause notice, ld. Commissioner has not specified that assessment order dated 28th September, 2021 passed under section 147 is being sought to be revised. He proposed to revise the assessment order under section 143(3). He has not mentioned the date of the order, which is being sought to be revised, which give rise to a vagueness in the show-cause notice. If original assessment order passed u/s 143(3) is being sought to be revised, then, action of the ld. Commissioner is beyond the time limit provided in sub-clause (2) of section 263. On that ground, this impugned order deserves to be quashed. A perusal of section 147 as was applicable prior to its amendment from 1st April, 2021 would indicate that this section authorizes to assess any other income, which came to the notice of ld. Assessing Officer during the reassessment proceeding. Had this information qua these nine parties was not in the knowledge of ld. Assessing Officer prior to reopening, then, it would have been construed that such information has come in the possession of the ld. Assessing Officer during reassessment proceeding. If ld. Assessing Officer failed to consider that probably ld. PCIT would be justified in taking action under section 263, but here is a case where the information whose non-consideration is being taken as a ground for exercising the powers under section 263 was already possessed by the ld. Assessing Officer before forming his prima facie opinion about escapement of income. In such a situation, it cannot be concluded by the ld. PCIT that assessment order is erroneous, which has caused prejudice to the revenue on account of non-consideration of an information for reopening. By this method, ld. PCIT is revising a second reopening on those very information. Therefore, otherwise on merit also, there is no ground to exercise powers under section 263. Assessee appeal allowed.

  ---

• Customs

• 2024 (12) TMI 1082
  Dismissal of revision applications filed by each of these petitioners against orders made by the Commissioner (Appeals) - confiscation of Gold bars and cash - petitioners were not adequately given an opportunity to cross-examine - violation of principles of natural justice - HELD THAT:- The petitioners have not made out any case for perversity. The findings are well supported by material on record. In any event, extraordinary jurisdiction cannot be equated to the appellate jurisdiction. The material on record is sufficient to sustain the adverse findings concurrently recorded by the three authorities. The allegation about the violation of natural justice is also not made out. Full opportunity was granted to the petitioners and only after those findings of fact had been recorded. Accordingly, there is no case made to interfere with the impugned order based on the alleged violation of natural justice. All the authorities have examined the material on record fairly and reasonably. Full opportunity was granted to the petitioners. The three authorities findings of fact indicate a conspiracy to smuggle gold from Dubai. There were contradictions in the stances raised by the petitioners. From the circumstances, it is apparent that none of the petitioners had no intention to declare the gold in their possession to the Customs authorities. They attempted to evade the law and smuggle this gold. There are certain observations about the complicity of the airline staff. However, it is refrained from taking cognisance of such observations because, even independent of such observations, it is satisfied that no case is made out to interfere with the impugned order. There are no good grounds to interfere with the impugned order - Accordingly, all these petitions are liable to be dismissed and hereby dismissed without any orders for costs.

  ---

• 2024 (12) TMI 1045
  Classification of imported goods - 100% Polyester bed cover / Quilt Cover - to be classified under CTH 6304 of the Customs Tariff Act or under CTH 5407? - deliberate mis-declaration of the goods - levy of mandatory penalty under Section 114A of the Customs Act, 1962 - it was held by CESTAT that As the respondent imported Bed sheets which are having merit classification under CTH 6304 of the Customs Tariff Act, in these circumstances, the charge of suppression of facts is not sustainable against the respondent. HELD THAT:- There are no reason to interfere with the impugned order passed by the Customs, Excise Service Tax Appellate Tribunal, East Zonal Bench, Kolkata. Appeal dismissed.

  ---

• 2024 (12) TMI 1044
  Delay of 15 years in adjudication of the SCN - reason given for the delay as recorded in the order in original is that the show cause notices were transferred to the call book on account of similar issue being pending before the Supreme Court - HELD THAT:- Following the decisions in Coventry Estates Pvt. Ltd. vs. The Joint Commissioner CGST and Central Excise and Another [ 2023 (8) TMI 352 - BOMBAY HIGH COURT] and Bhagwandas S. Tolani vs. B. C. Aggarwal and Others [ 1982 (7) TMI 264 - BOMBAY HIGH COURT] it is held that the order in original dated 31 January 2024 along with corrigendum dated 9 February 2024 is quashed and set aside. Petition disposed off.

  ---

• 2024 (12) TMI 1043
  Challenge to SCN on the ground that there has been a delay of more than 12 years in adjudication of the show cause notices - HELD THAT:- On a query being raised to the learned counsel for the Respondents whether they had intimated the Petitioner about the show cause notices being kept pending on account of the decision of the Supreme Court in Canon India Private Limited [ 2021 (3) TMI 384 - SUPREME COURT ], it is informed that same was not informed. In any case, the decision of the Supreme Court in Canon India Private Limited was rendered in the year 2021 which is almost after 10 years from the date of show cause notices. Therefore, even this ground cannot be accepted. There is no other justification given by the Respondents for not adjudicating the show cause notices for more than 10 years. Following the decision of the Coordinate Benches relied upon by the Petitioner and this Bench in the absence of any justification for delay in adjudication of the show cause notices, the show cause notices dated 20 October 2011 and 6 August 2012 are quashed and set aside. Petition disposed off.

  ---

• 2024 (12) TMI 1042
  Maintainability of petition - availability of alternative remedy - Challenge to Order-in-Original made by the Commissioner of Customs (II) Airport Special Cargo, Andheri (E), Mumbai - only averment in the petition in the context of alternate remedy was found - HELD THAT:- The issue of whether the statutory authority has not acted in accordance with the provisions of the enactment in question will have to be examined in the context of the facts and other material on record. These are disputed questions of facts and would involve appreciation and evaluation of the material on record. It is too premature to hold that this is a case of perversity. Therefore, based upon COMMISSIONER OF INCOME TAX OTHERS VERSUS CHHABIL DASS AGARWAL [ 2013 (8) TMI 458 - SUPREME COURT] , no case is made out to bypass the rule or practice of exhaustion of alternate remedies. There is no material on record, and nothing is pleaded about the Petitioner s capacity to arrange the pre-deposit amount. At least the impugned order indicates that during the hearing in question, the Petitioner was dealing in the import and export of gold and had a turnover of Rs.485 crores. It is declined to entertain this petition. However, this will not preclude the Petitioner from instituting an appeal against the impugned order. None of the observations in this order need to influence the Appellate Court should the Petitioner institute an appeal against the impugned order. The observations were in the context of considering the submissions regarding the departure from the rule or practice of exhaustion of alternate remedies. Petition disposed off.

  ---

• 2024 (12) TMI 1041
  Interpretation of time limit for filing refund claim under Customs Act, 1962 in case of provisional assessment - time is to be considered from the date of payment of duty or from the date of finalization of assessment in case where assessment is provisional - Whether in the facts and circumstances of the case, the Hon ble CESTAT is right in allowing the appeal of the Respondent, even when the Respondent had filed Refund claim beyond one year from the date of payment of duty? HELD THAT:- It was case of the assessee that the refund claim has been filed after one year of date of payment of duty, but it is within one year from the date of finalization of the provisional assessment. The Tribunal relying on the case of BHARAT SHIP BREAKERS CORPORATION, RISHI SHIP BREAKERS VERSUS COMMISSIONER OF CUSTOMS, JAMNAGAR (PREV.) [ 2023 (3) TMI 1547 - CESTAT AHMEDABAD] allowed the appeal. In view of the similar facts in case of THE COMMISSIONER, CUSTOMS (PREVENTIVE) VERSUS M/S SHITAL ISPAT PVT. LTD. [ 2024 (9) TMI 1669 - GUJARAT HIGH COURT] , these appeals being devoid of any merit, no questions of law much less any substantial questions of law arises from the impugned order passed by the CESTAT. Appeal dismissed.

  ---

• 2024 (12) TMI 1040
  Seeking regular bail in an NDPS case involving possession of a commercial quantity of Ganja - offence punishable under Sections 8(c) read with 20, 28, 29 of Narcotic Drugs and Psychotropic Substances Act (NDPS Act) - HELD THAT:- Where prima facie involvement of the Accused is apparent, the contentions raised regarding the contradictions in the charge sheet are required to be tested at the time of trial, but not at this stage. The period of incarceration by itself would not entitle the Petitioner/Accused to be enlarged on bail. Filing of the charge sheet establishes that after due investigation, the investigation agency, having found materials, has placed the charge sheet for the trial of the Petitioner. Taking into account the cumulative effect of entire facts and circumstances, without commenting upon the merits of the evidence, and the substantial quantity of contraband involved, the manner of its commission, and its impact on the society, it is evident that the Petitioner is not entitled to bail, at this stage. Hence, the petition deserves to be dismissed. Petition dismissed.

  ---

• 2024 (12) TMI 1039
  Scope of Notification No. 23/2012-Cus - Viscose Filament Yarn - It is the appellants contention that the impugned goods are embroidery threads and that under the Customs Tariff there is no difference between embroidered yarn and embroidery thread , since embroidered yarn is specifically excluded from the scope of Notification No. 23/2012-Cus, no duty is payable by them - HELD THAT:- CTH 5403 of the Customs Tariff reads as Artificial filament yarn (other than sewing thread) not put up for retail sale, including artificial mono filament of less than 67 decitex . The use of the phrase other than sewing thread , indicates that the heading though dealing with Artificial filament yarn does not specifically exclude threads other than sewing thread. Embroidery thread is not the same as sewing thread in trade parlance. It is perhaps for this reason that even the department has found the imported thread classifiable under CTH 5403 since it is found the description of the goods has not been challenged nor has any test or expert opinion been sought for. As rightly stated by the appellant and also held by the Hon ble Supreme Court in CC v. Dilip Kumar [ 2018 (7) TMI 1826 - SUPREME COURT ], that when the issue pertains to imposing a levy, the onus is on the Department to prove that the goods are leviable to such duty. The issue involves a question of fact which is very technical in nature as seen from the portions highlighted in the extract of the OIO above. The classification of the impugned goods between Embroidery Yarn and Embroidery Thread , requires a physical scrutiny of the characteristics of the goods. However, neither are the goods available to us nor is there any manufacturers product literature; examination report by the department or a test report / opinion of an expert body been placed - there is a lack of evidence to back the findings made by the Ld Adjudicating Authority. To avoid a confusion on basic facts, it was for the departmental authorities to gather the product literature, process of manufacture and even a test report/ opinion from the appropriate authority and make it a part of the SCN, while seeking to change the classification and extending the levy under ADD to the product, since the burden of proof is on the department. In fine, there is a complete absence of anything to prove the allegation made in the Show Cause Notice. It is found that the impugned order has failed to see that the OIO has not discharged the burden of proof to come to a conclusion that the goods attract anti-dumping duty under N/N. 23/2012 dated 04.05.2012. The impugned order hence merits to be set aside - appeal allowed.

  ---

• 2024 (12) TMI 1038
  Denial of duty exemption availed by the appellant against EPCG authorization for the import of goods under N/N. 97/2004--Cus. dated 17.09.2004 - HELD THAT:- From the copy of the T.R 6 challan placed on record, it is found that the appellant has remitted the Customs duty along with interest on 27.03.2024. The Authority being satisfied with the remittance of duty and interest as per the Amnesty Scheme, has issued closure letter. Hence, there is no scope to confirm the penalty which is imposed on an alleged violation. Though Ld. Advocate has disputed leviability of penalty under Section 112 (a) ibid since the violation here is of EPCG scheme, for the reasons which were beyond the reach of the appellant but, however, it is found that the whole Amnesty Scheme does not specify anything about the penalty and hence, it is possible that any violation insofar as the non-fulfilment of export obligation is concerned, is not viewed as irregularity or a mala fide intention. It is deemed appropriate to set aside the impugned order and the penalty - appeal allowed.

  ---

• 2024 (12) TMI 1037
  Sustainability of duty quantified and confirmed in the impugned order - imposition of redemption fine and penalties on the Appellants. Whether the duty quantified and confirmed in the impugned order is correct and sustainable? - HELD THAT:-The Larger Bench of the Tribunal in the case of Bombay Hospital Trust Vs. Commissioner of Customs, Mumbai [ 2006 (6) TMI 117 - BOMBAY HIGH COURT ] has held that when post importation conditions in an exemption notification are not fulfilled, the Department has the power to recover the escaped duty in terms of Section 12 of the Customs Act, 1962 - the duty demand in the present case is in order and does not call for any interference. Whether the redemption fine and penalties imposed on the Appellants are justified in the facts of these appeals? - HELD THAT:- Hon ble Supreme Court in the case of Weston Components Ltd. Vs CC, New Delhi [ 2000 (1) TMI 45 - SC ORDER ] has held that Under these circumstances if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine. - the confiscation of the imported goods for non-fulfilment of the export obligation upheld under the provisions of Section 111(o) and imposition of fine under Section 125 of the Customs Act, 1962. Imposition of penalties - HELD THAT:- It is found that the Adjudicating Authority has already complied with the earlier order of this Tribunal to show lenience by reducing the penalties imposed to Rs.5,00,000/- on the Appellant (A1) and Rs.2,00,000/- each on the Appellants (A2 and A3) which cannot be termed to be excessive. As such, the impugned Order-in-Original No. 27243/2014 dated 30.06.2014 of the Commissioner of Customs, Chennai do not call for any interference and so, required to be upheld. Appeal dismissed.

  ---

• 2024 (12) TMI 1036
  Denial of exemption of Basic Customs Duty [BCD] - whether the cameras imported by the taxpayer namely Digital Still Image Video Cameras under 15 Bills of Entry was not eligible for the benefit of BCD exemption in terms of Sl. No. 13 of N/N. 25/2005? - HELD THAT:- The Larger Bench of the Tribunal in the case of M/S. NIKON INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS (IMPORTS) , NEW DELHI. [ 2024 (6) TMI 1422 - CESTAT NEW DELHI [LB]] held that In the present case, there is no ambiguity in reading the Explanation of the Notification No.25/2003-Cus. dated 01.03.2005 as amended, in as much as, a literal interpretation of the said Explanation, as discussed above, reveals that all the three parameters/functions of a digital camera should be cumulatively read so as to ascertain whether all the characteristics are above the threshold limit; in that event, the digital camera would not be eligible to the exemption from BCD under the said Notification. The Appellant s claim for the benefit of BCD exemption was perfectly in order and therefore, the Revenue was not justified in denying the same to the Appellant - the impugned Order-in-Appeal dated 06.05.2014 passed by the Commissioner (Appeals) is set aside - Appeal allowed.

  ---

• 2024 (12) TMI 1035
  Benefit of Nil CVD in terms of N/N. 30/2004-CE dated 09.07.2004 as amended - benefit denied on the ground that the notification was not available on account of the same being amended vide N/N. 34/2015-CE dated 17.07.2015 and N/N. 37/2015 dt. 21.07.2015. HELD THAT:- It is found that in the case of M/S. HLG TRADING, M/S. ADITYA INTERNATIONAL LIMITED VERSUS COMMISSIONER OF CUSTOMS (CHENNAI IV) AND COMMISSIONER OF CUSTOMS VERSUS M/S. ADITYA INTERNATIONAL LIMITED, M/S. MICROWEB ENTERPRISES PRIVATE LIMITED [ 2023 (10) TMI 1469 - CESTAT CHENNAI] wherein it has been held that We are therefore of the view that the claim of the appellants for the benefit of Notification No. 30/2004-C.E., as amended vide Notification No. 34/2015-C.E. and Notification No. 37/2015-C.E., is not entertainable and has therefore been correctly rejected by the Ld. first appellate authority. Hence, we do not find any case being made out for interfering with the impugned Orders-in-Appeal. Thus, the appellant is clearly not eligible to claim the benefit of Nil CVD in terms of Notification No.30/2004-CE - there are no irregularity committed by the lower authorities in denying the above claim and therefore the impugned order does not call for any interference - appeal dismissed.

  ---

• Insolvency & Bankruptcy

• 2024 (12) TMI 1034
  Dismissal of Application u/s 7 of IBC - amount advanced by the Appellant qualifies as a financial debt under Section 5(8) of the IBC or not - Appellant s Petition is barred by limitation or not. Whether the amount advanced by the Appellant qualifies as a financial debt under Section 5(8) of the IBC with the confirmation of accounts, TDS deduction and other material on record? - Whether the Appellant s Petition is barred by limitation? - HELD THAT:- The Respondent has claimed that the confirmation of accounts was forged or issued by unauthorised individuals. It is noticed that there are repeated emails issued to the Appellant from the accountant, namely Mr Dilip Mohanty, who is the Chief Accountant of the group company, namely Supreme and Company Private Limited. In fact, he has signed the documents in the confirmation of accounts which is material on record. He has been corresponding with the Appellant on the email address of [email protected]. It is to be noted that Respondent Company is one of the companies of the Group Company of Supreme. Thus, we find that claim of forgery of confirmation of accounts of the Respondent is unsubstantiated and cannot be accepted as an argument of defence. With respect to the issue of limitation, it is noted that the Respondent has provided an acknowledgement through the confirmation of accounts and tax on interest with deductions as per Form 26AS, the latest of which being in FY 2020-21. This provides an acknowledgement of debt and provides a fresh starting point for the limitation period and extends the limitation. The demand notice was issued on 12.03.2022 and Section 7 Application was filed on 02.12.2022, which is well within three years from the date of last acknowledgment in FY 2020-21. Respondent s argument that the Petition was barred by limitation is untenable and needs to be rejected. It is to be noted that the loan is also recorded in the balance sheet of the Appellant even though as other liabilities instead of loan and this does not negate the existence of a financial debt and therefore the conclusion of the Adjudicating Authority that this is not a financial debt cannot be sustained. Even if this material on record not relied, there is sufficient other material on record to establish debt and default. Whether the dismissal of the Section 7 Petition by the Adjudicating Authority is sustainable or not? - HELD THAT:- The debt and default is established in the matter. In fact, the Respondent has not even bothered to appear before this Tribunal to defend its case. Under these conditions when the Appellant has been able to establish the debt and default, the finding of the Adjudicating Authority dismissing the Section 7 Petition cannot be sustained. Accordingly, the order of the Adjudicating Authority dated 21.11.2023 is set aside. The Corporate Debtor, namely Brick and Mortar Realty Private Limited, is ordered to be proceeded under Section 7 of the Code. Appeal allowed.

  ---

• 2024 (12) TMI 1033
  Challenge to order approving the Resolution Plan - Non-admission of the appellant s claim by the Resolution Professional - HELD THAT:- From the facts brought on the record, it is not shown that the Appellant at any point of time raised any grievance regarding non admission of claim nor claimed to have filed any application before the Adjudicating Authority challenging non-admission of the claim. Resolution Professional has published four updated list of creditors, where the claim of Appellant was reflected and in the list, it was stated that the claim was not admitted. The list of creditors mentioned the claim of the Appellant as not admitted but no steps were taken by the Appellant challenging non-admission of the claim. As noted above, SRA has also prepared the Resolution Plan treating the claim of statutory authorities as nil . There are no error in the order of the Adjudicating Authority dated 28.11.2019 approving the Resolution Plan. Appellant having not taken any steps for agitating its claim before the Adjudicating Authority at the relevant time, it is not open for the Appellant to raise any grievance for non-allocation of any amount in the Resolution Plan. The Hon ble Supreme Court in Kalpraj Dharamshi Anr. [ 2021 (3) TMI 496 - SUPREME COURT ] has also noticed one fact that the implementation of the Resolution Plan commenced after approval of the plan. Counsel for the Respondent Nos.2 and 3 has submitted that the Resolution Plan approved was fully implemented and information of the implementation of the Resolution Plan has already been sent to all stakeholders in March, 2021. Thus, no ground has been made out to interfere with the impugned order passed by the Adjudicating Authority approving the Resolution Plan of Respondent Nos.2 and 3. There is no merit in the Appeal - The Appeal is dismissed.

  ---

• 2024 (12) TMI 1032
  Prayer for recall of the order of liquidation - continuation of the auction process by the liquidator. Whether Adjudicating Authority committed error in rejecting IA (IB) No.93/CB/2024 filed by the Appellant praying for recall of the order dated 13.12.2023? - HELD THAT:- The order dated 13.12.2023 was an order which was passed by the Adjudicating Authority on an application which was filed by the Resolution Professional praying for excluding the CIRP period from 22.03.2023 till the date of filing of the application (30.11.2023). Adjudicating Authority heard the application and by the order dated 13.12.2023 after noticing the relevant facts refused to extend the period. It was noticed by the Adjudicating Authority that already 365 days have expired. The Appellant contended that in view of the law laid down by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Through Authorised Signatory vs. Satish Kumar Gupta Ors [ 2019 (11) TMI 731 - SUPREME COURT ], period of CIRP could have been extended even beyond 330 days. There can be no dispute to the proposition laid down by the Hon ble Supreme Court in the above case. However, for extension of period beyond 330 days there has to be valid reason. The present is a case where in CIRP no substantial progress has been made nor completion of Resolution Process was insight. The most important fact to be considered is that the application which was filed by the Appellant was for recall of the order dated 13.12.2023 passed by the Adjudicating Authority refusing exclusion of the period and directing the liquidation of the corporate debtor. On looking into the grounds which are available for a recall of the judgment and the grounds which were raised by the Appellant, they does not fall within any of the grounds on which recall could have been directed - the Adjudicating Authority did not commit any error in rejecting application filed by the Appellant for recall of the liquidation order. Whether the continuation of the auction process by the liquidator, as directed by the Adjudicating Authority, was appropriate? - HELD THAT:- There are no error committed by the Adjudicating Authority rejecting IA (IB) No.93/CB/2024 filed by the Appellant, hence, the liquidation order dated 13.12.2023 remains unaffected. We further are of the view that the Appellant is at liberty to file objection to the auction already undertaken by the liquidator before the Adjudicating Authority which may be considered while considering the application for confirmation of the auction. Appellant is free to raise all issues regarding the auction including inappropriate valuation of the assets as is being contended before us in these Appeals. The order dated 21.11.2024 which is challenged in the Company Appeal also does not require any interference since the said application IA ( IB ) No.301 / CB / 2024 filed by the Appellant is still pending and fixed for 19.12.2024. There are no good ground to interfere with the orders impugned in these Appeals, giving liberty to the Appellant to raise objection with respect to auction already held by the liquidator which are yet to be confirmed by the Adjudicating Authority - appeal disposed off.

  ---

• PMLA

• 2024 (12) TMI 1031
  Money Laundering - Illegal appointment of ineligible candidates in lieu of extraneous consideration - Applicability of section 45 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The Hon ble Supreme Court, in the authority in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT (LB)] has held that The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail. Whether seizure of incriminating articles/documents from the petitioner s house and property, both movable and immovable, worth crores of rupees allegedly acquired by the petitioner discloses an unbroken money trail, i.e., generation of proceeds of crime which eventually leads to the petitioner shall be decided in trial. The allegations primarily rest on the statement of the co-accused recorded under section 50 of the Act, the truth and veracity of which need to be weighed during trial. The material collected by the E.D. prima facie suggests that the petitioner was allegedly in liason with Manik Bhattacharyya and Kuntal Ghosh who were actively involved in the offence. Both of them have been granted bail by this Court. The petitioner is similarly circumstanced - With regard to prolonged incarceration of the petitioner and delay in trial, the petitioner has submitted that he is in custody since 10th March, 2023, i.e., for about twenty months. The Hon ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused-under trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part. It is not in dispute that he is a first-time offender and has not been convicted of any offence earlier. Keeping in view the voluminous evidence to be considered by the learned Trial Court, chance of conclusion of trial within the time frame for incarceration during trial laid down in section 479 is bleak. Rejecting the prayer of the petitioner at this stage and granting him liberty to renew his prayer upon completion of the said time frame shall serve no purpose at all. Article 21 of the Constitution and section 479 of the 2023 Act read in harmony speak in favour of grant of bail to the petitioner on the ground of prolonged detention without trial as well as delay in trial. This Court is inclined to release the petitioner on bail subject to stringent conditions - Application for bail allowed.

  ---

• Service Tax

• 2024 (12) TMI 1030
  Refund the service tax paid on ocean freight during the period April 2017 to June 2017 - Period of limitation - Section 11B of the Central Excise Act, 1944 - HELD THAT:- As is evident from a reading of the principles which came to be enunciated by the Constitution Bench in Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT ], a claim for refund founded on the ground of a provision of the statute having been struck down as unconstitutional would clearly fall outside the purview of the enactment itself. The Constitution Bench thus held that in such a case the claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution as also in terms of Section 72 of the Contract Act, 1872 [Contract Act]. It was in that context that the Supreme Court further observed that in all such cases, the period of limitation would have to be calculated taking into account the principles enshrined in Section 17 (1) (c) of the Limitation Act. It is, however, pertinent to note that Mafatlal Industries in unequivocal terms holds that where the refund is claimed consequent to a declaration of invalidity having been rendered, it would clearly fall outside the purview of the principal enactment and could be claimed either by way of suit or by way of a writ petition. Once it is held that the statutory provisions envisaging a levy of service tax on ocean freight had come to be declared unconstitutional, the levy itself would be liable to be viewed as invalid and thus not maintained under the principal enactment. The reliance on Section 11B of the Central Excise Act is thus clearly misconceived. Thus, bearing in mind the mandate of the Supreme Court and which clearly and in unequivocal terms excludes the period between 15 March 2020 and 28 February 2022, it would be wholly incorrect for the respondents to urge that the claim of the petitioners is barred by limitation when computed in light of Section 17 (1) (c) of the Limitation Act. The respondents are directed to attend to and dispose of the refund claims forthwith - petition allowed.

  ---

• 2024 (12) TMI 1029
  Liability of service tax - Whether the services in question have been provided by UTS-USA directly to Reliance Infocom amounting to Import of the Services or the services are provided by the appellant inviting its liability to pay service tax? - Extended period of limitation. HELD THAT:- The agreement about rendering of impunged services, makes it clear that the Support Services in question are provided by UTS-USA which is located in non taxable territory, to Reliance Infocom Ltd which is located in taxable territory with the clear agreement that later shall be paying the consideration to UTS-USA excluding all taxes applicable as per Indian laws except withholding tax. Thus it stands established that the service provider is UTS-USA and UTS-India is wrongly alleged as the servicer provider to Reliance Infocom Pvt. Recipient in the present case is Reliance Infocom located in taxable territory. Resultantly it was Reliance Infocom who was liable to pay service tax under reverse charge mechanism on the amount in dispute paid during the disputed period to UTS-USA. It is also the admitted fact on record that the Reliance Infocom has discharged the entire service tax liability on the disputed amount. The appellant / UTS-India is, admittedly, a subsidiary of UTS-USA hence cannot be considered as the distinct entity specifically when the service provider is the main company that UTS-USA. The observation are sufficient to hold that appellant is wrongly alleged to be the service provider. The service tax liability confirmed against the appellant is thereof liable to set aside. Extended period of limitation - HELD THAT:- The SCN was issued on wrong presumption. The impunged activity is held to be the Import of Service by Reliance Infocom as received from UTS-USA. Hence the demand has wrongly been confirmed against the appellant who is the subsidiary of UTSUSA, the service provider located in non taxable territory. Otherwise also the service tax stands already paid by the service recipient, Reliance Infocom Pvt. Ltd under reverse charge mechanism. This information was already provided to the department. The extended period is wrongly been invoked. Thus the show case notice is held barred by time. The order under challenge is hereby the set aside. Consequent thereto, the appeal stands allowed.

  ---

• 2024 (12) TMI 1028
  Confirmation of demand of service tax - Director s fee - Liability vis- -vis sponsoring the cookery event - Demand on account of difference in the amount shown in ledger and one shown in the ST-3 returns - Demand confirmed on testing analysis and certification charges - reverse charge mechanism - imposition of penalty on the appellant. Service tax on Director s fee - HELD THAT:- The service tax demand vis- -vis the Director s fee has duly been acknowledged. Hence it is not required to dwell into the said adjudication. Resultantly, the order confirming the demand of service tax of Rs. 1236/- stands upheld. Liability vis- -vis sponsoring the cookery event - HELD THAT:- Admittedly, the cookery event at Sehore, Gwalior was sponsored by the appellant displaying the appellant s company logo and trading name. The adjudicating authority below have observed that the appellant was given exclusive or priority booking rights. Sponsoring prices/trophy for the competition and all other expenses incurred towards organizing of the said event were borne by the appellant that too that with intent to obtain commercial benefit by bringing their name or product or services in public image to public attention by associating with the said event. No evidence is produced by the appellant to falsify the said observations. The said activity clearly falls under the scope of sponsorship services which invites the service tax liability. Hence there are no infirmity when this demand of service tax of Rs. 29,301/- has been confirmed against the appellant. Demand on account of difference in the amount shown in ledger and one shown in the ST-3 returns - HELD THAT:- The amount of consideration paid for receiving legal consultancy services is taxable under reverse charge mechanism and the 100% service tax is to be paid by the service recipient in terms of Entry No. 5 of Notification No. 30/2012-ST dated 20 June 2012. Hence the total amount paid by the appellant to his lawyers is liable to service tax and the liability is to be discharged by the appellant under RCM. There is appellant s own admission that the amount of notary charges and stamp charges also found the part of consultancy fee. Otherwise also the services of notary are also liable to service tax. It is only the purchase of stamp papers that can be excluded but there is no evidence on record bifurcating the said amount from the amount of the legal fee paid by the appellant for obtaining legal consultancy services. Hence there are no reason when this demand of service tax of Rs. 5020/- has also been confirmed against the appellant. Demand confirmed on testing analysis and certification charges - HELD THAT:- Apparently testing/analysis has been done in foreign laboratories. As per Rule 4(a) of Place of Provision Rules, 2012 the Place of provision will the place of provider of service. In the present case place of service provider is outside taxable territory whereas appellant is in taxable territory. The plea taken is that the laboratory was existing in appellant s premises but there is no evidence for the same. The service received is otherwise taxable. Hence it is held that the appellant was liable to pay service tax under reverse charge mechanism. Hence the demand of service tax amounting to Rs. 1,69,771/- is also upheld. Invocation of extended period while issuing the SCN - HELD THAT:- N/N. 30/2012 makes the service recipient of legal consultancy service liable to pay service tax on the amount of consultancy fee paid ignorance of law cannot be the defence. Hence the only possible outcome of still not paying the service tax is the intent to evade the tax. The appellant was relying on TRU circulars but those circulars apparently are not extending any exemption to the appellant. The plea of bona fide belief is also not available to the appellant - the extended period of limitation has rightly been invoked. There are no infirmity has been found in the order under challenge while confirming the impugned demand of service tax. The impugned order in appeal is, therefore, upheld - Consequent thereto, the appeal is hereby dismissed.

  ---

• 2024 (12) TMI 1027
  Recovery of CENVAT Credit with interest and penalty - invoices which were showing billing address of Ahmedabad Office though POs clearly mentioned the services were used by the Appellant - rent paid for unregistered premises - Xerox copy of invoices and similar documents termed as improper documents - credit availed on debit notes/demand notes/credit notes. CENVAT Credit disputed on invoices, which were showing billing address of Ahmedabad Office though POs clearly mentioned the services were used by the Appellant - HELD THAT:- Issue decided in the case of Mportal India Wireless Solutions Pvt Ltd [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT ] where it was held that Registration not compulsory for refund. CENVAT Credit availed for the rent paid for unregistered premises - HELD THAT:- Reliance placed in CCE ST NOIDA VERSUS SAMSUNG INDIA ELECTRONIC PVT. LTD. [ 2015 (11) TMI 1570 - CESTAT ALLAHABAD ] where it was held that the premises are not covered in the listed premises in their Centralised R.C. Thus, this premises cannot be said to be used for providing output service. CENVAT Credit taken on Xerox copy of invoices and similar documents termed as improper documents - HELD THAT:- Reliance placed in UNION OF INDIA VERSUS HIRA STEELS LTD [ 2010 (9) TMI 867 - CHHATTISGARH HIGH COURT ] where it was held that invoices were duly verified by Range Superintendent after getting satisfied from the concerned, departments has allowed Modvat credit, for the purpose of deciding the disputed question of fact, the Tribunal is the final authority, no substance in this appeal. CENVAT Credit availed on debit notes/demand notes/credit notes - HELD THAT:- Reliance placed in the case of appellant s Mumbai unit, where Commissioner has dropped the demand - demand set aside. Thus, these issues has been decided in favour of the appellant, there are no merits in the impugned order to the extent of denying the credit on these accounts - appeal disposed off.

  ---

• 2024 (12) TMI 1026
  Classification of service - facilitation for registration of motor vehicle carried out by the Appellant for their customer - Business Auxiliary Service or not - Teflon coating, mat fixing, accessory fitting etc - Motor Vehicle Repair Service or not. Classification of service - facilitation for registration of motor vehicle carried out by the Appellant for their customer - Business Auxiliary Service or not - HELD THAT:- The issue regarding service tax on the registration is well settled and following the decisions of Tribunal, it is held that no service tax is payable for registration of the vehicle as held by Adjudication authority. Classification of service - Teflon coating, mat fixing, accessory fitting etc - Motor Vehicle Repair Service or not - HELD THAT:- The issue is also considered by the Tribunal in large number of decisions, and it is held that the assessee is not liable to pay service tax for such activity since it involved both material and service charge. Further the Ld. Counsel for the Appellants admits that they were paying service tax on the actual charges with effect from 01.07.2012. Facts being so, no service tax can be confirmed on the Appellant prior to 01.07.2012. The appeal is partially allowed, and the matter is remanded to reconsider the demand of service tax after considering the details furnished by the Appellant and only on the actual amount received towards such services and not on the amount shows as provision for expenses during the relevant month in their books of accounts.

  ---

• 2024 (12) TMI 1025
  Liability to service tax of individual owners of a property when the property is leased to others - HELD THAT:- The issue has been decided by the Tribunal in a number of cases. It is found that Tribunal Bench at Ahmedabad in the case of Sarojben Khushal Chand [ 2017 (5) TMI 240 - CESTAT AHMEDABAD ] held that In the present case, the show cause notices were issued in many cases to one person among the Joint owners and in other cases to all the persons who had jointly owned the immovable property provided on rent. Needless to mention, the Service Tax Registration of individual assessees for collection of Service Tax is PAN based, hence, collection of Service Tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the Service Tax on the total rent be collected from one of the co-owners. In the present appeals, service tax cannot be recovered from the appellants in a combined fashion. If considered individually, the appellants are eligible for the benefit of exemption contained under N/N. 06/2005-S.T dated 01.03.2005. However, the appellants have undertaken that they will not ask for refund of the service tax deposited as they have recovered the same from their customer i.e. Axis Bank. As we hold that the appellants are not liable to pay service tax during the impugned period, penalties imposed are not sustainable and therefore set aside. Appeal allowed.

  ---

• 2024 (12) TMI 1024
  Extended period of limitation - demand in the present case is entirely barred by limitation as the demand pertains to the period 01.07.2004 to 31.03.2006 whereas the SCN has been issued on 13.10.2009 - liability to pay service tax on Commission is received by the appellant for sale of the product - HELD THAT:- In identical matters, this Tribunal has consistently held that extended period of limitation is not applicable to distributor/Commission agent of M/s Amway India Enterprises. This issue is no more res integra and has been held in the decisions M/S AB NETWORK DEVELOPMENT PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CHANDIGARH-I [ 2023 (12) TMI 180 - CESTAT CHANDIGARH] and MR. CHARANJEET SINGH KHANUJA AND OTHERS VERSUS CST, INDORE/LUCKNOW/JAIPUR/LUDHIANA AND OTHERS [ 2015 (6) TMI 585 - CESTAT NEW DELHI] relied upon by the appellant. It is found that the Department has not been able to prove the ingredients which are necessary to invoke the extended period of limitation; therefore, the impugned demand is barred by limitation and the same is set aside on limitation alone without going into the merits of the case. Appeal allowed.

  ---

• 2024 (12) TMI 1023
  Levy of service tax - Business Auxiliary Service - early payment incentive/ discount earned by the appellant in the capacity of del-credere agent of M/s Reliance Industries Limited - HELD THAT:- The very same issue in the appellant s own case only for the different period has been decided by this Tribunal in RUBEXCO PVT LTD. VERSUS COMMISSIONER OF C.E. S.T. -VADODARA-I [ 2024 (7) TMI 1570 - CESTAT AHMEDABAD] where it was held that This issue is no longer res-integra as in respect of identically placed delcredere agent in the case of M/S. TRADEX POLYMERS PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, AHMEDABAD [ 2011 (12) TMI 398 - CESTAT, AHMEDABAD] this Tribunal has held that The discounts/incentives received by the assessee from the print media will not be liable for service tax under the category of advertising agency services. The issue is no longer res-integra. Accordingly, following the above Tribunal s decision in the appellant s own case, the impugned order is set aside - Appeal is allowed.

  ---

• Central Excise

• 2024 (12) TMI 1022
  Classification of goods - pure coconut oil, packaged and sold in small quantities ranging from 5 ml to 2 litres - classifiable as Edible oil under Heading 1513, titled Coconut (Copra) oil, etc. , in Section IIIChapter 15, or as Hair oil under Heading 3305, titled Preparations for use on the hair , in Section VI-Chapter 33, of the First Schedule to the Central Excise Tariff Act, 1985? HELD THAT:- Presently, it is an admitted fact that pure coconut oil is suitable for multiple uses. That notwithstanding, when a specific heading was created in Chapter 15, viz., Heading 1513, for coconut oil along with other oils, it would not stand excluded therefrom so as to be classified as a cosmetic product under Heading 3305 in Chapter 33 in Section VI of the First Schedule, unless all the conditions required therefor are satisfied. As already noted, such conditions formed part of Chapter Note 2 in Chapter VI of the First Schedule itself, prior to the 2005 amendment, but after that amendment, whereby the said Chapter Note was brought into conformity with Chapter Note 3 in Chapter 33 of the HSN, the Explanatory/General Notes in the HSN in relation to the said Chapter Note would have to be fully satisfied. In effect, not only must the coconut oil be suitable for use as hair oil , but it must also be put in packaging sold in retail for such particular use, i.e., as hair oil. The mere fact that coconut oil is also capable of being put to use as a cosmetic or toilet preparation, by itself, would not be sufficient to exclude such oil from the ambit of coconut oil and subject it to classification as hair oil as coconut oil is name-specific. It is not in dispute that the packaging of the coconut oil in the cases on hand clearly demonstrated that it was being sold as edible oil and all parameters that had to be met in that regard were duly complied with - edible oil would have a shorter shelf life than oil meant for cosmetic purposes and must meet the Indian Standards Specifications prescribed for edible oil which are different from the standards for hair oil. Significantly, the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, provide that edible oil can be packed in specified sizes of 50 ml, 100 ml, 200 ml, 500 ml, 1 litre or 2 litres. Small-sized containers are a feature common to both edible oils as well as hair oils . Therefore, there must be something more to distinguish between them for classification of such oil, be it under Chapter 15 or under Chapter 33, other than the size of the packing - Reference may be made to Meghdoot Gramodyog Sewa Sansthan, U.P. vs. Commissioner of Central Excise, Lucknow [ 2004 (10) TMI 93 - SUPREME COURT ], wherein this Court held that the mere fact that the product in that case was sold in a packing depicting a lady with flowing hair was not determinative of such product being intended as a preparation for use on the hair. This Court considered the composition and curative properties of the product to ultimately conclude that the product was classifiable as a medicament under Heading 3003 in Chapter 30 of the First Schedule. The argument of the Revenue that pure coconut oil should invariably be classified under Heading 3305 is, therefore, liable to be rejected. This argument completely loses sight of the General/Explanatory Notes in relation to Chapter Note 3 in Chapter 33 of the HSN and the fact that the said Chapter Note 3 is identical to Chapter Note 3 in Chapter 33 of the First Schedule to the Act of 1985. It is for the Revenue to take a stand by way of legislative action in the event it chooses to treat pure coconut oil marketed in small quantities differently from Coconut oil in Heading 1513. Having failed to do so and given the fact that the relevant headings in the First Schedule to the Act of 1985 are corresponding with the entries in the HSN, there can be no distinction drawn between the two and the Explanatory Notes in the HSN would have to be given due effect while interpreting Heading 1513 in the First Schedule to the Act of 1985. In consequence, the coconut oil marketed and sold by the respondents during the relevant period must necessarily be classified as edible oil. Thus, pure coconut oil sold in small quantities as edible oil would be classifiable under Heading 1513 in Section III-Chapter 15 of the First Schedule to the Central Excise Tariff Act, 1985, unless the packaging thereof satisfies all the requirements set out in Chapter Note 3 in Section VI-Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985, read with the General/Explanatory Notes under the corresponding Chapter Note 3 in Chapter 33 of the Harmonized System of Nomenclature, whereupon it would be classifiable as hair oil under Heading 3305 in Section VI - Chapter 33 thereof. The impugned orders, holding to that effect, therefore do not brook interference on any count - The appeals are bereft of merit and are accordingly dismissed.

  ---

• 2024 (12) TMI 1021
  Seeking deletion of respondent no. 2 from the array of parties - HELD THAT:- There is no objection from the other side - The name of respondent no. 2 be deleted from the array of parties at the risk of petitioner. Amended memo of parties be filed accordingly.

  ---

• 2024 (12) TMI 1020
  Process amounting to manufacture or not - appellant imported ink in bulk and procured the container form third parties in open market - it was held by CESTAT that the activity undertaken by the appellant does not amount to manufacture - HELD THAT:- There are no reason to interfere with the impugned order passed by the Customs, Excise Service Tax Appellate Tribunal, Chandigarh. The Civil Appeals are, accordingly, dismissed.

  ---

• 2024 (12) TMI 1019
  Denial of CENVAT Credit on Engraved Printing Cylinder Copper Engraved Cylinder - denial on the ground that such Cylinder were not liable to pay the excise duty although the supplier from whom the Respondent-Assessee has purchased these goods has wrongly paid the duty, since these goods were exempted and no duty was required to be paid by the supplier - HELD THAT:- The Tribunal in paragraph 4 of its order has given a finding that there is no evidence on record that the payment of duty by the supplier was questioned / challenged / disputed by their jurisdictional officer and since the payment of duty by the supplier is found to be legal and correct, the Respondent-Assessee cannot be denied benefit of CENVAT credit. The learned counsel for the Appellant-Revenue has not challenged this finding of fact as incorrect. Therefore, on this very limited ground since these findings are not challenged and this being a finding of fact rendered by the final fact finding authority, no substantial questions of law can be said to arise from the impugned Tribunal s order. Secondly, the Tribunal in the impugned order has followed the decision of this Court in the case of THE COMMISSIONER, CENTRAL EXCISE GOA, VERSUS M/S. NESTLE INDIA LTD., [ 2011 (6) TMI 164 - BOMBAY HIGH COURT] and its own decision in the case of C.C.E. S.T. -VAPI VERSUS KRIS FLEXIPACKS PVT LTD (VICE-VERSA) [ 2023 (7) TMI 943 - CESTAT AHMEDABAD] . Nothing has been brought to our notice that the decision of the Tribunal in the case of Kris Flexipacks Pvt. Ltd. has been challenged by the Appellant-Revenue before the higher forum. Therefore, even on this count, no substantial questions of law would arise since the order of the Tribunal in the case of Kris Flexipacks Pvt. Ltd. has been accepted. The appeal of the Appellant-Revenue is dismissed.

  ---

• 2024 (12) TMI 1018
  100% EOU - Refund claim - disallowance of re-credit of cenvat in respect of certain input/input services - non-production of documents in respect of credit availed through ISD - non-application of mind - violation of principles of natural justice - HELD THAT:- It is seen from the impugned Orders of the Commissioner (Appeals) dated 18-11-2016 that the learned Commissioner (Appeals) has recorded a finding that the appellant has not produced any valid documents establishing their claim and that it was not evidenced that they had produced the necessary documents before the lower authority also and further that for want of these documents the aforesaid claim involving amount to the extent involved are liable for rejection. It is found from the records that the appellant has produced a letter dated 11-07-16 stating that they have enclosed three flat files as documents pertaining to their cenvat refund claim. Further, as regards the grounds of non-issuance of show cause notice, the learned appellate authority has put the onus on the appellant to seek clarity from the refund sanctioning authority and has also stated that having preferred the appeals it is not open for them to clamour for observance of principles of natural justice. These findings of the learned appellate authority are erroneous and are contrary to the established principles of natural justice, which would require that if the decision is to reject the claim for various reasons, the applicant/claimant who will be adversely affected by the decision, ought to be served a notice requiring him to show cause as to why such a rejection ought not to be made, before any such decision is taken. In any event, it is not for this Tribunal to go into the initial factual matrix of the claim, to come to any conclusion whether the evidence was correct or not, which would be better left to the adjudicating authority who are empowered and equipped to look into the documents, records, invoices and other evidences and all other relevant aspects. This factual verification of the documents and evidences submitted along with the claim has to be done by the adjudicating authority before recording a finding, and only thereafter would the stage of applying judicial precedents to the matter arise. Since, these claims need to be considered by appreciating the factual matrix, we are of the considered view that the impugned orders in appeal have to be set aside and the matter remanded back to the file of the Original Authority. Hence, without expressing any opinion on the merits of these refund claims, the orders of both the lower authorities are set aside and the matter remanded back to the adjudicating authority to re-consider the issue afresh after following the principles of natural justice bearing. Appeal allowed by way of remand.

  ---

• CST, VAT & Sales Tax

• 2024 (12) TMI 1017
  Time limitation - dismissal of application filed by the writ petitioner for condonation of delay of 655 days in filing appeal before the Tribunal - HELD THAT:- Considering the fact that the assessment is high-pitched assessment and the assessment was ex-parte since the petitioner did not appear and also taking note of the fact that though the final assessment order was passed on 27th February, 2018, till date, the same has remained a paper order and the Government has not been able to recover any tax, one more opportunity can be granted to the writ petitioner to pursue their appeal before the Senior Joint Commissioner, Commercial Taxes, Bally Circle provided the petitioner complies with the pre-deposit condition by paying 15% of the disputed tax. The writ petition is allowed and the orders impugned are set aside including the order passed by the Senior Joint Commissioner, Bally Charge dated 6th July, 2018 subject to the condition that the petitioner pays 15% of the disputed tax, as required under Section 84 (1) of the Act within 30 days from the date of receipt of the server copy of this judgment and order.

  ---

• Indian Laws

• 2024 (12) TMI 1016
  Recovery initiation proceedings for the alleged sums due from the Rice Millers as public demand - initiation of recovery proceedings under the Act against the Rice Millers as the nodal agency of the State Government - adherence of principles of natural justice or not - availing alternate statutory remedies to challenge the recovery certificate - Procurement of Custom Milled Rice (CMR) for the procurement year 2011-12 in the State of Bihar. Whether the recovery by the Civil Supplies Corporation qualifies as a public demand under the Act and the Rules? - HELD THAT:- The definition of public demand under section 3(6) is broad and inclusive. It incorporates any arrears mentioned in Schedule I and allows for recovery of such arrears under the Act. Clause 8-A further clarifies that any loan or advance payable to the State Government, its departments, or officials constitutes a public demand. The provision uses broad language, such as any loan and anybody whatsoever, indicating the legislative intent to create an all-encompassing framework for recovery. Clause 15 additionally specifies that debts owed to certain banks and statutory bodies also qualify as public demands, provided that the liability is acknowledged in writing. As held by the Full Bench of the Patna High Court in Ram Chandra Singh [ 1986 (11) TMI 394 - PATNA HIGH COURT ], the term public demand is of wide amplitude and encompasses all arrears or dues explicitly mentioned or implied in Schedule I. The deliberate legislative design of section 3(6) and Schedule I reinforces the inclusive scope of the term. Upon examination of admitted circumstances and the alleged default in delivery of CMR, it is unable to subscribe to the view taken by the Learned Single Judge on the existence of jurisdictional facts. A cause of action is stated to be a bundle of facts set out in the plaint. Similarly, jurisdictional facts are determined by the totality of circumstances in a given case. It is as simple as not omitting from consideration what is obvious. Likewise, a relevant circumstance, even if obfuscated, is not omitted from consideration while deciding a jurisdictional fact. Jurisdictional facts consist of a sequence of events or a bundle of circumstances. The relevant circumstances are determined on a case-to-case basis. Whether the Civil Supplies Corporation can initiate recovery proceedings under the Act against the Rice Millers as the nodal agency of the State Government? - HELD THAT:- The argument that the absence of a specific clause in the agreement authorising recovery under the Act, thus negating the jurisdiction of the certificate officer, is untenable. The Act itself provides a comprehensive framework for the recovery of public demands. The nature of the transaction, the public interest involved, and the role of the Civil Supplies Corporation as the State s nodal agency allows for the initiation of recovery proceedings before the Certificate Officer. The finding in the impugned judgement that the initiation of proceedings under the Act by the Civil Supplies Corporation, i.e., as the nodal agency of the state government upheld. The unaccounted deposit of rice at the depots of FCI certainly comes within the fold of public demand of the state government under section 3(6) of the Act. Therefore, the proceedings under the Act are maintainable before the certificate officer. Further, the jurisdictional fact on the initiation of recovery proceedings under the Act is available and legal - The impugned judgement correctly determined that the recovery proceedings initiated by the Civil Supplies Corporation were valid and justified. The court has appreciated the facts of the case and applied the law correctly. The nature of the transaction between the State Government and the Rice Millers, involving the procurement, milling, and distribution of public grain, clearly falls within the ambit of public demand as defined in the Act. The certificate officer s jurisdiction to initiate recovery proceedings is thus established. Whether the procedural safeguards under the Act and principles of natural justice have been adhered to during certificate proceedings? - HELD THAT:- The initiation is not in accordance with the procedure stipulated under the Act, the procedure prescribed by the Act is not followed, and the principles of natural justice are violated. Whether the Rice Millers can avail alternate statutory remedies to challenge the recovery certificate? - HELD THAT:- The Rice Millers invoked the writ remedy by raising a jurisdictional fact against realising the sums as a public demand under the Act. As a writ court or in an appeal under Article 136, we are not examining the contentions on alleged procedural deviations. It is left open to the respective Rice Millers to avail a statutory remedy as may be available under the Act. For availing a statutory remedy, we grant thirty days from today to the Rice Millers. In the event of a Rice Miller availing a statutory remedy as permitted by this Judgment, the said authority shall entertain the case without reference to the delay and the period of limitation in availing a remedy before the said authority. Appeal dismissed.

  ---

• 2024 (12) TMI 1015
  Calculation of post award interest - to be calculated on the principal sum adjudged or would it be calculated on the principal sum plus interest on the principal sum which has accrued from the date of cause of action to date of passing of award, as under the new 1996 Act, award is enforced as a decree of the court? - Applicability of Section 31(7) of the Arbitration and Conciliation Act, 1996 - Jurisdiction of the Arbitrator post-award for issuing clarification - HELD THAT:- From an analysis of Section 31(7)(a) of the 1996 Act, which provides for pre-award interest, it is seen that the provision begins with the expression unless otherwise agreed by the parties, thereby highlighting the legislative stance that parties possess the autonomy to determine pre-award interest on the payment of money awarded by the arbitral tribunal. However, no such discretion is available to the parties under Section 31(7)(b) of the 1996 Act though such discretion is available to the arbitral tribunal. Natural corollary to the analysis would be that the sum so awarded by the arbitral tribunal which may include interest from the date when the cause of action arose to the date of the award, would carry further interest of 18 percent from the date of the award to the date of payment unless the arbitral award otherwise directs. Thus, the legislative intent is that the awarded sum whether inclusive of interest or not, in case included, then from the date of cause of action to the date of award, would carry further interest from the date of the award to the date of payment. Going by the provisions contained in Section 31(7) of the 1996 Act, it is evident that an arbitral tribunal has the power to grant (i) pre-award (ii) pendente lite (iii) post-award interest. Intention behind awarding pre-award interest is primarily to compensate the claimant for the pecuniary loss suffered from the time the cause of action arose till passing of the arbitral award - It primarily acts as a disincentive to the award debtor not to delay payment of the arbitral amount to the award holder. Clause (a) of sub-Section (7) of Section 31 provides that the arbitral tribunal may include interest while making an award for payment of money in the sum for which the award is made and as per clause (b), the sum so directed to be made by the award shall carry interest at a certain rate for the post-award period. The purpose for enacting such a provision is to encourage early payment of the awarded sum and to discourage delay. Therefore, the sum directed to be paid by the arbitral award under clause (b) of sub-Section (7) of Section 31 of the 1996 Act is inclusive of interest pendente lite. The appellant had participated in the clarificatory proceeding before the learned Arbitrator taking the stand that no clarification as sought for was required on merit. Learned Single Judge, firstly, held that it was no longer open to examine the question as to whether the respondent had any right to approach the learned Arbitrator to seek clarification or whether the learned Arbitrator had become functus officio since the Division Bench had expressly permitted the respondent to seek clarification from the learned Arbitrator which decision was not interfered with by this Court. Thereafter, the decision of the Single Bench setting aside the clarification of the learned Arbitrator which was affirmed by the Division Bench were set aside by this Court in the civil appeal of the respondent with liberty to the respondent to seek execution as per the law laid down in M/s. Hyder Consulting (UK) Ltd. Secondly, learned Single Judge clarified that the respondent would be entitled to post-award interest not only on the claims as awarded but also on the pre-award interest as well as on the interest pendente lite. The quantum of pre-award interest and the interest pendente lite would be calculated and included in the amount awarded i.e. the sum and the post-award interest would run on the said sum i.e. principal amount plus interest (preaward interest plus interest pendente lite). The issue raised by the appellant in the present proceeding i.e. learned Arbitrator had become functus officio and therefore had no jurisdiction to issue the clarification, was also raised in the miscellaneous application filed by the appellant before this Court seeking clarification of the order dated 12.03.2015. While dismissing the miscellaneous application, no leave was granted by this Court to agitate the aforesaid issue in any other proceeding. Therefore, viewed from this perspective also, it is not open to the appellant to raise the aforesaid issue again in the present proceeding. The clarification sought for and issued by the learned Arbitrator would be covered by the expression unless another period of time has been agreed upon by the parties appearing in Section 33 (1) of the 1996 Act. This is a case where court had permitted the respondent to seek clarification from the learned Arbitrator beyond the initial period of 30 days whereafter the appellant fully participated in the clarificatory proceeding. Therefore, the present case would be covered by the above expression. In the circumstances, contention of the appellant that the learned Arbitrator had become functus officio and therefore lacked jurisdiction to issue the clarification cannot be accepted and is thus rejected. There are no error or infirmity in the impugned order passed by the Division Bench of the High Court - the appeal lacks merit and is, accordingly, dismissed.

  ---

• 2024 (12) TMI 1014
  Interpretation of insurance policy conditions regarding vehicle damage coverage and liability of the insurer in case of an accident - delay in intimation. Challenge to order by the National Consumer Disputes Redressal Commission that reduced the insurance amount payable to the appellant - HELD THAT:- On a careful scrutiny of the records of the case, it is seen that both the District and State Commissions had reached a concurrent finding about whether the delay in intimation to the respondent was justified. Both held that this delay was justifiable and not fatal to the insurance claim. Both the courts had also reached the finding that the damage took place in two phases: (a) once when the vehicle fell into a ditch and capsized; and (b) when the short-circuiting took place due to the car remaining in that state. The National Commission could not have interfered with pure finding of fact arrived at by the District and State Commissions while exercising revisional jurisdiction. It is unclear as to how the National Commission perceived that the State Commission exercised jurisdiction not vested in it or has failed to exercise jurisdiction vested in. There is nothing to indicate in the decision of the National Commission as to whether there is any illegality in the approach adopted by the State Commission or that it had acted with material irregularity. The other ground that the respondent has raised is that the survey report was disregarded by the District and State Commissions but the National Commission has correctly examined and relied on it. This submission cannot be accepted, since the State Commission had examined the survey report in detail and in fact found it to be lacking. It stated that the surveyor s claim that the vehicle was left unattended cannot be accepted since the appellant had justifiable reasons for the same. Furthermore, the finding of the surveyor that the short-circuiting was caused by the appellant himself was not based on any evidence. In the present case, no miscarriage of justice is made out by the respondent. The State Commission has addressed all the issues raised before it and found the delay in intimation to be reasonable and that the insurance claim is payable on the damage due to the accident as well as the short-circuiting. The State Commission also examined the genuineness of the accident s claim by considering the police report and discarded the surveyor s report for lack of evidence. It then directed the respondent to pay the entire insured sum giving its reasons for the same. Hence, the appellant is correct in stating that the National Commission has transgressed its jurisdiction by interefering with the State Commission s order. Delay in intimation - HELD THAT:- Reference made to the decision of this Court in OM PRAKASH VERSUS RELIANCE GENERAL INSURANCE AND ORS. [ 2017 (10) TMI 1663 - SUPREME COURT] where it was held that the delay may be condoned if it is properly explained. The impugned order set aside - appeal allowed.

  ---

• 2024 (12) TMI 1013
  Declination to interfere in the allotment of land by the RespondentState to Medinova Regal Cooperative Housing Society - Eligibility and composition changes of MRCHS - HELD THAT:- MRCHS proposed members in their initial application were subsequently changed thrice, in order to somehow meet the eligibility criteria. When MRCHS replied to the Letter of Intent on 28.02.2003, the proposed society had removed 5 of its members out of the list of eleven earlier submitted alongwith their application. These names were deleted on the grounds that they were ineligible. Had this been the case, why were they included in the first place? The only purpose therefore why these names were shown were because they were all doctors of Tata Memorial Centre on whose names ostensibly MRCHS was trying to get the allotment made. It was even noted by the Revenue Forest Department, Govt. of Maharashtra that the main object behind sanctioning of the plot of land to MRHCS i.e., to provide housing to the doctors working at Tata Memorial Hospital in close proximity to their workplace can no longer be achieved, due to changes in the composition of the society. In this case as well, no documents have been placed on record by MRCHS or the State to show that when the Letter of Intent was issued in their favour, more plots were unavailable in the layout as prepared under Rule 24 - MRCHS had applied for allotment of a different plot which is also at Village Bandra and part of the same Survey Number and hence at the very least there were more than two plots available for allotment in this layout when the Letter of Intent came to be issued in favour of MRCHS. In S.V. ASGAONKAR AND ORS. VERSUS THE MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY AND ORS. [ 2018 (4) TMI 1996 - SUPREME COURT] this Court upheld the dismissal of the appellant society s writ petition against the finding of ineligibility of its members. It was observed that the Society was conscious of the fact that eligibility of members has to be seen as on 11122003 that is the date on which letter of intent was issued in pursuance of allotment. The Society having accepted the aforesaid clause of eligibility and accepted the offer of allotment as given by the Authority, it is failed to see that how the eligibility as on 11-12-2003 be permitted to be questioned . However, in the present case, not only were MRCHS proposed members found ineligible, but the society was allowed to change its members frequently, starting from the point when it accepted the Letter of Intent in its favour. The order of the High Court of Bombay set aside - appeal allowed.

  ---

• 2024 (12) TMI 1012
  Challenge to order taking cognizance under Section 138 of the Negotiable Instruments Act, 1881 - rejection of petition seeking dismissal of the complaint case on the ground of pendency of a civil suit filed by the accused - quashment of the entire proceeding - rebuttal of presumption - HELD THAT:- It is well settled that the presumption enables the holder of the cheque to show a prima-facie case and such presumption shall survive before the trial court only when the contrary not having proved to the effect that the cheques in question were not issued for a consideration or discharge of any existing or future debt or liability - In the case in hand, neither the signature nor the issuance of the cheque has been disputed. The entire defence as recorded hereinabove can be established or the plea taken can be established by adducing rebuttal evidence inasmuch accused can place reliance on the material adduced by the complainant to rebut that actual liability was not disclosed and it is vague. It is by now well settled that the accused can undoubtedly place reliance not only on the complaint s lacuna or material but can also adduce positive evidence and take his defence under Section 313 Cr.P.C. to rebut the presumption. The pendency of the civil case, with the allegation that the defective machines were delivered, that the complainant is not liable to pay in view of deficiency etc. can be matter of such defence of the accused. In the case in hand, this court does not find any of such prerequisite after going through the complaint. In the case in hand, this court is of the unhesitant view that the necessary factual foundation to take cognizance under Section 138 of the NI Act has been laid in the complaint. This court is also of the unhesitant opinion that merely for the reason that the detail of enforceable debt has not been stated in the complaint, the complaint cannot be quashed, more particularly, when a specific statement have been made at paragraph 4,5 and 6 as regards factum of purchase of mobile stone crusher equipments, issuance of cheque for discharge of legally enforceable liability, the amount of the cheque and the total amount of the alleged due. It cannot also be said that the complaint is bereft of even the basic facts, which are absolutely necessary for making an offence under Section 138 of the NI Act. This court finds no merit in this petition to persuade it to exercise its power under Section 482 Cr.P.C. to quash the proceeding of Complaint Case No. 208C/2016 under Section 138 of the NI Act - Accordingly, the present criminal petition stands dismissed.

  ---

• 2024 (12) TMI 1011
  Seeking condonation of delay of 404 days in filing the appeal - HELD THAT:- It is clear that though the judgment of the learned Single Judge was pronounced on 27.02.2023, but the file kept on moving from 03.04.2023 till 30.04.2024 from table to table and from officer to officer. It is not as if the applicant was not aware about the period for filing the Letters Patent Appeal, yet a delay of 404 days occurred in filing the appeal from the date of the order and receiving of certified copy of the Judgment. It thus appears that the applicant has adopted a very lethargic attitude in the matter of filing the Letters Patent Appeal and has been negligent in that regard. Looking to the overall facts and circumstances of the case and the stand/explanation given by the appellant, it is opined that sufficient cause has not been shown to condone the huge period of delay in filing the appeal; accordingly, this application is dismissed.

  ---