Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 28, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of goods - SAC Code - rate of GST - The services rendered by the appellant can be classified as ‘Other environmental protection services’ and not as ‘Support services to agriculture, forestry, fishing, animal husbandry’ - there are no infirmity in the ruling pronounced by the WBAAR being that the supply of services for plantation of mangrove seeds and seedlings in coastal areas shall be covered under Serial Number 32 of Notification No. 11/2017-Central Tax (Rate) - AAAR
Income Tax
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Condonation of delay in e-filing the audit report in Form No.10B has been rejected - Delay condoned - No scrutiny could be carried out by the respondent since the audit report under Section 10B was not on record. Learned advocate for the petitioner Mr. B.S.Soparkar fairly submitted that the issue of benefit of exemption may be examined by issuance of notice u/s 143(1)/ 143(2) and the petitioner shall not object to the said proceedings by taking the ground of limitations. - HC
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Addition u/s 68 - genuineness and credit worthiness - It is evident that the assessee though has disclosed the source of the deposit but could not establish the nature thereof. Three conditions which are required to be proved by the Assessee as per Section 68 of the Income Tax Act, 1961, could not be proved by him. The burden would, therefore, not shift on the revenue, as the assessee has failed to discharge her burden. - HC
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Estimation of income - bogus purchases - when the purchases are held to be bogus and only certain percentage only to be disallowed - assessee has already declared profit @ 9% (confirmed by AO) the net difference of 3.5% (12.5 - 9) should be considered for disallowance. Accordingly, we direct Assessing Officer to disallow @ 3.5% of the alleged bogus purchases. - AT
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Long term capital gain - sub-tenancy right - the assessee had a sub-tenancy right in the property and upon surrender thereof, the assessee received a sum which was rightly offered as long-term capital gain in terms of section 45(1), 48, 55(2) and 2(29B) of the Income-tax Act, 1961. AO was wrong in rejecting the claim of long-term capital gain and assessing the same as income from other sources. - AT
Customs
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Condonation of delay in filing appeal - As the date of dispatch of the order is not available with the department therefore the limitation will start running from the date when the same was received by the Appellant which is 06.03.2020 and after taking into account the Taxation Act, 2020 (supra) read with notification dated 30.09.2020 which extended the time till 31.12.2020 in all the cases due to covid pandemic, the appeal filed on 30.12.2020 was filed well within limitation before the learned Commissioner. - AT
Corporate Law
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A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1. - HC
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Valuation of shares - Sick industrial unit - scheme of exit - Validity of order passed by the Tribunal asking an Independent Valuer be appointed forthwith from the list of approved valuers of IBBI by the Appellant Company - It is an incumbent duty to the Appellant company to disclose all material information to its shareholders disclosing thereon even the justification for the existing price offered by the Promoters which also seems to be missing in this case. - AT
Service Tax
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Work contract services - Scope of the term “consideration” - The impugned order which relies solely on the definition as contained in the Contract Act, for holding that this amount is “consideration”, for the services provided or to be provided cannot be upheld in view of the specific definition contained in Finance act, 1994. Commissioner needs to record a finding to the effect that this amount is an consideration as per the Finance Act, 1994 by referring to definition contained in therein. - AT
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Prayer for recalling of Final Order - Most of the documents as annexed with the present application also are with respect to Financial Year 2013-14 and 2014-15. Though balance-sheet as on 31st March, 2013 has also been annexed but the fact remains is that the said document, admittedly, was provided on 12.04.2012, for the first time, whereas the order in hand was dictated and pronounced on 11.04.2022. Had it been provided at the time of dictation also the said statement could have been taken into consideration. Being a document which was never provided before any of the adjudicating authorities below there seems no reason otherwise to take this document on record. - AT
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Intellectual Property Rights Service - The scope of the IPR in the service tax law specifically excludes copyrights. Therefore, the amounts earned under the agreements by the appellants are clearly excluded from the scope of the taxing statute for IPR service. - AT
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Invocation of extended period of limitation - activity of direct selling agent on commission basis - The non-payment of service tax was purely a bona fide unawarenss about the liability. In such circumstances the extended period could not have been invoked. The order under challenge though has dealt with the amount which was service tax liability of the appellant but the demand was not raised during the statutory period prescribed for raising the same. As held above, there was no reason to invoke the extended period of limitation - AT
Central Excise
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Claim for monetization of the restored CENVAT credit - To accede to the plea of the appellant herein would be to discard the leviability of duty/tax on manufacture/supply of goods/services procured by the appellant. - AT
VAT
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Deemed sale - transfer of right to use goods or not - inter-state transfer of goods - the owner of the cylinder is IOCL. The transport/supply does not fall within the ambit of transfer of goods as defined in “sale”. Further, when transaction has taken place in Assam, the respondent authorities cannot have any jurisdiction over Interstate. - HC
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Validity of suo-motu revision order - Admittedly, in the present case, it is the STO who has passed the assessment order under Section 42 of the OVAT Act which was sought to be revised by the Addl. CST. Therefore, even in terms of the notification dated 5th June, 2018 the Addl. CST lacked the jurisdiction to revise the order of the STO. - HC
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Jurisdiction - validity of notices and orders of assessment/penalty under VAT Act - post GST era - The effect of the saving clause cannot be defeated on any of the grounds now raised by the Dealers. The Dealers must complete the legal obligations, or the timelines expire to assume rights either accrued or vested. It is not the case of Dealers that beyond the period of limitation, the impugned notices are issued or orders made. The migration to GST is not an amnesty given to defaulting dealers from paying the tax due under the KVAT Act - the Revenue/State has not disentitled itself from enforcing its right to recover the defaulted tax or tax dues under the KVAT Act arising before 01/07/2017. - HC
Case Laws:
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GST
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2022 (12) TMI 1177
Maintainability of the writ petition - Availability of efficacious remedy of appeal - dispute pertains to questions of fact - seeking direction upon the respondents to show cause as to how an Officer of the State Taxes could carry out the proceedings under Section 129 of CGST Act - HELD THAT:- Having heard learned counsel for the parties and after going through the series of events, as also, taking into consideration that an efficacious alternative remedy by way of appeal is available to the petitioner under Section 107 of JGST Act, we therefore, grant liberty to the petitioner to approach the appellate authority against the impugned order passed under Form GST MOV 09. On his approaching, the State Taxes Officer, Intelligence Bureau, Jamshedpur Division, Jamshedpur shall provide the GSTIN number so that the petitioner can prefer an appeal online. The writ petition is disposed of.
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2022 (12) TMI 1176
Maintainability of the writ petition - Availability of efficacious remedy of appeal - dispute pertains to questions of fact - seeking direction upon the respondents to show cause as to how an Officer of the State Taxes could carry out the proceedings under Section 129 of CGST Act - HELD THAT:- Having heard learned counsel for the parties and after going through the series of events, as also, taking into consideration that an efficacious alternative remedy by way of appeal is available to the petitioner under Section 107 of JGST Act, we therefore, grant liberty to the petitioner to approach the appellate authority against the impugned order passed under Form GST MOV 09. On his approaching, the State Taxes Officer, Intelligence Bureau, Jamshedpur Division, Jamshedpur shall provide the GSTIN number so that the petitioner can prefer an appeal online. The writ petition is disposed of.
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2022 (12) TMI 1175
Cancellation of GST registration of petitioner - failure to furnish returns for a continuous period of six months - HELD THAT:- Since, the petitioner failed to furnish returns for a continuous period of six months and show cause notice has been sent to him, it is directed that the petitioner shall file an application for revocation under Section 30 of the CGST Act in terms of Rule 23 of the CGST Rules. Though it is time barred, we are inclined to wave the limitation and direct the petitioner to file an application for reviving of G.S.T. registration before the Revenue within a period of 21 days, hence. He shall also comply the other provisions of Section 30 of the U.K. GST Act, that is submission of returns for the defaulted six months and any further completed months after the revocation. In such case, if dues are found to be due from the petitioner and he pays the same, then his case shall be considered liberally by the revenue and shall be disposed of within a period of 30 days. Petition disposed off.
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2022 (12) TMI 1174
Attachment of Bank account of petitioner - Remission of deficit court fees of Rs.600/- during the course of this day - petition dismissed on the ground that the appellant / writ petitioner is not aware of the fate of the revisional application, which it had filed against the order passed by the appellate authority dated 7th February, 2014 - HELD THAT:- The appeal is partly allowed and the order passed in the writ petition is set aside with a direction to the appellant to file an application before the revisional authority clearly setting out all facts and requesting the revisional authority to recall the order disposing of the revisional application and if such an application is filed, the revisional authority shall take up the same and pass a speaking order on merits and in accordance with law after affording an opportunity of personal hearing to the authorised representative of the appellant. As stated by the learned Advocate for the appellant that sum of Rs.16,51,924/- has been recovered after the writ petition was dismissed, we feel the interest of revenue has been sufficiently safeguarded as more than 50% of the total dues has already been recovered. Therefore, the garnishee order for the balance amount shall be kept in abeyance and abide by the orders to be passed by the revisional authority in terms of the above direction. The attachment of the bank account of the appellant shall be lifted within a period of three days from the date of receipt of the server copy of this judgment in order to enable the appellant to operate its bank account - Application disposed off.
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2022 (12) TMI 1173
Classification of goods - SAC Code - rate of GST - outward supply - support services - mangroves being cultivated and nurtured at coastal communities - HELD THAT:- It is evident that the appellant is engaged in business of cultivation, planting and nurturing of mangrove seeds and seedlings for the primary purpose of environmental protection by way of enhancing biodiversity and re-establishing the ecosystem functions and such services are not related to cultivation of plants for food, fibre, fuel, raw material or other similar products. Therefore, none of the activities carried out by the appellant for the purpose as laid down in the agreement qualifies to be agriculture as claimed by him which is essential to be classified under SAC 9986. The services rendered by the appellant can be classified as Other environmental protection services and not as Support services to agriculture, forestry, fishing, animal husbandry - there are no infirmity in the ruling pronounced by the WBAAR being that the supply of services for plantation of mangrove seeds and seedlings in coastal areas shall be covered under Serial Number 32 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 having SAC 9994 and shall attract GST @ 18%.
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2022 (12) TMI 1136
Refund of the additional tax burden suffered by the petitioner in the light of introduction of the GST regime w.e.f. 1st July, 2017 onwards - HELD THAT:- The plain reading of the new amended Order of the State Government dated 30.09.2022 would reflect that the State Government has now for the Water Resources Department has taken a decision to ensure that the Additional Tax burden that has suffered by a Contractor in the event of a new tax that is imposed, the additional burden shall be reimbursed to the contract, subject to the Contractor furnishing the details of the difference of the tax liability and the additional tax that was required to be paid by the Contractor. It is the further contentions of the counsel for the petitioner that even otherwise the decision not to reimburse would be too harsh a decision on the part of the respondents, for the reason that the Contractor is not at fault in any manner for incurring the additional tax liability that has occurred because of the introduction of any new tax. The bid and the price quoted therein by the Contractor always is taking into consideration the existing taxes and for which he is liable to pay and deposit. In case of additional liability incurred on account of the imposition of a new tax, the Department has to have a mechanism of compensating the Contractor to the extent of the additional tax liability that the Contractor had to bare - It goes without saying that this aspect has been fairly appreciated by the Government itself and had taken a decision of reimbursing the additional tax burden to the Contractors when they had issued Orders for the various Departments under the State Government like: PWD, Chhattisgarh Rural and Development Agency and Chhattisgarh Urban Administration and Development Department and subsequently now vide the order dated 30.09.2022 in the Water Resource Department as well. The impugned therefore deserves to be and is accordingly set aside / quashed - Petition disposed off.
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Income Tax
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2022 (12) TMI 1172
Condonation of delay in e-filing the audit report in Form No.10B has been rejected - whether respondent committed an error in passing the order by not condoning the delay in filing Form No.10B along with the return filed? - HELD THAT:- In the decision of this Court in Sarvodaya Charitable Trust vs. Income Tax Officer (Exemption) [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] this Court has observed that furnishing of audit report along with return filed is to be treated as a procedural requirement. It is though mandatory in nature the substantial compliance is required to be made. In the case of Sarvodaya Charitable Trust [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] the assessee had produced the audit report after processing the return under Section 143(1). This Court in the said order has observed that the approach of the authority in these type of cases should be equitable, balancing and judicious. Technically speaking, respondent No.2 might be justified in denying the exemption under Section 11 of the Act by rejecting such condonation application, but an assessee, which is a public charitable trust for past 30 years which substantially satisfies the conditions for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay. Applying the said principle, the petition is allowed. The impugned order passed by respondent dated 12.3.2021 is quashed and aside. The impugned order of rectification under Section 154 of the Act dated 25.1.2019 is also quashed and set aside. The application for condonation of delay filed by the petitioner before the respondent is allowed. Respondent is now directed to process the return in accordance with law. It is noticed that no assessment is framed and only an intimation under Section 143(1) of the Act was issued. No scrutiny could be carried out by the respondent since the audit report under Section 10B was not on record. Learned advocate for the petitioner Mr. B.S.Soparkar fairly submitted that the issue of benefit of exemption may be examined by issuance of notice u/s 143(1)/ 143(2) and the petitioner shall not object to the said proceedings by taking the ground of limitations.
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2022 (12) TMI 1171
Unexplained income u/s 69A - writ petitioner has deposited huge sums of money after demonetisation regime kicked in - As argued writ petitioner had in fact responded to the Section 142 (1) notice dated 30.11.2017 by way of return on 15.04.2019 but the respondent has not taken note of that - contention of the respondent that the respondent could not look into the responses of the writ petitioner solely because of technical glitch at the respondent's end - HELD THAT:- The question as to whether an opportunity should be given to the assessee by the assessing officer by giving a notice and calling upon the assessee to show cause when Section 142(1) notice has been issued is left open as in the case on hand the respondent had admitted in the counter affidavit that notice has been issued and the responses of the writ petitioner could not be looked into solely owing to technical glitch at the respondent's end. Therefore, this order is being made in the unique fact setting and circumstances of the present case. It is also to be noted that the writ petitioner further contends that the writ petitioner is running a petrol bunk and there is a window available in this regard qua demonetisation. Therefore, this order will obviously not serve as precedent for Best judgment assessment orders under Section 144 where Section 142 (1) notice has been issued. In other words, this order is in the light of the admitted position of the respondent in paragraph 4 of the counter affidavit. Matter restored back for denovo assessment.
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2022 (12) TMI 1170
Reopening of the assessment - Necessity of grant of approval u/s 151(ii) - Competent authority u/s 151(ii) to grant approval - HELD THAT:- It appears from record and instruction submitted by Mr. Dutt that in this said case approval has been granted by principal CIT -9, Kolkata who is not the authority falls u/s 151(ii) of the Act as such the approval in this case is not an authority authorized under the law and such approval is not sustainable in law and in view of this factual and legal position the impugned notice under Section 148A(b) of the Act and all subsequent proceedings are not sustainable in law and accordingly quashed. Quashing of the impugned notice and subsequent proceedings will not be a bar on the part of the Income Tax authorities concerned to initiate any fresh proceeding in future in accordance with law.
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2022 (12) TMI 1169
Capital gain Computation - AO worked out the capital gain u/s 50C - Charging capital gain tax on the very same land on the basis of final execution of sale deed - CIT (A) deleted the addition made by the AO on the ground that the stated transaction had already been treated as transfer in A.Y.2009-2010 and capital gain earned thereon was brought to tax in hands of the assessee and had been accepted by the assessee also - HELD THAT:- No error in the Tribunals findings because undisputedly the issue relating to transfer of land to M/s. Aanya Developers in A.Y.2009-10 had attained finality and against the additions made no appeal has been preferred by the assessee and, therefore, the Tribunal is right in observing that the issue has been examined and taxed in A.Y.2009-10 on the basis of Banakhat (agreement to sale) dated 24.7.2008. The department has also considered the same as transfer in the Assessment order in A.Y.2009-10.Charging capital gain tax on the very same land on the basis of final execution of sale deed amounts to taxing the same twice over, which is not permissible.
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2022 (12) TMI 1168
Addition u/s 68 - genuineness and credit worthiness of the transaction in question - HELD THAT:- Under Section 68 of the Income Tax Act, if any sum is found credited in the Books of account of the assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, the sum so credited may be charged to income tax as to the income of the assessee of that previous year. Therefore, what has to be inquired into by the AO is about the nature and source of the deposit. If the explanation with regard to the nature and source is found unsatisfactory, only then the amount so credited may be treated is income. It is evident that the assessee though has disclosed the source of the deposit but could not establish the nature thereof. Three conditions which are required to be proved by the Assessee as per Section 68 of the Income Tax Act, 1961, could not be proved by him. The burden would, therefore, not shift on the revenue, as the assessee has failed to discharge her burden. The assessee has failed to prove the transaction as per Section 68 - No substantial question of law, arises in the instant appeal for consideration.
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2022 (12) TMI 1167
Reopening of assessment - Validity of reasons to believe - Whether reasons to believe were based on some non-extent material or extraneous and irrelevant material? - HELD THAT:- Firstly, the Petitioner did not bother to file any returns during Assessment Year 2015-16. Secondly, the Petitioner did not bother to file any response to the notice dated 27.03.2021 seeking to reopen the assessment within the time limit allowed to the Petitioner. The Petitioner filed returns only after eight months at the stage when the time limit for completing the reassessment proceedings was almost due to conclude. In these circumstances, the Assessing Officer rightly invoked the principle in Union of India V/s. Major General Madan Lal Yadav [ 1996 (3) TMI 472 - SUPREME COURT] . Discretion apart, we find that this is a matter where the explanation (2) to Section 147 of the IT Act would apply. This explanation inter alia provides that where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded with a maximum amount which is not chargeable to income-tax, the same shall also be deemed to be a case where income chargeable to tax has escaped assessment. Petitioner has not explained the amount of ₹2,15,107/-. The Petitioner may have its own version about the receipt of the amount of ₹6.74 crores. However, these are matters which can be looked into at the stage of reassessment. Based on the material available with the respondents, we cannot say that they either had no reason to believe or that their reasons to believe were based on some non-extent material or extraneous and irrelevant material.
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2022 (12) TMI 1166
Reopening of assessment u/s 147 - procedure followed for reassessment under Section 147 after newly inserted Section 148A - HELD THAT:- This is a case of proposed reassessment. In view of the newly inserted Section 148A in the Act, there has been a paradigm shift in the procedure followed for reassessment under Section 147 of the Act. Prior to issuance of notice under Section 148 of the Act, a notice under Section 148A(b) of the Act is required to be issued enabling the person concerned to submit reply, whereafter the assessing authority upon receipt of approval from the specified authority is mandated to pass an order under Section 148A(d) of the Act, whether the case is fit for reopening or not. Once it is decided that it is a case fit for reopening, consequential notice under Section 148 of the Act is issued. Thus the order under Section 148A(d) of the Act is at a stage prior to issuance of notice under Section 148 of the Act. Unless glaring omissions are demonstrated or the conditions precedent for exercise of the power to reopen assessment are not complied with, a writ Court would not ordinarily interfere with an order passed under Section 148A(d) of the Act inasmuch as the proceedings is at a very nascent stage even prior to issuance of the statutory notice under Section 148 of the Act. We are of the view that contentions raised by the petitioner can very well be raised in the reply to the notice issued under Section 148 of the Act. At this stage, preempting the authorities from proceeding further on the grounds urged in the writ petition would not be proper. We, therefore, decline to interfere in the matter.
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2022 (12) TMI 1165
Addition of interest from banks on the deposits made by it out of the maintenance deposit/ fund received from its members - obligation on the income earned by the Appellant out of the deployment of the maintenance deposit - assessee as a Trust or Co-operative Society - concept of mutuality - as submitted that the Appellant is required to maintain the society and incur common expense of the society out of the income received from the maintenance deposits, and thus, there is an overriding charge - HELD THAT:- As noted from the Balance Sheet the maintenance deposit is excessively used for maintenance of the residential premises and therefore, the collection of maintenance deposits are kept as fixed deposits in Axis Bank and HDFC Bank. From the sale deed also the said element of maintenance deposits has been collected from the owners of the flat. The decision of the Ahmedabad Tribunal in case of Manekbuag Co-op. Housing Society Ltd. [ 2010 (3) TMI 1083 - ITAT AHMEDABAD ] has clearly given the guidelines that when the main object of the society is to manage, administer, operate, supervise and make available the common facilities and maintains of its members to meet the expense on account of maintenance the housing society collected deposits from its members made deposits and earned interest thereon from banks which is squarely covered by the decision Adarsh Co-operative Housing Society Ltd. [ 1994 (10) TMI 32 - GUJARAT HIGH COURT ] which was cited by the Ld. A.R. at the time of hearing. The decision of Hon ble Bombay High Court in case of Sind Co-op. Hsg. Society [ 2009 (7) TMI 15 - BOMBAY HIGH COURT ] is squarely applicable in the present case as the income earned by the society on account of interest on Fixed Deposits from its members for the purpose of maintenance will attract the concept of mutuality and accordingly the income will be subject to exemption if any surplus is there. Thus, Ground No. 1 2 are allowed.
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2022 (12) TMI 1164
Revision u/s 263 - assessees claimed deduction u/s.80P in respect of interest from cooperative banks and nationalized banks which got allowed by the AO - HELD THAT:- Insofar as the allowability of deduction u/s.8P(2)(a)(i) is concerned, we find that the Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] has decided the question of availability of deduction u/s 80P on interest income by noticing that the Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed in Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] allowing deduction u/s. 80P on interest income and that of Mantola Cooperative Thrift Credit Society Ltd. [ 2014 (9) TMI 833 - DELHI HIGH COURT] not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] . No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. We thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act. Deduction u/s.80P(2)(d) of the Act, it is crystal clear from the language of the provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative societies registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. [ 2022 (12) TMI 959 - ITAT PUNE] We hold that the impugned orders questioning the grant of deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained. Appeals are allowed.
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2022 (12) TMI 1163
Disallowance for bad debt - Allowable business loss - AO requires the assessee to explain the genuineness of claim of bad debt as required under the provision of 36(1)(iii) of the Act i.e. the amount claimed represents debt arising out of business transaction, the amount has been included in the computation of income and the amount has been written off in the books of accounts - HELD THAT:- It is the trite law that the nomenclatural given by the assessee for making a claim is not a decisive factor. The claim of the assessee whether allowable or disallowable has to be seen in the light of the provisions of the Act. Thus, we are of the view that no disallowance can be made for the claim made by the assessee which was wrongly classified as bad debts. As such, it was the duty of the authorities below to verify the nature of the claim based on the documents whether such bad debts can be classified as business loss and allowable under the provisions of section 28 or 37 of the Act. Though, the assessee before the authorities below has contended that the impugned claim of the assessee represents the business loss but we note that no one has verified the agreement filed by the assessee in support of its claim which is available on record. Thus we are of the view that the claim of the assessee needs to be re-verified at the level of the AO de-novo as per the provisions of law. Therefore, we hereby set aside the issue to the file of the AO for fresh adjudication. Hence, the ground of appeal of the assessee is allowed for the statistical purposes. TDS u/s 194J - Disallowances of production expenses - Addition u/s 40(a))(ia) - HELD THAT:- As coordinate bench of Hyderabad Tribunal in case of BBR Project (P.) Ltd [ 2020 (8) TMI 69 - ITAT HYDERABAD ] where the bench set aside the issue to file of the AO for fresh adjudication with a direction to verify whether the assessee is an assessee in default under the provision of section 201(1) of the Act or not - In view of the above and in the interest of justice and fair play, we are inclined to restore the issue to the file of the AO for de novo assessment as per the provisions of law and in the light of the documents available on record. Hence, the ground of appeal of the assessee is allowed for the statistical purposes. Non-deduction of tax at source - Studio Renewal charges includes addition of new facilities such mike, sound system and lighting in recording studio in which no labour was included - HELD THAT:- we note that the assessee before the learned CIT(A) contended that legal expenses of Rs. 5 lakh and studio renewal expenses of Rs. 6.5 lakh include reimbursements of certain expenditure where the provisions of TDS are not applicable. The assessee in support of its contention has also filed necessary documentary evidence besides raising its contentions before the authorities below. However, the documents filed by the assessee have not been verified by the Authorities below. The learned AR for the assessee at the time of hearing also contended that recipients of the impugned amount are regular tax filing assessee and paying taxes on the income earned by them. Therefore, in such circumstances, the assessee should be provided with the benefit available under second proviso to section 40(a)(ia) of the Act. In this regard we find the coordinate bench of Hyderabad Tribunal in case of BBR Project (P.) Ltd [ 2020 (8) TMI 69 - ITAT HYDERABAD ] where the bench set aside the issue to file of the AO for fresh adjudication with the direction to verify whether the assessee is an assessee in default under the provision of section 201(1). Disallowances of cash payment - addition under the provision of section 40A(3) - AR for us contended that the payment made for the purchase of the capital assets exceeding the threshold limit provided under section 40A(3) of the Act cannot be made subject to the disallowance in pursuance to the circular issued by the CBDT bearing number 34 [F. No. 13A/92/69/-IT(A-II)] dated 05-03- 1970 - HELD THAT:- As the assessee has filed necessary documentary evidence besides raising its contentions before the authorities below to justify that provisions of section 40A(3) of the Act are not applicable. However, the documents filed by the assessee have not been verified by the AO during the assessment proceedings. Therefore, in the interest of justice and fair play, we are inclined to restore the issue to the file of the AO for de novo assessment as per the provisions of law and in the light of the documents available on record. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
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2022 (12) TMI 1162
Revision u/s 263 - allowing of the deduction by the AO(s) u/s 80P is contrary to law - grant of deduction u/s.80P by the AO in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous assessment orders prejudicial to the interest of the Revenue - HELD THAT:- Grant of deduction u/s.80P by the Assessing Officer (AO) in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous assessment orders prejudicial to the interest of the Revenue - HELD THAT:- Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Cred it Cooperative Ltd [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] The position continues to remain the same before this Tribunal also. We thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act. Coming to the other cases involving deduction u/s.80P(2)(d) of the Act, it is crystal clear from the language of the provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative society registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. [ 2022 (12) TMI 959 - ITAT PUNE] . We hold that the impugned orders questioning the deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained. Appeal allowed.
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2022 (12) TMI 1161
Reopening of assessment u/s 147 - ITO Raipur jurisdiction over the case of the assessee - addition of bogus purchases - HELD THAT:- ITO-1(3), Raipur at the time of issuance of notice u/s.148 was not vested with any jurisdiction over the case of the assessee, which as per the Notification No.1/2014-15 dated 15.11.2014 remained with the ITO-1(1), Raipur, therefore, as the notice u/s.148 issued by the ITO-1(3), Raipur was nothing short of a notice issued by an A.O who lacked inherent jurisdiction, thus, the provisions of Sec. 124(3) could not have been triggered to fasten an obligation upon the assessee to call in question the jurisdiction of the said officer, i.e., ITO- 1(3), Raipur. The reliance placed by the Ld. DR on the judgment of the Hon ble High Court of Delhi in the case of Abhishek Jain Vs. ITO, Ward-55(1), New Delhi [ 2018 (6) TMI 211 - DELHI HIGH COURT ] being distinguishable on facts would also not assist its case. As the ITO-1(1), Raipur had framed the impugned assessment u/s.143(3) r.w.s. 147 on the basis of a notice u/s.148 of the Act, issued by the ITO-1(3), Raipur, i.e., an A.O who at the time of issuance of the aforesaid notice lacked inherent jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be quashed. Accordingly, quash the assessment framed by the ITO-1(1), Raipur vide his order passed u/s.143(3) r.w.s. 147 for want of valid assumption of jurisdiction on his part. Decided in favour of assessee.
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2022 (12) TMI 1160
Estimation of income - bogus purchases - assessee has made an alternate plea that when the purchases are held to be bogus and only certain percentage only to be disallowed - HELD THAT:- By relying on the decision of the Hon'ble Bombay High Court in the case of Pr. CIT v. M/s. Mohommad Haji Adam Co [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] we are in agreement with the above submissions, the Coordinate Benches are disallowing only 12.5% of the total purchases as reasonable in these type of cases. We observe in the present case that assessee has already declared profit @ 9% (confirmed by AO) the net difference of 3.5% (12.5 - 9) should be considered for disallowance. Accordingly, we direct Assessing Officer to disallow @ 3.5% of the alleged bogus purchases. Appeal filed by the assessee is partly allowed.
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2022 (12) TMI 1159
Long term capital gain - sub-tenancy right was held for more than 3 years as required by section 2(29B) - assessee claimed to have surrendered such sub-tenancy right and received a sum as consideration vide Memorandum of Understanding (MOU) - AO held that the assessee was not having any kind of sub-tenancy right and the long-term capital gain declared in the return was just a managed capital gain to claim exemption u/s. 54F, accordingly, Ld. AO rejected the claim of long-term capital gain and assessed the income as income from other sources - HELD THAT:- MOU clearly provides complete details of Rs. 5,00,00,000/- paid by owners to all parties including Rs. 3,25,00,000/- paid to the assessee. AR has also demonstrated that the assessee has received the sum of Rs. 3,25,00,000/- through banking channel in ICICI Bank. AR has pointed out that the fact of filing reply by the owner, Shri Dipesh Khandelwal, in response to the notice u/s. 133(6) issued by Ld. AO, as recorded in the assessment-order is not very credible because the Ld. AO has neither supplied a copy of the reply to the assessee nor narrated the contents of reply in the assessment-order. Even during hearing before us, Ld. DR has not been able to rebut or defend this submission of Ld. AR. We also find merit in the submission of Ld. AR that FMG is an existent-company and the Ld. AO could have made enquiry from FMG but the same was not made - revenue has allowed deduction of Rs. 5,00,00,000/- in the assessment of owner, Shri Dipesh Khandelwal, which proves, without saying anything more, that the revenue authorities have accepted the factum of receipt by assessee from the said owner. Lastly, we also find merit in the contention of Ld. AR that revenue authorities have doubted the receipt of Rs. 3,25,00,000/- in the case of this assessee only. But they have not taken any adverse view in the assessments of other co-tenants who have received remaining consideration of Rs. 1,75,00,000/-, out of total payment of Rs. 5,00,00,000 to all co-tenants. We agree to Ld. AR's submission that the authorities cannot reject transaction in the hands of assessee while accepting it in the hands of other co-tenants. We are persuaded to hold that the assessee had a sub-tenancy right in the property and upon surrender thereof, the assessee received a sum which was rightly offered as long-term capital gain in terms of section 45(1), 48, 55(2) and 2(29B) of the Income-tax Act, 1961. AO was wrong in rejecting the claim of long-term capital gain and assessing the same as income from other sources. We do not find any infirmity in the order of Ld. CIT(A) who has, after mindful consideration, reversed the action of Ld. AO and allowed claim of assessee. Accordingly, we dismiss Ground No. 1 and 2 of the Revenue. Exemption u/s. 54F - HELD THAT:- No strength in the findings of AO and the contentions raised by Ld. DR. After a careful consideration, we are in agreement with the submission of AR that the Ld. CIT(A) has carefully dealt with facts, figures, evidences and legal position at length and rightly concluded that the assessee was entitled to exemption u/s. 54F. We do not find any infirmity in the action of Ld. CIT(A). Therefore, we uphold his action and dismiss the Ground No. 3 of Revenue. Addition on account of shares-transactions - HELD THAT:- The assessee has also filed a copy of Account with Aditya Birla Money Ltd. for the previous year 2014-15 relevant to the assessment-year 2015-16 to the lower authorities and the same is also placed in the Paper-Book, which is duly sealed and signed by broker and clearly demonstrates that no single transaction was done during the year by assessee and the opening balance B/F as on 01.04.2015 is carried forward as such as closing balance on 31.03.2015. Thus, the evidences placed by the assessee clearly demonstrate that no transaction had been done. During hearing, Ld. DR is not able to controvert these submissions of assessee. In this view of matter, we are inclined to agree with Ld. CIT(A) that the assessee has not done any transaction of shares as alleged by Ld. AO. Therefore, the Ld. CIT(A) has rightly deleted addition and we uphold his action. Ground No. 4 of the Revenue is thus dismissed. Disallowance of interest expenditure u/s. 57(iii) - HELD THAT:- The assessee has filed evidences in the form of (i) Ledger A/c of Interest Expenditure which shows date-wise party-wise interest-payments; (ii) Ledger A/c of BEPL which shows the loans given to BEPL from time to time on which interest has been received; and also (iii) a detailed Statement showing a co-relation of the amounts borrowed from different persons and investment made in BEPL - By means of these clinching evidences on record, the assessee has sufficiently proved that the interest expenditure has been incurred to earn interest-receipt disclosed in the return. On test-check of these evidences, we are satisfied with the explanation given by the assessee. Therefore, the assessee deserves deduction of interest expenditure, which the Ld. AO has wrongly disallowed but the Ld. CIT(A) has rightly allowed. Accordingly, we dismiss Ground No. 5 of the Revenue as well. Allowability of long-term capital loss from sale of shares - HELD THAT:- AO has not denied the authenticity of these statutory documents, but he had simply formed a view about bogus claim on the footing that the buyer is a relative of assessee and substantial portion of the consideration had been received after 2 years of sale. We observe that the company was a loss making company and the buyer was also sister of assessee, therefore there is a justification in the deferred receipt of consideration by the assessee. We also agree with the observations of Ld. CIT(A) that even otherwise such trivial considerations should not be a basis to deny the transaction, which has a statutory backing, supported by statutory documents and acted upon by parties. We observe that the Ld. AO has treated the loss claimed by assessee as bogus on mere suspicion and assumption as against the various documentary evidences. It is an accepted law that suspicion and presumption, how so ever strong, cannot be a basis for drawing any conclusion. Therefore, considering the documentary evidences on record in support of assessee's claim which could not have been disputed by Ld. AO, we do not find any merit in the action of Ld. AO.
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2022 (12) TMI 1158
Expenses incurred during the intervening period between setting up and actual business - pre-operative expenses - deductibility of the expenditure incurred between set-up business and actual commencement of business, set off of such expenses against the interest income earned on FDs made out of idle funds or not - HELD THAT:- The admitted facts of the case are that in the immediate preceding previous year, the appellant company had sold its business, however, it was in the process of setting up a new business by identifying some distribution business. In the process, incurred certain revenue expenditure in the form of salary, etc other expenses. AO as well as the ld. CIT(A) simply discussed the legal principle without adverting to the material facts on record and had not really decided whether the appellant company had set-up of business and ready to commence the business or not. On perusal of the Profit Loss Account placed at Paper Book indicates that certain expenditure was incurred in connection with business which was sold were also debited to the Profit Loss Account. Therefore,AO as well as the ld. CIT(A) had failed to examine the nexus of the expenditure incurred and the new business stated to have been set-up. In these circumstances, we are of the considered opinion that the matter requires remission to the file of the AO to decide the issue in appeal with reference to the material on record whether the appellant company had set-up a new business or not. In case, on examination of the material on record,AO formed an opinion that new business had been set-up, the expenditure incurred during the interval period of setting up of a new business and its commencement of business can be allowed as deduction and can be set-off against the interest income earned on fixed deposits by the assessee assessed under head Income from the other sources . Grounds of appeal raised by the assessee stands partly allowed for statistical purposes.
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2022 (12) TMI 1157
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) - unexplained credits introduced in garb of share application money addition u/s 68 - as argued AO did not specify any limb or charge for which the notice was issued i.e. either for concealment of particulars of income or furnishing of inaccurate particulars of such income - HELD THAT:- Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] . while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus we are of the opinion that, the penalty order passed u/s 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous. Accordingly, the penalty order passed by the A.O for Assessment Year 2007-08 is hereby quashed. Accordingly, Assessee s Grounds of Appeal are allowed.
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2022 (12) TMI 1156
Disallowance in respect of provision for leave encashment - HELD THAT:- We find that the issue with respect to applicability of provisions of Section 43B(f) is decided by the Hon ble Supreme Court in the case of M/s. Exide Industries Ltd [ 2020 (4) TMI 792 - SUPREME COURT] in favour of the Revenue Since the Hon ble Supreme Court has decided the provisions of Section 43B(f) is constitutionally valid and operative for all purposes, therefore, respectfully following the Judgment of Hon ble Supreme Court in the case of Union of India Others vs., M/s. Exide Industries Ltd., Anr. (supra), we dismiss grounds of appeal No.1 of the assessee. Disallowance of claim of sales tax incentive - HELD THAT:- Supreme Court in the case of Union of India vs., Kamlakshi Finance Corporation Ltd [ 1991 (9) TMI 72 - SUPREME COURT] has held that mere fact that the order of the appellate authority is not acceptable to the Department and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. We find that since the order of the Special Bench of the Tribunal is still holds the field and in absence of any contrary decision brought to our notice by the Ld. D.R, and the order of the Ld. CIT(A) in deleting the addition made by the A.O. is in accordance with law, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and, therefore, we hold that the amount of incentive is not a revenue receipt, but, it is a capital receipt and, therefore, we direct the A.O. to delete the addition. The Revenue fails in its grounds of appeal Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are dismissed. Adding back the excise duty exemption - Capital receipt - After analyzing the Office Memorandum dated 14-06-2002 behind the grant of Incentive has held that Excise Duty refund granted with the object of creating avenues for Perpetual Employment, to eradicate the social problem of unemployment in the State by accelerated industrial development was a capital receipt. Further, the Departmental Appeal filed against the said High Court decision of Shree Balaii Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] has also been dismissed by the Hon'ble Apex Court [ 2016 (4) TMI 1161 - SC ORDER] So, this issue has attained finality. Since we find no infirmity in the order of the Ld. CIT(A) and the Ld. D.R. failed to put forth any contrary decision, we confirm the order of the Ld. CIT(A) on this issue and dismiss the grounds of appeal no.2(i) to 2(v) of the Revenue. Swap loss - loss on derivatives in the P/L account which includes mark to market loss in respect of the LIBOR hedging with ICICI Bank, Currency Swap Transaction with ICICI Bank and Currency Swap Transaction with Centurion Bank of Punjab [presently known as HDFC Bank] - AO disallowed the claim on the contention that the swap loss arose on account of conversion of foreign exchange on the balance sheet date and such conversion was basically a mark to market loss and not the actual loss hence it was purely notional in nature - A.O. treated the swap loss arose on account of conversion of foreign exchange basically a mark to market loss and not the actual loss and hence, the A.O. disallowed the claim of loss on foreign exchange - CIT(A) has allowed the issue in favour of the assessee - HELD THAT:- We find that the Hon ble Supreme Court in the case of CIT vs., Woodard Governor India Pvt. Ltd [ 2009 (4) TMI 4 - SUPREME COURT] has held that loss suffered by assessee on account of the exchange difference as on the date of the balance sheet is an item of allowable expenditure/s under section 37(1) and has taken consistent view in an another appeal in the case of ONGC Ltd. [ 2010 (3) TMI 81 - SUPREME COURT] Since the order of the Ld. CIT(A) is in accordance with settled legal position of law, we, therefore, find no infirmity in his and in absence of any contrary decision/ material brought on record by the Ld. D.R, we dismiss the ground of appeal no.3 of the Revenue.
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2022 (12) TMI 1155
Adjustment u/s 143(1) - Set off of brought forward long term capital loss - HELD THAT:- We find that, as evident from a copy of the income tax return for the assessment year 2010-11 that the assessee had duly filed the income tax return, for the assessment year 2010-11, well within the time permitted u/s. 139 (i) i.e. on 31st July 2011. In this view of the matter, the very foundation of impugned adjustment under section 143(1) is wholly unsustainable in law. We, therefore, vacate the impugned action of the AO to allow the set off of loss brought forward from the assessment year 2010-11. The assessee, accordingly, get the relief for set off of long term capital loss. Assessee appeal allowed.
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Customs
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2022 (12) TMI 1154
Condonation of delay in filing appeal - rejection of appeal by resorting to the provisions Section 128 of the Customs Act, 1962 since according to learned Commissioner the appeal has been filed beyond the condonable period of 30 days as stipulated in section 128 ibid - HELD THAT:- Although the Appellant time and again requested the department for personal hearing, granting of refund etc. etc but in response to none of these communication the department replied that the Order-in- Original has already been passed. Since they have got the copy of the adjudicating order only on 06.03.2020 therefore they had time to file appeal before the learned Commissioner upto May, 2020 but since that was Covid time therefore vide Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 r/w Notification dated 30.09.2020 the time was got extended till 31.12.2020 and admittedly the appeal was filed by the appellant on 30.12.2020. On a specific direction issued to the department by this Tribunal vide order dated 17.11.2022 to place on record the document as to when the Order-in-Original was sent and served on the appellant, learned Authorised Representative placed on record communication dated 2.11.2022 received by him from concerned Commissionerate (filed by the learned authorised representative on 25.11.2022) stating that the file concerning the appellant is not traceable in the section and hence no comments can be offered. Since the department has failed to prove/place on record anything contrary to the claim of the appellant, therefore I have left with no other option but to accept the version of the appellant which is well supported by evidence and seems to be true. As the date of dispatch of the order is not available with the department therefore the limitation will start running from the date when the same was received by the Appellant which is 06.03.2020 and after taking into account the Taxation Act, 2020 (supra) read with notification dated 30.09.2020 which extended the time till 31.12.2020 in all the cases due to covid pandemic, the appeal filed on 30.12.2020 was filed well within limitation before the learned Commissioner. Since the appeal has not been decided on merits by the 1st Appellate Authority therefore the same is remanded to the learned Commissioner with a direction to decide the same on merits after following the principle of natural justice and providing sufficient opportunity of hearing. Appeal allowed by way of remand.
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Corporate Laws
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2022 (12) TMI 1153
Abuse of dominant position - scope of CCI s (Respondent No.1) power and jurisdiction under S.26(1) of the Act, 2002vis- -vis the scope of interference by High Court under Article 226 of Constitution of India - whether the order dated 03.10.2019 passed by Respondent No. 1 forming a prima facie opinion regarding existence of abuse of dominant position is liable to be set aside as similar reliefs were claimed by Respondent No.2 in W.P. No. 13298 of 2019 and the same is pending before this Court? - HELD THAT:- An order passed under S.26(1) of the Act, directing investigation by the Director General is an administrative order passed only to determine whether the allegations made by the informant under S.19 (1) of the Act, about possible violations of competition law are true. Once information is received under Section 19(1) of the Act, CCI, based on the material produced by the informant has to form a prima facie opinion regarding the possible competition law violations. It is relevant to note that while forming a prima facie opinion, CCI has to only determine if the allegations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competition law. It is also relevant to note that the scope of interference of High Courts under Article 226 of the Constitution of India, in an order passed directing investigation under Section 26(1) is extremely limited. CCI and the authorities under the Act, 2002 are well equipped to conduct investigation and possess expertise in the said field. High Courts cannot interfere with such investigation unless there is an abuse of process and prima facie it appears that the investigation was marred by mala fides. A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1. The other contentions raised by the Petitioners that CCI/Respondent No. 1 delineated the relevant market, the share of and participation of the parties in the downstream and upstream market erroneously cannot be decided at the preliminary stage when investigation is yet to be completed. The said grounds can be raised by the Petitioners at an appropriate stage if it is found that they are guilty of abusing their dominant position. At this stage when matter is yet to be investigated, this Court cannot consider disputed questions of facts. The writ petition is dismissed.
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2022 (12) TMI 1152
Valuation of shares - Sick industrial unit - scheme of exit - Validity of order passed by the Tribunal asking an Independent Valuer be appointed forthwith from the list of approved valuers of IBBI by the Appellant Company - HELD THAT:- It is also not in dispute that one day before the exit offer, its promoters have purchased lot of shares from Bank of Maharashtra and similarly inter se purchase has been made during exit offer from specific persons by the promoters - The Tribunal has given lot of thrust on lower valuation of shares and it seems that it is even less than earning per share. A doubt has also arisen to the Tribunal why the Appellant company has not provided Annual Returns and Balance Sheet to the Petitioners for the years 2014-2018 as also the valuation report of the Appellant company. The Respondent has sought the reliefs before the Tribunal comprising of 6 reliefs mainly and the Tribunal has granted only one relief i.e. appointing an independent valuer from the panel of valuers of IBBI in terms of Section 247 of the Act, the cost of which to be borne by the Appellant Company We are not commenting at the moment what will be the valuation of shares but apparently it is difficult to perceive as to how the fair value can be lower than the earning per share - It is an incumbent duty to the Appellant company to disclose all material information to its shareholders disclosing thereon even the justification for the existing price offered by the Promoters which also seems to be missing in this case. There are no inconformity in the order and the appeal deserves to be dismissed and is dismissed.
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Insolvency & Bankruptcy
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2022 (12) TMI 1151
Protection and recognition of pledge created in favour of the Applicant under Share Pledge Agreement - appropriate directions to the Liquidator to not treat the pledge in favour of the Appellant as a preferential transaction during the pendency of the Appeal - HELD THAT:- The issue of attracting preferential transaction arising only after the Appellant has filed the claim. It was also brought to the notice by the Appellant that R1 carried out the auction despite knowing that the Appellant has lodged this claim in January, 2018 and has also accepted EMD money from a third party. The Appellant is suspecting that R1 has filed the application under Section 43 of the Code at a later stage being afterthought in order to save the illegal auction carried out by him. All the problem has erupted from the fact that the Appellants have mentioned about the share pledge agreement of November, 2016 as an extension of earlier share pledge agreement dated 10.06.2014 wherein the substantial portion of shares have been pledged as contemplated by the Appellants. It is also a matter of fact to be recorded that since 2017, Respondent No.1 was having the full knowledge of share pledge agreement of 2016 but he chooses to file Section 43 application after a delay of one year. This reflects, no doubt, that filing of petition under Section 43 of the Code alleging that Share Pledge Agreement dated November 2016 is at belated stage by the R1 to deny the Appellant of their status or rights as financial creditor. Incidentally, impugned pledged largely satisfied all ingredients of Section 43 of the Code. The impugned order dated 29.10.2020 although passed by two separate orders but in concurring orders both the Ld. Members arrived at the conclusion that the impugned pledge is a preferential transaction covered under Section 43 of the Code. The approach of the Appellant to give the colour of pledge as in the ordinary course of business is no longer res integra as per the law laid down under the Code - reliance can be placed in the case of PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. [ 2020 (2) TMI 1259 - SUPREME COURT ]. This Pledge Agreement even of 2016 only reflects that the IVL/Appellant does not hold merit for the impugned pledge created during the ordinary course of business. Circumstantial evidence also suggests that there is no another pledge agreement dated 10.06.2014. Even the 2016 pledge agreement does not have backing a board resolution or registration which is a requirement for a listed company. No approval of RBI is available for 2016 pledge agreement. Hence, the Adjudicating Authority has rightly held in the impugned order dated 29.10.2020 that it is a preferential transaction covered under section 43 of the Code. Appeal dismissed.
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PMLA
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2022 (12) TMI 1150
Validity of summons issued - money laundering - proceeds of crime - process envisaged by Section 50 of the PMLA is in nature of inquiry against the proceeds of crime or investigation in strict sense of the term for initiating prosecution - authorities under the PMLA are police officers or not - HELD THAT:- The record reflects that the sole prayer of the petitioner in the writ petition was to quash the summons dated 26th of July, 2022 and 12 th of August, 2022. These summons were issued for the limited purpose seeking appearance of the petitioner before E.D. on the given date. The summon for appearing on 26th of July, 2022 contains the summon No. PMLA/SUMMON/HIU2/2022/616 and the summon dated 12th of August, 2022 contains a different summon No. PMLA/SUMMON/HIU2/2022/663 . These summons were issued in connection with F.No. ECIR/17/HUI/2020. The summons were in terms of Section 50(2) and (3) of PMLA related to powers of authorities regarding summons, production of documents and to give evidence etc. Sub-Section 2 of Section 50 empowers the specified officer to summon any person whose attendance is considered necessary to give evidence or to produce any records during the course of any investigation or proceeding under the Act. There is no further direction to the writ petitioner by the appellant to appear. Hence, the impugned summons have been worked out and have lost their force now. As on date, there is nothing on record indicating that the writ petitioner is further required to appear before the appellant in terms of Section 50 of PMLA. Thus, nothing survives in the pending writ petition. In fact, by way of interim relief, learned Single Judge had granted the final relief to the writ petitioner. Therefore, the writ petition has now become infructuous for all practical purposes. Nothing survives in the present writ petition pending before the learned Single Judge which has become infructuous on account of subsequent development - Appeal disposed off.
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Service Tax
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2022 (12) TMI 1149
Violation of the principles of natural justice - service of SCN - challenge has been made on the ground that the show cause notice issued preceding the Order-in-Original as well as the notice for personal hearing, were not served upon the petitioner - HELD THAT:- There is no finding recorded by the first respondent that show cause notice was served on the petitioner or that the four letters intimating virtual personal hearing were served upon the petitioner. Mere issuance of show cause notice or letters of personal hearing to an assessee is not adequate. Assessing Officer is required to record a finding that notices were issued and served upon the assessee but despite service of notice the assessee did not come forward to contest the proceeding. It is thereafter that the Assessing Officer may proceed exparte. Such a finding is conspicuous by its absence in the impugned order. Matter remanded back to the first respondent for a fresh decision. Since a copy of the show cause notice dated 24.12.2020 is now available, petitioner may submit its reply within 15 days from today - petition allowed by way of remand.
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2022 (12) TMI 1148
Prayer for recalling of Final Order - Non-consideration of documents - Small-Scale benefit - Bench was of the view that since there was no data, on record, about commission received during the preceding year i.e. Financial Year 2012-13 hence Small-Scale benefit cannot be granted for the Financial Year 2013-14 - HELD THAT:- It is perused that the impugned Final Order is an order which was dictated and pronounced in the open Court. Hence, as pointed out by ld. D.R. there was no occasion for affording an opportunity to the appellant - assessee to submit any document. From the record it is also perused that several letters were sent by the Department to the applicant assessee prior to issue the Show Cause Notice requiring the assessee to provide information and the documents to satisfy that there is no evasion of service tax for rendering the taxable services during the Financial Year 2013-14 2014-15, but no document was ever provided nor any information was given by the appellant. Resultantly, the Show Cause Notice dated 18.10.2018 was served. It is also perused that even before the Original Adjudicating Authority the submission of the assessee in defence talks about the expenses incurred as reimbursement or the discount received from the principal i.e. M/s. Obsurge Biotech Ltd. against the early payment, but only for the Financial year 2013-14 and Financial Year 2014-15 there is no mention of any document for the Financial Year 2012-13. No additional document was ever provided to Commissioner (Appeals). Most of the documents as annexed with the present application also are with respect to Financial Year 2013-14 and 2014-15. Though balance-sheet as on 31st March, 2013 has also been annexed but the fact remains is that the said document, admittedly, was provided on 12.04.2012, for the first time, whereas the order in hand was dictated and pronounced on 11.04.2022. Had it been provided at the time of dictation also the said statement could have been taken into consideration. Being a document which was never provided before any of the adjudicating authorities below there seems no reason otherwise to take this document on record. These observed facts are sufficient for me to hold that such a document cannot be considered for recalling a Final Order. Otherwise also there is no provision which permits the Tribunal to recall its own order. The impugned recalling cannot even be called as the rectification of error apparent on record - Application dismissed.
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2022 (12) TMI 1147
Levy of service tax - Club or Association Service - Intellectual Property Rights Service - Transport of Goods by Road Service - Development and Supply of Contents Service. Club or Association Service - appellant received contributions from its members which are relatable to various privileges which the members enjoy - HELD THAT:- In STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] , the Supreme Court held that companies and co-operative societies which are registered under the respective Acts can be said to have been constituted under those laws and therefore, get excluded from the definition of club or association under section 65(25a) and consequently, any service rendered by them will not be exigible to service tax under section 65(105)(zzze) - In this case, it is undisputed that the appellant is registered as a trust under the Indian Trusts Act. Therefore, the ratio of Calcutta Club Ltd. squarely applies to this case. Hence, the demand under this head cannot be sustained. Intellectual Property Rights Service - it is submitted that the demands under this head on the appellants pertain to the period 1.4.2007 to 31.3.2010 when intellectual property rights service was taxable but copyrights were specifically excluded from the purview of IPR by law - HELD THAT:- On perusal of the agreements in question, we find that the appellants gave the service recipients the right to print or telecast or make copies of the Yoga programmes which they produced. In one agreement, the programmes were also being translated into Russian and telecast to Russia and CIS countries (countries which were part of the former Soviet Union). Evidently, the appellants allowed their copyrighted materials to be used for a consideration. The demand of duty is under the head IPR services chargeable under section 65(105)(zzr) - an intellectual property service will be rendered if the IPR is either transferred temporarily or its use or enjoyment is permitted. The scope of the IPR in the service tax law specifically excludes copyrights. Therefore, the amounts earned under the agreements by the appellants are clearly excluded from the scope of the taxing statute for IPR service. The demands under this head cannot, therefore, be sustained. Transport of goods by road service - amounts paid as freight invoking Rule 2(1) (d) of the Service Tax Rules under reverse charge - HELD THAT:- Charging sections of taxing statutes must be strictly interpreted. Section 65(50b) clearly defines goods transport agency as one who renders any service in relation to transportation of the goods and issues consignment notes. It is a well settled law that if no consignment notes are issued, the service provider is not covered by section 65(50b) and consequently, any services rendered by such a service provider are not exigible to service tax. Learned counsel for the appellants submits that no consignment notes were issued in their case. We find no evidence on record to the effect that consignment notes have been issued - the demand under this head is not sustainable and needs to be set aside. Development and Supply of Content Service - amount received from M/s. Rajashri Media Pvt. Ltd. for grant of exclusive rights to all audio, visual, audio-visual and text materials of Divya Yog Mandir Trust - HELD THAT:- Evidently, as per the agreement between the appellant and Rajashri, the appellant provided material which was developed into audio and video content by the latter and it was also commercially exploited. Part of the Revenue earned was shared by Rajashri with the appellant. Thus, the relationship between the appellant and Rajashri is not one of service provider-service recipient but one of partners in a joint venture in which each contributed something to the project and shared the Revenue earned. In the absence of any service provider-service recipient relationship, there can be no service tax because service tax is chargeable on taxable services provided. There must be a service, it must be taxable, there must be a service provider and a service recipient and a consideration to levy service tax. There is no charge of service tax on sharing of revenues in any joint venture between two entities or persons. Levy of penalties u/s 76, 77 and 78 of FA - HELD THAT:- We do not find any evidence to substantiate the elements required to levy penalty under section 78. Therefore, only Section 76 would apply. Except for small amounts of service tax under two heads, we have also found that the demands themselves are not sustainable. Therefore, we find this a fit case to invoke section 80 and set aside the penalties under section 76 and 77 - the impugned order needs to be set aside to the extent it levies service tax on the appellant under the heads Club and Association Service, Intellectual property Rights service, Transport of goods by road service, and Development and supply of content service. The demand under the heads Renting of immovable property service and Health club and Fitness service is upheld along with applicable interest. All penalties are set aside by invoking section 80 of the Finance Act, 1994. Appeal allowed in part.
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2022 (12) TMI 1146
Levy of Service Tax - Banking and other Financial Services - charges paid by them in respect of their foreign currency transaction on reverse charge basis - HELD THAT:- It is noticed that the matter has been examined in detail in the case of M/S RAJ PETRO SPECIALITIES P LTD VERSUS C.C.E. S.T. - SILVASA [ 2018 (8) TMI 1179 - CESTAT AHMEDABAD] where it was held that any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant. In the instant case there are no allegation that any payment has been made directly by the appellant to the foreign bank. In this circumstances we find that no service tax can be demanded from the appellant. Appeal allowed.
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2022 (12) TMI 1145
Levy of Service Tax - differential value in comparing Form 26AS/ITR statement and taxable value declared in the ST-3 returns for the year 2016-17 - time limitation - HELD THAT:- The admitted facts involved in the present case are that the Appellant had undertaken Government construction work, in the capacity of a sub-contractor, for the main contractor M/s. Shantilal B. Patel Co. for all the three separate disputes involved in the present appeal. All remaining demand originally proposed, are already dropped by the Adjudicating authority himself. It is also an admitted fact, as also certified by the main contractor, that they neither paid any Service Tax in respect of all three service activities in dispute, nor any demand was raised against them in this regard as well. The Appellant has mainly contended that they were under bonafide belief that no Service Tax was payable on the work in question, being exclusively Governmental construction and when the main contractor too had not paid any Service Tax thereon without any adverse view being taken by Service Tax department. The demand is mainly contested as being time-barred as such - Also if the Appellant was liable to pay Service Tax, back to back, even the main contractor would have also been liable to pay the same. Whatever Service Tax, if paid by the Appellant, would have been back to back availed as Cenvat Credit by the main contractor anyway. Therefore without going into any other issues, including whether exemption for construction of affordable housing under MGY scheme is available irrespective of small portion of commercial construction involved as part of MGY scheme under the tender floated, we find that the issue on hand can otherwise be decided in the facts and circumstances of the present case, on account of demands being time-barred - no purposeful meaning will be served by remanding the matter back for re-examination of this, especially in light of the fact that the appeals are required to be allowed on account of demands being time-barred anyway. Appeal allowed.
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2022 (12) TMI 1144
Levy of Service tax - Business Auxiliary service of not - commission amount paid to foreign Commission agent - extended period of limitation - Revenue Neutrality - HELD THAT:- As regards the question of extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994, the same would not be available to the Department on the ground of revenue neutrality. We are of the view that the demand, having been raised by invoking the longer period of limitation is hit by the provisions of Section of the Act. If non-registration and non-filing of returns is the criteria for rejecting the appellant‟s plea of bona fide belief and holding against them, the plea of limitation would not be available to any assessee, inasmuch as the Service Tax liabilities would arise only in those cases where the appellants are not registered and are not filing the returns. Coming to the bona fide belief of the assessee, there are number of factors which are required to be considered. As no intention to contravene the provisions of Finance Act, 1994 and of the rules made thereunder can be attributed to the appellant for the reason that even if they are required to pay Service Tax on the disputed service, in question, provided by foreign agent, the entire Service Tax paid under RCM would be immediately available to them as Cenvat Credit and collection of Service Tax from the appellant would be a revenue neutral exercise - there are plethora of judgments by various Courts that no mala fide can be attributed to an assessee so as to invoke the longer period of limitation. The demand is barred by limitation and is required to be set aside - Appeal allowed.
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2022 (12) TMI 1143
Invocation of extended period of limitation - non-payment of service tax - providing the taxable service as that of Business Auxiliary Service on commission basis who had collected huge amount from various persons/companies/organizations etc. during the period from 01.10.2014 to 30.06.2017 - suppression of facts or not - HELD THAT:- It is an admitted case of the appellant that the appellant did not get itself registered under Service Tax Commissionerate during the period in question while providing the impugned Business Auxiliary Services on commission basis. It has also been acknowledged while making submissions that the issue of services in question being taxable is no more res integra - Reliance placed in the decision of this Tribunal in the case of VED AUTOMOTIVES VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [ 2016 (11) TMI 836 - CESTAT ALLAHABAD] , wherein a reference has been answered holding that the activity of direct selling agent on commission basis is a Business Auxiliary Service which is taxable under Section 65 (19) of the Finance Act, 1994. Whether the demand should not have been confirmed as the Show Cause Notice was issued beyond the normal period of limitation? - HELD THAT:- It is observed that department can issue a show cause notice beyond the prescribed period of one year from the period under question only in accordance of the proviso to Section 73 of the Finance Act, 1994 - here there is suppression of any fact for the reason of fraud or collusion or any willful misstatement with an intent to evade duty, the department is entitled to invoke the extended period. No doubt mere non-disclosure of fact will not be such suppression as may entitle the department to invoke this provision except where there is an intent to evade the duty. From the above observed admission of the appellant, it is clear that appellant was not paying the service tax to the department despite providing the taxable service. It is also nowhere denied that even the service tax registration was not obtained. It is also observed that the present show cause notice was issued based upon the information received from the Income Tax Department. It becomes clear that the amount received by the appellant during the period under challenge was taken as the income of the appellant and accordingly, the income tax liability thereupon was being discharged by the appellant. The circumstances are sufficient for me to hold that there was no intent on the part of the appellant to evade the liability - it is held that the intent to evade the duty has wrongly been confirmed against the appellant. The non-payment of service tax was purely a bona fide unawarenss about the liability. In such circumstances the extended period could not have been invoked. The order under challenge though has dealt with the amount which was service tax liability of the appellant but the demand was not raised during the statutory period prescribed for raising the same. As held above, there was no reason to invoke the extended period of limitation. It is held that demand has been time barred and thus has wrongly been confirmed by Commissioner (Appeals). Appeal allowed.
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2022 (12) TMI 1142
Work contract services - Determination of Value - Consideration - taxability of amount received on accrual basis - Commercial or Industrial Construction services/ Erection, Commissioning or Installation service - Works Contract service - Renting of Immovable Property service - Business Support services - demand of service tax alongwith interest and penalty - HELD THAT:- From the impugned order, para 13.4, it is evident that Commissioner has concluded that the amount of Rs 60,00,000/- forfeited by the Appellant, is a consideration on the basis of the definition of term consideration as per Section 2 (d) of the Contract Act, 1962. However in the Finance Act, 1994, explanation to section 67, defines the term consideration . In our view the manner in which the term consideration has been defined by the Finance Act, 1994 is not in pari materia with the definition as contained in Contract Act. The impugned order which relies solely on the definition as contained in the Contract Act, for holding that this amount is consideration , for the services provided or to be provided cannot be upheld in view of the specific definition contained in Finance act, 1994. Commissioner needs to record a finding to the effect that this amount is an consideration as per the Finance Act, 1994 by referring to definition contained in therein. Appeal is partly allowed and the matter is remanded back to the original authority.
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Central Excise
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2022 (12) TMI 1141
Non-payment of Central Excise Duty on new packing machines added during the relevant month - non-payment on the ground that the number of old packing machine have been replaced with equal number machines and the total number of installed packing machines remained unchanged during the said relevant months - contravention of statutory provisions of Rule 6(4),7,8,9 and 13 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - HELD THAT:- As regard the demand of Rs. 1,20,12,500/- we find that the case of the department is that provisions of Rule 8 nowhere provide the pro-rata payment of duty on the basis of date of installation of new Machines. As per department Appellant was required to pay duty for the whole month. The Learned Commissioner in impugned order also held that the Appellant was not entitled for the abetment of duty in case of non-production of the notified goods as provided in Rule 10. It should be appropriate at this juncture to re-visit the legal provisions. In the present matter undisputedly appellant had followed the procedure, as the appellant filed declaration regarding change of number of packing machines and the declaration was accepted by the proper officer after due verification, the declaration was accepted and the annual capacity of the machine was fixed by the competent jurisdictional officers and the appellant accordingly paid the duty. The same is also clear from the following correspondences. There is no misdeclaration found by Revenue on the part of appellant regarding number of machines used for manufacture of notified goods. In such circumstance demands of duty over and above the duty determined by the Jurisdictional officer legally not correct. It is clear the duty is payable on the number of installed machines which are deemed to be operating machines. In the present matter the number of installed machines in the month remained the same before and after replacement of the machines. Therefore, the demand confirmed by the Learned Commissioner in instant case is legally not correct. In the present matter Revenue cannot demand duty unless the orders of determination of production capacity based duty has been reviewed. In the present case, it is seen that the Appellant after following the proper procedure paid the duty assessed by the Jurisdictional Deputy Commissioner fixing annual capacity of production after the replacement of packing machines, however no action was taken by the department to modify these orders by filing review application or appeal. On this ground also demand is prima facie not sustainable. Appeal allowed.
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2022 (12) TMI 1140
Claim for monetization of the restored CENVAT credit as approved by the Hon ble High Court of Karnataka in circumstances of closure of the factory of the appellant - operation of rule 8(3A) of Central Excise Rules, 2002 (as existing then) withdrawing privilege of consolidated payment at the end of each month as well as of discharge through CENVAT credit till the default is made good along with interest - HELD THAT:- The duty liability, on which CENVAT credit is availed, is nothing but the leviability discharged in accordance with section 3 of Central Excise Act, 1944 on clearances effected by the supplier - manufacturer and refund of that amount would be tantamount to negating the correctness of that levy. CENVAT Credit Rules, 2004 does not, for this reason, envisage any erosion of credit availed except by utilization towards duty liability under rule 3(4) thereof, by refund under rule 5 thereof or by recovery for ineligible availment under rule 14 thereof. To accede to the plea of the appellant herein would be to discard the leviability of duty/tax on manufacture/supply of goods/services procured by the appellant. The appeal lacks merit and, for that reason, is dismissed.
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CST, VAT & Sales Tax
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2022 (12) TMI 1139
Validity of assessment order - Deemed sale - transfer of right to use goods or not - inter-state transfer of goods - sale or not - HELD THAT:- This court finds force in the argument of Mr. Deb, learned senior counsel on the point that respondents have no jurisdiction and there is no transfer/sale and further the situs of sale - This court is of the considered opinion that the owner of the cylinder is IOCL. The transport/supply does not fall within the ambit of transfer of goods as defined in sale . Further, when transaction has taken place in Assam, the respondent authorities cannot have any jurisdiction over Interstate. The impugned Assessment Order dated 31.03.2021 and consequently, the two demand notices dated 31.03.2021 issued by the respondent no.3 are liable to be set aside and quashed on the point of jurisdiction and also with regard to the right to sale of goods and further with regard to the place of execution of the contract since the situs of the sale which has been executed at Guwahati, the State of Tripura has no jurisdiction in so far as levying of tax by the respondents upon the petitioner - Petition allowed.
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2022 (12) TMI 1138
Validity of suo-motu revision order dated 12th July, 2018 passed by the Addl. Commissioner of Sales Tax (Addl.CST), Cuttack-II Range, Cuttack - jurisdiction of the Addl. CST to pass an order in suo-motu revision - HELD THAT:- In terms of Rule 5(2) of the OVAT Rules, the CST cannot delegate to an officer appointed under Section 3(2) of the OVAT Act, which includes the Addl. CST and the JCST, the powers of CST under Section 79(1) of the OVAT Act without the prior approval of the Government . The mandatory nature of the requirement of prior approval is evident from the fact that all the delegation notifications including the one dated 15th May, 2009 specifically mentioned the prior approval obtained from the Government. However, when one peruses the notification dated 5 th June, 2018 in terms of which the CST delegated his power under Section 79(1) of the OVAT Act to the Addl. CST, reference is made only the earlier approval obtained on 30th April, 2009. That approval was not for delegation of the powers of the CST to the Addl. CST but delegation of the powers of the CST to the JCST. The observation of the CST in the impugned order that the Addl. CST, at the time when the suo motu revision order was passed on 6 th December 2018, was still exercising the powers of the JCST is also not factually correct. The notification promoting the JCST as Addl. CST and posting him on promotion was issued on 2nd May, 2018 itself. Therefore, at the time when the impugned suo motu revisional power was passed by the Addl. CST he was functioning as Addl. CST and not as JCST. Even in terms of the notification dated 5 th June, 2018 the Addl. CST could have exercised the suo motu revisional power only if the order under revision was passed by the JCST or Dy. CST - Admittedly, in the present case, it is the STO who has passed the assessment order under Section 42 of the OVAT Act which was sought to be revised by the Addl. CST. Therefore, even in terms of the notification dated 5th June, 2018 the Addl. CST lacked the jurisdiction to revise the order of the STO. The Court is of the view that the suo motu revisional power passed by the Addl. CST on 6 th December, 2018 was entirely without jurisdiction and beyond the powers of the Addl. CST. Consequently, the suo motu revisional order, and the impugned order of the CST affirming it in the appeal, are hereby set aside - Petition allowed.
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2022 (12) TMI 1137
Jurisdiction - Constitutional validity of Section 174(2) of the KSGST Act - Demand / Recovery of VAT after implementation of GST - Scope of saving clause under the GST Act - validity of notices and orders of assessment/penalty - competence of the State Legislature - Revenue, in purported exercise of saving power granted by Section 174(2) of the KSGST Act read with Section 25(1), Section 42(3), or Section 67 of the KVAT Act 2003, issued notices proposing to reopen the assessments of the Dealers, as the case may be for best judgment, penalty etc. - HELD THAT:- The State Legislature is competent to enact Section 174(2) of the KSGST Act. The consequence of such a conclusion is that clauses in Section 174(2) are within the competence of the State Legislature. To escape the saving clause's effect, the arguments noted above are canvassed. The argument proceeds on the assumption that with the repeal of the KVAT Act, an absolute right in favour of Dealers erasing and effacing every legal obligation under the KVAT Act has been attracted. The purpose of savings is intended to have certainty on initiation, enquiry, etc., even after the repeal is given effect. Statutory obligation means an obligation arising under a Statute. Legal obligation means an obligation that derives from the operation of law. These obligations are discharged by duly complying with the requirement thereof, or the obligation stands discharged with the efflux of limitation. The third way now canvassed is that since notices are issued after 01.07.2017, the State cannot proceed to recover the amount - The absence of initiation of any proceeding before 16.09.2017 is not a criterion at all in the scheme of the KVAT Act. With the applicable saving clause, what is required in law is that when steps for reassessment etc., are taken up, those steps conform to the limitation covered by the applicable Section under the KVAT Act. The notices now impugned are well within the period under Section 25 or within the reasonable period under Sections 56, 58 and 67; such proceedings are covered by the saving clause of Section 174(2) of the KSGST Act. The converse of the above deliberation is that the State Legislature, however, has the power to repeal and provide for a saving clause; still, on the interpretation now suggested to various clauses, again, the provisions of the KVAT Act could be rendered ineffective. The effect of the saving clause cannot be defeated on any of the grounds now raised by the Dealers. The Dealers must complete the legal obligations, or the timelines expire to assume rights either accrued or vested. It is not the case of Dealers that beyond the period of limitation, the impugned notices are issued or orders made. The migration to GST is not an amnesty given to defaulting dealers from paying the tax due under the KVAT Act - the Revenue/State has not disentitled itself from enforcing its right to recover the defaulted tax or tax dues under the KVAT Act arising before 01/07/2017. The impugned notices are saved by clauses (i) to (iv) of Section 174(2) of the KSGST Act and are within the competence of the Department - Constitutionality of Section 174(2) of the KSGST Act and legality of notices/ orders as the case may be impugned in the respective Writ Appeals are answered against the dealers, hence necessarily, the Writ Appeals must fail and accordingly are dismissed.
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