TMI Tax Updates - e-Newsletter
December 28, 2024

Case Laws in this Newsletter:

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

Articles

1. ANNUAL RODTEP RETURN - DISCONCERTING COMPLIANCE FOR THE EXPORTERS

   By: Narayana Chambers

2. LEGAL TERMINOLOGY IN GST LAW (PART -2)

   By: Dr. Sanjiv Agarwal

3. Impact of GST on Small and Medium-Sized Enterprises

   By: Ishita Ramani

4. POWER OF REFERRAL COURT IS LIMITED UNDER SECTION 11 OF ARBITRAITON AND CONCILIATION ACT, 1996

   By: DR.MARIAPPAN GOVINDARAJAN

5. TP Adjustments in India: A Review of Recent Trends and Case Laws

   By: Eshaan Singal

News

1. Ministry of Finance Year Ender 2024: Department of Expenditure

2. Dr. Sandip Shah Appointed as the Chairperson of NABL-QCI

3. Dr. Arunish Chawla took charge as Secretary, Department of Revenue, Ministry of Finance

Notifications

Customs

1. 28/2024 - dated 26-12-2024 - ADD

Seeks to impose definitive Anti-Dumping Duty on import of “Digital Offset Printing Plates” originating in or exported from China PR, Japan, Korea RP, Vietnam, and Taiwan

GST - States

2. 33/2023-State Tax - dated 23-12-2024 - Delhi SGST

“Account Aggregator” notified as the systems with which information may be shared by the common portal based on consent u/s 158A of DGST Act, 2017

3. S.R.O. No. 1190/2024 - dated 24-12-2024 - Kerala SGST

Amendment in Notification No. G.O.(P) No.135/2018/TAXES (S.R.O. No.583/2018) dated 18th August, 2018

4. F A 3-47/2017/1/V (31) - dated 28-11-2024 - Madhya Pradesh SGST

Amendment in Notification No. F A-3-47/2017/1/V(59) dated 30th June, 2017

5. CT/8/0007/2024-Sec-1-05(CT)(30) - dated 20-11-2024 - Madhya Pradesh SGST

Seeks to bring in force Provision of clause 2 and 3 of Notification No. CT/8/0007/2024-Sec-1-05(CT)(19) dated 08-08-2024

SEBI

6. SEBI/LAD-NRO/GN/2024/222 - dated 24-12-2024 - SEBI

SEBI permitted the exit of the Indian Commodity Exchange Limited as a stock exchange and the consequent withdrawal of recognition granted to it

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/ MIRSD-PoD-1/P/CIR/2024/164 - dated 27-12-2024

Prior approval for change in control: Transfer of shareholdings among immediate relatives and transmission of shareholdings and their effect on change in control

Highlights / Catch Notes

GST

• E-Way Bill and Vehicle Seizure Dispute: Expedite Proceedings to Resolve Notice and Goods Origin Conflict.

  Case-Laws - HC : The HC directed the respondent to complete proceedings u/s 129 expeditiously, preferably within two weeks, in view of factual disputes regarding issuance of notices and origin of goods loaded in the petitioner's seized vehicle. The petitioner contended no notices were issued u/s 129, while the respondent claimed notices were issued strictly u/s 129. There was also a dispute over whether goods originated from Autonagar or the consignor's address.
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• Trial Court Certifies Online Filing Over Delayed Hard Copy for Appeals.

  Case-Laws - HC : The HC held that the requirement of physically filing a certified copy of the impugned order is not mandatory. An appeal filed online within the prescribed limitation period can be condoned even if the certified copy was submitted with a delay. The online filing, completed within the prescribed time along with an electronic copy of the order, constitutes valid filing. The Court remitted the appeals back to the Appellate Authority for consideration on merits, ruling that mere delay in physical submission cannot deprive a party of a hearing when online filing was within the limitation period.
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• Strict Rules on Fair Hearing Before GST Penalty: Tax Body Can't Skip Natural Justice.

  Case-Laws - HC : The HC held that the provisions of Section 75(4) of the GST Act mandating opportunity of hearing are mandatory. Allowing the petition, the HC concluded that due to violation of principles of natural justice by non-grant of opportunity of hearing, the order was unsustainable despite dismissal of appeal by the petitioner being time-barred.
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Income Tax

• Home Buyer Wins Case on Property Valuation for Tax Purposes - Stamp Duty Rate Prevails Over Sale Price.

  Case-Laws - HC : HC quashed orders rejecting assessee's request for revision u/s 264. Differential value between sale deed and stamp duty valuation exceeded Rs. 50,000, invoking Section 56(2)(vii)(b)(ii). Stamp duty valuation of Rs. 97,69,000 adopted by SRO to be considered for computing income. AO to refer valuation to Valuation Officer if disputed u/s 50C(2). Assessee can raise objections before revisional authority u/s 264 or appellate authority u/s 246A. Cases remitted to AO for fresh adjudication u/s 56(2)(vii)(c) proviso read with Section 50C(2).
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• Jurisdictional Assessment Officer Holds Exclusive Notice Authority; Shares Assessment Duties with Faceless Officer.

  Case-Laws - HC : The HC held that the Jurisdictional Assessment Officer (JAO) has exclusive jurisdiction to issue notice u/s 148 of the Income Tax Act. For assessment, re-assessment or re-computation u/s 147, both the Faceless Assessment Officer (FAO) and JAO have concurrent jurisdiction. The Directorate of Income Tax (Systems) allocates cases for Section 148 notice issuance to the JAO based on PAN jurisdiction. The JAO issues the notice digitally without name through the ITBA Portal to the assessee's registered email. Procedural lapses like not mentioning JAO's name do not vitiate the proceedings as they are curable. JAO requires higher authority's approval u/s 151A for issuing Section 148 notice. After issuing notice, JAO uploads documents and assessee's reply on ITBA Portal. The case then moves to the National Faceless Assessment Centre (NaFAC) which assumes jurisdiction u/s 144B and issues notice u/ss 143(2)/142(1) for further information. The guidelines u/s 144B(2) are not Central Government directions u/s 151A(2). Both FAO and JAO perform duties in a faceless manner as per the Scheme.
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• Court Upholds Jewelry Seizure; Assessee's Petition Dismissed Over Stock Discrepancies and Valuation Issues.

  Case-Laws - HC : Assessee's petition dismissed. HC held seizure of jewelry stock u/s 132A valid. Itemized stock register not furnished by assessee to authorities' satisfaction. Net weight of seized jewelry differed from closing stock. Difference in valuation of seized jewelry and bills produced. Ongoing assessment proceedings to determine tax liability. Factual disputes regarding stock register and seized quantity to be considered in assessment. Opportunity given to assessee u/s 131 to explain source of gold. Seizure u/s 132A after due approval. Stock register present but not matching jewelry items/bills. Seizure justified at this stage, compulsory proceedings to follow. Assessee's remedies during assessment proceedings. Argument that stock-in-trade cannot be seized u/s 132(1)(iii) rejected. Seeking quashment of proceedings u/ss 131/132 citing lack of 'reasons to believe' rejected.
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• Tax Break Allowed for Broken Period Interest on Securities Purchase, Reassessment Quashed.

  Case-Laws - HC : HC allowed the petition. Petitioner was entitled to deduction for broken period interest on purchase of HTM securities. The issue was no longer res integra in view of SC's decision in Bank of Rajasthan case. There was no basis for initiating reassessment proceedings against petitioner which were contrary to settled legal position.
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• A Taxpayer's Worst Nightmare: Appellate Authority Has Sweeping Powers Beyond Original Assessment.

  Case-Laws - AT : The CIT(A) has wide powers akin to reassessment. Once an assessment order is before CIT(A), its powers are not restricted to examining only grievances raised by the assessee but extend to the entire assessment to correct the AO. Under sec 250(4), CIT(A) can make further enquiries, fresh assessments and determine tax payability. Even if AO concluded income is non-taxable, CIT(A) can take a different view and bring that income to tax. Relying on Supreme Court decisions, ITAT held that the appellate authority has all original authority's powers, subject to statutory restrictions. Allowing the appeal for statistical purposes, ITAT emphasised the need for thorough and compliant adjudication.
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• Intra-group receivables beyond credit period recharacterized as financing, interest adjustment upheld.

  Case-Laws - AT : ITAT upheld characterization of outstanding dues beyond agreed credit period as separate international transaction of providing finance, requiring separate benchmarking. Interest adjustment limited to financial year under consideration. RBI COVID-19 relaxations not applicable to relevant period. No recharacterization of transaction by TPO. Commercial expediency for delayed receivables not established. Netting of receivables/payables permitted if demonstrated. Lack of show cause notice not fatal. Working capital adjustment to be considered for removing interest adjustment. MAT book profit computation remitted for rectification. Directed to grant tax credits after verification.
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• Taxpayer Avoids Penalty for Voluntary Disclosure of Income Before Reassessment; ITAT Cites Good Faith Effort.

  Case-Laws - AT : The ITAT held that penalty u/s 271(1)(c) was not imposable on the assessee. The assessee had voluntarily paid tax on income from sale of shares three years prior to initiation of reassessment proceedings, establishing bona fides under Explanation 1(B) to Section 271(1)(c). Alternatively, since the income was included in the return filed in compliance with notice u/s 148 and accepted by the AO without any addition/disallowance, no penalty could be imposed in absence of any amount added/disallowed to attract the deeming provisions of Explanations 1 and 4 to Section 271(1)(c). The ITAT relied on precedents holding that penalty u/s 271(1)(c) cannot be imposed where the income is voluntarily disclosed in the return and accepted by the AO without any concealment.
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• Washout Charges Ruled as Non-Taxable Business Income for Foreign Companies without Indian Permanent Establishment.

  Case-Laws - AT : AO's addition of "washout charges" as income was rejected. ITAT held that washout charges are business income, not speculative income. Even if speculative, it would be covered under Article 7 read with Article 5 of India-Singapore tax treaty as business income. Since the assessee had no PE in India as per Article 5, such business income is not taxable in India. ITAT ruled in assessee's favor.
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• ITAT rules online ad platform's receipts from Indian subsidiary not taxable as royalty/FTS under India-Singapore tax treaty.

  Case-Laws - AT : The ITAT held that the receipts from providing advertisement space and business support services to Criteo India were not taxable as royalty/FTS under Article 12 of the India-Singapore DTAA. The assessee did not have a PE in India under Article 5. The advertisement space was purchased from third-party publishers, over which the assessee had no control or possession. The business support services were routine administrative services without any enduring benefit or transfer of technology to Criteo India. The services did not satisfy the 'make available' clause for constituting FTS. The ITAT directed the AO to delete the additions made on these receipts.
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• Builders Entitled to Tax Break if Timely Applied for Occupancy Permit.

  Case-Laws - AT : ITAT remanded matter to AO to verify if assessee applied for completion/occupancy certificate before specified date of 31.03.2013 and if there was any lapse by assessee in fulfilling conditions for making application. AO directed to decide pro-rata deduction u/s 80IB(10) and violation of 80IB(10)(e) afresh after examining evidence. Assessee's ground allowed for statistical purposes.
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• Taxpayer Wins: Commissioner Can't Make Fresh Additions, Interest Deduction Allowed If Linked to Dividends.

  Case-Laws - AT : CIT(A)'s power u/s 251(1) restricted to subject matter assessed by AO. Addition for personal withdrawals not allowed as beyond AO's assessment. Addition for drawings from earlier year upheld as correctly reflected in capital account. Interest expenditure disallowance u/s 57(iii) deleted following coordinate bench ruling allowing deduction having nexus with dividend income. AO directed to recompute interest u/s 234B per earlier ITAT order.
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• Software Firm Dodges Tax Notice Due to Merger Mix-Up: Revenue Dept's Oversight Invalidates Assessment.

  Case-Laws - AT : Notice u/s 148 issued to a non-existent entity due to merger. ITAT held such notice illegal, invalid and non-est as per Bombay HC in Uber India Systems Pvt. Ltd. Despite Revenue's contention that it was a curable defect u/s 292B, ITAT decided in favor of the assessee, ruling the assessment invalid since notice was issued to a non-existing entity after being informed of the merger.
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• Legitimacy of Loans Established Through Banking Records and Lender Confirmations, No Tax Addition Warranted.

  Case-Laws - AT : Monies received through regular banking channels, reflected in balance sheet. Lender furnished confirmations and director's statement recorded. No incriminating evidence found during search. Running account with lender evident from ledgers for multiple years. Source of lender's funds proved. ITAT held genuineness of transactions established, no addition u/s 68 warranted. Decided in assessee's favour.
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Customs

• Imported Food Items Eligible for Duty Relief After Reprocessing Abroad.

  Case-Laws - AT : The CESTAT held that the reimported food items were eligible for the benefit under Notification No. 52/2003-Cus as they underwent reprocessing, which falls within the scope of 'Repair or Reconditioning' under S.No.14(i). Despite being reimported beyond one year from original exportation, the demand of duty was set aside as the proceedings were time-barred, and the appellant had complied with the conditions by furnishing export details and re-exporting the goods within the stipulated period after reprocessing.
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• Customs Broker Wins Big: License Revocation Overturned, But Fined For Lax Document Verification.

  Case-Laws - AT : CESTAT set aside revocation of Customs Broker's license and forfeiture of security deposit as allegation of violating Regulation 10(e) of CBLR, 2018 was unsustainable. However, considering violation of Regulation 10(n) by accepting documents through exporter's representative without verifying authorization, penalty of Rs.50,000/- imposed on broker under CBLR, 2018 was reasonable. Impugned order modified, appeal partly allowed.
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• Cocoa Bean Import Denied Over Food Safety Violations, Fines Reduced on Appeal.

  Case-Laws - AT : Appellant imported fermented and dried processed Sumatra cocoa beans which failed to conform to IS 8865:2003 standards as per FSSAI and BIS testing. Adjudicating Authority permitted re-export on payment of Rs. 15 lakh redemption fine and Rs. 5 lakh penalty. CESTAT reduced redemption fine to Rs. 5 lakh and penalty to Rs. 2 lakh, allowing appeal.
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• Importers of perishable goods not fined for re-exporting OIE pathogen-positive items if testing fails or beyond their control.

  Case-Laws - AT : Appellant imported perishable goods requiring compliance with Animal Quarantine Authority standards. Goods tested positive for OIE pathogen, hence could not be released. CESTAT held imposition of redemption fine and penalty unjustified where goods allowed re-export due to testing failures or reasons beyond importer's control. Impugned order set aside, appeal allowed.
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FEMA

• Hefty Fines for Unauthorized Foreign Exchange Transfer Sans RBI Approval.

  Case-Laws - AT : The AT upheld the penalty imposed by the authorities u/s 8(1) of FERA, 1973 on the appellants Shri Anil Agarwal, Navin Agarwal, and D.P. Agarwal for transferring foreign exchange equivalent to Rs. 208 crores without RBI's permission. The AT rejected the appellants' argument of putting the burden of proof on the respondents, as D.P. Agarwal failed to appear and produce documents despite summons. The AT drew an adverse inference against him for non-response and found the penalties of Rs. 20 crores on the company and Rs. 5 crores each on the individuals reasonable. Consequently, the appeals were dismissed.
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• Copper Scrap Import Goes Awry: Empty Containers, Lost Remittance, Penalties Reconsidered.

  Case-Laws - AT : Appellants imported copper scrap through high seas sale but containers were found empty. Remittance made without receiving goods. AT held contravention of Section 10(6) of FEMA. Penalty on appellant Madhusudan Jhanwar set aside as he wasn't responsible for business conduct. Penalty on appellant Rajesh Jhanwar reduced to 25% as he made efforts to recover amount though not serious. Order partially modified.
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Corporate Law

• Family Fights Over Ancestral Property Ownership and Company Control, Court Allows Suit to Proceed.

  Case-Laws - HC : HC allowed appeal. Plaint not barred by res judicata. Civil court has jurisdiction over primary reliefs of declaration of title and partition, despite consequential reliefs regarding company mismanagement falling under NCLT's purview. Cross-shareholdings indicate quasi-partnership, attracting civil court's jurisdiction. Benami Act's exceptions arguably applicable at this stage, not warranting plaint rejection. Trial court erred in returning entire plaint.
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IBC

• Insolvency Court Upholds Fair Process, Approves Resolution Plan by SRA.

  Case-Laws - AT : The NCLAT upheld the challenge process and negotiation process conducted by the Resolution Professional (RP) as per CIRP Regulations and Process Note. It held SRA eligible to submit the Resolution Plan as per Clause 3 of the Invitation for Expression of Interest, including the net worth and turnover of its promoter Mr. Sahil Mangla within the definition of 'entity'. The NCLAT found no material irregularities by the RP u/s 61(3)(ii) of the IBC to interfere with the Adjudicating Authority's order approving SRA's Resolution Plan. Consequently, the appeal was dismissed, upholding the processes and commercial judgment of the CoC during CIRP.
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• Home buyers' wait ends as NCLAT admits insolvency against defaulting builders who failed to deliver homes despite payments.

  Case-Laws - AT : Corporate Debtors failed to deliver housing units to allottees within stipulated time despite receiving payments. NCLAT rejected Corporate Debtors' contentions regarding non-fulfillment of 100 allottees threshold, lack of debt and default, pending litigations over land title, and absence of privity of contract between land-owning company and allottees. NCLAT upheld NCLT's admission of insolvency proceedings against Corporate Debtors u/s 7 IBC, initiated by allottees as Financial Creditors. Appeal dismissed, directing Resolution Professional to take steps for project completion via insolvency resolution process.
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• Creditor Bank Succeeds in Personal Guarantor Case Despite Appellants' Objections Over Limitation and Authority.

  Case-Laws - AT : The NCLAT held that the Section 95 application filed by Respondent No. 1 Bank against the personal guarantor was within the limitation period. The demand notice u/s 13(2) was issued on 04.06.2021, and the 60-day period for default expired on 04.08.2021. As the guarantee was an on-demand guarantee, the default arose when the demand was made. The Section 95 application filed on 18.06.2022 was thus within limitation. The NCLAT also held that the application was filed by a duly authorized person, an AGM, as per the State Bank of India General Regulations, 1955. Consequently, the appeals filed by the appellants were dismissed as devoid of merit.
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• House Buyer Denied Rs. 43 Crore Claim as Unsecured Creditor in Bankruptcy Case Due to Lack of Proper Documentation.

  Case-Laws - AT : NCLAT dismissed appeal against order rejecting claim of Rs. 42.86 crores by appellant as unsecured creditor. No evidence of loan advanced to corporate debtor. Agreement without registered sale deed cannot transfer immovable property under Registration Act. Mere agreement to sell without sale deed cannot prove claim amount was adjusted against sale consideration in dubious, preferential transaction to defraud creditors.
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Indian Laws

• Company Director Cleared of Liability for Bounced Checks Issued Prior to His Appointment.

  Case-Laws - HC : Petitioner, an additional director, not liable for dishonour of cheques issued by company. Petitioner neither signatory nor managing director at time of offence. No prima facie offence u/s 141 NI Act. Complaint quashed by HC exercising powers u/s 482 CrPC.
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• Cheque Bounce Case: Director Faces Liability Despite Not Being Signatory.

  Case-Laws - HC : Petitioner, a director in respondent company, challenged complaint and summoning order against her u/ss 138 and 141 of NI Act for dishonour of cheque issued to complainant. HC held petitioner prima facie liable u/s 141 as being in charge of company's affairs despite not being signatory. Mere non-signatory status didn't absolve liability if requisites u/ss 138 and 141 met. MM rightly issued summons after observing prima facie case and non-payment despite demand notice. No illegality in summoning order to warrant quashing u/s 482 of Code. Petition dismissed.
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PMLA

• Overturning Excessive Property Seizure for Money Laundering: Court Upholds Appellant's Ownership Rights.

  Case-Laws - HC : The HC set aside the order confiscating appellant's properties under Schedule 'A', recognizing appellant's ownership rights. It held that the fixed deposit furnished by late Sri. G.E. Veerabharappa to the extent of Rs. 1,72,40,951/- should have been considered the asset involved in money laundering, instead of confiscating appellant's properties worth more than that amount u/s 8(5) PMLA. The appeal against the confiscation order was allowed.
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• Appeal Dismissed: Tribunal Upholds Provisional Attachment Under PMLA; Links Crime to Attached Properties.

  Case-Laws - AT : The AT dismissed the appeal challenging the provisional attachment order u/s 5(1) of PMLA, 2002. It held that non-completion of adjudication proceedings within 180 days would not lapse the attachment due to the Apex Court's judgment in Prakash Corporates. The scheduled offence of misappropriation of government funds by granting exorbitant compensation to farmers was made out. The direct nexus between scheduled offence and attached properties vis-`a-vis their value was covered by the Apex Court's judgment in Vijay Madan Lal. The appellant failed to prove the source for acquiring properties worth crores, satisfying the ingredients of money laundering u/s 3. The procedure of recording reasons to believe u/s 5 was followed. The AT considered all issues raised by the appellant regarding non-consideration of merits by the Adjudicating Authority.
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• Appellate Tribunal Dismisses Appeal Against Provisional Money Laundering Attachment Order.

  Case-Laws - AT : The AT dismissed the appeal against the provisional attachment order u/s 26 of the Prevention of Money Laundering Act, 2002 as not maintainable. An appeal lies against an order passed by the adjudicating authority or u/s 13(2), not against a provisional attachment order. However, the adjudicating authority must independently analyze the sustainability of the second provisional attachment order, notwithstanding the dismissal, particularly considering its earlier order denying confirmation of the prior provisional attachment arising from the same ECIR, against which an appeal is pending before the AT.
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VAT

• Tax Reassessment Barred by Limitation Period, Court Upholds Taxpayer's Rights.

  Case-Laws - HC : The HC allowed the appeal, setting aside the order of reassessment dated 30.05.2018 by the Assessing Officer as being barred by limitation under proviso to Section 40 of the Karnataka Value Added Tax Act, 2003. The limitation period of 7 years for reassessment had expired on 26.06.2015, whereas the reassessment was done much later on 30.05.2018, rendering it without jurisdiction. The HC relied on the Supreme Court's judgment in Jaipuria Brothers Limited and the Punjab and Haryana HC's Full Bench decision in Assessing Authority, Amritsar, which held that fresh reassessment proceedings are governed by the statutory limitation period.
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Service Tax

• Apex Court Upholds Service Tax on Private Security Agencies Providing Ex-Servicemen Guards.

  Case-Laws - HC : The HC held that the appellant, a security agency providing security personnel who are ex-servicemen, would satisfy the definition of "a commercial concern engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner". Although a commercial concern is not defined, it is understood as an institution/establishment primarily engaged in commercial activities with profit as the primary aim. The appellant cannot be treated at par with educational institutions like IITs and IIMs, which are not commercial concerns. The appeal was dismissed, upholding the levy of service tax on the appellant's security agency services.
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• Exporters Rejoice! Govt. Rules Can't Deny Refund of Accumulated Tax Credits on Non-Taxable Services.

  Case-Laws - AT : The appellant, an exporter of services, accumulated CENVAT credit during the relevant quarter. Despite the exported services being non-taxable, the CESTAT, relying on the Karnataka HC judgment in MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. case and its own decision in CJK KNOWLEDGEWORKS GLOBAL INDIA PVT. LTD. case, held that the appellant cannot be denied refund of accumulated CENVAT credit u/r 5 of CCR, 2004. The impugned order was set aside, and the appeal allowing cash refund of accumulated CENVAT credit was allowed.
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Central Excise

• Sugar Syrup Sweetens Biscuits, but Taxman Bites: Manufacturing Process Yields Excisable Byproduct.

  Case-Laws - AT : Sugar syrup having 78.2% sugar content emerged as an intermediary product during biscuit manufacturing, an exempted final product. CESTAT held sugar syrup was marketable and excisable, not covered under exemption for inputs used in exempted final products. However, as issue related to law interpretation, extended period of limitation was set aside, limiting demand to normal period. No penalty was imposed. Revenue's appeal was partly allowed, confirming sugar syrup's excisability but restricting demand to normal limitation period.
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Case Laws:

• GST

• 2024 (12) TMI 1355
  Legality of seizure of the petitioner s vehicle - petitioner would contend that the iron and steel scrap was actually loaded in Autonagar at Vijayawada and not at the address of the office of the consignor - HELD THAT:- There are clear disputes of fact, in as much as, the petitioner contends that no notices and proceedings were initiated under Section 129 of the Act, while the 1st respondent contends that such notices were issued strictly within the ambit set out under Section 129 of the Act. Further, there is also a dispute as to the origin of the goods and whether the goods were loaded at Autonagar or they were said to have been loaded at the address of the consignor. Keeping in view, the time lines under Section 129 of the Act, this Court deems it appropriate to dispose of this Writ Petition, with a direction to the 1st respondent to complete the proceedings, under Section 129 of the Act, expeditiously and preferably within a period of two (02) weeks from today. Petition disposed off.

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• 2024 (12) TMI 1354
  Time limitation for filing appeal - whether the appeals were filed within the time period in terms of Rule 108 or not and if filed with a delay, does it merit condonation? - requirement of physical filing - merely a procedural requirement or not. HELD THAT:- A perusal of the amended rule and the decisions make it clear that the condition to physically file the certified copy of the impugned decision/order is not mandatory. Therefore, an appeal filed prior to the amendment, where the certified copy was submitted with a delay, may be condoned if the online filing was completed within the prescribed limitation period. Ultimately, what is to be borne in mind is the fact that online filing was within limitation. There is no doubt being raised as to the genuineness of the copy of the order, which has been filed. Merely because the physical submission of the appeal and the order was much later, when the online filing was within the prescribed time, cannot deprive the Petitioner of hearing on merits. In most Courts and Tribunals, online filing and electronic filing is now prescribed mode and the Courts are moving towards technologically advance systems. It would be retrograde to opine that online filing, which was complete in all respects, including electronic copy of the order, is not valid filing. Petition allowed in part - appeals are remitted back to the Appellate Authority for being considered on merits.

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• 2024 (12) TMI 1353
  Violation of principles of natural justice - requirement to provide opportunity of hearing - Time limitation for filing appeal - appeal preferred by the petitioner dismissed as being beyond limitation - HELD THAT:- The issue with regard to non grant of hearing was considered by the Division Bench of this Court in the case of M/S. ATLAS CYCLES HARYANA LTD. VERSUS STATE OF U.P. AND ANOTHER [ 2024 (2) TMI 942 - ALLAHABAD HIGH COURT] and held that the provisions of Section 75(4) of the GST Act are mandatory. Conclusion - Without going to the arguments with regard to limitation and considering the submissions on the ground of non-grant of opportunity of hearing, the petition is allowed.

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• Income Tax

• 2024 (12) TMI 1352
  Condition of eligibility to file application for settlement Commission - whether paragraph 4(i) of the circular dated 28.09.2021 is bad in law in as much as it imposes a condition of liability to file application for settlement as on 31.01.2021 along with the issue as to whether the Finance Act, 2021 is unconstitutional in as much as by giving retrospective application with effect from 01.02.2021? - HELD THAT:- Question no. (i) was answered in Jain Metal [ 2023 (11) TMI 1111 - MADRAS HIGH COURT ] by holding that when the Income Tax Settlement Commission itself has been made inoperative with effect from 01.02.2021, it cannot be said that Clause 4 (i) of the circular runs counter or imposes an additional condition to the statute. Question no. (ii) was answered by the Hon ble Division Bench by observing that it is just necessary to read down the last date mentioned for filing application in Section 245C (5) as 31.03.2021 and consequently the last date mentioned in paragraph 4(i) of the circular should be read as 31.03.2021. In the case on hand the petitioners applied before the Settlement Commission on 17.03.2021 i.e., prior to the date when the assent of the Hon ble President of India has been received. The decision in the case of Jain Metal (supra) shall squarely apply to the case on hand. Thus the learned Single Judge as well as the order impugned in the writ petition passed by the Income Tax Settlement Commission are set aside and quashed. The application of the petitioner filed before the Income Tax Settlement Commission stands restored to the file of the Settlement Commission. The Interim Board is directed to consider the said application in accordance with the scheme that may be framed by the Central Government as in respect of the cases which arose prior to 31.01.2021 and to decide the same in accordance with law and on merits.

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• 2024 (12) TMI 1351
  Cognizance of offences punishable u/s 276B/276BB - non deposit of TDS and TCS amounts in the revenue account by the stipulated due date - delay ranging from 1 day to 84 days - HELD THAT:- Explanation offered by the petitioners to explain the delay ranging from 1 day to 84 days owing to the prevailing COVID pandemic then was sufficient explanation. Therefore, the Revenue ought to have considered the same under Section 178AA of the I.T. Act and ought not to have proceeded against the petitioners. Thus, it is appropriate to exercise the jurisdiction u/s 482 Cr.P.C. and quash the proceeding in the exceptional circumstances - impugned order passed by Additional Chief Judicial Magistrate (Special Court), Cuttack quashed.

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• 2024 (12) TMI 1350
  Validity of orders passed u/s 264 - Addition u/s 56(2)(vii)(b)(ii) - value adopted for the purposes of payment of stamp duty value - Relevance and application of Section 50C(2) - differential value exceeds Rs. 50,000/- - HELD THAT:- In this case, admittedly, the value declared in the Sale Deed was Rs. 72,00,000/-. The value adopted by the SRO was Rs. 97,69,000/-. Thus, the differential value exceeds Rs. 50,000/-. Therefore, the present case is covered by Section 56(2)(vii)(b)(ii) of the IT Act as extracted in the above tabular column. Thus, the value adopted for assessment of the stamp duty by the SRO at Rs. 97,69,000/- has to be adopted for the purpose of computation of Income of the petitioner. If the value is disputed on the grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of Section 50C and sub-section (15) of Section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections. It is clear that if the valuation is disputed, the conditions stipulated in sub-clause (a) (b) to sub-section 2 to Section 50C will apply. Therefore, impugned orders rejecting the request of the respective petitioners for revising the orders is unsustainable and therefore, the same warrants interference. AO has to therefore refer the valuation of the property viz., capital asset under proviso to sub-clause (vii)(c) to sub-section 2 to Section 56 to the Valuation Officer. Merely because the Authorized Representative of the petitioner did not raise any objection before the Assessment Order dated 30.11.2017 was passed, ipso facto would not mean that reference under sub-clause (vii)(c) to sub-section 2 to Section 56 of the IT Act would be barred. Even if, no objections was raised before the Assessing Officer prior to the assessment order being passed, the assessee would still be entitled to raise such objections both before the Revisional Authority u/s 264 of the IT Act or before the Appellate Commissioner u/s 246A of the IT Act as these proceedings are continuation of the original assessment proceedings. The impugned orders are liable to be quashed and the cases are remitted back to the 2nd respondent to re-do the exercise under first proviso to sub-clause (vii)(c) to sub-section 2 to Section 56 of the IT Act read with sub-section 2 to Section 50C of the IT Act.

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• 2024 (12) TMI 1349
  Validity of reopening of assessment - jurisdiction of the Jurisdictional Assessment Officer (JAO) to issue notice u/s 148 - HELD THAT:- As far as the issuance of notice u/s 148 of the IT Act is concerned, only the JAO will have exclusive jurisdiction. As far as the assessment, re-assessment or re-computation in terms of the provisions of Section 147 of the IT Act is concerned, both the FAO as well as the JAO will have concurrent jurisdiction. Directorate of Income Tax (Systems) shall have the power to make allotment of cases, through Automated Allocation System to allot cases for issuance of notice u/s 148A/148 in eligible cases based on the risk management strategy in terms of the provisions of the Scheme dated 29.03.2022, to the Jurisdictional Assessing Officer based on the PAN card jurisdiction. JAO shall issue notice under Section 148 of the IT Act, based on the cases allotted by the Directorate of Income Tax (Systems) in faceless manner, by virtue of signing it digitally without referring their name, to the e-mail id of the registered account of the Assessee through the ITBA Portal. In the present writ petitions, the cases were allotted by the Directorate of Income Tax (Systems) through Automated Allocation System, based on the risk management strategy formulated by the Board as referred to in Section 148 for issuance of notice to the Jurisdictional Assessing Officer, who had thereafter sent the Section 148 notice to the registered email account of the Assessee from the ITBA Portal, in faceless manner. Thus, the issuance of the impugned notice was duly in accordance with the Scheme, except the procedural lapse of mentioning the name of the JAO. The said procedural errors will not vitiate the initiation of the proceedings for issuance of notice under Section 148 of the IT Act since such errors are curable in nature. In terms of the provisions of Section 151A of the IT Act, still the JAOs shall have to obtain prior approval from the higher authority for issuance of Section 148 notice under the Scheme in faceless manner. JAO shall upload in the ITBA Portal, the relevant documents along with the reply received for Section 148 notice from the Assessee. Directorate of Income Tax (Systems) forward the Section 148 cases to NaFAC to take further action. Immediately thereupon, the NaFAC shall assume the jurisdiction in terms of Section 144B of the IT Act. Once the NaFAC assumed its jurisdiction subsequent to the receipt of the information pertaining to Section 148 cases from the Directorate of Income Tax (Systems), the NaFAC shall issue the notice under Section 143(2) or 142(1) of the IT Act calling for the further information from the Assessee. In the present case, the guidelines issued in terms of Sub-Section (2) of Section 144B of the IT Act will not amount to the directions issued by the Central Government in terms of Sub- Section (2) of Section 151A of the IT Act. The power of Central Government to issue any direction in terms of Sub-Section (2) of Section 151A of the IT Act read with its proviso, will be entirely different from the issuance of guidelines, by the Board, with the power available in terms of Sub-Section (2) of Section 144B of the IT Act. The provisions of Section 144B of the IT Act is both in the nature of substantive as well as procedural. While the FAO performing the duties of faceless assessment in faceless manner, the JAO is also equally performing his duties, in faceless manner, while issuing the notice under Section 148A/148 of the IT Act, as intended in the Scheme. WP dismissed.

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• 2024 (12) TMI 1348
  Validity of proceedings u/s 131/132 - stock of Jewelry having gross weight of 4603.110 grams and net weight of 4146.69 grams was seized u/s 132A - HELD THAT:- Categorical stand of the respondents is that when the petitioner (assessee) was asked to give itemized stock register and match the items carried by him with the stock register, he could not do so, to the satisfaction of the authorities. The itemized stock register was not furnished. The net weight mentioned of the jewelry items did not match with the closing stock as on 21.03.2024 and was found to be different. The same has been demonstrated by the respondents by the answers given to Question No.18 in the statements in the proceedings under Section 131 and also in the answer to Question No.13. This Court also observes that the respondents have further taken a stand that the difference in valuation, the itemized stock registers not being produced and the bills of Rs. 50,00,000/- not corresponding to the value of the gold items which was worth Rs.2.16 crores, became the reason for not releasing the same. This Court further observes that the assessment proceedings are still going on and the present tax liability is still not ascertainable. This Court also observes that once there is a factual dispute regarding the itemized stock register and the quantity of the gold seized, then all other documents can be considered by the assessing authority while completing its assessment proceedings. The assessment is for the year 2024-25, and this case is covered under Section 132 and after completion of such assessment, if the tax liability is arising then the petitioner shall have his own remedy, regarding the ornaments, but non-release thereof at this stage is justified. The first summons u/s 131 as examined by this Court, was a sufficient opportunity for the petitioner to explain the source of the gold, and his failure to do so has prompted the respondents to initiate the proceedings u/s 132A, which has been done after due and prior approval of the concerned authorities as per the Act of 1961. This Court also observes that the stock register of the Firm was present, but the jewelry items and the stock register bills were not matching. The order u/s 132B thus, cannot be interfered with at this stage, as the information received warrants the assets to remain in custody. The compulsory proceedings have to take place and the petitioner during the assessment proceedings will get sufficient time and opportunity to defend his case and take his remedy by filing the appeal before the CIT(A), if any adverse order is passed and therefore, at this stage, no interference is called for in the present petition. The principal argument of the petitioner is that the respondents have acted in sheer violation of the proviso to Section 132(1)(iii) of the Act of 1961, which provides that stock-in-trade of the business cannot be seized. This Court also observes that in the present petition, the petitioner is seeking quashment of the proceedings u/s 131/132 of the Act of 1961, citing that Section 132 has reasons to believe and thus, once the reasons to believe were specified then the proceedings ought to have been dropped.

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• 2024 (12) TMI 1347
  Eligibility to deduction u/s 80HHC - HELD THAT:- Burden was on the assessee to prove its eligibility to claim such deduction. In the instant case, the assessee had received a sum of Rs. 5,52,60,467/- from other sources. However, the assessee did not lead any evidence to show that the amount in question was received from the export business. Therefore, the Tribunal held that a sum cannot be treated as income from exports. Thus, it is evident that Section 80HHC of the Act, in the facts and circumstances of the case, did not apply. The authorities under the Act have, therefore, rightly treated the aforesaid amount as miscellaneous income and excluded 90% of the said income in view of Explanation (baa) of Section 80HHC of the Act. Decided against assessee.

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• 2024 (12) TMI 1346
  Unexplained money u/s 69-A - deposit made after the demonetization notification on 8th November 2016 - HELD THAT:- The above argumentative explanation has given by the assessee after information received from UCO Bank, Sohela Branch, u/s 143 (6) was provided to him. In the facts found by the AO, confirmed by the First Appellate Authority and thereafter the Tribunal, there does not arise any substantial question of law for admission of the appeal. Explanation offered by assessee was no explanation at all. Nature or source of acquisition of the money not explained could only invite opinion of the AO of unexplained money. The appeal does not deserve to be admitted.

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• 2024 (12) TMI 1345
  Profit from the sale of jaggery - Agricultural income of not? - distinction between gur and jaggery - HELD THAT:- After a detailed discussion and relying on various judgments [CIT v H.G. Date [ 1970 (2) TMI 41 - BOMBAY HIGH COURT ], Commissioner of Income-Tax v Kirloskar Bros. Ltd [ 1989 (9) TMI 91 - BOMBAY HIGH COURT ], Krishi Utapadan Mandi Samiti and another v M/s. Shankar Industries and Others [ 1993 (2) TMI 332 - SUPREME COURT ], Banarsi Das Gupta v Commissioner of Income Tax [ 1972 (5) TMI 26 - ALLAHABAD HIGH COURT ], this Court has come to the conclusion that the essential characteristic of sugarcane in its original form, stands converted after processing, into jagerry and both the commodities are different and distinct from one another. Decided in favour of the revenue.

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• 2024 (12) TMI 1344
  Reopening of assessment u/s 147 - Entitlement for deduction to the broken period interest (BPI) on purchase of hold to maturity (HTM) securities - order passed u/s 148A (d) rejecting the petitioner s reply to the show cause notice - HELD THAT:- We are inclined to accept the petitioner s contention on the position in law in regard to the broken period interest on the purchase of HTM securities, which appears to be well settled in view of the decision as rendered by the Supreme Court in the case of Bank of Rajasthan [ 2024 (10) TMI 875 - SUPREME COURT ] and other decisions which are referred by us. Similar question had recently fell for the consideration of the Division Bench of which one of us (G. S. Kulkarni, J.) was a member, as pointed out on behalf of the petitioner in the case of HDFC [ 2024 (11) TMI 1386 - BOMBAY HIGH COURT ] wherein on question of law nos. 1 and 2 which were recorded in paragraph 2 of the order of the Division Bench, the Court answered the questions in the affirmative in favour of the assessee and against the revenue, when it was held that the Income-tax Appellate Tribunal had erred in holding that the appellant therein (HDFC) was not entitled to a deduction in respect of the broken period interest paid by it. Thus the issue on the entitlement of the petitioner to the deduction of the broken period interest is no more res integra. On this count, the petition needs to succeed. We are of the clear opinion that there was no basis in law whatsoever for respondent no. 1 to initiate the impugned proceedings against the petitioner and which are in the teeth of the principles of law as laid down by this Court and as confirmed by the Supreme Court as also reaffirmed by the Supreme Court in the recent decision in the case of Bank of Rajasthan [ 2024 (10) TMI 875 - SUPREME COURT ].

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• 2024 (12) TMI 1343
  Addition of expenses claimed towards the purchase of paddy - burden of proof - appellant herein had not discharged the burden by adducing evidence with regard to the actual incurring of the stated expenses while purchasing paddy from unregistered farmers - HELD THAT:- As rightly noticed by the First Appellate Authority, it is not in dispute that the assessing authority did not verify the books of accounts including the Stock Register, Ledger, Cash Purchase Register, etc., to see whether the allegation regarding bogus purchases of raw material (paddy) was justified or not. In the absence of such verification, we are of the view that there was no justification for proceeding on the assumption that there was no purchase of paddy from unregistered farmers, and for making additions to the income declared by the assessee by disallowing the expenses claimed u/s 37 (1). In our view, the findings to the contrary of the Appellate Tribunal cannot be legally sustained and it is only the order of the First Appellate Authority that confines the disallowance that can be legally sustained - impugned order of the Appellate Tribunal setaside, restoring the order of the First Appellate Authority - Decided in favour of the assessee.

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• 2024 (12) TMI 1342
  Bogus purchases - GST authorities found the seller (from whom the purchases were made) was a bogus entity issuing accommodation bills to generate fake Input Tax Credit - CIT(A) deleted addition - HELD THAT:- The powers of the CIT(A) are in the nature of reassessment and once an assessment order is brought before CIT(A), his power is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance but his powers range over the whole assessment to correct the AO not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the AO and determined in the course of assessment. Under sec 250(4)) of the Income-tax Act, the CIT-A is competent to make such further enquiry as he thinks fit or cause further enquiries to be made by the AO, under remand. He is further empowered to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment. If an income is the subject-matter of consideration by the AO and even though the AO might have come to the conclusion that that income is not subject to tax, still it would be open to the CIT-A to take different view and to bring that income to tax. In cases of Kapoorchand Srimal [ 1981 (8) TMI 2 - SUPREME COURT] and Jute Corporation of India Ltd. [ 1990 (9) TMI 6 - SUPREME COURT] likewise held that the appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In absence of any such restriction, the appellate authority is vested with all the powers of the assessing authority. Thus, we deem it appropriate to allow the appeal for statistical purposes, emphasizing the need for a thorough and compliant adjudication process. Appeal is allowed for statistical purposes.

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• 2024 (12) TMI 1341
  TP Adjustment - international transaction on outstanding due receivable beyond the credit period - Characterization of transaction of overdue receivable - contention of assessee that if there is no policy of charging interest from non-AE and therefore from AE such interest cannot be imputed. Separate international transaction - HELD THAT:- As at the point credit period ends the transaction of sales or services ends and in substances, the further credit allowed to the other party becomes transaction of providing finance, unless some other material is shown. There is no such material placed before us. Therefore, we uphold the finding of the learned lower authorities that the outstanding dues beyond an agreed credit period in the case of the assessee are separate international transaction, requires to be benchmarked separately and cannot be clubbed together with other transaction mentioned in para 11 B of form number 3CEB and therefore the learned that lower authorities have correctly benchmarked them separately. Period for which interest has been calculated is to be limited to the year under consideration as interest accrued in other years cannot be taxed in this year - Only interest the extent of the financial year have been made by the learned TPO. Looking at the last 4 entries of the computation, it is clear-cut that the addition had been made of Rs. 5.65 crores. The adjustment should have been restricted only up to 365 days. Therefore, there is a computational error in the addition made by the learned transfer pricing officer. Measures taken by the reserve bank of India for dealing with the Covid 19 pandemic - The financial year for which the relevant relaxation is made by the RBI starts from 1 April 2020. Here in impugned appeal financial year is 1-4-2019 to 31-3-2020. Therefore, for the financial year before us, the above relaxation by Reserve Bank of India does not apply. Therefore, the circular cited of the Reserve Bank Of India does not help the case of the assessee. Thus, we reject reliance on extended time period for this AY is not relevant at all. Even otherwise RBI circular has extended the time limit as per exchange control manual and may or may not have any impact on determination of arm s length price to be determined as per the Act, off Course considering special effects of COVID -19. Recharacterisation of the transaction - It is not related to the transfer pricing issues. Here the learned transfer pricing officer has also not recharacterised the transaction but has merely applied the law and benchmarked the arm s-length price of the international transaction of overdue receivable from associated enterprises. Commercial expediency in keeping the outstanding receivable - no facts are produced before the Ld. lower authorities or before us that there is any commercial expediency from the side of the assessee to keep the outstanding receivable from the associated enterprises beyond the due dates. This is also apparent from the fact that there are almost 216 entries listed by the learned TPO delay ranging from 61 to 548 days. Argument rejected. Setting off and netting of the outstanding receivable with outstanding payables - We fully agree with the learned authorized representative that if the sum is receivable from associated enterprises A and sum is also payable to the associated enterprises A , then the outstanding receivables should be net of first against the outstanding payable, provided there are no contrary agreements, facts and circumstances. It is for the assessee to show that the outstanding receivable is not received by the assessee beyond the credit period from associated enterprises for the reason that there is an outstanding payable to the same party. Such facts are required to be demonstrated, the learned TPO is directed to look into these facts, if placed before him. Instant adjustment was not proposed in show cause notice, no addition could have been made in the draft and final assessment order - The purpose of show cause notice is to make assessee aware about the likely step by the ld. AO and ld. TPO. Thus, assessee has been made aware about the issue in TP Assessment proceedings. If the outstanding dues are considered in margin of the assessee in working capital adjustment, it would have also given a better margin to the assessee compared to the comparable margins - We restore this issue back to the file of the learned transfer pricing officer/learned assessing officer with a direction to the assessee to show before the TPO / AO that if the working capital adjustment is made, if allowable in accordance with the law, the above adjustment of interest on overdue realization of trade receivable would not be required. MAT computation u/s 115JB - HELD THAT:- The book profit income has been taken by the learned AO at Rs. 4,664,431,180/ against Rs. 4,262,848,182/ shown by the assessee. We do not find any adjustment made to the book profit in the assessment order. Therefore, apparently there is an error which needs to be rectified. Therefore, the learned assessing officer is directed to compute the correct book profit u/s 115JB and consequent tax thereon. Accordingly ground number 7 of the appeal is allowed. Non-grant of advance tax, tax deduction at source, tax collection at source credits and foreign tax credit - We find that, if the above credit is not given to the assessee, the learned assessing officer is directed to grant the same after proper verification.

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• 2024 (12) TMI 1340
  Penalty u/s 271(1)(c) - assessee had wrongly claimed exemption u/s. 10(38) - HELD THAT:- Though the assessee had in her original return of income filed u/s. 139(1) raised a claim for exemption u/s. 10(38) on sale of shares of M/s Capital trade links, but she had thereafter, on her own voluntarily deposited the taxes corresponding to the aforesaid income on 14.02.2019 i.e. three years prior to issuance of notice u/s. 148 of the Act by the AO. We, thus, find substance in the claim of the Ld. AR that as the assessee had voluntarily paid tax on the income arising on sale of shares of M/s Capital trade links i.e. way back three years prior to initiation of proceedings u/s. 148 by the A.O, therefore, the same clearly establishes her bonafides, which, thus, clearly brings her explanation within the meaning of the concession provided in Explanation-1(B) of Section 271(1)(c) of the Act. Alternatively, we also find substance in the Ld. AR s contention that as the assessee in her return of income filed in compliance to notice u/s. 148 of the Act had included the income on sale of shares of M/s Capital trade links which, thereafter, had been accepted by the A.O vide his order u/ss. 147/144B as such, therefore, in absence of any amount having been added/disallowed while framing the said assessment, no penalty u/s. 271(1)(c) of the Act could have been imposed on her. Explanation 1 of Section 271(1)(c) pre-supposes an addition/disallowance made in the hands of the assessee. Apart from that, the machinery provision contemplated in Explanation 4 for computing the amount of penalty as per Section 271(1)(iii) of the Act, in absence of any addition/disallowance made in the course of assessment/reassessment proceedings is also rendered as unworkable. Our aforesaid view is fortified by the order of Renu Behl [ 2023 (12) TMI 1334 - ITAT RAIPUR ] wherein the Tribunal involving identical facts had vacated the penalty imposed by the A.O on the assessee. In Puspendra Surana [ 2013 (8) TMI 969 - RAJASTHAN HIGH COURT ] the Tribunal had held that as the assessee had declared the income from LTCG on sale of agricultural land in his revised return of income, which thereafter, was accepted by the A.O and there was no material available on record by which it could be inferred that there was deliberate concealment on the part of the assessee, thus, there was no justification in imposing penalty u/s. 271(1)(c) of the Act. Decided in favour of assessee.

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• 2024 (12) TMI 1339
  Disallowance of guarantee fees paid to Govt. of Gujarat - This guarantee fees paid by the assessee to Govt. of Gujarat in consideration of guarantee issued by it for repayment of unsecured loans - CIT(A) deleted the above addition following assessee s own case for the Assessment Year 2008-09 [ 2015 (6) TMI 1096 - ITAT AHMEDABAD ] by holding that the guarantee fees is directed to be allowed as revenue expenditure but directed the Ld AO to verify the above claim - HELD THAT:- Ground No. 1 raised by the Revenue is devoid of merits and the same is hereby dismissed. Since Ld CIT[A] directed the AO to verify the Certificate filed by the assessee during appellate proceedings whether the loans on which guarantee fee was paid were utilized for construction of plant or not, questioning this direction by the assessee in its Ground No.1 is hereby rejected and dismissed. Addition being 15% of year-end balance of capital grant - assessee submitted that this issue was remanded back to the file of the A.O. with specific direction by the Co-ordinate Bench of this Tribunal in Gujarat Energy Transmission Corporation Ltd. [ 2022 (8) TMI 1419 - ITAT AHMEDABAD] - HELD THAT:- Respectfully following the same, this issue is remitted back to the file of the Assessing Officer for verification of the proportionate amount of grant relating to different assets and upon applying the actual rate of depreciation relates to those assets and pass fresh order by giving proper opportunity of hearing to the assessee. Disallowance of prior period expenditure - This ground no. 3 raised by the Assessee is hereby setaside to the file of the Assessing Officer for de novo assessment and by giving proper opportunity to the assessee for being hearing. Disallowance of Additional Depreciation u/s. 32[1][iia] - generation of electricity which is covered under clause (i) of section 32(1) is excluded from availing additional depreciation - HELD THAT:- As relying on Kadodara Power Pvt. Ltd. [ 2019 (8) TMI 658 - GUJARAT HIGH COURT] we hold that the assessee is entitled for additional depreciation u/s. 32(1)(viia) of the Act and direct the A.O. to grant the same. Treatment of interest income and miscellaneous receipts as income from other sources as against the claim as business income - CIT(A) held that the miscellaneous receipts treated as income from business. However the interest income was treated as income from other sources . Considering the judgment of Odisha Power Generation Corporation Ltd. [ 2022 (3) TMI 539 - ORISSA HIGH COURT] we direct the Ld AO to consider the issue afresh and pass orders accordingly. Thus the Ground No. 5 raised by assessee is allowed for statistical purpose and Ground No. 2 raised by the Revenue is dismissed. Additions while computing book profit u/s. 115JB - Prior period Expenses - HELD THAT:- This issue is decided in favour of the assessee in the case of Gujarat Energy Transmission Corporation Ltd. [ 2022 (8) TMI 1419 - ITAT AHMEDABAD] which was followed in assessee s own case in [ 2023 (8) TMI 1597 - ITAT AHMEDABAD] relating to Asst. Years 2014-15 2012-13 wherein no adjustment on account of prior period expenses is to be made in the net profit of the company for arriving at the book profits u/s 115JB. Addition of capital grant - This issue is also decided in favour of the assessee in the case of Gujarat Energy Transmission Corporation Ltd. [ 2022 (8) TMI 1419 - ITAT AHMEDABAD] Addition being excess depreciation - Issue of excess depreciation is decided in favour of the assessee in the case of Kansara Popatlal Tribhuvan Metal Pvt. Ltd. [ 2022 (8) TMI 618 - ITAT AHMEDABAD] as held where for purpose of section 115J, assessee claimed depreciation at rates provided under Income-tax Rules, action of Assessing Officer in redrawing profit and loss account and adopting rates prescribed under Companies Act, was totally unauthorized - Decided in favour of assessee.

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• 2024 (12) TMI 1338
  Validity of Reopening of assessment u/s 147 - non-application of mind by the AO and the mechanical approval by the Principal Commissioner of Income Tax (Pr. CIT) - HELD THAT:- Undisputedly in this case there is non-application of mind by the AO in taking approval from the appropriate authority u/s 151 of the Act. Perusal of Form for recording the reasons for initiating proceedings u/s 148 and for obtaining approval of the Pr. CIT, Delhi-8, New Delhi suggests that the AO mentioned the provisions under which the assessment was reopened as 147(b) of the Act. As observed that the provisions of section 147(a)/147(b) have seized to be in the statute book from 1.4.1989. Therefore, mentioning all these incorrect and non-existent sections for obtaining approval for recording the reasons for initiating proceedings u/s 148 is a clear case of non-application of mind by the AO and also by the authorities providing satisfaction u/s 151 of the Act. Decided in favour of assessee.

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• 2024 (12) TMI 1337
  Income deemed to accrue or arise in India - taxability as per India-Singapore Tax Treaty - Addition on account of washing charging charges - difference between the buying price and selling price between both contracts is recorded as Washout Charges by the assessee - AO held that the assessee did not offer the consideration received for washout charges - HELD THAT:- Washout charges are in the nature of business transaction and therefore credit of washout charges will be business income of the assessee. We find support from the decision of Louis Defrus [ 2019 (11) TMI 95 - ITAT DELHI] wherein washout charges are held to be business expense in the hands of tax payer. The nature of transaction is nothing more than a business transaction and where it is credited, it will be business income and where it is debited, it will be revenue expense. As the said transactions are not speculative in nature, but hedging transactions entered to protect the price risk fluctuation, let us examine the result of the AO s contention that transactions being entered into by the assessee are in the nature of speculative activities u/s 43(5). We find that the income from the same would still be covered under business income as the proviso (a) of section 43(5) excludes hedging transaction from being speculative. Even if the contention of AO is accepted that the transaction is speculative income, the same will still be considered as part of business income governed by Article 7 read with Article 5 of the India-Singapore DTAA. Assessee having no Permanent Establishment (PE) in India, in terms of Article 5 of the India-Singapore tax treaty, the said washout receipts, being in nature of business income of the assessee, would still be not taxable in India. There are no business activities of the assessee, namely entering of contract, receipts of money etc. is performed in India and the fact that assessee does not have any PE in India to carry out any business activities, there is no source for the assessee in India resulting in any income - Decided in favour of assessee.

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• 2024 (12) TMI 1336
  Income deemed to accrue or arise in India - Royalty/Fee for Technical services ( FTS ) under Article 12 of the India-Singapore DTAA - receipts from data center related services and receipts from provision of advertisement space - Assessee does not have a presence in India or Permanent Establishment ( PE ) in India under Article 5 of the DTAA HELD THAT:- We find from the perusal of the Schedule 1 of the inter-company Service Agreement enumerating the list and description of services rendered, that the assessee has provided Criteo India with only advertising spaces purchased from publishers. We note that the assessee does not have any physical possession or any sort of control over the advertising space. It is the third-party publishers who actually control the advertising space and hence the assessee was not in a position to pass on the control/right to the advertisement space to Criteo India. In the instant case we find that Criteo India has used a standard facility which is provided for displaying advertisement on the website of third-party publishers. The assessee has merely provided the advertisement space bought from third-party publishers, which is also provided to other global customers of such publishers in the like manner. Equipment/installations are all owned by third-party publishers and the assessee/Criteo India does not have any role to play in either maintaining/involving into any managerial activities. Criteo India does not even have any economic/ possessory right with regard to the server of the third-party publishers and it is not at the disposal of the Assessee/ Criteo India. We also find that the right to modify/deal with the server in any manner, vest with the third-party publishers. The Services Agreement does not provide any right to use of any industrial, commercial, or scientific equipment or for imparting any information concerning technical, industrial, commercial, or scientific knowledge, experience or skill. In view of above, it is evident that the receipts for provision of advertisement space from Criteo India are not chargeable to tax in India as royalty under Article 12(3) of the India-Singapore DTAA. We accordingly direct the AO to delete the said addition. Accordingly, Ground No. 1.1 is allowed. Receipts on account of Business Support Services being treated as FTS - whether such receipts on Business support services are in the nature of FTS and whether the assessee has made available the technical knowledge, experience etc. under the DTAA? - HELD THAT:- In the instant case, we find that the receipts in question are for rendering the services categorized as Business support services which pertains to routine administrative services and that too, on a recurring basis year-on-year and thus, cannot have any enduring benefit for Criteo India as held by the AO. We find that the inter37 company agreement was effective since November 10, 2016 and the said support services are being provided to Criteo India year-on-year since the inception of the Agreement. We also find that travel related services was merely for supervisory activities and for very short duration. Such services, having a recurring nature, does not satisfy the make available clause. Mere incidental advantage to the recipient of services is not enough. The technical or consultancy services may be said to be made available only when the service recipient is enabled to apply the technology/ skill/ services in future without recourse to the service provider. A mere incidental advantage to the recipient of service is not enough. The test is the transfer of technology/ skill and not the incidental benefit to the recipient. Training/ recruitment and human resource support neither result in transfer of technology or knowledge or skill or know-how. The receipts on account of travelling, by no stretch of imagination, can be considered in the nature of managerial, technical or consultancy services or for any use or right to use of any technology or software or equipment. Employees of the assessee travelled to India on certain occasions for a very short duration in relation to supervisory activities only. In view of the above, the receipts in the hands of the assessee for providing Business support services, travelling related services and external consultants services to Criteo India are not in the nature of FTS as defined in Article 12(4) of the India-Singapore DTAA. We direct the AO to delete the said addition.

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• 2024 (12) TMI 1335
  Unverifiable purchases u/s. 69C - Addition @ 0.25% on cash sales - HELD THAT:- Admittedly, the assessee has explained the source of purchases of all the purchases are recorded in the books of accounts and has produced all the bills and vouchers, import bills, bill of entry, airline bills and custom documents etc. All purchases have been made through account payee cheque/RTGS. Assessee has recorded complete sales in the books of account and AO could not point out any defect in the books of account or even there is no finding in the Assessment Order about any deficiency in the books of account. AO has not at all invoked the provision of section 145 for rejection of books of account of the assessee. We are of the view that addition made by the AO is just based on assumptions and has ignored the facts of the case. Interesting point is that once the purchases are accepted as genuine and its sales cannot be taken as bogus until and unless books of account are rejected or found to be defective. One interesting fact is that even enforcement directorate has enquired into the issue and find no adverse circumstances or facts in this case against the assessee. Hence, we find no infirmity in the order of the CIT(A) the deleting of cash sales made by the AO u/s. 69C. Estimating the profit / commission on alleged cash sales @ 0.25% - CIT(A) has simply tried to balance the view expressed by him but there is no basis for such estimation because the assessee has already disclosed profit, which is part of the accounts of the assessee on cash sales recorded in the books of account. Hence, we delete this addition and allow assessee s appeal on this issue. As regards to the assessee s appeal, this issue of assessee s appeal is allowed and revenue s appeal is dismissed. Addition u/s 68 - HELD THAT:- We noticed that now the assessee for the first time before us filed bank statement of Pankaj Kapur from where this amount was advanced. Since, this document was produced before us for the first time, we admit this document and remand this issue back to the file of AO. AO will examine these cash credit of Sh. Pankaj Kapur in terms of section 68 of the Act and, thereafter, will decided this issue. This issue of assessee s appeal is set aside and allowed for statistical purposes.

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• 2024 (12) TMI 1334
  Addition u/s 68 r.w.s. 115BBE - addition of 900 US dollars and 2600 Singapore dollars being credits in the bank account of the assessee of an equivalent Indian currency of Rs. 1,79,639/- considering the credits in the bank accounts as unexplained credits - HELD THAT:-Question as to whether the passbook/bank statement constitute books of account so as to treat the credits in such passbook/bank statement as unexplained credit u/s 68 has been decided in the case of M/s Mayawati [ 2007 (11) TMI 328 - ITAT DELHI-A] wherein held that the cash credit appearing in assessee s passbook relevant to a particular previous year in a case where the assessee does not maintain books of account does not attract the provisions of section 68 of the Act. Following this decision in the case of Smt. Babbal Bhatia [ 2018 (6) TMI 1030 - ITAT DELHI] held that no addition u/s 68 of the Act based on the credits appearing in the passbook/bank statement when no books of account are maintained in the ordinary course of the business of the assessee. Addition u/s 68 of the Act in the case of the assessee is not sustainable - Decided in favour of assessee.

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• 2024 (12) TMI 1333
  Denial of deduction u/s 80IB(10) - assessee has not obtained the completion certificate from the Collector, Pune in respect of three projects, thus assessee has not completed the project before the specified date and certain flats in the projects were sold to the same buyers in violation of the provisions of section 80IB(10)(e) - HELD THAT:- If the competent authority gives the completion certificate / occupancy certificate on the basis of the applications made by the assessee before the specified date without any deviation, then the assessee in our opinion, is said to have fulfilled the conditions of section 80IB(10) in light of the various decisions relied on by the Ld. Counsel for the assessee - It has to be seen as to whether the assessee has made the applications to the competent authority before the specified date or not which in the instant case is 31.03.2013. In the instant case, admittedly, such applications made to the competent authority before the specified date were filed in the shape of additional evidences only and the same were not produced before the Assessing Officer during the course of assessment proceedings. Although it was stated before the Ld. CIT(A), however, there was no occasion on the part of the Ld. CIT(A) also to verify the same. We deem it proper to restore the issue to the file of the AO with a direction to call for information from the office of the Collector, Pune i.e. the competent authority to find out as to whether the assessee has applied for completion certificate / occupancy certificate before the specified date or not and if so, whether there is any variation in the application filed earlier and subsequently on 30.08.2014. AO may also find out the reasons for the delay in issue of completion certificate i.e. as to whether there was any lapse on the part of the assessee in fulfilling the conditions prescribed for making the application for occupancy certificate. AO shall also decide the prorata deduction and the violation of provisions of section 80IB(10)(e) of the Act afresh - Assessee ground allowed for statistical purposes.

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• 2024 (12) TMI 1332
  Assessment u/s 153A - Addition in respect of undisclosed sales - HELD THAT:- The incriminating materials found during search undisputedly revealed that there were unrecorded sales by the assessee and therefore once it is established that there are recorded sales, then only profit rate can be applied to assess the income embedded therein. In the present case the assessee suo-motto disclosed the profit on the said unrecorded sales in the return of income filed in compliance to section 153A of the Act. Therefore, respectfully following the ratios as laid down in the above decisions, we uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue. The appeal of the revenue is dismissed.

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• 2024 (12) TMI 1331
  TDS u/s 194H - Disallowance u/s. 40(a)(ia) - Failure of the assessee to deduct TDS on commission payments made to e-commerce platforms - HELD THAT:- Once the payment was made by the customer, it was received and credited to the account of the assessee. In the process, a small fee was deducted by the e-commerce platform, whose platform was used. Relationship between e-commerce platform and the assessee was not of an agency but that of two independent parties on principal to principal basis. \The amount retained by the e-commerce a fee charged by them for having rendered the e-commerce services and cannot be treated as a commission or brokerage paid in course of use of any services by a person acting on behalf of another for buying or selling of goods. The intention of the legislature is to include and treat commission or brokerage paid when a third person interacts between the seller and the buyer as an agent and thereby renders services in the course of buying and/or selling of goods. The requirement of an agent and principal relationship. This is the exact purport and the rationale behind the provision. The e-commerce platform in question is not concerned with buying or selling of goods. It is not bothered or concerned with the quality, price, nature, quantum, etc. of the goods bought/sold. The aforesaid principles and interpretations can apply to taxing statutes. In the present case, the said principle should be applied as ecommerce platform would necessarily have acted as per law and it is not the case of the revenue that the e-commerce platform had not paid taxes on their income. It is not a case of loss of revenue as such or a case where the recipient did not pay their taxes. Considering the additional evidence furnished by the assessee in compliance with section 201 of the Act, we allow the ground raised by the assessee.

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• 2024 (12) TMI 1330
  Power of CIT(A) for enhancement granted u/s 251(1) - Addition on account of personal withdrawals - HELD THAT:- The power of enhancement available with the learned CIT(A) is restricted to the subject matter of the assessment or the source of income which has been considered expressly or impliedly by the AO. In the present case, AO computed the total income of the assessee after making additions under section 68 of the Act on account of capital balance and disallowance of interest expenditure. Thus, the addition on account of personal withdrawals was neither the subject matter of assessment nor the source of income which was considered expressly or impliedly by the AO. Accordingly, we are of the considered view that the learned CIT(A), in the present case, has transgressed its power of enhancement granted under section 251(1) of the Act while making the addition on account of personal withdrawals, and therefore the impugned addition is void ab initio. Accordingly, on this short point, the addition on account of personal withdrawals made by the learned CIT(A) is deleted. As a result, the impugned order on this issue is set aside and grounds no.2-3 raised in assessee s appeal are allowed. Addition on account of drawings - We find that the amount shown as drawings in the ledger account for the financial year 2010-11 appears in Schedule A of the balance sheet of the year under consideration and thereby the capital account is reduced to that extent. Since the drawings in the books of the assessee for the year under consideration is nothing but the drawings of the financial year 2010-11, it appears that the same was reduced erroneously by the assessee from the capital account of this year and thus the direction of the learned CIT(A) to exclude the same, which resulted in the impugned addition, on the basis that same is not appropriately reflected is correct and we upheld the same. Accordingly, the impugned order on this issue is upheld and ground no.4 raised in assessee s appeal is dismissed. Deduction of interest expenditure - CIT(A) dismissed the ground raised by the assessee on this issue and upheld the disallowance made by the AO u/s 57(iii) - HELD THAT:- In the present case, it is undisputed that the assessee has claimed interest expenditure amounting against the income under the head income from other sources . We find that for similar reasons as noted in the foregoing paragraph, similar disallowance was made in the case of assessee s family member and while deleting the disallowance, the coordinate bench of the Tribunal in Pratima Hitesh Mehta [ 2023 (10) TMI 1474 - ITAT MUMBAI] held that the assessee is entitled to claim a deduction of interest expenditure u/s 57 of the Act since receipt of dividend is merely due to the shareholding of the assessee and the interest expenditure has nexus with the income under the head income from other sources including dividend income even though not direct. Accordingly, the AO is directed to allow the interest expenditure claimed by the assessee u/s 57. Calculation of interest u/s 234B - We find that a similar issue came up for consideration before the coordinate bench of the Tribunal in assessee s own case for the assessment years 2011-12, 2012-13 and 2013-14 [ 2017 (12) TMI 1668 - ITAT MUMBAI ] direct the AO to recompute the interest under section 234B of the Act in accordance with the directions therein.

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• 2024 (12) TMI 1329
  Notice u/s 148 as issued on a non-existent entity - whether curable defect u/s 292B - HELD THAT:- Hon ble Jurisdictional High Court in Uber India Systems Pvt. Ltd. [ 2024 (10) TMI 1001 - BOMBAY HIGH COURT] decided the writ petition, challenging the issuance of notice u/s 148A(b), order passed u/s 148A(d) and subsequent notice issued u/s 148, in favour of the taxpayer on the basis that there was neither a legal basis nor jurisdiction with the Revenue to issue such notices and order on non-existing entity. Accordingly, the Hon ble Jurisdictional High Court held such notices to be illegal, invalid and non-est. The present case, it is discernible from the record that the Revenue has not disputed the fact that the notice under section 148 of the Act was issued on a non-existing entity, even after the intimation by the assessee regarding the fact of the merger. Revenue has emphasized on the fact that such an error is a curable defect u/s 292B of the Act and since the assessment order has been passed in the correct name, therefore, the assessment has rightly been made in the present case. Decided in favour of assessee.

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• 2024 (12) TMI 1328
  Disallowance u/s 14A - Assessee had mixed pool funds and the available funds, which were more than the investments made in mutual funds - HELD THAT:- As no dispute regarding the fact that the Assessee had mixed pool funds and the available funds were more than investments made in the mutual funds and the investment made out of mixed pool funds with the presumption that it had been made out the tax funds available, by following the ratio laid down in South India Bank [ 2021 (9) TMI 566 - SUPREME COURT] and Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] we are of the opinion that the CIT(A) has committed error in sustaining the addition u/s 14A of the Act by incorrectly applying Rule 8D of the IT Rules - Decided in favour of assessee. Disallowance of interest u/s 36(1) (iii) - HELD THAT:- It is not in dispute that the claim of the Assessee have been accepted by the Department right from Assessment Year 2010-11 to 2012- 13, no disallowances have been made by the A.O. which can be corroborated by the Assessment Orders for Assessment Year 2010-11 to 2012-13 which were passed u/s 143(3) of the Act. By following the Rule of consistency as reiterated in the case of M/s Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] and M/s Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] and finding merit in the contention of the Ld. Assessee s Representative, disallowance made by the A.O. u/s 36(1) (iii) deleted. - Decided in favour of assessee. Disallowance under the head of repair and Maintenance - HELD THAT:- By respectfully following the order of the Tribunal for Assessment Year 2012-13 in Assessee s own case [ 2019 (10) TMI 1600 - ITAT DELHI] and considering the nature of the business of the Assessee which involve preservation and maintenance of already existing assets and also considering the fact that such expenditures have been allowed for Assessment Year 2012-13, 2001-02 and 1997-98, we find no reason to sustain the disallowance made by the Ld. CIT(A). - Decided in favour of assessee.

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• 2024 (12) TMI 1327
  Addition u/s 68 - unexplained cash credit - HELD THAT:- Cash deposit in the bank account represents legitimate fee collections from students, supported by detailed documentation submitted by the assessee. The addition made u/s 68 is, therefore, unsustainable. The reliance placed by CIT(A) on judicial precedents is misplaced, as the facts and circumstances of the present case are distinguishable, and the assessee has satisfactorily discharged its onus of proving the source of the cash deposits. Accordingly, the addition made u/s 68 of the Act is directed to be deleted, and the ground of appeal of the assessee is allowed. Application of Section 115BBE and initiation of penalty u/s 271AAC are consequential in nature. Since the addition u/s 68 has been deleted, these grounds are also allowed in favour of the assessee.

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• 2024 (12) TMI 1326
  Bogus unsecured loans - HELD THAT:- The monies have been received in regular banking channels and duly reflected in the balance sheet of the lender company. The lender company had also furnished confirmation before the AO directly in response to notice u/s 133(6) along with other requisite details that were called for by the AO. Even the statement of Director of lender company appeared before the AO and a statement on oath was recorded from him wherein he had duly confirmed all the loan transactions with the assessee company. Hence the genuineness of transactions could not be doubted at all. The notice issued u/s 133(6) of the Act behind the back of the assessee stood directly served on the lender company and the same was also duly responded by the lender company directly before the ld AO by furnishing the requisite details. Hence the identity of the lender company cannot be doubted at all. Assessee was also subjected to search u/s 132 of the Act and nothing incriminating was found during the course of search to support the allegations of the ld AO. Hence nothing was found to substantiate the allegations of the AO to allege that the unsecured loan received by the assessee was in the nature of accommodation entry from the lender company. It is not in dispute that the assessee company is having running account with the lender company which is evident from the ledger account for the period 1.4.2015 to 31.3.2021 containing loans received in various years (which stood accepted by the revenue u/s 143(3) of the Act except AY 2017-18 as detailed supra) and loans being repaid in various years by the assessee company. Source of source of funds of the lender company is also proved by the assessee in the instant case. Hence there is absolutely no case for the revenue to justify an addition u/s 68 - Decided in favour of assessee.

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• 2024 (12) TMI 1325
  Addition u/s 68 - bogus LTCG - Addition made to the income of the assessee of share capital and premium received during the year finding the same to be mere accommodation entries - CIT(A) deleted addition - HELD THAT:- AO treated transaction as bogus accommodation entry based on information available with him that these entities were bogus paper companies managed and controlled by Shri Shirish Chandrakant Shah. Information was based on evidences gathered during search and survey action conducted on Shirish Shah which revealed him to be involved in providing accommodation entries through several dummy companies. CIT(A), however, deleted the addition made finding the evidences and statements relied upon by the AO for treating the share capital and premium received by the assessee during the year as bogus accommodation entries to be not sufficient or having no evidentiary value. CIT(A) has picked up each piece of evidence to discard it as having no evidentiary value when the AO had considered all of them together to make a case against the assessee. The approach of the CIT(A) in singularly dismissing each piece of evidence, we find, is totally incorrect, and we are of the view that the matter needs to be reconsidered by the CIT(A) after giving a holistic consideration to all the evidences and statements relied upon by the Assessing Officer for holding the share application and share premium received by the assessee during the year to be bogus accommodation entry. Decided in favour of revenue for statistical purposes. Assessment u/s 153C v/s 147 - HELD THAT:- There is no merit on facts itself, in the ground raised by the assessee before us in the impugned CO that the assessment in the present case ought to have been framed in terms provisions of section 153C of the Act as opposed to having been framed u/s 147 of the Act, thus, rendering it invalid. Assessee, has been unable to demonstrate how the provisions of section 153C were applicable in the facts of the case. As per the admission of Assessee himself before us, no material pertaining to the assessee having been found during the search on Shri Shrish C Shah, there was no occasion, we hold, for assessment to be framed in terms of section 153C of the Act.

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• Customs

• 2024 (12) TMI 1324
  Cancellation of bail application - smuggling of high value goods such as precious metal, restricted items or prohibited items or goods notified under Section 123 of the Customs Act, 1962 - It is contended that the Court below misconstrued the circular No.13/2022 dated 16.08.2022 and enlarged the respondents on bail - HELD THAT:- This fact is not denied that complaint has yet not been filed against the respondents for prosecuting them under Section 135 (2) (a) (b) of the Customs Act. It is not desirable to express anything on the merits of the case. The respondents have not breached any conditions incorporated in the bail order, the maximum punishment awarded under the Customs Act 7 years. Therefore, considering the above aspects, this Court is not inclined to entertain the application filed by the Union of India. These instant bail cancellation applications are hereby dismissed.

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• 2024 (12) TMI 1323
  Authority and procedure for confiscation and re-export under the Customs Act - Imposition of redemption fine and penalty - compliance with standards for Cocoa Beans under the FSS Act or not - goods were unsafe/substandard or not - HELD THAT:- The goods Fermented and dried processed Sumatra Cocoa Beans (dead beans) were imported vide 4(four) bills of entry and on test by the FSSAI and thereafter by Indian Bureau of Standards as per the directions of the Hon ble High Court of Kerala the analysis report states that, the sample cocoa beans does not conforms the requirement as laid down in IS 8865:2003 for the above listed parameters . Consequently, the goods were recalled and at the request of the appellant, the Adjudicating Authority has allowed re-export of the goods covered by the 4(four) Bills of Entry on payment of redemption fine of Rs. 15 Lakhs and penalty of Rs. 5 Lakhs. The appellant contended that the goods were tested by BIS after a lapse of 11(eleven) months, therefore the goods being agriculture produce would certainly deteriorate with passage of time, therefore the test results after 11(eleven) months would be different, if they are tested immediately after import. In this case the imports were made in the month of May 2014 and September 2014, therefore the contention of the appellant in that the goods where tested after 11(eleven) is not correct, since 2(two) consignments have come in the month of September 2014. Further, it is found that on import and on examination and testing by FASSI they have found that the goods are not as per the approved standards. The appellant has also contended that they obtained the import permit for import of the impugned goods as per the requirement of Plants, Fruits and Seeds (Regulation of Import into India) Order, 1989, Cocoa Beans being agricultural seed must be imported with a valid permit under the Regulation 3 (1), since they have the import permit from the concerned authority their import is valid and there is no violation of the import policy. The appellant contended that according to foreign supplier s test report, the cocoa beans have fully complied with BIS standards prescribed under IS 8865:2003. On recall of the goods by the Authorised Officer and after the issue of the show cause notice, the Adjudicating Authority as per the request of the appellant permitted re-export of the impugned goods on payment of redemption fine and penalty. The appellant has filed this appeal for waiver of fine and penalty imposed by the Adjudicating Authority, while allowing the re-export the impugned goods - in the facts and circumstances of the case, the redemption fine and penalty imposed by the Adjudicating Authority could be considered for reduction - redemption fine is reduced to Rs. 5,00,000/- and penalty to Rs. 2,00,000/- - appeal allowed.

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• 2024 (12) TMI 1322
  Imposition of redemption fine and penalty on re-export of goods - perishable goods or not - violation of import policies - HELD THAT:- The Larger Bench relied upon by the Revenue in the case of Hemant Bhai R. Patel Vs Commissioner of Customs, Ahmedabad [ 2003 (2) TMI 87 - CEGAT, NEW DELHI ] observed that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods . Thus, the Bench was only answering the question whether redemption fine and penalty can be imposed while ordering for re-export of goods. In the case of Commissioner of Customs Vs Elephanta Oil and Inds. [ 2003 (1) TMI 108 - SUPREME COURT ], the Hon ble Supreme Court observed that I n this view of the matter, it is apparent that respondent knowing fully well the import policy imported prohibited goods i.e. import of canalised item namely beef tallow and, therefore, the Collector was fully justified in imposing the penalty under Section 112 of the Customs Act. In the present case, the products imported are perishable and have to meet the standards specified by the Animal Quarantine Authority. The order of the original authority clearly held that the Animal Quarantine authority vide letter dated 05.01.2023 on testing the consignment was found to be positive for OIE pathogen, hence, could not be released. It is a fact that at the time of import, the appellant had produced Veterinary Health Certificate from the country of import, which stated that the product is free from all relevant OIE listed pathogens for fin fishes - The Board Circular No.100/2003-Cus dated 28.11.2003 (reproduced below) clearly states that depending upon the facts and circumstances of the case, the Commissioner has the discretion to impose redemption fine and penalty, thus, implying that it is not necessary that in all cases redemption fine and penalties needs to be imposed. Conclusion - In cases where goods are allowed to be re-exported due to testing failures or other reasons beyond the importer s control, the imposition of redemption fine and penalty may not be justified. The impugned order is set aside - Consequently, the Appeal is allowed.

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• 2024 (12) TMI 1321
  Refund of SAD under N/N. 102/2007 dated 14.09.2007 against Bill of Entry No. 2935961 dated 10.03.2011 - rejection on the ground that no endorsement on the sales invoices by affixing seal or stamp has been made indicating that CENVAT credit has not been availed and also the invoices did not reflect in the VAT Returns filed and, also they were not attested by the Chartered Accountant or receipt of the same have not been acknowledged by the Tax Department. Denial of refund on the ground that no endorsement on the sales invoices by affixing seal or stamp has been made indicating that CENVAT credit has not been availed - HELD THAT:- The Larger Bench of the Tribunal in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] had held that appellant is entitled to SAD refund even if no endorsements are made on the commercial invoices. Whether refund of SAD is admissible under Notification No.102-/2007-Cus. dated 14.9.2007 when VAT was exempted on imported goods? - HELD THAT:- The issue is squarely covered by the decision rendered in appellant s own case on similar set of facts by the Chennai Bench of this Tribunal in M/S. HONDA SIEL PRODUCTS LTD. VERSUS CC, CHENNAI-IV [ 2018 (2) TMI 1135 - CESTAT CHENNAI] referring to their earlier cases in M/S. KUBOTA AGRICULTURALL MACHINERY INDIA PVT. LTD. AND M/S. ACER INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI-IV [ 2017 (6) TMI 565 - CESTAT CHENNAI] and M/S GAZAL OVERSEAS, M/S MAYANK ENTERPRISES, M/S ANAND ASSOCIATES VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2015 (12) TMI 427 - CESTAT NEW DELHI] where it was held that what is required in terms of the said notification is payment of appropriate sales tax/VAT regardless of the rate thereof. It logically follows that if the appropriate rate of sales tax/VAT was NIL then the appropriate sales tax/VAT paid will also be NIL. Conclusion - The appellants are entitled to SAD refund and the refund cannot be denied. Appeal allowed.

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• 2024 (12) TMI 1320
  100% EOU - Eligibility to claim the benefit of Notification No. 52/2003-Cus dated 31.03.2003 - reimport of goods being food items - time limit of three years under S.No.14 of the said Notification No. 52/2003-Cus dated 31.03.2003 cannot be extended to the impugned reimported goods - goods were reimported beyond one year from the date of original exportation - HELD THAT:- On a plain reading of the S. No. 14 of the Notification No.52/2003-Cus dated 31.03.2003 the meaning of Repair and Reconditioning is extensive and inclusive, the said term would include reprocessing or re-making or restoring or reusable etc. On a plain reading of clause (i) of S.No. 14 it is unambiguosly clear that any goods other than the goods specified in Annexure-VII to the Notification are permitted to be re-imported within 3(three) years from the date of exportation for Repair or Reconditioning . The finding given by the Adjudication authority limiting such exemption to machinery and equipments, spare parts accessories, etc., is not tenable. As far as food products are re-imported, and if they are subjected to reprocessing, clause (i) of S.No. 14 to Notification No. 52/2003-Cus dated 31.03.2003 will apply, if the goods are not covered in Annexure-VII, even as per the communication relied on by the appellant dated 25.01.2021 and the endorsement of the respondent shows that at the time of re-import, the appellant was permitted to clear the goods by executing a bond with an undertaking to re-export the goods within 1(one) year and it was allowed by proper officer in accordance with law. Moreover, at the time of re-import, the appellant had furnished the details of export and there is no suppression of facts by the appellant. The goods were also exported after reprocessing within the stipulated period. Facts being so there is no reason to justify the demand of duty from the appellant and is not tenable. Conclusion - The proceedings being barred by time limitation, the demand of duty cannot be sustained. Appeal allowed.

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• 2024 (12) TMI 1319
  Classification of imported spectrometers - to be classified under Customs Tariff Heading (CTH) under 90273010 or under Customs Tariff Heading (CTH) 90221900? - benefit of exemption N/N. 24/2005 dated 01.03.20005 - Time limitation. Time limitation - suppression of facts or not - HELD THAT:- There is no allegation of suppression of facts in the impugned orders. Appellant had made declaration as per the invoice/details provided by overseas supplier and there is no allegation of any fraud, collusion or willful misstatement or suppression of facts to invoke the extended period of limitation. Thus, the demand made against the goods imported against two Bills of Entries Nos. 684781 dated 29.02.2008 and 748868 dated 09.05.2008 by issuing a Show Cause Notice after 3(three) years and 9(nine) months is barred by limitation and impugned orders are unsustainable. Further, the issue of classification of the impugned imported goods is not decided as the issue considered on limitation, and it is found that the impugned order is unsustainable on limitation. Conclusion - The demand is barred by time limitation. The demand for differential duty unsustainable. The classification issue was not substantively addressed due to this finding.

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• 2024 (12) TMI 1318
  Revocation of the Customs Broker License - forfeiture of security deposit - Levy of penalty - attempt to export Red Sanders, illegally - failure to exercise due diligence in verifying KYC of the exporter and the correctness of the goods to be exported has required under regulation 10(e) and 10(n) of CBLR, 2018. Violation of Regulation 10 (e) of CBLR 2018 - HELD THAT:- It is an admitted fact that the exporter had produced the KYC documents, and the appellant verified the documents, online. Thus, the allegation regarding violation of Regulation 10 (e) of CBLR 2018 is unsustainable. Violation of Regulation 10 (n) of CBLR 2018 - HELD THAT:- There was an act of negligence on the part of appellant to accept the documents through the representative of the exporters without considering the authorization of such representative. Since the appellant verified the documents through online and filed the shipping bill in good faith, it cannot be construed that they have actively involved themselves in the illegal attempt to export prohibited goods. Conclusion - The revocation of license and forfeiture of the security deposit set aside as the allegation regarding violation of Regulation 10 (e) of CBLR 2018 is unsustainable. However, considering the violation of Regulation 10 (n) of CBLR 2018, it is found that the penalty of Rs.50,000/- imposed on the Appellant under CBLR, 2018 is reasonable and tenable. The impugned order is modified - Appeal allowed in part.

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• Corporate Laws

• 2024 (12) TMI 1317
  Entitlement to 1/3rd of all the family assets and properties including business, assets and property - Challenge to an order whereby, while deciding an application of the defendant/respondent no. 25 under Order VII Rule 11 of the Code of Civil Procedure, the learned Trial Judge treated the same to be one under Order VII Rule 10 of the Code and directed return of the plaint to be presented before the appropriate forum - Principles of res judicata - Partial rejection/return of plaint - Jurisdiction of the NCLT - Concept of quasi-partnership - Applicability of the Benami Transactions Act. Principles of res judicata - HELD THAT:- It is well-settled that the principle of res judicata operates at different stages of the same suit. Since both the applications have been filed under Order VII Rule 11 of the Code, no distinction can be drawn between the powers of the court or the competence of the court to decide the issues involved, which were similar in the present case as that on the earlier occasion, when a similar prayer was rejected by the order dated July 15, 2017. The said order has attained finality, having not been assailed successfully. Hence, the present application of respondent no. 25 is barred by the principle of res judicata. Partial rejection/return of plaint - HELD THAT:- It is found from the reliefs sought in the plaint that the argument as to the NCLT having jurisdiction applies only to certain consequential reliefs sought in the suit in respect of alleged mismanagement of the funds of the defendant-Companies. Even if the said reliefs are held to be barred at the final hearing of the suit, the primary relief of declaration and partition cannot be held to fall within the domain of the NCLT s jurisdiction. As held in Ammonia Supplies [ 1998 (9) TMI 427 - SUPREME COURT] and Sangramsinh P. Gaekwad [ 2005 (1) TMI 409 - SUPREME COURT] , disputed questions which are pure questions of title cannot be adjudicated under the Companies Act. As held in Dwarka Prasad Agarwal (D) by LRS. [ 2003 (7) TMI 481 - SUPREME COURT] , the jurisdiction of the Civil Court is not completely ousted by the Companies Act, 1956. Importantly, the reliefs pertaining to the management of the affairs of the Companies are only consequential to the primary reliefs of declaration of the shares of the parties in respect of the subject-matter of the suit, flowing from the claim that those can be traced back to the joint family nucleus, and partition of such joint assets. The said primary reliefs cannot be granted by the NCLT but comes squarely within the purview of the Civil Court. Even as per the judgments cited by the respondents, if the disputes pertain to questions of title and squarely fall within the domain of the Civil Court, the exclusion of the jurisdiction of the Civil Court under Section 9 of the Code of Civil Procedure is not readily inferred. Thus, if at all, the plaint would have to be rejected/returned partially. Such split being not permissible in law, the impugned order returning the plaint as a whole is bad on such count as well. Jurisdiction of the NCLT - HELD THAT:- The reliefs do not confine themselves to mismanagement of the affairs of the Company standing on an independent footing. The plaintiffs claim over the entire subject-matter of the suit, including in the assets of the Company and the shares of the Companies, apart from certain other immovable properties which do not belong to the Companies. Such claim of title by inheritance to the shareholding and other assets is entirely beyond the jurisdiction of the NCLT to adjudicate upon under Sections 241 and 242 of the 2013 Act - The bar in Section 430 of the 2013 Act is only applicable in respect of reliefs which come within the exclusive jurisdiction of the NCLT and cannot be stretched beyond the same. Reliefs which can be granted exclusively by the Civil Court, thus, cannot be covered by Section 430 of the 2013 Act. Hence, the NCLT does not have jurisdiction to grant the primary reliefs claimed in the suit. Concept of quasi-partnership - HELD THAT:- The cross-holdings in the shares of the different Companies as pleaded in the plaint indicate pervasive control over the Companies by the descendants and family-members of Late Sukhdeo Prasad. The Directorship in most of the Companies is substantially held between the family-members and the plaint case is that the Companies were formed from the joint funds of the family. The cross-shareholdings averred in the plaint clearly show that control over all the assets of the defendants-Companies vests in the joint family. Hence, the concept of quasi-partnership can definitely by borrowed in the backdrop of the plaint case. It is to be noted that the decisions in Ammonia Supplies [ 1998 (9) TMI 427 - SUPREME COURT] and Shashi Prakash Khemka (Dead) by LRS [ 2019 (2) TMI 971 - SUPREME COURT] highlight the fact that the NCLT has jurisdiction only in cases covered by the Companies Act, 2013. In the said judgment, the Supreme Court also noted that Section 430 of the 2013 Act bars the jurisdiction of the Civil Courts only in matters in respect of which exclusive power has been conferred on the NCLT and not otherwise. Unless the remedy of a Civil Suit is completely barred, Section 430 is not attracted at all. Thus, in the present case, the primary reliefs sought are declaration of title and partition. In view of the cross-shareholdings and pervasive control over the defendants-Companies by the joint family-members, it is opined that the concept of quasi-partnership can be applied to the present case in view of the plaint averments. Applicability of the Benami Transactions Act - HELD THAT:- Section 2 (9) (A) (b) of the Benami Act, in sub-clauses (i) and (iv) thereof, incorporates certain exceptions to the bar of benami. Sub-clause (i) contemplates, as one of such exceptions, a scenario when the property is held by a Karta or a member of a Hindu Undivided Family (HUF), if the property is held for his benefit or for the benefit of the other members in the family and the consideration for such property has been provided or paid out of the known sources of the HUF. In the present case, the said exception is very much applicable at a glance, since the entire title to the suit properties and the shares of the parties in the suit properties are claimed on the premise of the joint family nucleus which allegedly forms the basis of acquisition of the properties - the bar under the Benami Act is, to say the least, an arguable issue and required to be decided upon adduction of detailed evidence on facts. Hence, no occasion arises at this premature stage for the court to return the plaint or reject the plaint on the ground of benami. Conclusion - The learned Trial Judge committed a patent error of law and fact in entertaining and deciding the application under Order VII Rule 11 of the Code at the behest of the respondent no. 25 and ultimately moulding the relief to return the plaint to be presented before the appropriate forum - Appeal allowed.

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• Insolvency & Bankruptcy

• 2024 (12) TMI 1316
  Challenge Process conducted by the Resolution Professional - Negotiation Process initiated by the CoC/Resolution Professional after the Challenge Process - eligibility to submit a Resolution Plan as per Clause 3 of the Invitation for Expression of interest and the net worth and the turnover of the promoter - material irregularities committed by the Resolution Professional within the meaning of Section 61(3)(ii) of the IBC. Whether the Challenge Process conducted by the Resolution Professional on 27.10.2023 was not in accordance with the CIRP Regulations, 2016 as well as Process Note dated 12.10.2023? - HELD THAT:- After receipt of the Resolution Plans, the CoC decided to hold a Challenge Process. The Resolution Professional issued a Challenge Process Document on 12.10.2023 containing Rules of the Challenge Process. Resolution Professional also asked by email dated 12.10.2023 to the Resolution Applicants asking them to submit undertaking before commencement of the Challenge Process. As per Annexure 1, the details pertain to financial bid in Challenge Process, base price, increment and other relevant clauses were mentioned. Clause 5(h) provided that value submitted by highest bidder of each round will be disclosed at the end of each round during the meeting to all the participating Resolution Applicants. There are no error in the Challenge Process insofar as consortium was exited after 2nd round. In the 3rd round, SRA has given a bid of Rs.251 Crores which was with increment of Rs.10 Crores to its earlier bid which was Rs.241 Crores. In the 3rd round, highest bid was Rs.251 Crores and there are no other Resolution Applicants. The Challenge Process was rightly closed - the Challenge Process was conducted by the Resolution Professional in accordance with Process Note. Counsel for the Appellant has also contended that the Challenge Process adopted by the Resolution Professional is in violation of Regulation 39(1A) of the CIRP Regulations - there are no violation of Regulation 39(1A) of the CIRP Regulations in the Challenge Process conducted by the Resolution Professional. Whether Negotiation Process initiated by the CoC/Resolution Professional after the Challenge Process was in accordance with the CIRP Regulations and RFRP/ Process Note? - HELD THAT:- The Consortium as well as SRA gave their enhanced financial offers by submitting a plan on 04.11.2023. The SRA has given proposal for Rs.261 Crores and Consortium has given proposal for Rs.248 Crores, thus, both the SRA and the Consortium have increased their last financial proposal which was given in the challenge process. Creative also gave proposal of Rs.240 Crores although did not participate in the Challenge Process. In the 12th CoC meeting held on 06.11.2023, the revised proposals received from the Resolution Applicants were opened. One of the CoC members even asked the Consortium if they are satisfied with the Challenge Process and further negotiations by the CoC. In the minutes of 12th CoC meeting, representative of the Consortium stated that they are satisfied with the negotiation process which is recorded in the minutes. Resolution Professional has filed the minutes of 12th CoC meeting. The Consortium participated in the negotiation process and also gave increased bid. Negotiation process was conducted by the CoC for the value maximisation as is permitted by the RFRP - there are no error in the negotiation process conducted by the Resolution Professional under the decision of the CoC. From the above discussions, it is opined that there is no error in the Challenge Process conducted by the Resolution Professional on 27.10.2023 as well as negotiation process which was undertaken by the CoC after challenge process. Whether the SRA was ineligible to submit a Resolution Plan as per Clause 3 of the Invitation for Expression of interest and the net worth and the turnover of the promoter Mr. Sahil Mangla could not be included for purpose of net worth of a group it being not a entity within the meaning of Clause 3 of Invitation for Expression of Interest? - HELD THAT:- It is true that when no objection was raised to inclusion of Resolution Applicants in the provisional list and the final list, the Resolution Applicants are to be treated eligible to participate in the process and in the process, no objection can be taken regarding eligibility. However, when the Resolution Plan came for approval before the Adjudicating Authority, in a case where it is found that Resolution Applicant is not eligible and does not fulfil any requirement of eligibility, the Adjudicating Authority in no manner is deprived from considering the said question regarding eligibility. The objection regarding eligibility of Resolution Applicant, thus, can very well be considered by the Adjudicating Authority while considering the approval of the Resolution Plan - regarding eligibility of the Resolution Applicant, the same can very well be considered and examined by the Adjudicating Authority when the application to approve the Resolution Plan comes for consideration. The CoC which consists of financial institutions is well versed with the financials of all Resolution Applicants. The CoC under whose direction the Resolution Professional has issued Invitation for Expression of Interest is well aware of the clauses and eligibility provided. As noted above, the Resolution Plan has placed before the CoC, while computing the net worth and turnover of the SRA, net worth and turnover of the promoter has been included. The definition of entity as occurring in Note 5 group also includes an individual - the SRA was fully eligible to submit Resolution Plan it having complied with the eligibility as prescribed in Clause 3. The SRA was eligible to submit a Resolution Plan as per Clause 3 of Invitation for Expression of Interest and the net worth and turnover of the promoter Mr. Sahil Mangla could be included for purposes of net worth of a group it being entity within the meaning of Clause 3 of Invitation for Expression of Interest. Whether there are any material irregularities committed by the Resolution Professional within the meaning of Section 61(3)(ii) of the IBC so as to interfere with the order of the Adjudicating Authority approving the Resolution Plan dated 06.05.2024? - HELD THAT:- It is already found that the challenge mechanism as well as negotiation conducted by the Resolution Professional is in accordance with the CIRP Regulations and Process Note. In evaluation of eligibility of the SRA also there is no irregularity committed by the Resolution Professional. There are no tenable ground raised within the meaning of Section 61(3)(ii) of the IBC, to interfere with the order approving the Resolution Plan. Conclusion - The processes and decisions made during the CIRP upheld, emphasizing adherence to regulations and the commercial judgment of the CoC - there are no ground to interfere in the impugned order - appeal dismissed.

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• 2024 (12) TMI 1315
  Admission of Application u/s 7 of the Insolvency and Bankruptcy Code, 2016 - non-fulfillment of the threshold requirement of 100 allottees - Existence of debt and default on the part of the Corporate Debtors in delivering the units within 36 months with grace period of 12 months or not - Existence of privity of contract between the land owning Company and the allottees or not. Non-fulfillment of the threshold requirement of 100 allottees - HELD THAT:- The effect and consequence of the order, rejecting the Application to initiate criminal proceedings against the Financial Creditors in a class, cannot be bypassed by the Appellant(s) by filing First Information Report or complaints against Financial Creditors. Any Status Report submitted in such criminal proceedings can have no bearing on proceedings, which was taken by Financial Creditors in a class under Section 7. Reliance on Status Report submitted by Appellant(s) in a criminal proceeding can have no bearing while deciding Section 7 Application. The said Status Report is not an evidence on which it can be pronounced that threshold of 100 allottees was not complete in filing of Section 7 Application. Thus, the submission raised by the Appellant(s) that threshold of 100 is not complete has no legs to stand and has to be rejected. Existence of debt and default on the part of the Corporate Debtors in delivering the units within 36 months with grace period of 12 months or not - HELD THAT:- The unit holders have been waiting for their units for last more than a decade and the amount, was paid in the year 2012 by the allottees, the Appellant cannot be absolved by permitting them to deposit the amount with meagre interest, which was received in the year 2012. The findings recorded by the Adjudicating Authority regarding debt and default and Application filed by the Corporate Debtors itself being IA Nos. 293 and 2497 of 2024 proves beyond doubt that debt and default is admitted on the part of the Corporate Debtor. Civil Suit has been filed before the District Court Gautam Budh Nagar in the year 2017 and the Writ Petition No.1553/2019 has been filed before the Allahabad high Court in the year 2019. Other Writ Petitions filed by Sammiti were in the year 2019 and 2020. The Project was launched in the year 2012, in which year the amounts were collected from the allottees. Litigation which commenced in the year 2019 and 2020, cannot be a ground to absolve the Corporate Debtor from its responsibility and obligation to complete the Project within the time as contemplated in the Builder Buyers Agreement with the allottees. The fact that litigations are pending with regard to two of the Khasras, which is also included in the Project land, cannot be a ground to absolve the Corporate Debtor from its obligation, nor that can be a reason for not completing the Project - thus, on the ground that litigations filed by the Corporate Debtor for resolution of the issue with respect to title of land are pending, cannot be a ground to reject Section 7 Application, which was filed by the Financial Creditors in a class for initiating CIRP against the Corporate Debtor. Existence of privity of contract between the land owning Company and the allottees or not - HELD THAT:- All the three Corporate Debtors had joined hands to develop the Project. The Corporate Debtors being closely connected with the construction and implementation of the Project, it is not open for the land owning Company to say that there is no financial debt. There are no substance in submission of the learned Counsel for the Appellant that there being no privity of contract between the land owning Company and the allottees, there is no liability on the land owning Company towards the Project - This Tribunal in Gp. Capt Atul Jain (Retd.) vs. Tripathi Hospital Pvt. Ltd. Ors. [ 2023 (7) TMI 1242 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] also came to the conclusion that there was no evidence of any direct transaction to have taken place between the Appellant and the Corporate Debtor and the insolvency resolution can be triggered where there is a financial debt owed to a person. It was held that Appellant was not able to prove that he is a Financial Creditors. This Tribunal affirmed the judgment of the Adjudicating Authority rejecting Section 7 Application. The above judgment does not in any manner help the Appellant in the facts of the present case. Conclusion - The present is a case of clear default of Appellant in not completing the Project and handing over the units within the time - The challenge in the Appeal is order of the Adjudicating Authority passed in Section 7 Application, which was initiated by allottees of the Corporate Debtors, there are no sufficient ground to interfere with the order passed by Adjudicating Authority under Section 7. It is not for this Tribunal to consider the mode and manner for completion of the Project at this stage. The steps shall be taken by Resolution Professional for completion of the Project in accordance with insolvency resolution process as per the IBC and Regulations. There are no good ground to interfere with the impugned order - In result, the Appeal is dismissed.

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• 2024 (12) TMI 1314
  Time limitation of Section 95 application filed by the Respondent No. 1 Bank - Section 95 application was filed by a duly authorized person or not. Whether the Section 95 application filed by the Respondent No. 1 Bank was time-barred? - HELD THAT:- Demand Notice under Rule 7(1) clearly stipulated that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act. The date of default in the Rule 7(1) notice was clearly shown as 04.08.2021 being 60 days from 04.06.2021. The Section 13(2) Notice was also attached with the Rule 7(1) Notice. Since the guarantee deed specifically mentioned that the guarantee was in the nature of an on-demand guarantee, the default was to arise on the part of the Guarantor only when the Demand Notice was issued as contemplated in the Deed of Guarantee. Thus, the period of limitation of the Personal Guarantor was to commence once the demand was made on the Guarantor by the Respondent No.1 Bank. Hence, the Notice dated 04.06.2021 issued by the Respondent No.1 Bank to the Personal Guarantor has to be treated to be Notice on Demand as contemplated in the Deed of Guarantee. The Rule 7(1) Notice dated 28.06.2021 had therefore rightly recorded that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act and that the date of default occurred on 04.08.2021 on the expiry of 60 days from 04.06.2021. Section 95 petition which was filed on 18.06.2022 was very much within the limitation period since the Personal Guarantee had been invoked on 04.06.2021 and demand qua the Personal Guarantor arose on the expiry of the period specified in the Demand Notice. When the Respondent No.1 Bank has given time to the Guarantor to make payment by 04.08.2021 in terms of the Notice dated 04.06.2021, there can be no default on the part of the Guarantor on any earlier date. Whether the Section 95 application was filed by a duly authorized person? - HELD THAT:- It is an admitted fact that the Authority Letter authorising the AGM to file the Section 95 application was signed by the Deputy General Manager. It was clarified by the Ld. Counsel for the Respondent No.1 Bank during the oral submissions that the AGM of the Respondent No1 Bank being SMGS-V was statutorily competent to sign any petition by virtue of The Gazette of India Notification dated 02.05.1987 which notified that in pursuance of Regulations 76(1) of the State Bank of India General Regulations, 1955 framed under Section 50 of the State Bank of India Act, 1955 the Executive Committee of the Central Board of the State Bank of India authorized all Officers in the Grade of SMGS-IV and above to exercise Signing Power in respect of documents connected with the current or authorized business of the Bank. Since the Gazette of India Notification lies in the public domain and is subsisting, the plea raised by the Appellant that the Section 95 application signed by an AGM level Officer of the Respondent No.1 Bank to be unauthorized not impressed - Section 95 application filed by the Respondent No.1 Bank is valid and therefore reject this technical plea raised by the Appellant. All the three impugned orders therefore do not warrant any interference - The Appeals filed by all the three Appellants are devoid of merit and therefore dismissed.

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• 2024 (12) TMI 1313
  Ownership of property - Validity of the Slump Sale Agreement between the Corporate Debtor and the Appellant - no detail of the loan placed on record - dubious and preferential transaction, carried out to defraud the Creditors - HELD THAT:- Although Appellant has vehemently argued that the amount of Rs. 42.86 Crores was an unsecured loan towards the Corporate Debtor, but there is no documentary evidence that the Corporate Debtor has availed such a huge loan from the Appellant. The Tribunal has also categorically observed that there was no registered Sale/Conveyance Deed, executed between the Parties of the Immovable Property, which as per Section 17 of the Registration Act is a mandatory condition as has been held by the Hon ble Supreme Court in the matter of Suraj Lamp Industries Pvt. Ltd. Vs. State of Haryana Anr. [ 2011 (10) TMI 8 - SUPREME COURT ], held that an Immovable Property cannot be transferred merely on the Agreement of Sale, rather there has to be registered Sale Deed in that regard. Also, the Appellant is asked to refer to the Agreement between the Parties on the basis of which the said loan of Rs. 42.86 Crores has been obtained by the Corporate Debtor to which he could only answer that CA Certificate has been attached in this regard which cannot be taken into consideration to hold that the Corporate Debtor has been given such a huge loan by the Appellant and the said advance has been adjusted as a sale consideration on the basis of a mere Agreement to sell and without a Sale Deed. There are no error in the Impugned Order and thus the present Appeal is hereby dismissed.

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• FEMA

• 2024 (12) TMI 1312
  Contravention of Section 8(1) - transferring foreign exchange equivalent to Rs. 208 crores without previous, general or special permission of the Reserve Bank of India - appellants, Shri Anil Agarwal, Navin Agarwal and D.P. Agarwal were charged for violation of Section 68 of the FERA, 1973 - HELD THAT:- The main argument of the appellants of putting burden of proof on the respondents even though they discharged their part of burden, cannot be accepted. The appellant Shri D.P. Agarwal was holding position in M/s Twinstar and was summoned but failed to appear and produce the documents. He did not respond to the summons. It cannot be to his benefit or given premium to non-response. Rather, adverse inference can safely be drawn against the appellant. In the background aforesaid and in the light of the discussion made above, we are unable to accept the argument raised by the counsel for the appellants and otherwise find that against an amount of Rs. 208 Crores, penalty of only Rs. 20 Crores has been imposed on the company and Rs. 5 Crores each on the individuals holding the position in the company. Accordingly, finding no reason to cause interference in the impugned order appeals would fail and are dismissed.

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• 2024 (12) TMI 1311
  Contravention of Section 10(6) of FEMA - Penalty imposed - import of copper scrap in 10 containers but all the containers were found empty carrying no copper scrap - Remittance of the foreign exchange was made by M/s G. Tex Inc. even without receipt of the documents by their banker - HELD THAT:- On the receipt of the consignment of 10 containers, they were found empty and thereby copper scrap was not found therein. It is despite the fact that M/s G. Tex had already effected remittance of US$ 6,56,864 through Bank of India, Bangaluru. Since the sale of copper scrap was made on high seas sale basis M/s G. Tex could receive part consideration from M/s Maruti which could not get copper scrap because the containers were found empty. We do not find serious efforts to recover the amount from M/s Koya International, rather for that, the appellant should have lodged the claim to recover the amount through Court of Law. The appellant failed to do so. So far as the appellant Madhusudan Jhan Waris concerned, he was not responsible for conduct of the business and in charge under which foreign remittance was made by the appellant. The penalty of Rs. 7,50,000/- has been imposed without showing his role in the transaction. The material available on record shows it to be at the behest of appellant Rajesh Jhanwar who was mainly looking after the firm M/s G. Tex and made transaction to import the copper scrap. No reasons to impose penalty on appellant Madhusudan Jhanwar when he was not responsible for conduct of the business for import of copper scrap or for remittance of money. The penalty imposed on him is set aside. Appellant Rajesh Jhanwar made efforts to recover the amount though it cannot be said to be serious efforts to recover the amount because he did not lodge a claim for recovery of the amount. In the light of the aforesaid, while we find contravention of Section 10(6) of the Act of 1999, we find reasons to reduce the penalty which on the facts of the case seems to be excessive. The amount of penalty is reduced to 25% of the penalty. The amount of penalty to the extent of 25% has already been deposited to satisfy the condition of pre-deposit. We accordingly reduce the penalty and modify the order partially. With the aforesaid, appeal stands disposed of. It is made clear that if the amount to the extent of 25% of the penalty has not been deposited, the respondents would recover the said amount.

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• 2024 (12) TMI 1310
  Contravention of the provisions of section 9(1)(e) along with 64 to of FERA - penalty imposed - Allahabad Bank opened a current account in the name of a non-resident company and sums were placed to the credit of the said non-resident company in form of deposits in the said current account, allegedly in contravention of section 9(1)(e) - HELD THAT:- It was the appellant Bank which was holding the permission/license under the Act subject to compliance with the foreign exchange law and rules and regulations framed thereunder. The same having been contravened, the appellant bank would be deemed to have contravened such provision. On the other hand, contrary to the submission made by the learned counsel for the appellant, the appellant cannot be said to have abetted the contravention because the allegation of abetment can arise only against a person other than the one who was holding a license or permission. In this case the Bank itself was holding such license/permission and would be deemed to have contravened the provision. No merit in the contention of the learned counsel for the appellant that at best the appellant Bank could have been held liable for abetment . As a result of the deeming provision of Section 49, the appellant Bank had clearly contravened the provisions of FERA, 1999 and rendered itself liable for imposition of penalty. That having been said, I also find certain mitigating factors in favour of the Bank. deliberate mala fides have also not been alleged in the present case against the Bank. There is little doubt that the orders of both the authorities below are in the nature of ex parte order. No proof has been placed on record by the respondents that the call notices referred to in the impugned order were duly served on the appellant and were wantonly ignored. As regards the KYC norms, considering the period of time the matter relates to, namely, the early 1990s, it would not be wrong to say that the awareness regarding the same at that time was considerably less than what it is today, the requirements were much less stringent and the enforcement thereof even less so. Ends of justice would be met if the penalty imposed upon the appellant Bank is substantially reduced to Rs. 5,00,000/-. It is ordered accordingly.

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• PMLA

• 2024 (12) TMI 1309
  Confiscation of properties - Money laundering - scheduled offence - appellant would contend that the Special Court without issuing the notice to the appellant has passed the impugned order confiscating the properties of the appellant - violation of principles of natural justice - Applicability of Criminal Procedure Code (Cr.P.C) provisions to the proceedings under PMLA. Applicability of Criminal Procedure Code (Cr.P.C) provisions to the proceedings under PMLA - HELD THAT:- Except as otherwise provided in the P.M.L.A Act, the provision of Cr.P.C., are made applicable to the proceedings before the Special Court. The order of confiscation of the properties of the accused by the Special Court amounts to disposal of properties under section 452 of Cr.P.C. Against the order of said disposal of the properties passed under section 452 of Cr.P.C, the appeal shall lie to this Court under Section 454 of Cr.P.C. The provision of the P.M.L.A Act does not provide for filing of any appeal against the order of confiscation of properties. Therefore, the appeal shall lie under section 454 of Cr.P.C to this Court as appeal against conviction lie to this Court. Confiscation of schedule A properties - HELD THAT:- The words such properties involved in money laundering or which has been used for commission of offence of money laundering would indicate that the disproportionate assets acquired by the accused which had been used for money laundering is subject to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. The scheduled offence alleged against late Sri. G.E. Veerabharappa has been tried in Spl. CC. No. 56/2015. Even though the C.B.I had alleged disproportionate assets to the tune of Rs. 2,91,70,984/-, the Court only directed confiscation of disproportionate asset to the extent of Rs. 1,72,40,951/- in favour of the Central Government. Therefore, the proceeds of crime is to the extent of Rs. 1,72,40,951/-. The said disproportionate assets to the extent of Rs. 1,72,40,951/- is alleged to have been used by late Sri. G.E. Veerabharappa in money laundering. Therefore, the properties to the extent of Rs. 1,72,40,951/- requires to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. Late Sri. G.E. Veerabharappa had furnished the fixed deposit receipts to the tune of Rs. 1,72,40,951/- pursuant to the order of the Hon ble Apex Court in VEERBHADRAPPA G.E. [ 2023 (4) TMI 1332 - SUPREME COURT ] in favour of C.B.I and E.D. The said fixed deposit receipts in a sum of Rs. 1,72,40,951/- is the properties involved in money laundering and it is said to have been used for commission of the offence of money laundering. The properties worth more than Rs. 1,72,40,951/- cannot be confiscated under Sub Section (5) of Section 8 of the P.M.L.A Act - The option open for the Special Court was to confiscate the fixed deposit to the extent of Rs. 1,72,40,951/- furnished by late Sri. G.E. Veerabharappa with a lien in favour of the C.B.I and E.D. Instead of that, the Special Court has confiscated the properties of the appellant. Therefore, the Trial Court has erred in ordering confiscation of the properties of the appellant which are at Sl.No. 2 of schedule A properties in Spl. CC. No. 359/2019 - the said order of confiscation of properties of the appellant requires to be set-aside. Conclusion - The impugned order dated 24.06.2024 passed in Spl. C.C. No. 359/2019 by the XXXII Additional City Civil and Sessions Judge and Special Judge for C.B.I cases, Bengaluru, sofar as it relates to confiscation of the appellant s properties ie., Sl. No. 2 of the Schedule A properties namely, the land measuring 6 acres 37 guntas, located at Gunjal village, Varthuru Hobli, Bengaluru East Taluk, bearing Survey No.187/3 (28 guntas), Survey No.188/1 (3 acres and 20 guntas) and Survey No. 210/2 (2 acres and 29 guntas) is set-aside - The court recognized the appellant s ownership rights over the properties and ruled that the confiscation order was not justified, as the fixed deposit furnished by late Sri. G.E. Veerabharappa should have been considered the asset involved in money laundering. Appeal allowed.

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• 2024 (12) TMI 1308
  Money Laundering - scheduled offences - challenge to provisional attachment under Section 5(1) of PMLA, 2002 - Distribution of exorbitant and unjustified compensation to farmers with the intention of getting monetary benefits - misappropriation of government funds by way of granting compensation on acquisition of land at non-agricultural rate for the agricultural land which resulted into loss to Government - Non-completion/concluding of adjudication proceedings within prescribed period of 180 days - No scheduled offence and offence of money laundering is made out as per the observation of Ld. Special Judge (PMLA), Dehradun, Uttarakhand Non-completion/concluding of adjudication proceedings within prescribed period of 180 days - HELD THAT:- The issue was meticulously considered and decided by the Telangana High Court. It is after taking note of the Judgement of the Apex Court in the case of Prakash Corporates vs Dee Vee Projects Limited [ 2022 (2) TMI 1268 - SUPREME COURT ]. The Judgement in the case of Prakash Corporates [ 2022 (2) TMI 1268 - SUPREME COURT ] has distinguished its earlier Judgement in the case of S. Kasi v. State [ 2020 (6) TMI 727 - SUPREME COURT ]. The Judgement in the case of S. Kasi was discussed therein and found it to be in reference to Article 21 of the Constitution of India whereas the case of attachment of properties is not governed by Article 21 of the Constitution of India. The attachment would lapse in the present case because the period subsequent to 15.03.2020 is to be eliminated for determination of the period of 180 days and in that case, the impugned order of attachment would not lapse. No scheduled offence and offence of money laundering is made out as per the observation of Ld. Special Judge (PMLA), Dehradun, Uttarakhand - HELD THAT:- The High Court found a case under the Act of 2002 after considering all the relevant facts which includes the order passed by the Arbitrator - the argument alleging non commission of crime under section 3 of the Act of 2002 would not be made out. No direct nexus found between scheduled offence and properties in question vis- -vis principle of value thereof - HELD THAT:- he issue is otherwise covered by the judgement of the Apex Court in the case of Vijay Madan Lal wherein the similar argument that the value of any such property would apply only when property is held outside the country was not accepted. The appellant Dinesh Pratap Singh has even referred to the balance of Rs. 25,51,000/- in his bank account to justify the purchase of property apart from his agriculture income in the different financial years without referring to any document to prove the agriculture income other than the assessment order, if any, because agriculture produced is to be disclosed in the revenue record and otherwise by producing the receipt of amount on sale of the produce. The appellant has failed to submit any document to prove the same and accordingly we find that in the absence of the proof of source to acquire the property and that too worth of crores by the two appellants, it was rightly attached by the respondents. Since, total value of the proceeds was available with the appellant having vanished, the other properties and the value of any other property was attached. There are no substance in the issue and is rejected. Non-satisfaction of basic ingredients of offence of money laundering - HELD THAT:- The appellant has submitted that basic ingredient of section 3 of the Act of 2002 is not made out whereas according to the respondent and in the opinion of the Tribunal the ingredient of section 3 has been satisfied which would reveal from the Judgement of the Uttarakhand High Court in the case of the appellant himself - the issue has no substance. Non-recording of reasons to believe as prescribed under Section 5 of PMLA, 2002 - HELD THAT:- In the instant case, the procedure aforesaid was applied and therefore only the Adjudicating Authority issued notice to the appellant to disclose the source of income as per section 8(1) of the Act of 2002. The finding has been recorded on the offence and acquisition of the proceeds of crime - the ground is not made out to cause interference in the order. Non-consideration of merits and demerits of the case by the Ld. Adjudicating Authority - HELD THAT:- The last argument raised by the appellant is that the Adjudicating Authority has failed to make consideration of any of the issue raised by the appellant. Reference to the Judgment of Delhi High Court has been given - The position of the fact is that now this Tribunal has taken up each issue raised by the appellant and the order has been passed in reference to each issue. It is after analyzing the issue separately. Even the impugned order has been passed by using the technology of cut-copy-paste without appreciating the material on record -the impugned attachment order passed by Ld. Adjudicating Authority may be set-aside - the last issue raised by the appellant remains of no consequence. There are no merit in the appeal - appeal dismissed.

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• 2024 (12) TMI 1307
  Maintainability of the Appeal in reference to Section 26 of the Prevention of Money Laundering Act, 2002 against the Provisional Attachment Order - Writ Petition before the High Court invoking jurisdiction under Article 226 of the Constitution of the India - HELD THAT:- An interim order was passed but ultimately the Delhi High Court relegated the Appellant to approach the Tribunal and for that Writ Petition was order to be treated as an Appeal. The copy of the Writ Petition was accordingly presented by the Appellant and was registered as an Appeal in compliance of the order of the High Court. The perusal of sub Section (1) and (2) reveals that Appeal can be preferred against the order passed by the Adjudicating Authority or an order under Section 13(2) of the Act of 2002. The Appeal has not been provided against the order of the Provisional Attachment Order - there are reasons to dismiss the Appeal being not maintainable. The Adjudicating Authority would not be persuaded by the dismissal of the Appeal rather it would independently analyze the issue and more specifically in reference to the earlier order passed by the same Authority denying confirmation of the earlier Provisional Attachment Order arising out of same ECIR though Appeal against that order is pending before the Tribunal. The Authority would be expected to examine whether second Provisional Attachment Order is sustainable.

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• Service Tax

• 2024 (12) TMI 1306
  Condonation of gross delay of 408 days in filing the Civil Appeals - sufficient reasons for delay not provided - Classification of services - Supply of Tangible Goods Service - leasing out Power Generating and Heat Recovery Equipments to various parties under various Lease Agreements - it was held by CESTAT that The transfer of right to use gas genset/ plant on lease charges basis is a deemed sale in terms of Article 366(29)A of the Constitution, which is exclusive from service. Since the nature of transaction under dispute is deemed sale, no service tax can be demanded. HELD THAT:- There is a gross delay of 408 days in filing the Civil Appeals which has not been satisfactorily explained by the appellant - Revenue. The Civil Appeals are dismissed on the ground of delay.

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• 2024 (12) TMI 1305
  Levy of service tax - security agency service - scope of commercial concern - whether or not the appellant would satisfy the definition of a commercial concern engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner ? HELD THAT:- It is is clear from reading of the definitions of Security Agency and Taxable service, that to attract the levy of tax as applicable to the security agency services, the service has to be provided by a commercial concern engaged in the business of rendering services relating to security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel. It cannot be disputed that the activity that the appellant provides is essentially the providing of security personnel, who invariably are its members, being ex-servicemen. The only other issue that needs to be considered is whether the appellant would satisfy the definition of a commercial concern engaged in the business of rendering the security agency services. In this connection, it is noted that a commercial concern albeit not defined under the Act or in the Rules, has been understood by the Central Board of Excise and Customs, as an institution/establishment that is primarily engaged in commercial activities, having profit as the primary aim. The Circular No. 86/4/2006-ST dated 01.11.2006 issued in this connection goes on to clarify that it is not one/few isolated activities which determine whether or not an institution is a commercial concern but it is the totality of its activity and the objective of its existence that determines the commercial nature of an institution as an entity or a concern. The said Circular which basically considers the applicability of service tax to educational institutes like IITs and IIMs, goes on to clarify that the principal activity of institutes like IITs and IIMs being the imparting of education without the objective of making profit, the said institutes cannot be seen as commercial concerns, even if for some of their activities they charged a fee. Conclusion - The appellant cannot be treated at par with educational institutions, which by their very nature and going by the activities intended to be performed by them, cannot be seen as commercial concerns. It cannot be accepted that the appellant is not a commercial concern for the purposes of levy of service tax - the impugned order need not be interfered. Appeal dismissed.

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• 2024 (12) TMI 1304
  Levy of service tax on the services of Tour Operator provided for Haj and Umrah - HELD THAT:- The issue with regards to levy of service tax in respect of these services for the period post introduction of Negative List concept for levy of service tax (i.e. from 01.07.2012) is no longer res-integra and has been decided by Hon ble Supreme Court in the case of ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION MUMBAI VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1233 - SUPREME COURT ]. In view of the above decision, the dispute with regards to applicability of service tax (post 01.07.2012) in respect of these services provided by private tour operator in respect of Haj and Umrah has been settled against the appellant. Hon ble Supreme Court has also held that these services provided by the private tour operators are not exempted by the Mega Exemption Notification. Conclusion - The demand of service tax on tour operator services for Haj and Umrah confirmed, while allowing the small scale exemption - there are no merits in the impugned order and set aside the same. Appeal filed by the revenue is allowed.

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• 2024 (12) TMI 1303
  Abatement of appeal - recovery of service tax with interest and penalty - HELD THAT:- It is evident that the Respondent came under Liquidation, as such the proceedings pending in this appeal have become infructuous. Hon ble Apex Court in the case of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] has held that once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. As the NCLT, Chennai has ordered for Liquidation of the Respondent and as no application as per Rule 22 has been made by the Official Liquidator appointed by the NCLT for continuance of the appeal, the appeal should abate in terms of the above referred Rule. As such the appeal gets abated in terms of Rule 22 of the CESTAT (Procedure) Rules, 1982 and also gets dismissed as being infructuous.

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• 2024 (12) TMI 1302
  Cash Refund of accumulated cenvat credit on account of services exported in terms of Rule 5 of Cenvat Credit Rules (CCR), 2004 read with N/N. 5/2006-CE-NT dated 14.3.2006 - HELD THAT:- There is no dispute about the export of services by the appellant during the said quarter resulting into accumulation of cenvat credit. Assuming that even if the services are of non-taxable service, the issue is covered by the judgment of the Hon ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] which has been consistently followed by the Tribunal in a series of cases. Recently, this Tribunal in the case of M/S. CJK KNOWLEDGEWORKS GLOBAL INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BANGALORE [ 2024 (11) TMI 55 - CESTAT BANGALORE] observed that The assessee is a 100% export oriented unit. The export of software at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. According to the assessee a sum of Rs. 4,36,985/- is accumulated Cenvat credit. The Tribunal has categorically held that even though the export of software is not a taxable service but still the assessee cannot be denied the Cenvat credit. The assessee is entitled to the refund of Cenvat credit. Conclusion - The refund claim cannot be denied. The fact remains is that the services which is exported were Information Technology Enabled Service . The cash refund of accumulated cenvat credit under Rule 5 of CCR, 2004 allowed. The impugned order set aside - appeal allowed.

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• 2024 (12) TMI 1301
  Non/short payment of service tax - transportation charges received under C F services - job charges under business auxiliary service - renting of immovable property service - extended period of limitation - penalties u/s 77 and 78 of FA. Demand of Rs.44,83,913/- under the category of GTA service - HELD THAT:- The Appellant had been engaged as a consignment agent of M/s. Tata Steels Ltd. and had also provided goods transport agency service . In this regard, the Appellant produced a letter dated 09.01.2011 issued by M/s. Tata Steels Ltd. wherein M/s. Tata Steels Ltd. have categorically stated that they are paying Service Tax in respect of the services under goods transport agency (GTA) service - the activity undertaken by the Appellant is appropriately classifiable under the category of goods transport agency (GTA) service, the Service Tax for which is liable to be paid by the recipient of Service viz. M/s. Tata Steels Ltd. In this case, the above letter clearly indicates that M/s. Tata Steels Ltd. has accepted their liability for payment of Service Tax under GTA services under reverse charge mechanism and discharged their Service Tax liability. In view of the above, the demand of Service Tax of Rs.44,83,913/- from the Appellant under clearing and forwarding agency service is not sustainable. Demand of service tax of Rs.1,07,40,970/- under the category of Business Auxiliary Service - HELD THAT:- The Appellant has been rendering job work at the premises of the principal wherein, after the job work, the final product has been cleared on payment of duty by the principal. However, in the impugned order, the benefit of the above Notification has not been extended to the Appellant on the ground that the job work has not been done at their own premises. In this regard, it is observed that there is no such condition in the notification that the job work has to be done in their own premises. Even if the job work is undertaken at the premises of the customer, the benefit of the exemption under N/N. 08/2005-S.T cannot be denied to the appellant. Accordingly, the demand of Service Tax of Rs.1,07,40,970/- confirmed under the category of business auxiliary service in the impugned order is not sustainable and thus, the same is set aside. Demand of Service Tax of Rs.3,43,641/-under the category of renting of immovable property service - demand in this case has been raised for the period from 2007-08 to 2011-12 and the Show Cause Notice was issued on 19.10.2012 - Extended period of limitation - HELD THAT:- There was confusion prevalent during the relevant period about the Service Tax liability of an assessee under the category of renting of immovable property service and thus the invocation of the extended period of limitation is set aside. Thus, the appellant is liable to pay Service Tax for the normal period of limitation, along with interest. Imposition of penalty under Section 78 of the Finance Act, 1994 - HELD THAT:- There is no suppression of facts with intention to evade the tax established in this case. Accordingly, no penalty is imposable on the Appellant and hence the same is set aside. Penalty imposed under Section 77 of the Act - HELD THAT:- The same has been imposed based on the allegation that the Appellant has not reflected the correct service values in their S.T.-3 Return. This allegation is not substantiated. Accordingly, the penalty imposed under Section 77 ibid. is also set aside. Conclusion - The demands under clearing and forwarding agency service and business auxiliary service were set aside. The demand under renting of immovable property service was upheld only for the normal period, and all penalties were set aside. Appeal disposed off.

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• 2024 (12) TMI 1300
  Classification of service - activities carried out by the Appellant for the period from 10.09.2004 to 31.01.2009 fall under the category of Erection, Commissioning or Installation service or they fall under the category of Works Contract Service? - invocation of extended period of limitation. Classification of services - HELD THAT:- The issue is no more res integra, the issue is settled by the judgment of Hon ble Supreme Court in the matter of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] and the activities carried out by the Appellant, which includes supply of goods and materials and when the Appellant had paid VAT as applicable under Works Contract, to consider the gross amount as consideration and to classify the goods under the category of Erection, Commissioning or Installation services is unsustainable. Conclusion - For the period 10.09.2004 to 01.06.2007, the appellant is not liable to service tax under the category of Erection, Commissioning or Installation services in view of the decision of the Hon ble Supreme Court in the case of M/s. Larsen and Toubro Ltd. Further for the period 01.06.2007 to 31.01.2009 the activity of the appellant is classifiable under Works Contract service and is eligible for composition scheme under Works Contract (payment of Service Tax Composition Scheme) Rules, 2007. Appeal alowed.

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• 2024 (12) TMI 1299
  CENVAT Credit - input services availed by the Appellant are in compliance with Rule 2(l) of the CENVAT Credit Rules, 2004 or not -CENVAT Credit on Passenger Boarding Bridge (classified under CETH 9801), Bridge Mount Converter (classified Under CETH 9801) etc. related to project import - CENVAT credit on professional services related to Hotel project - CENVAT credit - Chartered Flights hired by Chairman and Managing Director - Pinnacle Award ceremony - sponsorship service and event management services with respect to events (for celebrating National and State functions such as Kannada Rajyotsava, independence day - Photography service (incurred for various airlines and other promotional events) - Landscaping bills relating to Trumpet flyover, which includes landscape maintenance of landscaping as part of Airport activity in a greenfield airport - immigration services incurred for relocation charges of the expats - Guest House maintenance - Flower Decoration - Hotel accommodation - Membership fees - CENVAT credit on construction services - Denial of CENVAT credit on Mobile Command Post Vehicles, Projection Screens and Advertising Structures. CENVAT Credit on Passenger Boarding Bridge (classified under CETH 9801), Bridge Mount Converter (classified Under CETH 9801) etc. related to project import - HELD THAT:- It is an admitted fact that the said goods were imported as part of Project Import and in the absence of any such conditions for availing of CENVAT credit as per CENVAT Credit Rules, 2004, as held by various authorities, the same are eligible for CENVAT credit irrespective of the fact that whether it is falling under the category of inputs or capital goods. CENVAT credit on professional services related to Hotel project - HELD THAT:- The Expenses incurred by the appellant includes professional and consultancy fees paid in relation to arbitration, feasibility study for the investment in the Hotel project - Since these are incurred to know the viability and feasibility for the investment in such project, the same should qualify to be input services - Credit allowed. CENVAT credit - Chartered Flights hired by Chairman and Managing Director - Pinnacle Award ceremony - sponsorship service and event management services with respect to events (for celebrating National and State functions such as Kannada Rajyotsava, independence day - Photography service (incurred for various airlines and other promotional events) - Landscaping bills relating to Trumpet flyover, which includes landscape maintenance of landscaping as part of Airport activity in a greenfield airport - immigration services incurred for relocation charges of the expats - Guest House maintenance - Flower Decoration - Hotel accommodation - Membership fees - HELD THAT:- Even if the said services are not directly related to output service, considering the activity of the appellant, they are required for the output service, it is held that the appellant is entitled to the CENVAT credit under dispute. CENVAT credit on construction services - denial on the ground that assessee has not produced any documentary evidence to show that service is in relation to repair/modification work and not towards original construction - HELD THAT:- These services used for repairs of premises of provider of output service is specifically included in the inclusion portion of input service definition, Cenvat credit is eligible. Denial of CENVAT credit on Mobile Command Post Vehicles, Projection Screens and Advertising Structures - HELD THAT:- It is a special purpose customized motor vehicle designed and the same is neither used to carry passengers nor goods. The vehicle is a special purpose vehicle equipped with satellite telephone and internet communication capabilities to react, if the local and cellular telephone services and broadband internet are not available. This is not a vehicle designed to carry passengers and goods instead is a specially designed vehicle for disaster response and recovery of assets. This kind of motor vehicle finds special mention in the definition of capital goods as per Rule 2(a)(A)(viii) of CENVAT Credit Rules, 2004 - thus, recognized as capital goods due to their specialized nature, thus eligible for credit. Appeal allowed in part.

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• Central Excise

• 2024 (12) TMI 1298
  Liability of assessee to pay penalty - non-application of mind - violation of principles of natural justice - HELD THAT:- The contention of the appellant that the Commissioner had passed order basing on the statements recorded during inspection is not tenable under law on the ground that the Commissioner after verification of the records passed the order. The finding recorded by the Commissioner is not based on the statement recorded during the inspection alone, but is based on other material available on record. In an appeal under Section 35G of the Central Excise Act, 1944, a finding of fact cannot be interfered with unless and until the same is shown to be perverse. The finding recorded by the authorities under the Act can by no stretch of imagination be termed as perverse. The substantial question of law is answered against the assessee in favour revenue - there are no merit in the appeal - appeal dismissed.

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• 2024 (12) TMI 1297
  CENVAT Credit - common inputs/ input services used for manufacture of dutiable and exempted goods - non-maintenance of separate account for dutiable and exempted activity as envisaged under Rule 6(2) of CCR, 2004 - non-compliance with the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004 - wilful suppression of facts or not - extended period of limitation. CENVAT Credit - HELD THAT:- It is found that all the documents were either not produced before the adjudicating authority or adjudicating authority has not recorded any findings on any of these documents in the impugned order. The fact that these documents show is that trading activities were undertaken by the appellant from separate premises located at Kanpur, and separate accounts were maintained for the trading activities undertaken. Neither in the show cause notice nor in the impugned order we find that the manner of usage of the services alleged to used both for trading activities and manufacture of the goods have been brought out. The basic quest which requires to be examined before invoking Rule 6 of The CENVAT Credit Rules, 2004 is that there should be common inputs/ input services used for manufacture of dutiable and exempted goods or for the provision of both taxable and exempted services. There are nothing recorded in the impugned order to the usage of common services for trading activities and manufacture of dutiable goods. No evidence has been adduced in the show cause notice to establish the usage of common services for the provision of taxable and exempted service or for the manufacture of dutiable and exempted goodsit is not required to even remand this matter, for examination in light of the documents submitted. Extended period of limitation - penalty - HELD THAT:- As there are no merits in the demand made, no finding recorded on the issue of limitation raised by the appellant in the appeal. As demand is itself set aside the penalty imposed set aside. Conclusion - The absence of any finding to the effect of common services usage invalidates the demand under Rule 6(3) of the CENVAT Credit Rules, 2004. No evidence has been adduced to establish the usage of common services for the provision of taxable and exempted service or for the manufacture of dutiable and exempted goods. No finding reorded on time limitation and penalty. Appeal allowed.

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• 2024 (12) TMI 1296
  Excisability of intermediate goods - Whether sugar syrup having sugar content of 78.2% by weight emerged as an intermediary product, during the course of manufacture of final product viz., Biscuits which is exempted, is excisable and leviable to duty as the benefit of N/N. 67/1995 dated 16.03.1995 would not be available to inputs used in the exempted final product? - extended period of limitation. Excisability of intermediate goods - HELD THAT:- In Karnataka Soaps Detergents Ltd. [ 2017 (10) TMI 660 - SUPREME COURT] explaining the scope of marketability their Lordships observed that Marketability is thus essentially a question of fact to be decided on the facts of each case. There can be no generalisation. The fact that goods are not in fact marketed is of no relevance. So long as the goods are marketable, they are goods for the purposes of Section 3 of the Act. It is also not necessary that the goods in question should be generally available in the market. The marketability of articles does not depend neither upon the number of purchasers nor is the market confined to the territorial limits of this country. Thus, the original authority had sufficiently established the test of marketability. Extended period of limitation - HELD THAT:- The sugar syrup manufactured by the appellant, during the course of manufacture of exempted product namely, biscuits, is stable and marketable; hence, liable to duty being an excisable goods - the issue relates to interpretation of law, therefore, invoking of extended period of limitation cannot be sustained and the demand be restricted to the normal period of limitation. Conclusion - Revenue s appeal is partly allowed to the extent of confirming excisability of sugar syrup manufactured at the intermediate stage of manufacture of biscuits, an exempted product, and the demand be limited to the normal period of limitation. No penalty is imposable on the appellant. Appeal is disposed of.

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• CST, VAT & Sales Tax

• 2024 (12) TMI 1295
  Challenge to order of penalty passed under the APVAT Act, 2005 - without issuing a SCN the order of penalty came to be passed - violation of principles of natural justice - HELD THAT:- It is failed to understand the basis for the revenue to challenge such orders before this Court. It has been fairly conceded before us that the order of penalty was passed without issuing any show cause notice. What is more disturbing is that instead of accepting the order passed by the High Court and issuing a show cause notice so as to give an opportunity to the assessee to show cause as regards the penalty, the revenue has wasted six years in this litigation which is now coming to end with the dismissal of this petition. Petition dismissed.

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• 2024 (12) TMI 1294
  Challenge to order of re-assessment passed by Respondent No. 1 u/s 39 (1) of the Karnataka Value Added Tax Act, 2003 on the ground of being barred by time limitation - case of appellant is that Section 40 of the Act of 2003 provided for a period of limitation for passing an order of assessment or re-assessment - whether the learned Single Judge is justified to hold that the limitation for the purpose of re-assessment would start running from the date of passing of the order by the Commissioner under Section 64 (2) of the Act of 2003? HELD THAT:- There is no dispute that, we are concerned with the tax period between April 2007 to September 2007, and the Assessing Authority has passed an order of re-assessment on 16.01.2010. The Appellate Authority exercising jurisdiction under Section 62 of the Act, had allowed the first appeal filed by the appellant vide order dated 31.05.2010. Pursuant thereto, even the Revisional Authority had by initiating the suo-moto revision, has dropped the proceedings on 13.06.2012. It is only on 17.07.2014 the Commissioner of Commercial Taxes had initiated the proceedings under Section 64 (2) of the Act and set aside the order of the Appellate Authority and the Revisional Authority, and remanded the matter to the Assessing Officer for re-verifying the taxable contract receipts for the period of April and May of 2007 and to do the re-assessment. It follows that the period taken for disposal by different authorities like Appellate Authority/Revisional Authority/Commissioner of Commercial Taxes in the manner depicted by the appellant, which we have reproduced above, need to be excluded. In other words, as stated above, if 07 years of limitation for assessment or re-assessment need to be computed, the same shall expire on 31.05.2014, but, if 391 days are added to the same, then the period will come to an end just five days before 30.06.2015. So in other words, the re-assessment cannot be carried out after 26.06.2015. In the present case, the re-assessment was done only on 30.05.2018, much after 26.06.2015. Hence, in that sense, the bar under proviso to Section 40 of the Act of 2003 shall come into play. The appellant is also justified in relying upon the judgment of the Hon ble Supreme Court in the case of Jaipuria Brothers Limited [ 1964 (10) TMI 57 - SUPREME COURT ]. In the said case the facts were, on March 20, 1952, the Sales Tax Officer, Kanpur, issued a notice under Section 21 of the Uttar Pradesh Sales Tax Act 1948, calling upon the appellant/Company to file a return of its turnover for the Assessment Year 1948-49 on the ground that the turnover had escaped assessment. On March 31, 1952, the Sales Tax Officer has made a best judgment assessment and determined the taxable turnover of the appellant/Company at Rs. 50/- for the year 1948-49 and determined the appropriate tax liability. In the judgment reported, as the Assessing Authority, Amritsar and another [ 1969 (5) TMI 49 - PUNJAB AND HARYANA HIGH COURT ] the Full Bench of Punjab and Haryana High Court was considering the reference made to it on the question whether the jurisdiction of the Commissioner under Section 21(1) of the Punjab General Sales Tax Act, 1948 is subject to period of limitation prescribed under Section 11(A) of the Act. In the said case also, the Commissioner while disposing of the revision under Section 21 of the Act had set aside the Order of Assessment and ordered the Assessing Authority to make a fresh assessment in accordance with law. The court held the proceedings are governed by the period of limitation prescribed in subsections (4), (5) and (6) of Section 11 or Section 11(A) of the Punjab General Sales Tax Act, 1948 - The Court held that, the view is well-founded based on the judgment of the Hon ble Supreme Court in Jaipuria Brothers Limited. It was also held that once the Commissioner while exercising revisional powers decided to direct the Assessing Authority to make a reassessment in accordance with law, the proceedings for re-assessment were fresh proceedings which were governed by the period of limitation prescribed under Section 11(A) of the Act and accordingly, the appeal was dismissed. Conclusion - The reassessment done by the Assessing Officer leading to impugned orders dated 30.05.2018 is without jurisdiction, being beyond the statutory limitation period, and accordingly the impugned order of the learned Single Judge is set aside, and consequently, the orders of the Assessing Authority and the demand made thereof, are also set aside. Appeal allowed.

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• 2024 (12) TMI 1293
  Entitlement to recall or set aside an assessment order issued under the Kerala Value Added Tax Act, 2003 based on a subsequent order issued due to a mistake - benefit of an Amnesty Scheme - HELD THAT:- The petitioner is not entitled to any relief in the present writ petition. It is not disputed before that Ext. P2 order, which is issued under Section 25 (1) of the KVAT Act on 15.12.2018, has not been set aside or modified in any proceedings. If that be the case, the provisions of Section 25 (1) of the KVAT Act does not permit the Assessing Authority to pass a fresh order for the same assessment year. If such course of action is permitted, it would result in contradictory orders being passed without the original order being set aside or modified in a manner known to law. In such circumstances, there are no hesitation to hold that the second assessment order (Ext. P3) dated 29.03.2021 is non-est in law and cannot be sustained. Therefore, in that view of the matter, it is not necessary to consider the question as to whether the prayer to recall the earlier assessment order dated 15.12.2018 was maintainable under Section 66 of the KVAT Act. The petitioner is not entitled to any reliefs as sought for in the writ petition. The writ petition will stand dismissed.

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• Indian Laws

• 2024 (12) TMI 1292
  Dishonour of Cheque - vicarious liability of petitioner, as an additional director - petitioner was neither the signatory of the cheques in question nor the managing direction of the respondent no. 3 company - Section 141 of the NI Act, 1881 - HELD THAT:- In the case of State of Haryana v. Bhajan Lal [ 1990 (11) TMI 386 - SUPREME COURT ], the Hon ble Supreme Court had set out the broad categories of cases in which the inherent powers under Section 482 of the Cr.P.C. could be exercised - From the judgment, it is clear that the Court may quash a complaint under Section 482 of the CrPC if it is satisfied that the allegations made against the accused in the complaint, even when they are taken at face value and accepted in their entirety, do not prima facie constitute any offence or make out a case against the accused. Further, the Court may also invoke its extraordinary powers to quash a complaint if the allegations made in the complaint are so absurd and improbable that no prudent person may reach a conclusion that there is sufficient ground for proceeding against the accused. In the present case, this Court is concerned with the determination of criminal liability arising due to dishonour of cheques. As can be clearly established from various provisions that in case of a company, the vicarious liability as contemplated under Section 141 of the NI Act extends criminal liability under Section 138 of the NI Act to every person who at the time of the commission of the said offence was in charge of, or responsible for the conduct of the business of the said company - it is well-established that in order to subject a person to criminal proceedings under Section 141 of the NI Act, a clear case should be spelled out against the accused with necessary averments in the complaint that the accused is involved in the commission of the said offence. In the present case, it is undisputed that the respondent no. 3 company issued cheque 1 on 28th September, 2014 and cheque 2 on 30th September, 2014 in favour of respondent no. 2. Both the cheques were returned unpaid on 18th December, 2014 by the payee bank due to insufficiency of funds, and subsequently, a notice was issued was issued on 15th January, 2015 demanding the payment of the cheque amount, which was not paid even after the expiry of the timeline of 15 days after the receipt of the notice of demand. Conclusion - This Court is of the considered view that the petitioner had ceased to be an additional director at the time of the commission of the said offence under Section 141 of the NI Act and there is nothing on record to show that he was in control of or managing the conduct of the business or day-to-day affairs of the respondent no. 3 company during the relevant timeline of the commission of the said offence. Therefore, no offence is prima facie made out against the petitioner under Section 141 of the NI Act from the uncontroverted allegations made against the petitioner in the instant complaint. This Court finds it a fit case to exercise its extraordinary powers under Section 482 of the CrPC for quashing of the Criminal Complaint - Petition disposed off.

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• 2024 (12) TMI 1291
  Dishonour of Cheque - vicarious liability - petitioner s involvement in the company s affairs or not - whether this Court can exercise inherent powers under Section 482 of the Code (Section 528 of the BNSS) for quashing of the complaint bearing no. 7369/2022 and summoning order dated 6th January, 2020? - HELD THAT:- It is pertinent to understand the contention of the petitioner that the said complaint and the summoning order are liable to be quashed as the petitioner is not involved in the day-to-day affairs of the company and was unaware of the cheques issued to the complainant, hence, the offences under Section 138 and 141 of the NI Act are not made out. In the instant case, the complainant presented the said cheque for the second time on 19th October, 2019, which was dishonored vide memo dated 21st October, 2019 for insufficiency of funds. As required by Section 138 of the NI Act, the complainant issued a demand notice dated 2nd November, 2019, which was issued well within the statutory period of 30 days. However, despite intimating the accused persons, including the petitioner, regarding the dishonor of the cheque and payment of the due amount, the accused persons including the petitioner failed to pay the said amount, thereby, making out an offence under Section 138 of the NI Act. Accordingly, the aforesaid complaint was filed - Section 141 of the NI Act merely states the liability of certain people for the offences committed by the company, which needs to satisfy the test of who is in charge of or responsible for the conduct of company s affairs . However, the extent of their liability is discussed elaborately in a catena of judgments. In the instant case, even though the petitioner is not an authorised signatory of the cheque, she is an officer of the company, holding a directorial position at the respondent no.4-company. Therefore, not being an authorised signatory does not absolve her from the liability of the commission of offence as long as the requisites under Section 138 and 141 of the NI Act are met - this Court has observed a prima facie case against the petitioner for her involvement in the day-to-day activities of the conduct of the company affairs at the time of commission of the offence under Section 141 of the NI Act and her knowledge in issuance of the said cheque to the complainant. Conclusion - This Court is of the view that the learned MM has rightly issued summons against the petitioner after being satisfied that a prima facie case is made out under Section 138 of the NI Act. Moreover, sufficient reasons were given in the summoning order, wherein, the learned MM observed that payment was not made by the petitioner despite the issuance of the demand notice dated 2nd November, 2019 - this Court is of a considered view that the learned MM has not committed any error or illegality in passing the summoning order and therefore, this Court does not find any reason to exercise its inherent powers under Section 482 of the Code (Section 528 of the BNSS). Petition dismissed.

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