TMI Tax Updates - e-Newsletter
December 26, 2022

Case Laws in this Newsletter:

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

Articles

1. Shipping Industry – A Complex Saga

   By: Sabyasachi Chakraborty

2. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

3. Revenue Department has the discretion to allow/disallow redemption of prohibited hazardous waste

   By: Bimal jain

4. Interest paid on belated payments of service tax is allowable for deduction u/s 37(1) IT Act

   By: Bimal jain

Circulars / Instructions / Orders

GST - States

1. F.3 (461)/GST/Policy/2022/ 1835-1841 - dated 23-12-2022

Submitting Field Visit through GST Field visit app

2. F.3 (459)GST/Policy/2022/1785-92 - dated 15-12-2022

Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 47th meeting held on 28th- 29th June, 2022 at Chandigarh

3. F.3 (460)GST/Policy/2022/1793-1800 - dated 15-12-2022

Clarification on refund related issues

4. E-128072/DTT-D011/9/GST/Policy/2022/1697-1706 - dated 10-11-2022

Clarification on various issues pertaining to GST

Highlights / Catch Notes

GST

• Court Overturns Registration Cancellation Due to Lack of Valid Reasoning in Show-Cause Notice Dated May 26, 2022.

  Case-Laws - HC : Cancellation of registration of petitioner - no valid reason provided - as the show-cause notice dated 26.05.2022 is bereft of any reasons, the same deserves to be quashed and set aside and hereby quashed and set aside. The order of cancellation of registration dated 11.10.2022 is also quashed and set aside. - HC
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• GST Applies to University Affiliation Services for Colleges, Not Exempt from Tax, Says Authority.

  Case-Laws - AAR : Levy of GST - Supply of service or not - services provided by the University of Kola relating to affiliation granted to colleges for imparting education - the affiliation services provided by the applicant enables the said institution to conduct the course/programme and do not relate to admission of students to such course/programme in the said institutions or conduct of examination for such admission in the said institution. - affiliation fees so collected by the applicant is not exempted from GST - AAR
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Income Tax

• Court Denies Mandamus Petition to Extend Construction Project Period u/s 80-IBA(2)(b) Due to Insufficient Pleadings.

  Case-Laws - HC : Deductions u/s 80-IBA - writ of Mandamus to direct the Respondent to extend the time period for completion of construction projects from five years to seven year under section 80-IBA(2) (b) - We find the present petition is grossly lacking in sufficient pleadings as would be required from making out a case of discrimination as claimed by the Petitioner. The petition lacks all material particulars required to be stated in the pleadings, to draw some parity or similarity between members of the Petitioner and persons stated to be covered by the provisions of section 80-IAC of the Act. - HC
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• Court Reduces Penalty for Tax Officer Misconduct; Improves Department Practices Following Jurisdiction Abuse Case.

  Case-Laws - HC : Reduction of cost imposed on Income Tax officers - they have acted arbitrarily, illegally without jurisdiction, caused harrassment to the petitioner and abused power conferred under the Act, 196 - corrective steps being taken by the respondent-department to improve its working - we reduce the cost from Rs.50 lacs to Rs.5 lacs with the consent of learned counsel for the petitioner and accordingly modify our judgment dated 11.08.2022 in respect of cost only. - HC
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• Tribunal Rules: Assessing Officer Must Accept Valuation Officer's Report u/s 50(C)(2) for Capital Gains.

  Case-Laws - HC : Capital gain computation - Jantri rates v/s DVO’s report - Tribunal has rightly observed that once valid reference to the valuation officer is made under section 50(C)(2) of the Act, assessing officer is not empowered to reject the report of the valuation officer. - the A.O. is not justified in adopting the value other than as adopted by the stamp duty authority. - HC
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• Trademark Licensing Payments Classified as Royalties u/s 9(1)(vi) and India-Turkey Tax Treaty Article 12(3.

  Case-Laws - AT : Income deemed to accrue or arise in India - the consideration received by the assessee for permitting the right to use of brand name/trademark under TLA is nothing else but in the nature of royalties as defined under section 9(1)(vi) read with Article 12(3) of India – Turkey tax treaty. Therefore, we concur with the view expressed by learned DRP. - AT
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• Assessee Loses Section 11 Tax Exemption Due to Violation of Sections 13(1)(b) & 13(1)(c) for Specified Persons.

  Case-Laws - AT : Exemption u/s 11 - Application of provisions of "Accumulation of income" for Notional Income (Rent) - the assessee has violated the provisions of section 13(1)(c) r.w.s. 13(1)(b) of the Act, as the assessee has received rent from two tenants who are specified persons u/s.13(3) of the Act and hence, clear violation of provisions of section 13(1)(c) r.w.s. 13(1)(b) of the Act. Therefore, the assessee is not entitled for claim of deduction. - AT
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• Taxpayer Not Liable for TDS Non-Deduction Due to Retrospective Amendment u/s 195(1) of Income Tax Act.

  Case-Laws - AT : TDS u/s 195 - disallowance u/s 40(a)(i) - AO has invoked Explanation-2 to Sec.195(1) as inserted by Finance Act, 2012 w.r.e.f. 01.04.1962. However, the assessee could not be expected to deduct tax at source in this year by foreseeing such a future amendment to law. In the impugned year, there was no such obligation on the assessee to deduct TDS but such obligation has arisen out of subsequent amendment to law which assessee could never anticipate. - AT
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• Penalties u/ss 271D and 271E not sustainable as assessee shows reasonable cause for using journal entries.

  Case-Laws - AT : Penalty u/s. 271D - assessee has repaid loans/ deposits from various sister concerns through journal entries, i.e., otherwise than account payee cheques/draft - though the assessee has violated the provisions of ss. 269SS/269T of the Act in respect of journal entries, the assessee has shown reasonable cause and, therefore, the penalty imposed u/s 271D/271E of the Act are not sustainable. - AT
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• Compensation for BOT project pre-closure not classified as revenue receipt u/s 28(ii)(d), ruling favors assessee.

  Case-Laws - AT : Nature of receipt - amount received by the assessee firm as a compensation for pre-closure of its BOT projects - Revenue or capital receipt - both the learned authorities have erred in law and on facts in invoking section 28(ii)(d) qua assessee’s impugned compensation thereby holding it as a revenue receipt. The assessee succeeds. - AT
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• ITAT Appeal Dismissed: Must First Approach Commissioner (Appeals); Counsel's Misunderstanding Not Grounds for Exception.

  Case-Laws - AT : Maintainability of appeal before ITAT - Commissioner (Appeals) need to be approached first - The order sought to be impugned in this appeal is passed by the AO and, therefore, this exception does not come into play. Learned counsel’s understanding of the legal position, even if bonafide- particularly considering his young age and limited experience, is clearly incorrect. The appeal filed before us is thus indeed not maintainable in law. - AT
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Customs

• Detention order for gold smuggling voided; detainee not provided legible or translated documents, undermining legal validity.

  Case-Laws - HC : Detention order - Smuggling - illicit import of foreign origin gold into India via air cargo - The failure and non-supply of legible/translated copies of all RUDs despite a request and representation made by the detenu for the supply of the same, renders the order of detention illegal and bad in law; and vitiates the ‘subjective satisfaction’ arrived at by the Detaining Authority - the Detaining Authority gravely erred in relying upon the illegible documents which is equivalent to non-placement of translated-RUDs in a language which the detenu understands; by the act of omitting them from due consideration, which consequently vitiates the ‘subjective satisfaction’ arrived at by the Detaining Authority. - HC
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• Court Overturns Confiscation of Vessel Due to Lack of Evidence for Misstatement or Misconduct by Appellants.

  Case-Laws - AT : Confiscation of imported goods - vessel - there is no sufficient material to substantiate the case of mis-statement much less any such acts wilfully done by the appellants. In any event, since the vessel cannot be said to have been imported contrary to any prohibition in force, redemption fine and penalties upon the appellants imposed by the impugned order are liable to be set aside. - AT
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• DGFT Grants Extension for EPCG Export Obligations; Customs Ordered to De-seal Machinery Sealed Since 2016.

  Case-Laws - AT : Confiscation of the imported machinery under the EPCG scheme - the DGFT, by granting extension for fulfilment of export obligation, have condoned the delay in achieving the export obligations and have also regularised the shifting of the machinery to the new address. However, such extension remained mere formality or an eye wash, as the appellant did not have any opportunity to manufacture and export pursuant to granting of extension in March, 2018, as the machines were admittedly lying sealed by the Customs Department since 2016. - the machines shall be de-sealed with the immediate effect - AT
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IBC

• No Further Extensions Allowed: Section 12 Proviso Bars Additional Insolvency Resolution Periods, Section 60(5) Cannot Override This.

  Case-Laws - HC : Extension of period of insolvency resolution proceeding, beyond limit - when there is a specific provision on the question of maintainability of a claim for subsequent extension under the first proviso to section 12, the provisions of section 60(5) cannot be invoked to take advantage of the non-obstante clause to make an application for subsequent extension maintainable in spite of the specific bar on its maintainability provided in the first proviso to section 12.- HC
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• Supreme Court to Decide on Sole Arbitrator Appointment Amidst CIRP, No Stay on NCLAT Order Yet.

  Case-Laws - HC : CIRP - Seeking appointment of a sole arbitrator for the resolution of disputes between the parties - The purpose and rationale behind granting a moratorium is to ensure that the assets of the corporate debtor are protected, with an intention to keep the company a going concern and to use the period to strengthen its financial position. It means, the intent of the order of the NCLAT is to protect the assets of IL&FS and its group companies in order to make the resolution process effective/purposeful. - Since, the matter is pending before the Supreme Court and there is no stay of the NCLAT order - HC
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• Appellants' Objection to 2019 CoC-Approved Resolution Plan Dismissed; Plan Already Implemented, No Grounds for Reversal Found.

  Case-Laws - AT : Approval of Resolution Plan - Appellants raised several objections against the Resolution Plan, as approved by the CoC, being discriminatory towards ‘Operational Creditors’ - Keeping in view the peculiar facts of the instant case that the Resolution Plan was approved by the CoC way back in 2019 and the Adjudicating Authority has approved the Plan on 01.06.2021 after a period of two years and the Plan has already been implemented, we do not see it a fit case to set the clock back - AT
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• Adjudicating Authority chooses Resolution Professional candidate from a single applicant, bypassing others; Indiabulls Housing Finance Ltd. not mentioned.

  Case-Laws - AT : Seeking replacement of Resolution Professional (RP) - Why the Adjudicating Authority did not choose the name suggested by two Applicants and accepted the name suggested by one Applicant- ‘Indiabulls Housing Finance Ltd.’ has not been dealt with the order. - AT
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• Madras High Court Issues Interim Injunction on Disciplinary Actions, Does Not Address AFA Requirement Under Regulation 7A.

  Case-Laws - AT : Valid Authorisations for Assignment (AFA) on the date of appointment as the Liquidator of the Corporate Debtor - The Interim injunction order passed by the Hon’ble Madras High Court confines only to the order with regard to action arising out of proceedings of the Disciplinary Committee and is silent on the issue of requirement of AFA by the Appellant, compulsory requirement of AFA as per Regulation 7A of IBBI (Insolvency Professional) Regulation 2016 and any stay on removed of the Appellant from Liquidator of the Corporate Debtor - this Appellate Tribunal do not find prima-facie any restrain on the Adjudicating Authority to adjudicate in this case and no conflict is found. - AT
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• Tribunal Rules Insolvency and Bankruptcy Code Prevails Over SARFAESI Act, Invalidating Sale Confirmation Amid Moratorium Violation.

  Case-Laws - AT : Validity of Sale Confirmation Letter and Sale Certificate - One cannot remain in Oblivion, as to the crystalline fact, that the Appellant / 1st Respondent, had Registered the Sale Certificate, to and in favour of the 2nd Respondent, in utter disregard to the Order of Moratorium, declared by the Adjudicating Authority - Viewed in that perspective, the availing of remedy, under ‘Section 17 (1) of the SARFAESI Act, 2002, by the Aggrieved, before the Debts Recovery Tribunal – I, Hyderabad, is an Otiose one and the same is Negatived, by this Tribunal, considering the fact that the provisions of I & B Code, 2016, overrides the SARFAESI Act, 2002. - AT
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• Resolution Plan Approved with 97.18% Majority; Tribunal Affirms Priority of Employee Provident Fund Dues Under IA No.746/2021.

  Case-Laws - AT : Validity of approval of Resolution Plan - Dues of EPF - Seeking entire claim to be allowed on priority - the ‘Petitioner’ / ‘Appellant’ is ‘not a Party’ to the ‘Proceedings’ - the Resolution Plan came to be approved with a majority of 97.18% Vote, by giving a due consideration and weightage to the commercial wisdom of the Committee of Creditors, this Tribunal comes to a resultant conclusion, that the impugned order in allowing the IA No.746/2021, by approving the Resolution Plan, is free from any Legal Flaws. - AT
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Service Tax

• Service Tax on Residential Complexes for Urban Poor Deemed Unsustainable Due to "Personal Use" Classification by Commissioner.

  Case-Laws - AT : Levy of Service tax - Construction of Complex Service - In the present case, the quarters/residential complexes were got constructed by the AMC and AUDA for urban poor people for their residential use, the same amounts to “personal use‟. The confirmation of demand qua these services by the Commissioner is therefore not sustainable. - AT
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Central Excise

• Court Rules Undervaluation of Bought-Out Items Requires Duty from Supplier; Erected Goods Become Immovable Property, No Excise Duty.

  Case-Laws - AT : Valuation - non-inclusion of value of Bought Out items received at site - If there was any undervaluation of these items then the demand of duty should have been made on the supplier of these brought out items. Admittedly and undisputedly these brought out items were not even brought into the premises of appellant - Undisputedly after erection of the goods manufactured and cleared by the appellant and other brought out items at the site of Customer, what emerges is a immovable property which as such is not excisable. - AT
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VAT

• Taxpayer Entitled to Interest on Delayed Refund; Tax Department Must Comply Despite Form 27 Issuance.

  Case-Laws - HC : Refund the amount of excess tax paid by the appellant - if the amount is not refunded within time, the appellant / assessee would be entitled to interest on the same as the department seeks to recover alleged tax dues with interest. The same principle will equally apply to the department as well when they have withheld the refund though Form 27 was issued as early as on 4th August, 2016. - HC
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• Court Rejects Appeal Due to Unpaid Pre-Deposit; Orders Payment Within Two Weeks to Proceed Further.

  Case-Laws - HC : Rejection of appeal on the ground of non-payment of pre-deposit amount - instead of this Court delving into the factual aspect involved in the matter, should direct the petitioner to make the payment of the pre-deposit amount within a two weeks - HC
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Case Laws:

• GST

• 2022 (12) TMI 1102
  Cancellation of registration of petitioner - no valid reason provided - HELD THAT:- Perusal of both these orders dated 26.05.2022 and 11.10.2022 show that no valid reason was given for cancellation of registration. Despite requested for, no details were provided and prima facie reply of the petitioners have not been considered. To our opinion, the show-cause notice dated 26.05.2022 does not specify the reason for which the allegation of wrongful availment or utilization of Input Tax Credit (ITC) or refund of tax is made. As the show-cause notice does not contain reason to justify the action of the respondent, it is violative of principles of natural justice. As held by this Court in AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] , reasons are heart and soul of the order and non-communication of the same itself amounts to denial of reasonable opportunity of hearing resulting into miscarriage of justice. Therefore, applying the same principle, as the show-cause notice dated 26.05.2022 is bereft of any reasons, the same deserves to be quashed and set aside and hereby quashed and set aside. The order of cancellation of registration dated 11.10.2022 is also quashed and set aside. Petition disposed off.

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• 2022 (12) TMI 1101
  Excess claim of input tax credit (ITC) - show cause notice as well as notice of personal hearing were uploaded in the common portal which is an accepted mode of service of notice under Section 169 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- On due consideration, we are of the view that it would only be in the interest of justice if the petitioner is granted an opportunity of hearing by the Assistant Commissioner before passing a fresh order in accordance with law. The matter remanded back to the file of Assistant Commissioner (ST), Maredpally Circle, Hyderabad - petition disposed off.

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• 2022 (12) TMI 1100
  Levy of GST - Supply of service or not - services provided by the University of Kola relating to affiliation granted to colleges for imparting education - amount collected by way of affiliation fee, are exempted vide S.No 66 of Notification No.12/2017-CT (Rate) dated 28.06.2017 or not - HELD THAT:- The amendment was proposed to exempt services relating to admission to, or conduct of examination for admission to all educational institutions, as defined in the notification (definition 2(y) of Notification No. 12/2017-CT(R)). Thus the entry at 66(b)(iv) seeks to exempt only those services provided to such institution in relation to admission of students or conduct of examination for such admission to all the educational Institutions, including the higher educational institutions, which were not exempted up to this amendment. On examination of clarification in Circular No. 177/09/2022-TRU, we don t found that affiliation fees so collected by applicant from its affiliated colleges is exempt. Further we would like to refer Circular No. 151/07/2021-GST dated 17.06.2021 regarding Clarification regarding GST on supply of various services by Central and State Board (such as National Board of Examination) wherein it is clarified at SI.4 (iii) that 18% GST will be applied to other services. In the case at hand, it is evident that the affiliation services provided by the applicant enables the said institution to conduct the course/programme and do not relate to admission of students to such course/programme in the said institutions or conduct of examination for such admission in the said institution. Also, the exempted services on the conduct of examination is that related to the admission to such institution and not related to the examination based on which degree/title, etc are conferred to the students, as is being claimed by the applicant, though we do not part any opinion on the claim of the applicant that they extend such services to the institutions by extending the affiliation - affiliation fees so collected by the applicant is not exempted under the entry SI.No.66 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended.

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• Income Tax

• 2022 (12) TMI 1099
  Reopening of assessment u/s 147 - Allowability of expenses incurred on advertisement and marketing by the Petitioner - change of opinion - Reopening beyond period of four years - As decided by HC [ 2021 (11) TMI 776 - BOMBAY HIGH COURT] Once the Assessing Officer had applied his mind in the regular assessment proceedings of Petitioner having incurred advertisement and marketing expenditure, it is not open for the Assessing Officer to reopen the assessment - when the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. AO could not have reopened the assessment merely on the basis of change of opinion HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed.

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• 2022 (12) TMI 1098
  Education cess as a disallowable expenditure u/s 40(a)(ii) - assessee states that in view of the amendment vide the Finance Act, 2022 with retrospective effect from 01.04.2005 to Section 40(a) (ii) of the Income Tax Act, 1961, the present appeal has to be allowed. HELD THAT:- In view of the statement made, we direct that the Education cess paid by the respondent-assessee would not be allowed as an expenditure under Section 37 read with 40 (a) (ii) of the Income Tax Act, 1961. Assessee states that they have also paid the applicable tax on the disallowance. Recording the above, the appeal is allowed in the aforesaid terms, without any order as to costs.

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• 2022 (12) TMI 1097
  Deductions u/s 80-IBA - writ of Mandamus to direct the Respondent to extend the time period for completion of construction projects from five years to seven year under section 80-IBA(2) (b) - HELD THAT:- The Petitioner s claim to be discriminated against, on the basis that its members are similarly situated to persons covered under the provisions of section 80-IAC of the Act. In order to prove the element of discrimination, the Petitioner would be required to plead specific facts to demonstrate that its members as a class and those covered by the provisions of section 80- IAC of the Act are similarly situated The Petitioner would be required to make out a case for the issuance of a writ of Mandamus in exercise of powers vested in this Court under Article 226 of the Constitution of India for directing the Respondent, or for that matter, the legislature to legislate and extend the timelines in the provisions of section 80-IBA(2)(b) of the Act, 1961 as claimed in the petition. We find the present petition is grossly lacking in sufficient pleadings as would be required from making out a case of discrimination as claimed by the Petitioner. The petition lacks all material particulars required to be stated in the pleadings, to draw some parity or similarity between members of the Petitioner and persons stated to be covered by the provisions of section 80-IAC of the Act. Further applying the ratio laid down in Supreme Court Employees Welfare [ 1989 (7) TMI 333 - SUPREME COURT] this Court would not exercise its jurisdiction under Article 226 of the Constitution of India, to issue a writ of Mandamus to the Respondent and much less to the legislature, directing the legislation in the nature sought by the Petitioner in the reliefs claimed in the petition. We are of the opinion that no writ of Mandamus would lie to direct the legislature and accordingly, we dismiss the petition.

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• 2022 (12) TMI 1096
  Exemption u/s 10(37) - entitlement of a person for exemption under Clause 37 Section 10 - land needed for the public purpose within the meaning of Land Acquisition Act - acquisition of the land at Village Dindoli by the SMC was for the Sewage Treatment Plant - whether land not being used as an agricultural land two years prior to the transfer to SMC? - HELD THAT:- CIT(Appeals) and the ITAT both have held rightly that the acquisition of the land at Village Dindoli by the SMC was for the Sewage Treatment Plant and this is a compulsorily acquired land under the provision of Section 107 of the GTP UD Act. The land was needed for the purpose of Town Planning Scheme or the Development Plan and therefore, it was deemed to be the land needed for the public purpose within the meaning of Land Acquisition Act. Deed of transfer of the land was signed between the SMC represented by the Director of the Town Planning and the assessee along with his family members - The proceedings u/s 77 of the BPMC Act were pending at the time of registration of sale deed for transfer of property and pending the reservation, efforts were made by the farmers and SMC to negotiate the price of land to be transferred in favour of the SMC to avoid the compulsory acquisition of the land by SMC under Sections 77 and 78. This negotiation had been vetted by the Standing Committee of the SMC vide its Resolution No. 1758 dated 28.12.2007 where the SMC had agreed to pay land owners at the rate of Rs. 2,000/- per sq.mt for their land and to not invoke provisions of Sections 77 and 78 (Compulsory Acquisition) of Gujarat Town Planning Act. The land had been transferred by the registration of sale deed by the assessee and the SMC where the purchaser had to pay stamp duty at the prevalent market rate to avoid any kind of litigation. This was a better way worked out by the authority and the land owners. This had resulted into the Assessing Officer finding it not to be a compulsory acquisition, but, more a voluntary transfer. However, this Court in case of other assessee being Dipak Kalidas Pauwala [ 2016 (4) TMI 431 - GUJARAT HIGH COURT ] has held the requisite conditions of Section 10(37) to have been fulfilled. The issue raised in the instant case is that the agricultural land owned by the respondent assessee should have been used for a period of two years immediately before the date of transfer for the agricultural purpose and that aspect is missed out by all authorities. As noticed that before the Ao, the department has not raised the issue and the order AO was further challenged before the CIT (Appeals) and thereafter, before the Tribunal where, by a concurrent finding they have held in favour of the respondent. These are the factual aspects of the land not being used as an agricultural land two years prior to the transfer to SMC. This being a factual aspect never having been raised by the department and none of the authorities having opined anything on this, that cannot furnish the ground for disallowing anything under Section 10(37) of the Act. Tax Appeal is dismissed.

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• 2022 (12) TMI 1095
  Imposition of Cost on Income Tax officers - Reduction of cost imposed by our judgment in SR COLD STORAGE VERSUS UNION OF INDIA AND 3 OTHERS [ 2022 (8) TMI 806 - ALLAHABAD HIGH COURT] - respondents have acted arbitrarily, illegally without jurisdiction, caused harrassment to the petitioner and abused power conferred under the Act, 1961, which resulted in creation of illegal demand of income Tax - HELD THAT:- As considering the request and steps being taken by the respondent-department to improve its working so as to rule out possibility of harassment of genuine assessees in the hands of the departmental-officers, we reduce the cost from Rs.50 lacs to Rs.5 lacs with the consent of learned counsel for the petitioner and accordingly modify our judgment dated 11.08.2022 in respect of cost only. The cost shall be deposited by the respondents within one month from today in terms of the directions given in the judgment in SR COLD STORAGE [supra].

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• 2022 (12) TMI 1094
  Capital gain computation - Jantri rates v/s DVO s report - scope of invoking provisions of section 50C - AO empowered to reject the report of the valuation officer - AO to ascertain the fair market value, referred the matter to the Department Valuation Officer s (DVO) but rejected the DVO s report, on the ground that the sale instance of A.Y.2008-09 were considered when the old Jantri rates were prevalent - HELD THAT:- Since, section 50C provides the rate adopted or assessed by the Stamp Duty Authorities is to be considered for the purpose of Section 50C - AO was not correct in adopting the market value assessable for the purpose of stamp duty, as said the provision has been inserted in the section 50C with effect from 01/10/2009, and applicable from A.Y.2010-11. Tribunal has rightly observed that once valid reference to the valuation officer is made under section 50(C)(2) of the Act, assessing officer is not empowered to reject the report of the valuation officer. This finding of the Tribunal is supported by the decision of coordinate bench in the case Ravjibhai Nagjibhai Thesia [ 2016 (9) TMI 645 - GUJARAT HIGH COURT] Therefore, we could not find any error in the findings of the Tribunal that the A.O. is not justified in adopting the value other than as adopted by the stamp duty authority. No substantial question of law.

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• 2022 (12) TMI 1093
  Jurisdiction to initiate Reopening of assessment - validity of order under Section 148A(d) - Petitioner also challenges the order passed by the CIT (International Taxation 2), Mumbai, in purported exercise of powers under Section 127 - Notices u/s 148 A(b) and the consequent notice u/s 148 of the Act are challenged on the ground that the said order and notice could be sustained only, if the initial notice under Section 148 A(b) of the Act had been issued by the concerned A.O. at Delhi. HELD THAT:- In the present case, it is stated that while notice under Section 148 A(b) of the Act was issued by the officer at Bombay, the order under Section 148A(d) as also the notice 148 of the Act were issued by the A.O. at Delhi, which thus cannot be upheld. Prima facie, we are satisfied with the argument of Mr. Mistri, learned Senior Counsel that a part of cause of action has accrued to the Petitioner within the territorial jurisdiction of this Court, inasmuch as the initial notice under Section 148 A(b) of the Act was issued by the A.O. in Mumbai and that this Court would have the jurisdiction to entertain the present writ petition, more so when this Court had proceeded to exercise jurisdiction in the case of the Petitioner while entertaining a challenge to the initial notice under Section 148 of the Act, issued under the unamended provisions of Section 148 of the Act as it existed before 01st April, 2021. Issue notice to Respondent Nos. 2, 4 and 5, returnable on 13 th January, 2023. Objections be fled within six weeks from today. There shall be ad-interim relief in terms of prayer clause d of the petition.

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• 2022 (12) TMI 1092
  Assessment u/s 153A - addition of penny stocks LTCG - incriminating material found during search or not ? - HELD THAT:- We find that this is an unabated assessment. Hence, de hors incriminating material, addition is not sustainable in assessment u/s 153A. This issue is duly decided by Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] - Other decisions referred by ld. CIT (A) are also germane. Accordingly, following the precedent, we do not find any infirmity in the order of the ld. CIT (A). Accordingly, we uphold the same. Appeal filed by the Revenue stands dismissed.

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• 2022 (12) TMI 1091
  Income deemed to accrue or arise in India - Amount received by on account of transfer of trademark and brand name - Whether be treated as royalty under Article 12 of India Turkey Double Taxation Avoidance Agreement (DTAA), instead of capital gains under Article 13 of the DTAA - assessee is a non-resident corporate entity incorporated under the laws of Turkey and a tax resident of Turkey - HELD THAT:- As relying on Hilton Roulunds Ltd. case [ 2018 (4) TMI 1485 - DELHI HIGH COURT] licensee acknowledges the licensor s rights and title over the trademark, the manner of use of trademark/brand name is specified and restricted in the TLA and the licensee is bound by such conditions/restrictions. TLA authorizes the licensor to terminate the agreement in case of any breach of the conditions. That being the case, it has to be held that it is a case of licence conferring right to use the trademark/brand name and not assignment/transfer of brand name/trademark in favour of the licensee. Thus we have no hesitation in holding that the consideration received by the assessee for permitting the right to use of brand name/trademark under TLA is nothing else but in the nature of royalties as defined under section 9(1)(vi) read with Article 12(3) of India Turkey tax treaty. Therefore, we concur with the view expressed by learned DRP. Grounds are dismissed. Taxation of royalty income at the rate of 15% as per the treaty provision instead of applying the lower rate of tax as per the provisions of the domestic law - HELD THAT:- We find, the claim of the assessee has neither been examined by learned DRP, nor by the AO. Therefore, we restore this issue to the Assessing Officer for examining assessee s claim with reference to the provisions of treaty and section 90(2) of the Act. Needless to mention, the assessee must be provided reasonable opportunity of being heard before deciding the issue. Set off of royalty income against the long term capital loss - HELD THAT:- Having heard the parties, we find, this issue also has not been addressed either by the DRP or by the Assessing Officer. Therefore, we restore this issue to the Assessing Officer for examining assessee s claim, keeping in view the provisions of section 71(3) of the Act. Before deciding the issue, the assessee must be given a reasonable opportunity of being heard. This ground is allowed for statistical purposes.

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• 2022 (12) TMI 1090
  Addition of trade payables above on lakh - addition to the income of the assessee company - CIT-A deleted the addition - HELD THAT:- Appreciating the matter on record it can be observed that primarily on the basis of no adverse observations on the purchases the Ld. CIT(A) had deleted the additions at the same time perusal of the order of Ld. CIT(A) took into consideration the fact that assessee had only submitted part evidences of confirmation - Bench is of opinion, if assessee was not having sufficient time for filing confirmations before Ld. AO, an attempt could have been made to file those before Ld. First Appellate Authority. However, Ld. CIT(A) instead of proceeding to make an inquiry on this own or to given opportunity to the assessee, deleted the additions made by the Ld. AO. AO was proceeding with assessment on limited scrutiny as to mismatch in sale and large current liability in comparison to total assets, then only for the reason for not questioning purchases the opinion of Ld. AO could not have been interfered, when otherwise before Ld. CIT(A) there was no additional material or evidences. That being so, the grounds raised by revenue are sustained. The Appeal of Revenue is allowed and impugned order of Ld. CIT(A) is set aside and one of Ld. AO is restored.

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• 2022 (12) TMI 1089
  Exemption u/s 11 - assessee could not produce its books of account during the assessment proceedings without appreciating that the books of account could not be produced before the Ld. AO as the same were impounded by the DGIT(Exemption) under section 131(3) - AO traversed beyond the direction of the Tribunal to verify whether expenses incurred by the assessee were utilized for the purpose of the Trust, and all other conditions relating to allowability of deduction under section 11 were satisfied or not which has been upheld by the Ld. CIT(A) - On examination of the books of account and comments/opinion of FSL, the Ld. AO came to the conclusion that books have not been written on day to day basis but in a few sittings - HELD THAT:- The above allegation alone is not sufficient to make ad hoc disallowances of 50% of expenses in the absence of any adverse finding even after examining the books duly supported by the bills and vouchers. Not even single instance has been brought on record to suggest that expenses were incurred for purposes other than the purposes to fulfill the objects of the assessee Trust. There is clear cut finding that payments were made through account payee cheques. No defect has been found in any item of receipts and expenditure. Explanation as to why income from all centers showed vast difference in comparison to expenditure was given by the assessee which explanation has not been considered nor adversely commented by the Ld. CIT(A). We, therefore, delete the ad hoc 50% disallowances out of the expenses in both the years. There is nothing in the order of the Ld. AO to show that the conditions for claiming exemption under section 11 have not been satisfied in the AYs under consideration. Moreover in CIT vs. Indian Institute of Engineering Society [ 2012 (11) TMI 1243 - ALLAHABAD HIGH COURT] and Indian Institute of Banking and Finance [ 2018 (4) TMI 197 - BOMBAY HIGH COURT] have held that benefit under section 11 cannot be denied on the ground that the assessee has not obtained exemption from prescribed authorities under section 10(23C) of the Act. Denial of exemption under section 11 of the Act to the assessee Trust in these two AYs is not justified. Exemption under section 11 of the Act deserves to be allowed to the assessse in both the years. Accordingly, the assessee succeeds in all its effective grounds of appeals in both the AYs involved i.e. AYs 2006-07 and 2008-09 relating to denial of exemption under section 11 and disallowances out of expenses claimed. - Decided in favour of assessee.

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• 2022 (12) TMI 1088
  Exemption u/s 11 - Application of provisions of Accumulation of income for Notional Income (Rent) - annual value of any property is to be determined - two properties leased out by assessee are not the fair market value of rental income and it is only nominal value and he compared the prevailing market rent in the area - As per AO assessee charitable trust owns land leased out the same and the two tenants are specified persons u/s.13(3 hence, provisions of section 13(1)(c) of the Act are applicable to the case of the assessee - HELD THAT:- As going through the CBDT Circular No.005P (LXX-6) dt. 19th June, 1968 cited above, which has been considered in the case of Rao Bahadur Calavala Cunnan Chetty Charities [ 1979 (8) TMI 17 - MADRAS HIGH COURT] and Ganga Charity Trust Fund [ 1985 (10) TMI 67 - GUJARAT HIGH COURT] we are of the view that the accumulation or application in section 11(1)(a) of the Act must be of real income and as per the CBDT circular No.005P(LXX-6) cited above, makes it clear that the word income in section 11(1)(a) must be understood in commercial sense. The entire income of the trust in the commercial sense has been spent for the purpose and not the notional income. But in the present case before us, the assessee has violated the provisions of section 13(1)(c) r.w.s. 13(1)(b) of the Act, as the assessee has received rent from two tenants who are specified persons u/s.13(3) of the Act and hence, clear violation of provisions of section 13(1)(c) r.w.s. 13(1)(b) of the Act. Therefore, the assessee is not entitled for claim of deduction. Accordingly assessee trust cannot be assessed on notional rental income in term of CBDT Circular No.005P(LXX-6) dt. 19th June 1968 AO will deny exemption u/s.11 of the Act, in regard to the income declared by assessee and will assess the same to tax in term of section 164(1) of the Act.

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• 2022 (12) TMI 1087
  Deduction u/s 80IA - deduction denied on non-filing of Form 10CCB along with the return of income - HELD THAT :- As assessee filed the audit report in Form 10CCB for claiming deduction under section 80IA of the Act on 13.11.2017. The processing of return under section 143(1) of the Act was done by the CPC, Bengaluru and issued intimation dated 16.03.2019, which is much after the filing of audit report. This being the case, this issue is squarely covered by the decision of AKS Alloys (P.) Ltd. [ 2011 (12) TMI 39 - MADRAS HIGH COURT] which was duly affirmed by CIT v. G.M. Knitting Industries (P.) Ltd. [ 2015 (11) TMI 397 - SC ORDER] as held that even though necessary certificate in Form 10CCB has to be filed along with the return of income, but, even if the same was filed before the final order of assessment was made, the assessee is entitled to claim deduction under section 80IB of the Act. Thus we are of the considered opinion that once the assessee has filed an audit report in Form 10CCB on 13.11.2017 and processing of return under section 143(1) was done by the CPC, Bengaluru on 16.03.2019, which is an event much after, the assessee is fully entitled to claim deduction under section 80IA of the Act. Accordingly, we set aside the orders of authorities below on this issue and direct the Assessing Officer to allow the claim of deduction under section 80IA of the Act. Thus, the ground raised by the assessee is allowed.

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• 2022 (12) TMI 1086
  Approval u/s 80G(5) - application for registration in Form No.10AB rejected on non submission of mandatory information - HELD THAT:- It is apparent from the records that the assessee has submitted most of the information asked for in the notice of hearing such as PAN, Society Registration Certificate, Bye Laws, Details of Members of the Society, copies of income tax returns, financial statements at the time of submission of application for registration u/s 80G itself before the Ld.CIT(E). On perusal of the written submissions filed in the paper book and the medical reports submitted by the assessee, we find that it is a fit case to grant one more opportunity of being heard to the assessee to furnish all the details / information sought by the Ld.CIT(E) - We set aside the order passed by the Ld.CIT(E) and remit the matter back to the file of the Ld.CIT(E) with a direction to grant one more opportunity of being heard to the assessee. Appeals of the assessee are allowed for statistical purpose.

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• 2022 (12) TMI 1085
  Revision u/s 263 - deduction u/s 80P(2)(d) on the interest received from the cooperative banks - whether assessee is eligible to claim deduction on interest earned from Co-Operative Banks u/s 80P(2)(d) of the Act ? - HELD THAT:- As in the case of Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] held assessee-cooperative society was eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank. In the case of Surendranagar District Co-op. Milk Producers Union Ltd. [ 2019 (9) TMI 978 - ITAT RAJKOT] held that assessee-co-operative society could not claim benefit of section 80P(2)(d) in respect of interest earned by it from deposits made with nationalised/private banks, however, said benefit was available in respect of interest earned on deposits made with co-operative bank. In the case of Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] held that the interest income earned by a cooperative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. In view of the aforesaid decisions of Honourable High Court of Gujarat and other cases cited above , Principal CIT erred in holding that the order passed by AO is erroneous and prejudicial to the interest of the Revenue on account of allowability of interest earned by the assessee on interest earned by the assessee from cooperative banks, coupled with the fact that Ld. AO had made due enquiries on this issue during the course of assessment proceedings.Appeal of the assessee is allowed.

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• 2022 (12) TMI 1084
  TP adjustment - upward adjustment on notional interest on advance made to wholly subsidiaries/associated enterprises of the assessee - HELD THAT:- We noted that this issue is covered in the case of CIT v. Everest Kanto Cylinder Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] wherein, the Libor + 200 bps point is accepted at the bench mark and hence, respectfully following the same, we upheld the order of the AO/TPO. This issue of the assessee is dismissed. Disallowance of expenses relatable to exempt income by invoking provisions of Sec.14A r.w.r.8D and making disallowance of interest u/r.8D(2)(ii) and u/r.8D(2)(iii) - HELD THAT:- We noted that the AO simpliciter given his findings that the disallowance computed by the assessee is not correct, but he has not examined the accounts of the assessee and disallowance made even though offered by the assessee. We noted that the AO could not find any fault as to how this disallowance is not correct. There is no satisfaction recorded by the AO in regard to this disallowance and hence, there is no satisfaction recorded by the AO in terms of sec.14A of the Act. This issue of the assessee is allowed. Disallowance of claim of deduction u/s.80JJAA - AO required the assessee as to whether any of the regular workmen as mentioned in Column No.7 was employed for a period of less than 300 days during the previous year - HELD THAT:- The Hon ble High Court of Karnataka in the case of Texas Instruments India (P.) Ltd. [ 2021 (4) TMI 1049 - KARNATAKA HIGH COURT] has considered the issue of amendment brought in Sec.80JJAA of the Act, by bringing proviso which has relaxed condition in regard to number of days of employment of new employees. Once, one has interpreted the provision and held the same as retrospective, no contrary decision was pointed out by the Revenue before us. We in principle allow the claim of the assessee, but subject to verification by the AO. The AO will carry out the verification in terms of amendment bringing the provisions of Sec.80JJAA and then will consider the eligibility of claim of deduction. Accordingly, appeal is allowed, but for verification purpose remanded back.

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• 2022 (12) TMI 1083
  Calculation of exact amount of interest payable to the assessee on the amount of refund granted under section 244A - HELD THAT:- The amount of refund granted to the assessee, first, has to be adjusted against the interest payable to the assessee in the given facts and circumstances. We are also conscious to the fact that the AO has made a reference in his order to the judgment of Gujarat Flouro chemicals [ 2012 (8) TMI 740 - SUPREME COURT] in the case on hand before us, the facts are altogether distinguishable from the facts of the case which were there before the Hon ble Supreme Court as discussed above. In our humble understanding, we find that there was no question before the Hon ble Supreme Court whether the amount of refund granted by the Revenue first has to be adjusted against the interest or the principal. Accordingly, no benefit can be derived by the revenue based on the judgment of Hon ble Supreme Court cited above. As such, the issue on hand is identical to the controversy which was there before the Mumbai tribunal in [ 2016 (8) TMI 688 - ITAT MUMBAI] and the same has been resolved. The relevant extract of the order of the ITAT has already been reproduced somewhere in the preceding paragraph. In view of the above and after considering the facts in totality, we set aside the finding of the learned CIT (A) and direct the AO to allow the amount of interest to the assessee in the light of the aforesaid discussion and as per the provisions of law. Hence, the ground of appeal of the assessee is allowed.

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• 2022 (12) TMI 1082
  Foreign Tax Credit - Denial of deduction on the ground of belated filing of Form 67 - whether mere late fling of Form 67 would result incomplete denial of tax which has been deposited by the assesse in USA where services were rendered? - HELD THAT:- We have perused the Article 25 in the applicable DTAA between India and USA and also Rule 128 of the rules and provisions of Section 90(2) of the Act. Rule 128(9) of the rules provides that Form 67 should be filed on or before the due date of return of income however we also observe that the said Rule nowhere states that in case of late filing of Form 67 the credit of FTC which is deposited by the assesse in foreign country would be denied. In our considered view the FTC can not be denied to the assesse merely for late filing of Form 67 as the it is procedural formality on the part of the assesse.We have also perused the various decisions filed before us by assesse in defence of his argument that FTC cannot be denied merely on the basis of late filing of Form 67. We have perused the decision of Co-ordinate Bench of Bangalore in the case of M/s Brinda Rama Krishna [ 2022 (2) TMI 752 - ITAT BANGALORE] and find that similar issue has been decided in favour of the assessee. We also note that similar issue also has been decided [ 2022 (9) TMI 926 - ITAT JAIPUR] wherein the Co-ordinate Bench has allowed FTC by holding that the filing of form 67 is a procedural formality and could not the basis for denial of FTC to the assessee. Appeal of the assessee allowed.

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• 2022 (12) TMI 1081
  TDS u/s 195 - disallowance u/s 40(a)(i) - payments were made to US and Australia based entities as commission towards procurement and solicitation of business - HELD THAT:- The impugned payments made by the assessee are in the nature of selling commission for procurement of orders outside India for the assessee. Upon examination of contractual terms, these payments could not be termed as fees for technical services . Further, none of the payee is shown to have any PE in India. Therefore, the findings of Ld. CIT(A), in that regard, could not be faulted with. AO has invoked Explanation-2 to Sec.195(1) as inserted by Finance Act, 2012 w.r.e.f. 01.04.1962. However, the assessee could not be expected to deduct tax at source in this year by foreseeing such a future amendment to law. In the impugned year, there was no such obligation on the assessee to deduct TDS but such obligation has arisen out of subsequent amendment to law which assessee could never anticipate. As relying on M/S RANE ENGINE VALVES LTD. case [ 2022 (3) TMI 1022 - ITAT CHENNAI] assessee could not be expected to deduct Tax at source on payment made to non-residents on the basis of subsequent amendment to the law with retrospective effect from earlier date because the assessee cannot foresee the amendment and deduct TDS. Therefore, the disallowance made u/s 40(a)(i) would be unwarranted. Similar is the situation before us. No contrary decision is on record. Therefore, following this decision, we confirm the stand of Ld. CIT(A). The corresponding grounds raised by the revenue stand dismissed. Disallowance u/s 14A - AOapplying Rule 8D(2)(iii), computed indirect expense disallowance - CIT(A) directed Ld. AO to consider those investments which actually yielded exempt income during the year - HELD THAT:- We find that the directions of Ld. CIT(A) are in accordance with the decision of Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] - Therefore, the impugned order could not be faulted with. We order so. The corresponding grounds raised by revenue stand dismissed.

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• 2022 (12) TMI 1080
  Validity of assessment - non issuance of notice u/s 143(2) - Whether curable defect u/s 292BB? - HELD THAT:- As decided in Laxman Das Khandelwal case [ 2019 (8) TMI 660 - SUPREME COURT] for section 292BB to apply, section 143(2) notice must have emanated from the department and it is only infirmities in the manner of service of notice that the section seeks to cure and it is not intended to cure the complete absence of notice under section 143(2) of the Act itself. Thus the entire reassessment proceedings under section 143(3) read with section 147, in the present case, stood vitiated as the AO lacked jurisdiction in absence of notice u/s 143(2) of the Act. Hence, the assessment order passed under section 143(3) read with section 147 of the Act is quashed. - Decided in favour of assessee.

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• 2022 (12) TMI 1079
  Penalty u/s. 271D - assessee has repaid loans/ deposits from various sister concerns through journal entries, i.e., otherwise than account payee cheques/draft, thereby violating the provisions of section 269T - assessee has not shown the reasonable cause u/s. 273B of the Act for entering into such transactions through journal entries - CIT-A deleted the penalty levy - HELD THAT:- As decided in assessee s group company i.e. Lodha Builder Pvt. Ltd [ 2021 (12) TMI 1174 - ITAT MUMBAI] there is no adverse finding by the AO in the regular assessment. AO has not made out in the -assessment that any of the impugned transactions is aimed at non commercial reasons and outside the normal business operations? As such, the provisions of ss. 269SS and 269T of the Act shall not be attracted where there is no involvement of the money . Therefore, in the fact of the present case, in our opinion, though the assessee has violated the provisions of ss. 269SS/269T of the Act in respect of journal entries, the assessee has shown reasonable cause and, therefore, the penalty imposed u/s 271D/271E of the Act are not sustainable. Regarding an amount of money said to have been paid in violation of the said provisions, the same needs to be deleted. Appeal filed by the Revenue is dismissed.

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• 2022 (12) TMI 1078
  TP adjustment on AMP expenditure - TPO show caused the assessee as to why 1% of gross sales be not considered as brand building exercise for AE as done in last year - HELD THAT:- From the facts, it emerges that this adjustment made by Ld. TPO is primarily guided by adjustment made in the earlier years. Similar issue, in AY 2012-13, has been adjudicated by this Tribunal in assessee s favor for the reason that determination as done by Ld. TPO at 1% of gross sales is adhoc figure and not a figure arrived by calculation or method as provided in Sec. 92C(1) much less Rule 10AB of Income Tax Rules, 1962. Therefore, the adjustment so made without following any prescribed method is not sustainable and accordingly, deleted. We find that similar factual matrix exist in this year. TPO has merely presumed that there exist an arrangement between the assessee and its AE for promotion of the brand. No such arrangement has been shown to us. Therefore, taking a consistent stand in the matter, the impugned adjustment stand deleted. The corresponding grounds stands allowed. Disallowance u/s. 14A u/r 8D(2)(iii) - AO rejecting assessee s plea that it had not availed any loan for investment and the investments were out of own funds - HELD THAT:- We find that similar issue in AY 2012-13 thus the issue of disallowance u/r 8D(2)(ii) as well as u/r 8D(2)(iii) stand restored back to the file of Ld. AO on similar lines - AO shall take consistent view as taken on AY 2012-13 on this issue. This ground stand allowed for statistical purposes. Disallowance u/s. 40(a)(ia) - short deduction of tax - assessee paid connectivity expenses for dedicated leased lines provided by various vendors and deducted TDS @ 2% - A.O opined that the tax should have been deducted at 10% - HELD THAT:- The Tribunal, in latest decision for AY 2012-13 relying upon decision for AY 2009-10 [ 2015 (12) TMI 1328 - ITAT CHENNAI] held that disallowance u/s 40(a)(ia) is not attracted in case of short deduction of tax at source. Respectfully following the consistent view of Tribunal, the impugned disallowance stand deleted. Disallowance of provision for inventory - assessee created provision towards provision for inventories which was stated to be towards slow moving and obsolete traded goods on account of diminishment in the value of stock held in the course of business - HELD THAT:- From the financial statements of the assessee, it could be ascertained that the assessee is valuing the inventories at lower of cost price or net realizable value which is prescribed method of valuation of inventories. When the valuation is done on lower of cost or net realizable value then any decrease in value of obsolete or slow moving stock on valuation date would automatically take care of the loss suffered by the assessee on this account. Accordingly, a separate provision made, in this regard, could not be allowed to the assessee. The Ld. AR has cited many case laws to support this deduction. However, in the given factual matrix, the same are not applicable. Therefore, the adjustment made by Ld. AO, in this regard, could not be faulted with. The corresponding grounds raised by the assessee stand dismissed. Depreciation on software - @60% or 25% - HELD THAT:- The bench, noticing the entries in Appendix I of Income Tax Rules, 1962, held that the rate of depreciation mentioned at III(5) for computers including computer software would be 60%. Considering the same, we direct Ld. AO to allow depreciation of 60% on software. Provision for VAT assessment demand - HELD THAT:- From the fact, it emerges that this liability pertains to earlier years. In such a case, the same could be allowed to the assessee only upon crystallization of the liability. From assessee s submissions, it is quite clear that the liability has been crystalized only on 04.04.2013 and therefore, the deduction of mere provision in this year could not be allowed to the assessee. It is very clear that this is a prior period item and the liability, in this respect, has not crystallized during this year. Therefore, the corresponding grounds stand dismissed. No other ground has been urged in the appeal.

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• 2022 (12) TMI 1077
  Estimation of income - bogus purchases - HELD THAT:- There is always an element of guesswork on the quantum of disallowance that should be made in case in the case of purchases made from parties whom the assessee is unable to identify. It would not be justifiable to disallow the entire purchases when the corresponding sale of finished product (in which such which the purchases so made were utilised for making the final finished product) have been subject to tax. Accordingly, in light of the judicial precedents cited above, a certain percentage of such alleged bogus purchases may be disallowed, keeping into consideration the profit offered to tax by the assessee. Accordingly, in the interest of justice, we are of the view that in the instant set of facts 10% of the above purchases may be disallowed and added back to the income of the assessee. Unexplained deposit on the basis of a AIR information - HELD THAT:- In light of the facts placed before us, in the interests of justice, the matter is being restored to the file of the Ld. Assessing Officer to verify the correctness of the claim made by the assessee. The assessee may file the necessary confirmation given by the Bank of India, the assessee s banker, to the effect that the deposits made with the bank are duly tallying with the assessee s books of accounts.

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• 2022 (12) TMI 1076
  Nature of receipt - amount received by the assessee firm as a compensation for pre-closure of its BOT projects - Revenue or capital receipt - whether taxable as a revenue receipt in the hands of the assessee firm since it represented the net present value of the future cash flows to be received by the assessee? - HELD THAT:- Revenue s vehement arguments supporting the learned lower authorities action treating the impugned compensation as a revenue receipt fail to evoke our acceptance. This is for the reason that the Government of Maharashtra herein had acquired the assessee s BOT project(s); lock, stock and barrel by way of gazette notification(s) dated 27.06.2014 thereby rescinding it s earlier notification dated 08.04.2000 introducing the toll scheme in issue. We conclude in the light of these clinching facts and settled legal proposition that the hon ble Calcutta high court s view [ 1989 (12) TMI 362 - CALCUTTA HIGH COURT] would squarely apply since not only the assessee s business stood closed but also it s intangible asset(s) by way of right to collect the toll u/s.32(i)(ii) and building, plant and machinery, as the case may be, vested with the government. Legislature has also inserted clause (e) in section 28(ii) of the Act by the Finance Act 2018 w.e.f. 01.04.2019 wherein any compensation or such payment received at or in connection with termination or the modification of the terms and conditions, if any, contract relating to his business is assessed has seem held taxable as profits and gains of business or profession. This latter amendment is applicable w.e.f. 01.04.2019 whereas we are in AY 2015-16 only. We also take note of the explanatory memo thereof that this latter amendment proposes to invoke section 28 of the Act qua any compensation; including both revenue as well as capital u/s.28 of the Act. We thus conclude that both the learned authorities have erred in law and on facts in invoking section 28(ii)(d) qua assessee s impugned compensation thereby holding it as a revenue receipt. The assessee succeeds.

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• 2022 (12) TMI 1075
  Levy of penalty u/s 271 (1 )(b) - non compliance of notice issued u/s 142(1) - HELD THAT:- As is not in dispute that notice under section 142(1) of the Act along with the questionnaire has been issued, but the assessee has failed to file any reply in response to the said notice. It is also not in dispute that the assessment order has been passed under section 142(1) of the Act not under section 144 of the Act, wherein the Ld. A.O. considering the subsequent compliance made by the assessee and by considering the said compliance as good compliance, ignored the default committed earlier. The said fact has been corroborated with the assessment order dated 22.11.2018 passed under section 143(3) of the Act by the A.O. See case of Akhil Bhartiya Prathmik Shamshak Sangh Bhawan Trust [ 2007 (8) TMI 386 - ITAT DELHI-G] - Penalty order set aside - Decided in favour of assessee.

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• 2022 (12) TMI 1074
  TP adjustments - adverse effect of forex due to depreciation of Indian Rupees resulting in incremental import costs which is not attributable to the transfer pricing of its purchase of raw materials from its AEs - HELD THAT:- As relying on assessee s own case for AY 2011-12 [ 2022 (10) TMI 474 - ITAT BANGALORE] this issue is remitted to the AO/TPO with a direction to consider the foreign exchange fluctuation adjustment for computing the ALP. Excluding the additional custom duty costs as a result of increased import costs of raw materials due to forex impact of depreciation of the Indian Rupee - As relying on assessee s own case for AY 2011-12 [ 2022 (10) TMI 474 - ITAT BANGALORE] to bring uniformity, the customs duty was to be eliminated from the comparable price also to arrive at correct PLI. Accordingly, we remit the issue to the file of AO for fresh consideration. TP Adjustment - international transactions of the Assessee - HELD THAT:- We notice that the coordinate bench of the Tribunal in the case of IKA India (P.) Ltd [ 2018 (10) TMI 49 - ITAT BANGALORE] considered a similar issues and held that section 92 of the Act can be applied only in respect of international transactions i.e., transactions with AE. Recomputation of operating profit margin pursuant to the MAP resolution - This issue was considered in assessee s own case for AY 2011-12 [ 2022 (10) TMI 474 - ITAT BANGALORE] thus we remit this issue to the AO with a direction to re-compute the operating margins pursuant to the MAP resolution.

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• 2022 (12) TMI 1073
  TP adjustment - Selection of MAM - rejecting RMP - value of international transactions pertaining to the import of spare parts and cranes/ machines for trading purpose entered - Non granting the excise duty adjustment and closing stock adjustment sought - HELD THAT:- Appellant had received service commission from AEs in Austria, Germany, France and Switzerland under separate contracts. The international transactions under consideration are of different nature. In the two immediately preceding assessment years the appellant had furnished segmental working for commission segment, service segment and trading segment, and the International Transactions pertaining to trading segment were benchmarked using RPM. Vide Letter, dated 28.10.2015, filed during the assessment proceedings the Appellant has expressed the apprehension that reliable data may not be available from publicly available database to facilitate application of RPM and that hidden differences in accounting of direct costs can lead to distorted results. Given the fact that the Appellant had adopted RPM in the immediately two preceding assessment years and not faced such hindrances, we are not persuaded to accept the aforesaid apprehension of the Appellant as a genuine reason for rejecting RMP Trading segment of the Appellant involves import of spares and machinery from AEs for sale to customers in India without making any value addition. The Appellant had adopted RPM as most appropriate method for benchmarking international transactions pertaining to trading segment during the Assessment Year 2010-11 and 2011-12. It is admitted position that there is no change in the facts and circumstances during Assessment Year AY 2012-13 as compared to AY 2010-11 and 2011-12. Revenue was justified in rejecting the aggregation approach adopted by the Appellant and in adopting RPM to benchmark international transactions pertaining to trading segment. Economic adjustments sought by the Appellant - We are of the view that the TPO/AO/DRP were correct in rejecting the same as the Appellant has failed to establish how the economic adjustments claimed by the Appellant could materially affect the amount of gross profit margin in the open market as per the requirements of Rule 10B(1)(b) of the Income Tax Rules, 1962. Impact of the custom duty adjustments and closing stock adjustment sought by the Appellant can be discerned on the basis of the standalone computation provided by the Appellant. Further, as rightly noted by the DRP, closing stock adjustment claimed by the Appellant was not required in view of the fact that the financials of the Appellant as well as the comparable companies were prepared in accordance with the Accounting Standard 2. Where the higher import content is reflective of the difference in business models of the assessee and the comparables, adjustments can be made for functional differences. Therefore, in our view, the DRP was justified in not granting the excise duty adjustment and closing stock adjustment sought by the Appellant. Deduction as travelling and conveyance expenses - We note that during the assessment proceedings for relevant assessment year disallowance of 100% of travelling and conveyance expenses has been made in identical facts and circumstances. In appeal for the earlier years such disallowance has been restricted to 10% of the travelling and conveyance expenses by the Tribunal - Thus we restrict the disallowance of travelling and conveyance expenses to 10% of the amount debited to Profit Loss account during the relevant previous year. Appeal filed by the Appellant is partly allowed.

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• 2022 (12) TMI 1072
  TP Adjustment - selection of MSM - RPM or TNMM - Transaction pertaining to purchase of goods for the purpose of resale in India - TPO objected to the arm s length margin computed in relation to trading segment, by rejecting RPM adopted by the assessee for the trading segment and applied Transactional Net Margin Method ( TNMM ) to benchmark the trading segment - HELD THAT:- We have no hesitation to hold that the assessee is a pure trading company involved in the distribution activity without adding any value to the purchased product and hence the RPM is the most appropriate method. We, accordingly, direct the Assessing Officer/TPO to accept RPM as the most appropriate method and decide the issue accordingly. Since we have held that RPM is the most appropriate method, on the facts of the case in hand, all the other issues raised by the assessee will be decided accordingly.

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• 2022 (12) TMI 1071
  Maintainability of appeal before ITAT - Commissioner (Appeals) need to be approached first - as pointed this appeal is filed against the penalty order u/s 270A of the Income Tax Act, 1961, passed by the AO directly before us whereas the assessee ought to have approached Commissioner (Appeals) first - assessee, submits that Section 246A, which lists out the appealable orders before the CIT(A) does not refer to an order passed by the Assessing Officer under section 270A, whereas Section 253(1)(a), which sets out provisions for appeals before the Income Tax Appellate Tribunal, does specifically refer to the orders passed under section 270A.HELD THAT:- The objection taken by the learned Departmental Representative is indeed correct. Section 246A(1)(q) specifically includes, in orders appealable before the learned Commissioner (Appeals), an order imposing a penalty under chapter XXI , and chapter XXI of the Income Tax Act, 1961 covers Sections 270 to 275- Section 270A, dealing with underreporting and misreporting of income, is thus covered by the said provision. Clearly, therefore, the appeal against an order imposing penalty under section 270A, as passed by the AO, is appealable before the Commissioner (A). As for the reference to the order passed under section 270A being appealable before this Tribunal, u/s 253(1)(a), is specifically with reference to such orders being passed by the Commissioner (Appeals), and that is the limited extent to which general provisions of the Section 246A(1)(q) must make way for the specific provisions of the Section 253(1)(a). The order sought to be impugned in this appeal is passed by the AO and, therefore, this exception does not come into play. Learned counsel s understanding of the legal position, even if bonafide- particularly considering his young age and limited experience, is clearly incorrect. The appeal filed before us is thus indeed not maintainable in law. Thus learned counsel to file the appeal, alongwith condonation petition setting out the requisite details resulting in the delay in filing of appeal before the CIT(A), as soon as possible now, and it is for the learned CIT(A) to take a call thereon in accordance with the law, by way of a speaking order and after giving a due and reasonable opportunity to the assessee.

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• 2022 (12) TMI 1070
  TP Adjustment - adjustment on account of TP study pertaining to interest on outstanding receivables - TPO returned a finding that the outstanding receivables in the case of the assessee constitute an international transaction which is liable to be benchmarked separately - argument was advanced on behalf of the assessee was that the outstanding receivables arising from intercompany services transactions (included in the definition of international transaction vide Finance Act 2012) was duly benchmarked by the assessee by undertaking working capital adjustment during assessment proceedings and the same is subsumed in the working capital adjustment - HELD THAT:- In view of the sequence of events, it would be noted that the decision of Hon ble Delhi High Court in the case of Kusum Healthcare [ 2017 (4) TMI 1254 - DELHI HIGH COURT] is still the binding precedent on the issue of interest on outstanding receivables. Needless to mention that the law laid down by the Hon ble High Court in the case of Kusum Healthcare was followed by the ITAT in case of Global Logic India Ltd.[ 2021 (11) TMI 1090 - ITAT DELHI] , [ 2020 (6) TMI 712 - ITAT DELHI] , [ 2020 (9) TMI 572 - ITAT DELHI] and [ 2017 (12) TMI 1052 - ITAT DELHI] Hence, keeping in view, the established position, we hereby deleted the addition made by the Assessing Officer. Appeals of the assessee are allowed

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• Customs

• 2022 (12) TMI 1069
  Detention order - Smuggling - illicit import of foreign origin gold into India via air cargo - prohibited item or not - whether supply of illegible RUDs vitiates the subjective satisfaction of the Detaining Authority thereby rendering the impugned detention order invalid? - whether detenu s constitutionally secured right of making an effective representation has been jeopardized, by the non-supply of relevant documents, in a language which the detenu understands; thereby rendering the order of detention illegal and bad? HELD THAT:- It is well settled and not in dispute that under the provisions of Section 3 of COFEPOSA, it is only the Detaining Authority, which can ultimately decide to pass or not, a detention order against any person, and that too, after perusing each and every document and material placed before it. It is also not in dispute that the subjective satisfaction of the Detaining Authority itself is to be arrived at after perusing all the relevant documents and material produced. This is a constitutionally provided condition precedent for passing a valid order of detention. The issue, as to whether the non-supply of certain RUDs and the supply of illegible RUDs, vitiates the subjective satisfaction arrived at by the Detaining Authority; and whether the detention order resultantly passed is vitiated on the ground of non-application of mind, is concerned; we have considered the rival submissions, as well as the material placed before us in the present proceedings. It was observed by this Court from a perusal of the relevant original record that several RUDs; including not only those supplied to the Detenu; but also those on the record with the Detaining Authority, are illegible i.e., not readable. The RUDs supplied to the detenu, as well as, relied upon by the Detaining Authority in arriving at its subjective satisfaction were admittedly illegible, therefore, grossly violating the constitutional right of making an effective representation, guaranteed to the detenu under Articles 14, 21 and 22(5) of the Constitution of India. Keeping in mind the constitutional mandate of Article 22(5) as well as the dictum in the plethora of Supreme Court decisions, we consider it incumbent to emphasize on the legal necessity of furnishing the grounds of detention to the detenu in a language that the latter understands. More specifically, the Supreme Court has observed that oral explanation or oral translation of the grounds of detention would not amount to communicating the grounds to a detenu because communicating the grounds of detention, effectively and fully to a detenu implies that the grounds must be furnished to him in a language which the detenu understands; and if that entails translation of the grounds into such language, then that is unquestionably a part of the Constitutional mandate. The failure and non-supply of legible/translated copies of all RUDs despite a request and representation made by the detenu for the supply of the same, renders the order of detention illegal and bad in law; and vitiates the subjective satisfaction arrived at by the Detaining Authority - the Detaining Authority gravely erred in relying upon the illegible documents which is equivalent to non-placement of translated-RUDs in a language which the detenu understands; by the act of omitting them from due consideration, which consequently vitiates the subjective satisfaction arrived at by the Detaining Authority. The impugned detention order stands invalidated - petition allowed.

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• 2022 (12) TMI 1068
  Duty Drawback - whether the goods exported under the Shipping bill would fall under S.S.No. 85.37 or not - HELD THAT:- The grievance of the Petitioner that the order in Appeal dated 31 December 1997 has not been considered at all is justified. Though this order is noted in the impugned order there is no discussion as to what is the implication of the said order, which according to the Petitioner is inter parte binding. There is no discussion as to why the said order should not be taken into consideration or if taken into consideration what is the implication thereof. In the light of the fact that there was a pre-existing order of the Commissioner (Appeals) inter parte regarding the same product, where different classification and impugned order has been arrived at and which supports the claim of the Petitioner, the same should have been considered and the Petitioner is right in contending that failure to do so has caused serious prejudice to the Petitioner - the proceedings need to be remanded to the Appellate Authority for considering the effect and implication of the order in Appeal dated 31 December 1997. The impugned order dated 31 December 1997 passed by the Commissioner of Customs (Appeals) and order dated 13 June 2012 passed by the Revisionary Authority, are quashed and set aside. Proceedings are restored to the file of the Commissioner of Customs (Appeals).

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• 2022 (12) TMI 1067
  Confiscation of imported goods - vessel - whether MEA S.O. 2158(E) dated 20.06.2016 prohibited the subject vessel imported for breaking purpose? - case of the department is that S.O. dated 20.06.2016 is issued in order to implement the UNSC resolutions and prohibited the subject vessel for entry into India and since it is imported contrary to the said S.O. dated 20.06.2016; the same was liable for confiscation under section 111 (d) of the Act. HELD THAT:- It can be seen that the S.O. only provides for enabling provisions for the purpose of prevention of the designated vessels for entry into Indian Port. In exercise of such powers, and to give effect to S.O. subject vessel could have been notified as prohibited for imports or to say least the entry could have been prevented by executive action in exercise of powers under the S.O. It, however, appears that no such steps appear to have been taken to give effect to the said S.O. for prevention of entry of vessel which was granted entry by various concerned authorities and it was only when the vessel was part-broken; the same was placed under seizure by the officers of DRI. In absence of any mechanism or modalities framed viz. to bring prohibition in force or notification issued under section 11 of the Act; Section 111(d) of the Act cannot be pressed into service particularly when the S.O. dated 20.06.2016 by itself does not expressly prohibit the entry of the vessel. It can be seen that the S.O. dated 20.06.2016 applied to the resolutions upto 2214 (2015) adopted by the Security Council of the United Nations as provided in para 2(1)(a) of the said S.O. The base resolution 2146 (2014) provides for its termination one year from the date of adoption unless extended. The said base resolution dated 19.03.2014 was set to expire on 19.03.2015 unless extended. On 27.03.2015 the said base resolution 2146 was extended till 31.03.2016 by resolution 2213(2015), and further extended upto 31.07.2017 by resolution 2278(2016) - the subject vessel even when designated by committee, was entered into India for the breaking/recycling purposes only and it is nobody s case that when it entered India, it carried crude oil, petroleum etc loaded from Libya; as per the perusal of the available records, it is not disputed fact that the vessel was, after due clearances from UAE port authorities, brought to India without cargo for breaking/recycling purposes on 10/14.02.2018; during that period and for the said purpose, there appears to be no contravention of any UNSC resolutions in force. In view of above, the case of the department in the impugned order that the subject vessel was prohibited for importation cannot be sustained. The issue of mis-declaration before the customs, upon perusal of available records, it appears that IMO 8900878 of the vessel is correctly mentioned in the Bill of Entry, further, name of the vessel at the time of filing bill of entry was MT Capricorn as can be seen from the certificate of ownership dated 12.02.2018 issued by Maritime Administration of Union of Comoros. In the circumstances, there is no sufficient material to substantiate the case of mis-statement much less any such acts wilfully done by the appellants. In any event, since the vessel cannot be said to have been imported contrary to any prohibition in force, redemption fine and penalties upon the appellants imposed by the impugned order are liable to be set aside. Appeal allowed.

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• 2022 (12) TMI 1066
  Confiscation of the imported machinery under the EPCG scheme (Export Promotion Capital Goods Scheme) with option to pay redemption fine - levy of penalty - It appeared to Revenue that the appellant have not fulfilled the export obligations and have not complied with the undertaking given in the bond, accordingly, the duty foregone at the time of import of the capital goods seems to be recoverable - HELD THAT:- There was a disruption in business both due to fire and due to shifting of the machinery to the new address, for a period of more than 2 years. Further, I find that the DGFT, by granting extension for fulfilment of export obligation, have condoned the delay in achieving the export obligations and have also regularised the shifting of the machinery to the new address. However, such extension remained mere formality or an eye wash, as the appellant did not have any opportunity to manufacture and export pursuant to granting of extension in March, 2018, as the machines were admittedly lying sealed by the Customs Department since 2016. The impugned orders are set aside - appeal allowed.

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• 2022 (12) TMI 1065
  Maintainability of appeal - appeal filed without making the statutory deposit contemplated under section 129E of the Customs Act, 1962 - HELD THAT:- It is seen that the earlier appeal filed by the appellant was dismissed by the Tribunal on 10.01.2019 for the reason that the mandatory requirement of section 129E of the Customs Act had not been complied with by the appellant and the writ petition filed by the appellant before the High Court was dismissed by a detailed order. Similar factual position arises in this appeal. The appellant, even during the last three years, has not deposited the statutory amount. The appeal, therefore, deserves to be dismissed for non-compliance of the statutory requirement and is, accordingly, dismissed.

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• 2022 (12) TMI 1064
  Maintainability of appeal - non-compliance of the statutory provisions of section 129E of the Customs Act, 1962 regarding pre-deposit of the amount - power of Tribunal/Commissioner (Appeals) to waive the requirement of pre-deposit - HELD THAT:- The Supreme Court in NARAYAN CHANDRA GHOSH VERSUS UCO BANK [ 2011 (3) TMI 1478 - SUPREME COURT] , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. A Division Bench of Delhi High Court in M/S. VISH WIND INFRASTRUCTURE LLP, M/S. J.N. INVESTMENT TRADING CO. PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI [ 2019 (8) TMI 1809 - DELHI HIGH COURT] examined the provisions of section 35F of the Central Excise Act, 1944 which are pari materia to section 129E of the Customs Act and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. The appellant has not made the pre-deposit. As the law relating to pre-deposit has been settled by the Supreme Court and the High Courts, the appeal would have to be dismissed for non-compliance of the statutory mandatory requirement - appeal dismissed.

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• 2022 (12) TMI 1063
  Eligibility for exemption Notification No. 1/2017-IT Integrated Tax (Rate) dated 28.06.2017 - imported Fertilizer Grade Phosphoric Acid - HELD THAT:- We prima facie find that there is no difference in the fact regarding the nature of the goods imported in the present bill of entry and the bills of entry wherein the adjudication order was passed vide order dated 24.06.2021. In this development, we are of the view that the matter needs to be re-considered, considering the order in original dated 24.06.2021. The matter remanded to the Adjudicating Authority for passing a fresh order - appeal allowed by way of remand.

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• Law of Competition

• 2022 (12) TMI 1062
  Conspiracy - omission and commission of misconduct by official of Pune Municipal Corporation in connivance with appellants filed a detailed information application before the CCI - levy of penalty - HELD THAT:- On examination of entire material we are of the opinion that sufficient evidence were brought on record to show forming cartelisation by the appellants in influencing tender. It was specific case of contravention of Section 3(3)(d) of the Act read with Section 3(1) of the Act. Besides evidence by way of filing leniency application all the appellants have already accepted their guilt. Most of the appellants on the strength of their leniency application have also got reduction in the penalty which is reflected from the relevant portion of the impugned order which we have quoted in the present order. We are of the opinion that disclosure made in leniency application admitting involvement amounts to confession. If confessional statement is also corroborated even by some sort of evidence one is precluded to assail an order imposing penalty/punishment on such confession. Moreover, in the present case at the time of admission itself it was admitted by the appellants that the appeal may be heard on the point of penalty only. Now coming to the discretionary jurisdiction of the CCI in considering the turnover on the higher level i.e. 10% which is maximum percentage prescribed under Section 27(b) of the Act is concerned we are of the opinion that though CCI is empowered to take turnover upto 10% but while taking up such percentage i.e. maximum as prescribed in the Act it was required for the CCI to elaborately assign reason for coming to the conclusion for maximum penalty. It may not be held that CCI in no case can impose higher penalty upto 10% but in such situation it would be required for the CCI to afford full opportunity to the concerned party to address the CCI as to why such higher penalty may not be imposed - On going through the impugned order we find no indication as to whether the appellants were asked to explain regarding exemplary penalty i.e. maximum 10% or detailed reasons has been assigned for the same. It is true that in respect of imposing penalty discretion has been given to the CCI, but at the same time it is settled that discretion may not be exercised indiscreet manner. Though discretionary jurisdiction may not be interfered with but in view of facts and circumstances particularly the fact that discretion by the CCI in the present case has not been exercised in a reasonable manner it would be a fit case for remanding back the matter to CCI to examine the issue to afford opportunity to the appellants to address on the point as to whether instead of exemplary penalty i.e. upper limit of 10%, the appellants are entitled to get the said percentage reduced or not. In the present case it has been noticed that in the information petition which was filed by the informant it is evident that the informant had alleged that conspiracy and collusion by Accused No.1 and 2 alongwith technically ineligible company (nevertheless qualified) on the one hand and personnel of PMC Accused No.3 on the other hand as a result and by giving effect to this fraud Accused No.2 became L1 in 5 tenders in 2014 bagging contracts for worth of Rs.14,82,94,580/- while the internal estimate was Rs.11.45 crores i.e. 30% lower. Even during investigation DG had examined the role of PMC in its report. We are of the opinion that while remitting back the aforesaid appeals to CCI to reconsider the penalty a direction can be issued to the Director General of Police Maharashtra/Director General, Anti-Corruption, Maharashtra to conduct an enquiry in respect of role played by the Pune Municipal Corporation in relation to Tender No.34, 35, 44, 62 and 63 of 2014. It goes without saying that if during enquiry any cognisable offence comes to fore in that event it would be necessary to register FIR for its statutory investigation to its logical end. Let a copy of this order be sent to Director General of Police, Maharashtra/Director General, Anti Corruption, Maharashtra.

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• Insolvency & Bankruptcy

• 2022 (12) TMI 1061
  Extension of period of insolvency resolution proceeding, beyond limit - whether upon an insolvency resolution proceeding being not completed within the period granted which also includes an extension, whether a subsequent extension would be permissible under the law? - whether the non-obstante provision in Section 60 (5) also includes the other provisions of the IBC of 2016? - whether irrespective of the provisions of the IBC of 2016 a subsequent extension can be granted on a resolution of approval by a majority of the members of the COC? HELD THAT:- A reading of the afore-extracted minutes of the resolution of the COC dated 12.08.2022 makes it discernible that there is a revised resolution plan submitted by the resolution applicant and circulated in the meeting and further that one of the secured creditor Bank has insisted upon to make an application to the adjudicating authority requesting for further extension of 30 days and in the said situation, the COC through its resolution had required the RP to approach the adjudicating authority for extension of the CIRP process by another 30 days. It is stated that the provisions in the resolution plan are being projected to be a part of the resolution proceeding to put the corporate debtor back on its feet. A reading of the afore-extracted portion of the resolution plan makes it discernible that the resolution plan is more of corporate takeover by means of lease/rent of the corporate debtor rather than it being a plan to bring the corporate debtor back to its feet. Taking over a corporate management under the law is governed by a different set of provision and it cannot per-se be said to be a part of a resolution plan to bring the corporate debtor back to its feet - as the reading of the resolution plan produced before the Court does not make it discernible that it is a resolution plan to bring the corporate debtor back to its feet, it cannot be accepted. A reading of section 60(5) makes it discernible that it is a provision with a non-obstante clause that notwithstanding anything contrary contained in any other law gives a jurisdiction to the NCLT to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person; any claim made by or against the corporate debtor or corporate person including claims by or against any of its subsidiaries situated in India; or any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code - section 60(5) of the IBC of 2016 would now have to be understood that an application under section 60 (5) to be maintainable notwithstanding anything contained in any other law would not also mean notwithstanding anything contained in the other provisions of the IBC of 2016 itself, but any other law other than the IBC of 2016. From such point of view when there is a specific provision on the question of maintainability of a claim for subsequent extension under the first proviso to section 12, the provisions of section 60(5) cannot be invoked to take advantage of the non-obstante clause to make an application for subsequent extension maintainable in spite of the specific bar on its maintainability provided in the first proviso to section 12. Petition allowed.

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• 2022 (12) TMI 1060
  Seeking appointment of a sole arbitrator for the resolution of disputes between the parties - Section 11 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- To answer this issue, it is necessary to go into the effect of the said order staying the institution or continuation of suits or other proceedings by any party or person or bank or company against IL FS and its 348 Group Companies in any Court of law, tribunal, arbitration panel or arbitration authority. In this regard the plea of Mr. Mehta is that during the resolution process of a company, its creditor is obligated to necessarily lodge claims before a resolution professional, as a successful resolution applicant cannot suddenly be faced with undecided claims after the resolution plan submitted by him has been accepted. This would amount to a hydra-head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully takes over the business of the corporate debtor. The purpose and rationale behind granting a moratorium is to ensure that the assets of the corporate debtor are protected, with an intention to keep the company a going concern and to use the period to strengthen its financial position. It means, the intent of the order of the NCLAT is to protect the assets of IL FS and its group companies in order to make the resolution process effective/purposeful. In any case, the legality of the order dated March 12, 2020 confirming the order dated October 15, 2018 has been challenged before the Supreme Court. Since, the matter is pending before the Supreme Court and there is no stay of the NCLAT order, the petitioner has to await adjudication of the proceedings before the Supreme Court. Petition dismissed.

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• 2022 (12) TMI 1059
  Condonation of delay in filing appeal - Sufficient Cause for not preferring an Appeal was provided or not - HELD THAT:- It comes to be known that the Leased Period of 15 years got expired on 16.01.2022 and the Corporate Debtor had lost his right to remain in possession of the property. But the Leased Premises was neither vacated nor the enhanced rent (which is outstanding) was paid to the Appellant till date - In the above background, the Appellant, had filed the application, seeking to direct the Respondent to vacate the Leased out premises immediately, in view of the expiry of lease, as on 16.01.2022. Alternatively, upon calculation of the CIRP period directed the Respondent to pay all the leased rental dues of Rs.2,82,63,305/- as on 28.02.2022 to the Appellant forthwith. Considering the fact, that a Lease, more than 12 months has to be registered in the manner known to Law and in accordance with Law and an unregistered Lease / Documents cannot be looked into by a Court of Law / Tribunal even for a collateral purpose, this Tribunal comes to a resultant conclusion that the Adjudicating Authority (Tribunal) had in the impugned order had mentioned that Dr. A.M. Arun had already paid the amount towards the Lease Rental and came to the right conclusion that IA/434(CHE)/2022 in CA/1/IB/2017 is not maintainable but had directed the Resolution Professional to pay the rent at Rs.2,25,000/- till the continuation of the Corporate Insolvency Resolution Process (CIRP), which was agreed to be paid. Appeal dismissed. Application dismissed.

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• 2022 (12) TMI 1058
  Approval of Resolution Plan - Section 31 of the Insolvency and Bankruptcy Code, 2016 - Appellants raised several objections against the Resolution Plan, as approved by the CoC, being discriminatory towards Operational Creditors - HELD THAT:- In the instant case, what has to be kept in mind is that the Corporate Debtor is a Real Estate Company involved in construction of Housing and Commercial Units and the land on which the construction is to be completed belongs to GMADA. As the nature of the activity of the Corporate Debtor is dependent on the land owned by GMADA, the commercial decision taken by the CoC to make a provision in the Resolution Plan with respect to the Statutory Dues owed to GMADA, cannot be faulted with, though GMADA has failed to make the requisite claim, as provided for under the Code, but has been in communication with the RP - We do not appreciate the act of GMADA not having filed their claim, the fact remains that the Real Estate Project is being constructed on GMADA land and all approvals, permits and licences involves GMADA, which is a Secured Creditor . Further, the nature of business and the ground realities were kept in mind by the CoC before taking a commercial decision. In approval of the Resolution Plan, the CoC takes a business decision based on ground realities, by a majority which binds all stakeholders including dissenting Creditors . Keeping in view the peculiar facts of the instant case that the Resolution Plan was approved by the CoC way back in 2019 and the Adjudicating Authority has approved the Plan on 01.06.2021 after a period of two years and the Plan has already been implemented, we do not see it a fit case to set the clock back, specifically keeping in view the ratio of the Hon ble Supreme Court in the aforenoted Judgements. It is hoped that the IBBI the Government may take effective steps to make necessary amendments/frame Regulations to protect the class of Financial Creditors /Homebuyers from imposition of any haircuts, and likewise take essential measures to safeguard the interest of Operational Creditors in the Structure of the Resolution Plans . Appeal dismissed.

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• 2022 (12) TMI 1057
  Seeking replacement of Resolution Professional (RP) - HELD THAT:- There was no consensus in the name of the Resolution Professional and it was open for the Adjudicating Authority to appoint any Resolution Professional. However, there being no consensus between the parties, Memo filed by Indiabulls Housing Finance Ltd. could not have been taken notice or Resolution Professional appointed on the basis of said Memo. Out of three Applicants, two Applicants had filed Joint Memo namely- SREI Equipment Finance Ltd. and IIRF India Realty XII Ltd. recommending the name of Mr. Avil Jerome Menezes. Why the Adjudicating Authority did not choose the name suggested by two Applicants and accepted the name suggested by one Applicant- Indiabulls Housing Finance Ltd. has not been dealt with the order. When the clear intent of the order dated 28.11.2022, is that unless the Applicants mutually agree on any name of the Resolution Professional, Resolution Professional will be appointed by the Adjudicating Authority, and it was clear that there was no consensus with regard to the name of the Resolution Professional between three Applicants, the Adjudicating Authority ought to have appointed Resolution Professional on its own without referring to or relying to any prayer made by the Applicant- Indiabulls Housing Finance Ltd. . The Adjudicating Authority committed error in appointing Mr. Sapan Mohan Garg as Resolution Professional whose name was submitted by Memo filed by Indiabulls Housing Finance Ltd. . The order dated 28.11.2022 (in order sheet) insofar as it appoints Mr. Sapan Mohan Garg as Resolution Professional is set aside and the Adjudicating Authority is directed to pass an order appointing any Resolution Professional from the eligible Resolution Professional as it deem fit and proper. The Order passed insofar as it appoints Mr. Sapan Mohan Garg as Resolution Professional is set aside - Appeal allowed in part.

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• 2022 (12) TMI 1056
  Replacement of Liquidator of the Corporate Debtor - Appellant submitted that the 2nd and 3rd Respondent condoned the lapse of the Appellant for taking assignment in the present case without having Authorisations for Assignment (AFA) by imposing fine of Rs. 10,000/-. Valid Authorisations for Assignment (AFA) on the date of appointment as the Liquidator of the Corporate Debtor is there or not - AFA was deemed to have been issued in terms of Regulation 12A of the Insolvency and Bankruptcy Board of India (Model Bye -Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 Vide Notification No. IBBI/2016-17/GN/REG001, dated 21st November, 2016 or not? - AFA issued subsequent to taking up assignment by the Appellant, absolve Appellant of meeting requirement of Regulation 7A of IBBI Insolvency Professional Regulation 2016 or not - Whether, the Regulation 12A of the Insolvency and Bankruptcy Board of India (Model Bye -Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 Vide Notification No. IBBI/2016-17/GN/REG001, dated 21st November, 2016 will prevail over Regulation 7A of IBBI Insolvency Professional Regulation 2016? HELD THAT:- The Appellant himself admitted that application for AFA was filed on 31.12.2019 and the same was rejected on 14.01.2020 hence this Appellate Tribunal feels that the argument the Appellant that he has deemed to have been received the AFA or renewed within 15 days does not seems to be correct - the appellant cannot claim that there was no requirement of issue of fresh AFA for his assignment as the Liquidator. The assignment as the Liquidator to which the Appellant got confirmed on 29-05-2020, is beyond the prescribed threshold date i.e. 31-12-2019. Therefore, this is non-compliance of the regulatory provisions. The Appellant got authorized and valid AFA by the 3rd Respondent only on 30.12.2020 which is way beyond the date of his appointment/assent as liquidator. Therefore, it is clear that as per Regulation 7A of IBBI (Resolution Professional) Regulation 2016, the Appellant did not hold valid AFA on the date of acceptance of the Assignment and the AFA cannot be ratified retrospectively in the absence of any such provisions in the law - this Appellate Tribunal considers that the Appellant did not possess the legally required AFA on the date of the acceptance of the assignment and the Appellant thus fails to meet the legal bar. Therefore, there is no error in the impugned order on these accounts. The Interim injunction order passed by the Hon ble Madras High Court confines only to the order with regard to action arising out of proceedings of the Disciplinary Committee and is silent on the issue of requirement of AFA by the Appellant, compulsory requirement of AFA as per Regulation 7A of IBBI (Insolvency Professional) Regulation 2016 and any stay on removed of the Appellant from Liquidator of the Corporate Debtor - this Appellate Tribunal do not find prima-facie any restrain on the Adjudicating Authority to adjudicate in this case and no conflict is found. Whether the Adjudicating Authority can remove the Liquidator? - HELD THAT:- No Liquidator has any personal rights, to continue in Liquidation and the Adjudicating Authority, can order for Replacement of the Liquidator, recording sufficient reasons, as per Law - Further, since the Adjudicating Authority, is vested with the power, to appoint a Liquidator, under Section 33 and 34 of the I B Code, 2016. It is by the virtue of the Section 16 of the General Clauses Act, 1897, that an Adjudicating Authority, who also, has the power, to remove the Liquidator. This Appellate Tribunal without any ambiguity / simmering doubt, finds that there was no error in the impugned order. The Appeal, is devoid of merits and stand dismissed.

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• 2022 (12) TMI 1055
  Validity of Sale Confirmation Letter and Sale Certificate - stand of the 1st Respondent / Resolution Professional is that the Appellant/ 1st Respondent / Financial Creditor, had issued a Sale Certificate on 20.01.2021. during the Moratorium Period which is impermissible, as per Section 14 of the I B Code, 2016 - HELD THAT:- Before the Adjudicating Authority, the 1st Respondent / Resolution Professional, had prayed for passing of an Order in Setting aside, the Sale Certificate, issued by the Appellant / Financial Creditor, to and in favour of the 2nd Respondent and to pass an Order, in directing the Respondents in Interlocutory Application No. 124 of 2021 therein, to handover the Properties of the Corporate Debtor, including Company s entire fixed and current assets, including stocks and receivables, which include Plant and Machinery, on the lease hold land admeasuring Plant and Machinery on the lease hold land admeasuring Ac. 11.37 guntas in Sy. No. 334 / A, 3 / 1A, 3 / 1B, 5 and Ac. 10.27 guntas in Sy. No. 332 / A, 333/A, 7, 8B, 8A, are situated at Kaveli Village, Kohir Mandal, Sangareddy District (erstwhile Medak District) and (d) to pass an Order, in directing the Commissioner of Police, Sangareddy at Office of the Superintendent of Police, Sangareddy to provide necessary assistance to him and his team, to takeover the Control and Custody of the Properties of the Corporate Debtor etc. The subject Asset, over which the Security Interest, was created to and in favour of United Bank of India (under SARFAESI Act, 2002), by the Borrower, was purportedly assigned, in favour of the Appellant / 1st Respondent, through Assignment Deed, dated 04.04.2019 - The Appellant / 1st Respondent, had caused a Notice, as per Section 13 (1) of the SARFAESI Act, 2022, requiring the Borrower, to wipe out the Liability, within the time prescribed therein and owing to the failure of the Borrower, in fulfilling the conditions of the Demand Notice, the Secured Asset, was taken possession by means of the Possession Notice dated 27.09.2019 and subsequently, the Property, was sold, based on a Private Treaty, to the 2nd Respondent for a Monetary Consideration of Rs.9,75,00,000/- - As a matter of fact, the Sale, was affirmed on 20.01.2021, and was Registered on 04.03.2021 in the Office of the Sub-Registrar, Zaheerabad, Medak District, in favour of the 2nd Respondent. There is no second opinion of the fact that the Moratorium, declared by the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I, Hyderabad), was published on 22.01.2021, and later the Sale Certificate, dated 20.01.2021, in favour of the 2nd Respondent, was Registered by the Appellant / 1st Respondent, which is in Negation, of the ingredients of Section 14 (1) (a) of the Code. Therefore, the Plea, taken on behalf of the Appellant / 1st Respondent, that the Registration of Sale Certificate, is only a Ritualistic Formality, is not acceded to, by this Tribunal, especially, the Registration of Sale Certificate, was made in breach of the Order of Moratorium, declared by the Adjudicating Authority, in the main Company Petition, on 18.01.2021. As far as the present case is concerned, the Sale, by an Authorised Officer, pursuant to a Private Treaty, between the Appellant / 1st Respondent and the 2nd Respondent, is to be Compulsorily Registered, and also the Requisite Stamp Duty, is to be paid, in terms of Article 18C, read with Article 23 of Schedule I of the Stamp Act, 1899 , as held by this Tribunal. As such, the contra plea taken on behalf of the Appellant / 1st Respondent, is unworthy of acceptance. One cannot remain in Oblivion, as to the crystalline fact, that the Appellant / 1st Respondent, had Registered the Sale Certificate, to and in favour of the 2nd Respondent, in utter disregard to the Order of Moratorium, declared by the Adjudicating Authority, in the main CP (IB) No. 673 / 7 / HDB / 2019 dated 18.01.2021. Viewed in that perspective, the availing of remedy, under Section 17 (1) of the SARFAESI Act, 2002, by the Aggrieved, before the Debts Recovery Tribunal I, Hyderabad, is an Otiose one and the same is Negatived, by this Tribunal, considering the fact that the provisions of I B Code, 2016, overrides the SARFAESI Act, 2002. This Tribunal, on a careful consideration of divergent contentions and also on going through the impugned order dated 23.12.2021, in IA No. 124 of 2021 in CP (IB) No. 673 / 7 / HDB / 2019, passed by the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I, Hyderabad), comes to a clear cut conclusion that the same is free from legal infirmities - Appeal dismissed.

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• 2022 (12) TMI 1054
  Validity of approval of Resolution Plan - Dues of EPF - Seeking entire claim to be allowed on priority - the Petitioner / Appellant is not a Party to the Proceedings - It is the stand of the Petitioner / Appellant that it is the Statutory Authority and Creditor to the Corporate Debtor and the grievance of the Petitioner/ Appellant is that its Claim, was not paid, in entirety and in priority, in the Resolution Plan - HELD THAT:- The Resolution Plan of the 2nd Respondent / Successful Resolution Applicant, was voted by 97.18% voting share of Committee of Creditors and the 2nd Respondent / Successful Resolution Applicant, was declared as the Successful Resolution Applicant, in terms of the ingredients of Section 30 (2) of the Insolvency Bankruptcy Code, 2016. The 1st Respondent/ Resolution Professional had evaluated the Resolution Plan of the 2nd Respondent and, affirmed, that it fulfills the requirements of the Insolvency and Bankruptcy Code, 2016. It is axiomatic principle, in Law, that before approving the Resolution Plan, the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench, Hyderabad) is to apply his mind and come to a conclusion, that the same satisfies the requirements adumbrated under Section 30 (2) of the I B Code, 2016 - Undoubtedly, an approval of Resolution Plan, is to be Judged, with due diligence, by an Adjudicating Authority. In fact, the Resolution Plan is not a Sale / Auction/ Not Recovery / Not Liquidation. The Creditors will be bound by the Sums, stated to be Payable, under the Resolution Plan, of course, in accordance with Section 31, of the Insolvency Bankruptcy Code, 2016. The pros and cons of the Scheme / Resolution Plan, is required to be thoroughly scrutinised, regarding a subjective satisfaction, being arrived at, by an Adjudicating Authority. A Resolution Professional is to find out, whether the Resolution Plan of a Resolution Applicant, satisfies the requirements, mentioned in Section 30 (2) of the I B Code, 2016 - In the instant case, the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench, Hyderabad) came to the conclusion, that the Resolution Plan, satisfies the requirements of the I B Code, 2016, and approved the said Plan, through an Order dated 10.01.2022 in IA No.746/2021 in CP (IB) No.326/7/HDB/2020. The Adjudicating Authority, is empowered to turn down the Resolution Plan, when it does not satisfy the parameters mentioned in Section 30 (2) of the I B Code, 2016. A Judicial Review, of the approved Resolution Plan, by the Committee of Creditors is limited, by the Adjudicating Authority, (Tribunal). In the instant case, the Appellant, was paid a sum of Rs.46,400/- through a Cheque dated 10.02.2022, although its Claim in Form B dated 29.01.2021, in respect of the Corporate Debtor was Rs.40,09,102/-. Be that as it may, in view of the fact that in the impugned order, the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench, Hyderabad), had clearly observed that the Resolution Plan, furnished by the 2nd Respondent / successful Resolution Applicant is in conformity with the requirements of Section 30 (2) of the I B Code, 2016 and the other requirements, prescribed by the Insolvency Bankruptcy Board of India, and this Tribunal, keeping in mind an important fact that the Resolution Plan came to be approved with a majority of 97.18% Vote, by giving a due consideration and weightage to the commercial wisdom of the Committee of Creditors, this Tribunal comes to a resultant conclusion, that the impugned order dated 10.01.2022 in IA No.746/2021 in CP (IB) No.326/7/HDB/2020 in allowing the IA No.746/2021, by approving the Resolution Plan, is free from any Legal Flaws. Appeal dismissed.

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• Service Tax

• 2022 (12) TMI 1053
  Levy of Service tax - Construction of Complex Service - exemption by Government of India vide Notification No. 28/2010 dtd. 22.06.2010 - HELD THAT:- The complex which is constructed with an intention for personaluse as residence by a person who is directly engaging any other person for designing/planning of layout and the construction of such complexes out of the ambit of such construction and thus from taxability. We draw the support from the case of COMMISSIONER OF CENTRAL EXCISE, AURANGABAD VERSUS MALL ENTERPRISES [ 2015 (11) TMI 333 - CESTAT MUMBAI ] wherein it was held that not only residential complex is designed or laid out by another person are excluded from the definition but also the ones intended for personaluse of such person i.e. the owner of the complex - In another case titled as NITHESH ESTATES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX AND CUSTOMS BANGALORE-II [ 2015 (11) TMI 219 - CESTAT BANGALORE ] wherein it was held that the construction of residential complex for ITC (in that case) intended to provide accommodation built for own employees, activity was covered by definition of personaluse in Explanation to Section 65(91A) of Finance Act, 1994. Hence, the assessee s activity falls under exclusion of that Section and as such is excluded from levy of Service Tax. In the present case, the quarters/residential complexes were got constructed by the AMC and AUDA for urban poor people for their residential use, the same amounts to personal use . The confirmation of demand qua these services by the Commissioner is therefore not sustainable. In the case in hand in as much as in both the cases the construction service was provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana. It was held that the service tax is not leviable to such project. Hence, the ratio of the above judgment is directly applicable in the present case. Appeal allowed.

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• 2022 (12) TMI 1052
  Denial of CENVAT Credit - Manpower Agency service - services of transport of goods by transporters - period from April 2014 to August 2014 and September 2014 - reverse charge mechanism - HELD THAT:- There was an issue with the availing of the CENVAT Credit in question, which requires to be ironed out after verifying the records; that there was also an issue as regards the verification of ST-3 returns for the subsequent period and not the one for the relevant period in dispute, from which the issue was flagged by the Audit Commissionerate and for the same, a speaking order is required, for which reason the matter has to be restored to the file of the Adjudicating Authority. The impugned order, to the extent it is appealed before this forum, is set aside and the matter is restored to the file of the Adjudicating Authority, who shall afford reasonable opportunity to the appellant and then pass a de novo order after verifying the relevant documents that may be furnished by the appellant, if so advised. The appellant shall cooperate with the Adjudicating Authority without seeking unnecessary adjournments. All the contentions in this regard are left open. Appeal allowed by way of remand.

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• 2022 (12) TMI 1051
  Time Limitation - demand of service tax raised against the appellant M/s. Gujarat Engineering Research - HELD THAT:- In the present case the demand of service tax pertains to the period March/July 2007, 2003 to May 2007 and the show cause notice was issued on 11.01.2009. Therefore, the entire demand is under the extended period of limitation. This Tribunal, considering the status of the appellant and facts of the case which are absolutely identical to the facts of present case, vide order No. A/10270-10271/2019 dated 03.01.2019 [ 2019 (2) TMI 1303 - CESTAT AHMEDABAD] held that the demand is time-barred and appeal was allowed on limitation. The demand raised in the present case for extended period is not maintainable on the ground of limitation itself - Appeal allowed.

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• 2022 (12) TMI 1050
  Seeking remand of the case - Service tax was paid in excess - excess amount may be adjusted against the interest liability - invocation of Section 73(3) of FA - HELD THAT:- There is no dispute that the appellant have paid the Service Tax in excess as claimed by them, and it was submitted that the excess amount shall be taken care of liability of interest. If this be so the Commissioner(Appeals) should have considered this issue. However, the Commissioner (Appeals) has not given any finding on the claim of the appellant to settle the case under Section 73(3) of Finance Act, 1994. The matter needs to be reconsidered in the light of Section 73(3) of Finance Act, 1994 - appeal allowed by way of remand.

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• Central Excise

• 2022 (12) TMI 1049
  Demand of differential duty - reliance on statement of employee - significant , statement - Classification of goods manufactured and cleared by appellant - presence of fertilizing element - Vasundhara - Jalpurti - Purti - Rasna Chelated - Rasna Plus - other fertilisers - examination of statement / employee in accordance with section 9D of Central Excise Act, 1944 - HELD THAT:- It is seen from the test report there is no doubt about the presence of the said fertilizing elements in the impugned goods. Though it is the contention on behalf of Revenue that the statement of the employee is clear enough evidence that presence is questionable which, according to Learned Senior Counsel, required that the statement of the said employee, being in total variance with the test reports that indicate presence of the fertilizing elements, should be discarded. It is his submission that the relevancy of the said statement had not been examined by the adjudicating authority in the manner mandated in section 9D of Central Excise Act, 1944. Section 9D of Central Excise Act, 1944 appears to have been observed in its breach and must be remedied. To enable that, we set aside the impugned order and remand the matter back to the original authority for subjecting the statement of Mr Sanjay Shembekar, considered to be of particular relevance in determining the outcome of the impugned order, to the prescriptive mandate of section 9D of Central Excise Act, 1944. Needless to say, the adjudicating authority shall afford the appellant herein sufficient opportunity, in accordance with the principles of natural justice, to rebut the contents of the show cause notice both by submission as well as through documents. Appeal allowed by way of remand.

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• 2022 (12) TMI 1048
  Refund by way of re-credit in cenvat credit account - amount was paid as pre-deposit - transition to GST regime - HELD THAT:- The Commissioner (Appeals) have erred in dismissing the appeal, as appellant was before the Adjudicating Authority for correction of mistake of law in the adjudication order. Thus, there is no deliberate delay and the appellant have filed appeal within thirty days from the date of receipt of communication dated 09.04.2018 of the Adjudicating Authority. Secondly, I find that the order of the Court below directing to take credit of Rs. 6,60,016/- in the cenvat account vide Order-in-original dated 16.08.2017, is directly in conflict with the transitional provision, particularly in Section 142(6)(a) of the CGST Act. The order of the Court below is modified to the effect that the refund of the amount of Rs.6,60,016/-, which was a pre-deposit during pendency of appeal, be refunded in cash to the appellant-assessee alongwith interest from the date of deposit till the date of refund at the prescribed rate under Section 35FF of the Central Excise Act - appeal allowed.

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• 2022 (12) TMI 1047
  Valuation - non-inclusion of value of Bought Out items received at site and used in the Erection of Boilers have in the assessable value of the Boilers - contravention of provisions of Rule 4, Rule 5, Rule 6, and Rule 8 of the Central Excise Rules, 2002 - short paid excise duty - extended period of limitation - HELD THAT:- The finding of the Commissioner that all the systems received at the site of the erection of the Boiler, do not essentially constitute as essential parts of the boiler required for the erection and commissioning of the boiler. Certain parts as noted by the Hon ble Apex Court will be in nature of auxiliaries etc., however they in view of the HSN explanatory note continue to be classified as Boiler under heading 8402.10 and not under the heading 8402.90. Undisputedly the goods which have been cleared by the Appellants have to be assessed in the form in which they were cleared by the appellant. In the case of RELIANCE TEXTILE INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1992 (3) TMI 86 - HIGH COURT OF JUDICATURE AT BOMBAY] , Hon ble High Court held It is not in dispute that when base yarn undergoes texturising process to bring into existence texturised yarn, then separate excise duty is leviable for the process of manufacture. In these circumstances, it is impossible to accede to the submission urged on behalf of the department that at the time of clearance of base yarn, the petitioners are liable to pay excise duty which is required to be paid after the texturised yarn comes into existence. The provisional assessment made by the department, therefore, is unsustainable. Having held so we also find merits in the submission made by the appellant that the goods as per the turnkey contract entered by them emerged only at the site of customer which do not fall within the jurisdiction of the Pune Commissionerate. Accordingly the issues relating to excisablity and valuation of the goods as per the turnkey contract could not have been determined by the Commissioner Pune, having jurisdiction over the factory/ factories of the appellant. From the reading of the order of the Hon ble Apex Court in COMMISSIONER VERSUS SIEMENS LTD. [ 2003 (5) TMI 535 - SC ORDER ] it is quite evident that Hon ble Supreme Court has not recorded any finding in respect of the issue of the inclusion of the value of the brought out items in the value of the boiler. On the contrary Hon ble Supreme Court has not taken up the issue for consideration as that question was not raised in the show cause notice which was the foundation for the entire proceedings. Hon ble Supreme Court order cannot be said to declaration of law on the subject, when Supreme Court itself observes for the deletion of the para 10 and 11 (b) if the there is no demand made in respect of the brought out items in the show cause notice. Commissioner has in the impugned order not recorded any finding in this respect in the impugned order, as to whether any demand was made in the show cause notice in that case or not. Hence we do not find any merits in the sole reliance placed in the impugned order on the said decision of the tribunal and Hon ble Supreme Court. In the present case by the impugned order, revenue has not sought to add the value of the brought out items in the assessable value but has sought to add the some value which they have determined. Impugned order records that there is difference in value which has been shown by the appellant while raising the invoices on the customer and the value at which these brought out items had been invoiced by the supplier of the brought items. Further impugned order also has sought to add certain undetermined charges under the category of design and engineering head, in the garb of brought out items. The charge of undervaluation of the goods has been made even without reference to the supplier of these brought out items. If there was any undervaluation of these items then the demand of duty should have been made on the supplier of these brought out items. Admittedly and undisputedly these brought out items were not even brought into the premises of appellant - Undisputedly after erection of the goods manufactured and cleared by the appellant and other brought out items at the site of Customer, what emerges is a immovable property which as such is not excisable. As we find that impugned orders cannot be sustained on grounds of jurisdiction and merits, we do not consider the other grounds urged by the appellant in appeals and during course of argument - there are no merits in the impugned orders so as to sustain them. Appeal allowed.

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• CST, VAT & Sales Tax

• 2022 (12) TMI 1046
  Entitlement of interest subsidy under West Bengal State Support for Industry Scheme, 2008 - Fixation of Capital Investment Subsidy (FCIS) in full - seeking total waiver of electricity subsidy in terms of the Scheme - HELD THAT:- In the matter of BHAI JASPAL SINGH AND ANOTHER VERSUS ASSISTANT COMMISSIONER OF COMMERCIAL TAXES AND OTHERS [ 2010 (10) TMI 899 - SUPREME COURT ] considering the exemption notification for sales tax and VAT under the West Bengal Sales Tax Act, 1954, Hon ble Supreme Court has held that the exemption provision should be construed strictly against the person claiming exemption and that before an exemption can be recognized, a person or property claiming exemption must come clearly within language apparently granting the exemption. We are conscious of the fact that the aforesaid judgment have been rendered by the Hon ble Supreme Court considering the statutory notifications relating to tax exemption whereas the notification in question concerning WBSSIS 2008 is not a statutory notification but the broad principles stated by the Hon ble Supreme Court will be attracted in respect of the present notification also - The above judgment make it clear that the concession notification should be strictly construed to ascertain whether the subject falls in the notification or in the exemption clause, but once the subject is found to be eligible, then liberal interpretation is to given for extending the benefit. It is also settled that while determining the entitlement, the purpose of the scheme or notification should not be defeated. Claim relating to fixed capital investment subsidy - HELD THAT:- The writ petitioner was granted the registration certificate for assistance under the WBSSIS 2008 dated 22nd of May, 2012 in respect of general eligibility to receive benefit under the scheme. The writ petitioner is undisputedly a unit with investment under Scale 1 and is not an ineligible unit under clause 9.1.1 - The denial of fixed capital investment subsidy on the ground that it will lead to granting of double benefit to the petitioner, cannot be sustained, as under the Scheme of subsidy, WBIDC was acting in two different and separate capacities as Authorized Agent and as Financial Institution . Hence, we find no error in the order of the learned Single Judge in allowing the prayer for grant of fixed capital investment subsidy. So far as the grant of total waiver of electricity duty in terms of clause 9.3 of WBSSIS 2008 is concerned, no serious challenge has been advanced before this Court, no infirmity has been pointed out, therefore, we find no reason to interfere in that part of the order of the learned Single Judge. Thus, no case is made out to interfere in the order of the learned Single Judge - Application dismissed.

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• 2022 (12) TMI 1045
  Refund the amount of excess tax paid by the appellant - HELD THAT:- It would have been well open to the writ Court to grant permission to the appellant to withdraw the proceedings before the Tribunal by making necessary submission in the writ petition. In any event, there is nothing on record to point out that there was an order of assessment under both the enactments, which had culminated in a demand. There is also nothing placed on record before the Tribunal or before this Court to show that the demand was pending prior to the issuance of the refund order in Form 27 or subsequent to the said order. The respondents are not justified in linking both the proceedings. After the issuance of Form 27 in which it has been clearly recorded that the appellant had paid excess tax, it is the duty of the department to refund the said amount and if the amount is not refunded within time, the appellant / assessee would be entitled to interest on the same as the department seeks to recover alleged tax dues with interest. The same principle will equally apply to the department as well when they have withheld the refund though Form 27 was issued as early as on 4th August, 2016. The sanction and payment of the excess tax collected is an independent proceedings to the proceedings that the department may initiate for any alleged tax dues either under the provisions of the WBVAT Act or under the CST Act. Appeal allowed.

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• 2022 (12) TMI 1044
  Rejection of appeal on the ground of non-payment of pre-deposit amount - Violation of principles of natural justice - HELD TH AT:- It is to be seen that aggrieved by the order of assessment passed by the 1st respondent dated 01.10.2013, the petitioner had filed appeal in time i.e., within thirty days as prescribed under the Act. Though the petitioner had filed appeal in time, it is an admitted fact that it did not make payment of pre-deposit of 12.5% of the disputed tax, except the payment of the appeal fee of Rs.1,000/-. Upon rejection of the appeal by the 2 nd respondent authority, the petitioner choose to challenge the said order by questioning the assessment order also before this Court and thus there was no situation where the petitioner could have made the payment of pre-deposit amount prescribed under the Act. Though the delay in the case of Innovative Systems (2 supra) [ 2015 (2) TMI 1314 - SUPREME COURT ] was of three months from the date of rejection of appeal to the date of payment, it is the principle and ratio laid down that need to be applied and not by comparing the period of delay - In the facts of the present case, since the petitioner had approached this Court upon rejection of the appeal by the 2 nd respondent and this Court having admitted the Writ Petition, this Court is of the considered opinion that the petitioner cannot be deprived of the benefit of the ratio decidendi of the judgment of the Supreme Court in Innovative Systems on the ground of lapse of long period. Since the Writ Petition is filed challenging the order of assessment which involves factual aspects as also in the alternative, the rejection of the appeal by the 2nd respondent on the ground of non-payment of the pre-deposit relying on the judgment of Ankamma Trading Co. (1 supra) [ 2011 (2) TMI 1254 - ANDHRA PRADESH HIGH COURT ] which now stands impliedly overruled, we are of the considered view that instead of this Court delving into the factual aspect involved in the matter, should direct the petitioner to make the payment of the pre-deposit amount within a reasonable time. Petition disposed off.

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• 2022 (12) TMI 1043
  Refund claim - parallel proceedings - petitioner has already initiated a parallel proceeding by filing another case before the West Bengal Taxation Tribunal which is still pending - HELD THAT:- If the prayer of the petitioner is granted in this writ petition the same will make the proceeding before the Tribunal infructuous. At the same time, it is a matter of record that the said proceeding initiated before the Tribunal has not even been withdrawn by the petitioner and it will not be proper on the part of this writ court to entertain this writ petition by giving indulgence to the petitioner to run parallel proceeding for the very same relief. Petition dismissed.

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• Indian Laws

• 2022 (12) TMI 1042
  Seeking grant of anticipatory bail - Sections 379-B and 307 of the Indian Penal Code (Section 307 IPC added later on and Section 285 IPC deleted) and under Section 25 of the arms Act - HELD THAT:- Since the petitioner has joined the investigation and his custodial interrogation is not required, the present petition is allowed and the interim order dated 05.04.2022 is made absolute - However, the petitioner shall continue to join investigation as and when required to do so and shall abide by the terms and conditions, as laid down under Section 438 (2) Cr.P.C.

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