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TMI Tax Updates - e-Newsletter
December 9, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Health care institute or Educational institute - Charitable Society - in the instant case, the main services of the Appellant, i.e., educational services and health care services are provided to the students and patients whereas the services of renting of immovable property are provided to some third party consumers, who run their establishments on their own account on the land made available to them by the Appellant against certain consideration. - The activity cannot be said to be part of the composite supply. - AAAR
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Levy of GST - reimbursement of expenses at actual cost which are incurred by the employee staffs on behalf of Company - Not liable to GST - Reverse Charge Mechanism is not applicable on reimbursement of expenses paid on behalf of the Company at actuals which are incurred by the employee staff who is also a whole-time director Company. - AAR
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Levy of GST - Reverse Charge Mechanism (RCM) - whole-time director - A director who has taken an employment in the company may be functioning in dual capacities, namely, one as a director of the company and the other on the basis of the contractual relationship of master and servant with the company (employment). As per the circular only part of employee Director’s remuneration which is declared separately other than “salaries” in the Company’s accounts and subjected to TDS under Section 194J of the IT Act shall be treated as consideration for providing services which are outside the scope of Schedule III of the CGST Act, and hence taxable under reverse charge basis. - AAR
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Reversal of ITC - Cancellation of gst registration of supplier - finding recorded by the first Appellate Authority is cryptic as it only states in its order that the registration of the supplier was cancelled, but no date of cancellation has been mentioned so as to demonstrate whether transaction took place prior to cancellation or subsequently - order set aside - matter restored back - HC
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Refund of IGST paid - goods exported under Advance Authorizations/EOU Scheme - The enquiry as regards entitlement of the Petitioner to receive any refund is already under way. Letters have been issued to the Petitioner, which the Petitioner has responded. In these circumstances to give declarations of law as sought by the Petitioner would be not only academic but also premature. - HC
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Export of services or not - Jurisdiction of advance ruling authority - The place of supply needs to be determined to decide whether the impugned supply of services by the applicant amounts to export of services or not. The determination of place of supply is beyond the jurisdiction of this authority and we don't intend to discuss the other issues / points of the definition. - AAR
Income Tax
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Disallowance u/s 14 A - determine the expenditure attributable to earning dividend income - once the Revenue Authorities have found no reason to doubt the Assessee’s claim that the investments have been managed by a group company without levy of charge, it may not be open for the tribunal to disallow expenditure on the basis that some deployment of manpower for managing the investment cannot be “ruled out” - HC
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Denial of foreign tax credit u/s 90/90A due to delay in filing Form no.67 - mere delay in filing Form No. 67 as per the provisions of Rule 128(9), as they stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India. - AT
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Grant of recognition u/s 80G - substance over form - If Trust/Institution incurs expenses for religious purposes which is inclusive and is only a small part of the income, and if the substantial work done by the trust is charitable in nature benefitting the public at large then the institution or trust has to be granted exemption u/s 80G of the Act. - AT
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Levy of penalty - Assessment and penalty proceedings are distinct and separate. To our mind, when the Ld. AO has dropped the penalty proceedings after due consideration of facts and circumstances of the case, the direction of the Ld. Pr. CIT to consider levying penalty under section 271(1)(c) afresh was not in order. - AT
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Depreciation - Disallowance of Capitalization of CENVAT credit on capital goods - the Revenue authorities were justified in rejecting the claim of the assessee for deduction on account of unutilized CENVAT credit which was claimed as deduction in computing income from business of the assessee - AT
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Levy of penalty u/s 272A(2)(k) - Belated filing of TDS return - On filing the belated returns/statements, Revenue has not suffered any loss because the tax deducted was already deposited on time with the Revenue Department. It was, therefore, a technical breach of the provisions contained in the Act for submitting the return statement of tax deducted at source - No penalty - AT
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Determination of profit on sale of Flats - the assessee has been following project completion method of recognition of revenue and this system of accounting has been followed by from year to year which can be seen from the assessment order in assessment year from 2014-15 passed u/s 143(3) dated 19.5.2015. - the additions made under the income from business by computing the income based on percentage completion method will result in double taxation which is impermissible in law. - AT
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Assessment u/s 153A - unsecured loan taken by the assessee - reliance on statement of third party - When the Assessing Officer and ld. CIT(A) has accepted that the assessments were completed and books of account were verified, returns were filed, the entire record are persuaded by the AO and the ld. CIT(A) when there is no incriminating material found then the statements recorded during the assessment proceedings has no evidentiary value when it is not supported with corroborative evidences - AT
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Disallowance of premium payable on redemption of debentures - addition on account of claim of premium on non-convertible debentures on proportionate basis - the moment the debentures were issued, the liability had arisen against the assessee which would constitute on expenditure allowable u/s 37 - Claim on proportionate basis cannot be disallowed - AT
Customs
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West Bengal Industrial Promotion Assistance to Industrial Enterprises (scheme) - The purpose of the scheme as spelt out is for encouraging manufacturing activities expansion etc. which would go to generate direct and indirect employment in the state. - Thus, any interpretation which is given which will stultify the objects of the schemes has to be frowned upon. - the bonafides of the appellant have not been doubted by the respondents, the eligibility is also not in dispute and if that be a factual position on account of a technical ground such incentive or benefit extended by the Government should not be denied. - HC
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Provisional release of imported goods - detention of goods - there is no seizure at all - doubt on Country-of-Origin certificate - The petitioners would be entitled to have a release of the goods completely without any fetter, however, the goods are alleged to be from Pakistan as the Country-of-Origin Certificate is doubted. Let the inquiry be expedited and with a word of caution to all concerned to follow the statute. We are releasing the goods provisionally - HC
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Eligibility to the exemption from Custom Duty - DEEC - Value-based Duty Exemption Entitlement Certificate - the learned CESTAT is correct in its approach by holding that it cannot entrench upon the sample issue particularly when there is no dispute with regard to “other conditions” stipulated in the Exemption Notification issued in connection with the DEEC Scheme. - HC
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Seizure of assorted diamond studded jewellery - The Respondent cannot be directed to accept the report when it was found to be unreliable. The Respondent Authorities have gone by the basic criteria of valuing the goods in question by considering the transactional value based on invoices found in possession of the Petitioner himself. Despite the same, Authorities at each stage have taken a lenient view and have reduced redemption and personal fines. - HC
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Delay in adjudication of show cause notice (SCN) - the Petitioner is justified in submitting that the Petitioner was under bonafide belief that the Respondents were not interested in adjudicating the show cause notice and that the same was dropped. - There are no justification for the inaction on the part of the Respondents for keeping the adjudication of the show cause notice pending and for seeking revival of the same after a period of 9 years - the show cause notice quahsed - HC
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Denial of redemption fine in lieu of confiscation of goods - Since import of the disputed good was prohibited, the Adjudicating Authority had the discretion to either allow redemption or not. In our considered view, the Adjudicating Authority has correctly exercised its discretion not to allow redemption of hazardous waste to the appellant and the Commissioner (Appeals) has, in the impugned order, correctly upheld it. - AT
IBC
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Initiation of CIRP - Financial creditors - The use of the word ‘if any’ clearly makes that it is not essential for all financial debt to be with interest. However, the essential condition which is required to be fulfilled for a debt to be a financial debt is “disbursement for time value of money” which has to be fulfilled for all transactions referred to in clauses (a) to (f) in sub-section (8) of Section 5 of the Code. - AT
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Initiation of CIRP - existence of debt and dispute or not - NCLT rejected the application - the issues raised in these emails are not moonshine defense, the issues regarding quality of work were raised much prior to the issuance of Section 8 notice. - The Adjudicating Authority had to examine the defence of the Corporate Debtor to find out if there is pre-existing dispute. If the Adjudicating Authority is satisfied on those emails, it is not necessary to refer to explanations given by the Appellant. - AT
Service Tax
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Condonation of inordinate delay in filing appeals - Though we do not fully approve of the conduct of the appellant in not pursuing the matter in a time bound manner, considering the fact that the present claim for refund is for the subsequent period, i.e., from October, 2008 to December, 2008, we are of the view that this aspect of the matter can be taken note of by the learned Tribunal while considering the application for condonation of delay - HC
VAT
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Valuation - inclusion of the turnover of liquor sold in the petitioner's hotel while computing taxable turnover - the petitioner is not required to include the turnover relating to the sale of alcoholic liquor sold in its restaurant into the turnover of foods and drinks as sale of alcoholic liquor are separately liable to tax - HC
Case Laws:
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GST
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2022 (12) TMI 362
Maintainability of petition - availability of alternate remedy - remedy of approaching the Tribunal under Section 112 of the Act of 2017 - HELD THAT:- It is an admitted position that the Tribunal is not constituted as of today. We are not informed whether the order passed by the Telangana High Court has been challenged by the Union of India higher nor we are shown any view taken by any Court that even though the Tribunal is not made functional, no Writ Petition should be entertained. The learned Counsel for the Respondents, who is representing the Union of India, is unable to inform us what is the remedy for the Petitioner. The Advocate for the Respondents has sought to contend that though there is no Tribunal, nor it can be committed when it will be set up in near future, the position that the Petitioner is remedy-less, is appropriate. Therefore, it is necessary for us to know whether the Union of India has given such instructions to the Advocate. The Central Board of Indirect Taxes and Customs will file an affidavit in this Petition as to whether the stand taken by the Advocate for the Respondents and pressed seriously in the argument that the position that the Petitioner is remedy-less till the tribunal is made functional, is appropriate, is on the instructions of the Respondent Union of India and as to whether the judgment and order passed by the Telangana High Court in the case of M/s. Appario Retail Pvt. Ltd. [ 2021 (11) TMI 153 - TELANGANA HIGH COURT ] is challenged. Stand over 23 January 2023. The affidavit to be filed before the next date. To be heard along with Writ Petition No. 10883 of 2019 where the notice is issued to the Central Board of Indirect Taxes and Customs on similar issue.
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2022 (12) TMI 361
Seeking grant of regular bail - availment of irregular input tax credit - fake/forged documents - HELD THAT:- There is no denial to the fact that the economic offences constitute a separate class of their own, but trite it is that presumption of innocence is one of the bedrocks on which the criminal jurisprudence rests. Time and again, Apex Court has reiterated the need to integrate the right of investigating agencies to have effective interrogation of the accused with the right of liberty of the accused. Coming to the facts of the present case the investigation stands concluded and the challan stands presented. Thus, there cannot be any apprehension that the petitioner(s) shall tamper with the evidence. Considering the cumulative effect of all these circumstances the Court finds that petitioner-Arjun cannot be kept behind bars for an indefinite period. Petitioner-Arjun alias Muggu is ordered to be released on bail on his furnishing bail/surety bonds subject to the satisfaction of the Ld. Trial Court/Duty Magistrate concerned. The Court finds that no ground is made out for granting bail in his favour - Petition dismissed.
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2022 (12) TMI 360
Health care institute or Educational institute - Charitable Society, having the main object and factually engaged in imparting Medical Education - taxable supply or not - requirement of registration in view of the provisions of section 23 of the CGST Act - Outward supply/composite supply - cost of Medicines and Consumables recovered from OPD patients along with nominal charges collected for Diagnosing by the pathological investigations - nominal charges received from patients (who is an essential clinical material for education laboratory) towards an Unparallel Health Insurance Scheme to retain their flow at one end for the purpose of imparting medical education as a result to provide them the benefit of concessional rates for investigations and treatment - nominal amount received for making space available for essential facilities needed by the students and staffs such as Banking, Parking, Refreshment etc. which are support activities for attainment of main activities. Whether the impugned activities by the Appellant wherein they are providing educational services by way of imparting medical education through MGIMS, and providing the health care services through Kasturba Hospital, can be construed as Business in terms of the provisions of CGST Act, 2017? - HELD THAT:- On perusal of both the definitions of the term business, it is noticed that the definition of the term business under the erstwhile Bombay Sales Tax Act, 1959, does not include the entries profession and vocation, which are present in the definition of the term -business under the CGST Act, 2017, thereby, rendering much wider meaning and scope to the term business under CGST Act, 2017. Thus, the term business under the CGST Act, 2017 is wide enough to include the activities of the Appellant-Society. Thus, the contention of the Appellant is not tenable. Whether the said activities of educational services and health care services undertaken by the Appellant will be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017, or not? - HELD THAT:- As it is an admitted and undisputed fact that the Appellant-Society are providing the education and health care services through its two arms, namely, MGIMS and Kasturba Hospital, respectively. Further, there is also no doubt about the Appellant-Society being a person in term of its definition provided under section 2(84) of the CGST Act, 2017, which inter alia includes the society. Moreover, it is also evident that the said activities are being performed by the Appellant-Society in the course of their business as the said activities comprising imparting of medical education to the students to address the shortage of doctors in rural India, and providing the health care services to the poor rural and urban people are the sole objectives of the Appellant-Society. Thus, it is opined that the activities of the Appellant can be rightly construed as supply in term of section 7(1)(a) of the CGST Act, 2017. As the services of medical education provided by the Appellant-Society is recognized by the Maharashtra University of Health Sciences, Nashik and Nagpur University, MGIMS, an establishment of the Appellant-Society, falls under the category of educational institution as defined under the GST law, and accordingly, it is held that the medical education services provided by the Appellant to the students will attract nil rate of GST as per the aforesaid entry 66, ibid. Since the impugned activities of the Appellant pertaining to imparting of medical education and health care services as discussed hereinabove have been held to be supplies in terms of section 7(1)(a) of the CGST Act, 2017, the said activities would also be considered as outward supply for the Appellant in terms of the provisions of section 2(83) of the CGST Act, 2017. Therefore, the fees. Therefore, the fees and other charges received from students, and recoupment charges received from patients would accordingly constitute consideration for outward supply - it is observed that the core services of the Appellant-Society, viz. provision of medical education to the students and provision of health care services to the patients, are exempted supplies. On careful perusal of the aforesaid definition of the term composite supply and the essential conditions enumerated hereinabove, it is seen that the composite supply comprising two or more supplies of goods or services or both, or any combination thereof should be made by a taxable person to a recipient. However, in the instant case, the main services of the Appellant, i.e., educational services and health care services are provided to the students and patients whereas the services of renting of immovable property are provided to some third party consumers, who run their establishments on their own account on the land made available to them by the Appellant against certain consideration. Thus. It is apparent that these services under consideration are not provided to a single recipient as mandated under the provisions of composite supply under section 2(30) of the CGST Act. 2017, and accordingly, cannot be said to be part of the composite supply. Appellant receive an amount on account of disposal of wastes such as medical equipment, apparatus, and other instruments, etc., by selling them to the interested vendors - HELD THAT:- The said activities of the supply of the scrap to the vendors are not being made to the students or the patients. who are the recipients of the exempted supply of educational services or health care services respectively, and therefore, the said supply can aptly be construed as independent and separate supply, attracting the levy of GST thereon at the applicable rate prescribed under Notification No. 01/2017-C.T. (Rate) dated 28.06.2017. The Appellant-Society are rendering exempted services as well as taxable services. Hence, it is concluded that the Appellant-Society are liable to take registration in terms of section 22(1) of the CGST Act, 2017 provided their aggregate turnover exceeds the threshold limit prescribed under the said Act.
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2022 (12) TMI 359
Levy of GST - reimbursement of expenses at actual cost which are incurred by the employee staffs on behalf of Company - applicability of Reverse Charge Mechanism on reimbursement of expenses paid on behalf of the Company at actuals which are incurred by the employee staff who is also a whole-time director Company - time limitation to take input tax credit - HELD THAT:- Services by an employee to the employer in the course of or in relation to his employment are covered under Clause 1 of the Schedule III which relates to the activities or transactions which shall be treated neither as a Supply of Goods nor as a Supply of Services. Hence the services provided by the employees of the Applicant to the Applicant are not a supply. Further, the expenses incurred by the employees are expenses of the applicant and the consideration is payable by the applicant himself and later on reimbursed by the applicant. The amount paid by the employee to the supplier of service represents the amount paid by any other person and is therefore covered under the term consideration paid by the applicant to the service provider for the services received by the employees on behalf of the company. This amount reimbursed by the applicant to the employee later on would not amount to consideration for the supplies received as the services of the employee to his employer in the course of his employment is not a supply of goods or supply of services in terms of clause 1 of the Schedule III of the CGST Act, 2017 and hence the same is not liable to tax. A director who has taken an employment in the company may be functioning in dual capacities, namely, one as a director of the company and the other on the basis of the contractual relationship of master and servant with the company (employment). As per the circular only part of employee Director s remuneration which is declared separately other than salaries in the Company s accounts and subjected to TDS under Section 194J of the IT Act shall be treated as consideration for providing services which are outside the scope of Schedule III of the CGST Act, and hence taxable under reverse charge basis. Hence Reverse Charge Mechanism is not applicable on reimbursement of expenses on actuals, to a whole-time director of Company who is also an employee of the company. Whether section 16 (4) of the GST Act, 2017 applies to invoice issued under reverse charge mechanism and also wants to know when can the ITC on payment of tax under RCM be availed? - HELD THAT:- Section 15 (2) of the CGST Act 2017 says about what all shall be included in the value of supply. Based on the same, it is concluded that reverse charge is to be calculated on the gross consideration paid or payable to the supplier, i.e, the values excluding GST.
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2022 (12) TMI 344
Reversal of ITC - specific ground was taken that all the GST was deposited timely and all the relevant documents were placed before the authorities and the claim of ITC was wrongly cancelled by the Assessing Authority - assessment year 2019-20 - HELD THAT:- From reading of both the Sections 16 and 74 of CGST Act 2017, it is clear that the Legislature has provided the benefit of input tax credit to those assessee who had supplied goods or services and are registered dealers and further on the requirement being fulfilled as per the provisions can make claim. Section 74 puts embargo and places a restriction and gives a handle to the authorities that in case of availing the benefit wrongfully or by reasons of fraud or willful mis-statement of the fact a notice is issued to the assessee and upon adjudication amount is recovered and ITC claimed is reversed. In the present case a show cause notice was issued to the assessee on 09.12.2019 which was replied by the assessee. The claim was rejected vide order dated 23.01.2020, thereafter, the appellate authority while confirming the order of cancellation of ITC had recorded a categorical finding to the effect that though all the documents were placed on record by the assessee yet it was found that no evidence was placed on record in regard to the payment made for loading and unloading of the goods. This Court finds that finding recorded by the first Appellate Authority is cryptic as it only states in its order that the registration of the supplier was cancelled, but no date of cancellation has been mentioned so as to demonstrate whether transaction took place prior to cancellation or subsequently - This Court finds that the finding recorded by the first Appellate Authority cannot be sustained and the same is hereby set-aside. The matter is remanded to the first Appellate Authority to record specific finding as to when the registration of supplier i.e. M/s Riddhi Siddhi Enterprises, Agra was cancelled - Petition allowed in part.
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2022 (12) TMI 343
Interest on delayed payment of refund - Section 50(1) of Central Goods and Services Act, 2017 - HELD THAT:- It is to be noted that out of Rs.1,45,925/-, substantial amounts have been paid in two tranches and only Rs.1,642/- remains to be paid is learned writ petitioner counsel's say but learned Revenue Counsel says that this needs to be verified qua records. Writ petitioner to pay the admitted liability of Rs.1,45,925/-[Rupees One Lakh Forty Five Thousand Nine Hundred and Twenty Five only] or demonstrate to the satisfaction of Respondents 1 and 2 that substantial part of same has been paid and pay the balance within one week from today i.e., on or before 12.12.2022 - On payment or demonstration to the satisfaction of respondents 1 and 2 (as above), the impugned notice and the consequent impugned garnishee notice will stand set aside. Captioned writ petition stands disposed of.
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2022 (12) TMI 342
Refund of IGST paid - goods exported under Advance Authorizations/EOU Scheme - availment of of full exemption of Integrated Goods and Service Tax in the course of import of raw materials which have been imported for use in the manufacture of export goods - HELD THAT:- In the enquiry pursuant to the notice, various factual aspects arise such as whether the Petitioner s products are entirely made from imported raw material or not, whether they are manufacturing products made partly out of imported raw material, partly out of domestically procured raw material and whether the Petitioner is purchasing packing material locally would be ascertained and whether petitioner then is entitled to input tax credit on the said purchase locally. This enquiry as regards entitlement of the Petitioner to receive any refund is already under way. Letters have been issued to the Petitioner, which the Petitioner has responded. In these circumstances to give declarations of law as sought by the Petitioner would be not only academic but also premature. Learned counsel for the Petitioner states that on the limited aspect regarding the power of the Respondent CGST Authorities to issue instructions dated 30 June 2021 to Customs Authorities, Petitioner will file a separate Writ Petition and the other challenges raised by the Petitioner would be raised at the appropriate time. Petition disposed off.
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2022 (12) TMI 341
Cancellation of the Registration Certificate of petitioner - failure to file Goods and Services Tax monthly returns - Section 29 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In identical circumstances, this Court, in the case of Tvl.Suguna Cutpiece Vs The Appellate Deputy Commissioner (ST) (GST) and others [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , it was held that The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid. This Court has been consistently following the directions issued in the case of Tvl.Suguna Cutpiece Vs Appellate Deputy Commissioner (ST) (GST) and others and the Revenue/Department has also accepted the said view as evident from the fact that no appeal has been filed in any of the matters, this Court intends to follow the above order of this Court. Petition disposed off.
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2022 (12) TMI 340
Classification of services - export of services or not - services provided by the company to its parent company relating to the test benches which are in the name of MRO services - be classified under heading 9987 as Maintenance, Repair or Overhaul services in respect of aircrafts, aircraft engines and other aircraft components or parts or not - place of supply - location of the recipient - N/N. 02/2020-Integrated Tax dated 26th March 2020. HELD THAT:- The contract is for Maintenance and Repair of MERMOZ system which is used for testing the air worthiness of the aircraft. Therefore the impugned services are relevant to maintenance and repair services of instruments for testing airworthiness of an aircraft - the impugned services are covered under maintenance and repair services of other machinery and equipment and are classifiable under SAC 998719. The entry at SI.No. 25(ia) and concessional rate of GST of 5% is applicable to only Maintenance, repair or overhaul services in respect of aircrafts, aircraft engines and other aircraft components or parts. In the instant case the applicant is providing maintenance and repair services of test bench equipment (Mermoz system) which are used for testing air worthiness of an aircraft. The said equipment does not qualify to be an aircraft or as an aircraft engine. To be termed as 'other aircraft components or parts', it should form a constituent piece or ingredient that is used to build an aircraft, which is not the case here. The test bench equipment (Mermoz system) neither forms part of aircraft nor forms a component of aircraft and therefore the said entry at SI.no.25 (ia) of Notification No. 11/2017-Central Tax(Rate), dated: 26.06.2017 as amended vide Notification No.02/2020-Central Tax (Rate), dated: 26.03.2020 and the concessional rate of GST of 5% is not applicable. The place of supply needs to be determined to decide whether the impugned supply of services by the applicant amounts to export of services or not. The determination of place of supply is beyond the jurisdiction of this authority and we don't intend to discuss the other issues / points of the definition.
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Income Tax
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2022 (12) TMI 358
Foreign exchange fluctuations loss on unmatured, matured and cancelled forward contracts - loss on Forward Cover Purchase Contracts for foreign exchange (hereafter Forward Contracts ) - allowable as a deduction from the income chargeable to tax for the relevant assessment year notwithstanding that the Forward Contracts have not closed - Whether the losses on account of foreign exchange fluctuations on forward contracts are allowable undersection 37(1) of the Income Tax Act and covered as hedging transactions u/s 43(5)(a) of the Act or should be disallowed as speculation losses under Section 43(5) of the Act in view of the CBDT Instruction No. 3/2010 dated 23.03.2010? - HELD THAT:- Undisputedly, the Forward Contracts, in the present case, are hedging transactions. Assessee has reinstated its debits and credits from the underlying transactions on the value of the foreign exchange on the due date. The corresponding losses/gains under the Forward Contracts, thus, were also required to be accounted for to arrive at the real profits. It would be anomalous if, on the one hand, debtors and creditors, in respect of current assets, are stated at the current value of foreign exchange and the corresponding loss on the hedging transaction is not accounted for. In essence, the Assessee has stated his income by taking into account the foreign exchange value as it stands on the due date. It is well settled that the CBDT Instructions and circulars which are contrary to law are not binding. This Court finds no fault with the order of the learned CIT(A) as well as the learned Tribunal in finding that the loss, on account of Forward Contracts, cannot be considered as speculative and the AO had erred in disallowing the same. The questions raised (Questions I and II) are thus, covered by the decision of the Supreme Court in CIT v. Woodword Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] . Disallowance u/s 14 A - determine the expenditure attributable to earning dividend income at 0.5% of the value of average investment in terms of Rule 8D of the Rules - HELD THAT:- It is not disputed that the AO can ascertain the expenditure attributable to earning tax-free income if he is not satisfied that the Assessee s allocation of expenses for earning the said income or otherwise and or is otherwise dissatisfied with the Assessee s explanation. A plain reading of the impugned order passed by Tribunal indicates that the Tribunal also did not find, as a matter of fact, that the Assessee had devoted any of its resources for managing the said investments or had otherwise incurred any expenditure for the same. It is relevant to note that the Assessee s assertion, that its investment was monitored by a group of company without levying any charge or fee, was not found to be incorrect. Tribunal did not accept the AO s determination of ₹8,53,916/- as expenditure incurred for earning the exempt income. Notwithstanding the above, the learned Tribunal held that the deployment of manpower for monitoring the dividends from mutual funds cannot be ruled out. On this basis the learned Tribunal had reduced the disallowance from ₹8,53,916/- to ₹1,00,000/-per month on ad-hoc basis. As submitted on behalf of the Revenue that reduction on ad-hoc basis is not permissible. We are of the view that once the Revenue Authorities have found no reason to doubt the Assessee s claim that the investments have been managed by a group company without levy of charge, it may not be open for the tribunal to disallow expenditure on the basis that some deployment of manpower for managing the investment cannot be ruled out . Assessee has not appealed against the said decision. As noted above, the present appeal has been filed against the impugned order passed whereby the learned Tribunal had dismissed the appellant s appeal. The Revenue s appeal before learned Tribunal was confined to disallowance of loss on account of Forward Contracts.
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2022 (12) TMI 357
Denial of foreign tax credit u/s 90/90A due to delay in filing Form no.67 - taxpayer filed Form No.67, after the due date for filing the return of income u/s139(1) - HELD THAT:- We find that under Rule 128(9), as it stood during the year under consideration, provided that the statement in Form No.67, referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139, in the manner specified for furnishing such return of income. Thus, during the year under consideration, the assessee was required to furnish Form No. 67 on or before the due date of filing the return of income under section 139(1) of the Act, as per the provisions of Rule 128(9). With effect from 01/04/2022, the time period for furnishing statement in Form No. 67 has been extended till the end of the assessment year in which the corresponding income has been offered/assessed to tax and the return of such assessment year has been furnished within the time specified under 139(1) or 139(4) of the Act. As in Anuj Bhagwati [ 2022 (9) TMI 1397 - ITAT MUMBAI] while deciding a similar issue held that section 90/91 of the Act has not been amended insofar as grant of foreign tax credit is concerned and Rules cannot override the Act and therefore filing of Form No. 67 is not mandatory but it is directory. Thus mere delay in filing Form No. 67 as per the provisions of Rule 128(9), as they stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India. Since in the present case, the claim of the assessee was denied on this technical aspect without going into the merits, therefore, we deem it appropriate to direct the jurisdictional Assessing Officer to decide the claim of the foreign tax credit on merits, after accepting the Form No. 67 and other related documents filed by the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
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2022 (12) TMI 356
Disallowance u/s 36(1)(iii) - AO held that the assessee did not capitalize any interest on such loans in respect of land classified as current asset - interest capitalization in case of fixed asset and not with respect to current asset - CIT-A deleted the addition by holding that the land is stock-in-trade - HELD THAT:- Undisputedly, the stock-in-trade are to be valued on conservative basis on lower of cost or market value. The interest costs are not to be capitalized along with stock-in-trade. This being so, the interest cost so paid by the assessee towards stock-in-trade would be revenue expenditure for the assessee. This situation would be akin to a situation wherein the assessee has borrowed working capital loans to procure stock and paid interest on such loans. In such a case, the interest costs are not to be capitalized with stock-in-trade but interest payment would become part of trading operations for the assessee and the same are allowable as revenue expenditure. The proviso to Sec.36(1)(iii) as introduced w.e.f. 01.04.2004 would apply only in situation wherein the capital has been borrowed for acquisition of fixed assets and not otherwise. The Hon ble Court Ceebros Hotels (P.) Ltd. [ 2021 (10) TMI 686 - MADRAS HIGH COURT] inter-alia, confirmed the stand of Tribunal that the term put to use in the proviso to Sec.36(1)(iii) would apply to capital assets / income earning apparatus facilitating the business activity and therefore, the statute envisages the importance of such capital asset should be put to use in the business in contradistinction to the inventory of the assessee. The decision of Bangalore Tribunal in DCIT vs. Cornerstone Property Investment (P) Ltd. [ 2020 (8) TMI 366 - ITAT BANGALORE] also support the view that interest paid on borrowed funds for acquisition of land which was an inventory would be allowable u/s 36(1)(iii). The decision of Hon ble High Court of Madras in the case of Mahindra World City Developers Ltd. [ 2019 (5) TMI 1274 - MADRAS HIGH COURT] as referred to by Ld. Sr. DR, is a case wherein proviso to Sec.36(1)(iii) has been found to be applicable and this case laws deals with interest on capital borrowed to acquire capital assets. Therefore, this case law does not apply to the facts of case before us. Revenue appeal dismissed.
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2022 (12) TMI 355
Revision u/s 263 - Deduction u/s 80P - eligibility of income earned on the investment made with the cooperative bank - HELD THAT:- In the present case, we find that admittedly the interest income was earned from the cooperative banks, the cooperative bank is also a specie of cooperative society, therefore, the interest income earned by the cooperative society from the cooperative banks qualifies for deduction u/s 80(P)(2)(d) - Such interest also qualifies for exemption u/s 80P(2)(a)(i) as held by in the case of Nashik Road Nagari Sahkari Patsanstha Limited [ 2021 (12) TMI 1259 - ITAT PUNE] . We find that the issue which is subject matter of revision is covered in favour of the assessee by judicial precedents. Therefore, it cannot be said that the assessment order is erroneous or prejudicial to the interests of the revenue. Therefore, we are of the considered opinion that the order of revision passed by the ld. PCIT u/s 263 of the Act cannot be sustained in the eyes of law. Hence, the grounds of appeal raised by the assessee stand allowed.
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2022 (12) TMI 354
Disallowance u/s.36(1)(va) - Intimations issued u/s.143(1) - amount received by the assessee from employees as contribution to the Employees Provident Fund (EPF)/Employees State Insurance Corporation (ESIC) etc. was not credited to the employees accounts on or before the due date as prescribed under the respective Acts - AR referred to section 5 of the Payment of Wages Act, 1936, to contend that deduction made from an employee s salary for the month of October should suffer disallowance only if it is not paid by 15th December - HELD THAT:- There is no merit in the contention of linking the date of deposit of the employees share in the relevant funds with the date of payment of wages. Section 5 of the Payment of Wages Act simply deals with the Time of payment of wages . It does not stipulate any time limit for deposit of the employees share in the relevant funds. For that purpose, the relevant Acts give a window for depositing the contribution within 15 days of the last month's salary. Thus, contribution to the relevant fund towards the salary for the month of October-ending should be deposited before 15th November. CIT(A) was justified in sustaining the adjustment u/s 143(1)(a) by means of disallowance made in these cases for late deposit of employees share to the relevant funds beyond the date prescribed under the respective Acts. Both the sides are agreeable that the facts and circumstances of all the appeals except the two, which will be taken up hereinafter, are similar. We, ergo, countenance the disallowance. The first case which involves some different facts is IT Cube Solutions Pvt. Ltd.- AR submitted that the information in audit report in point 20(b) was wrongly given pertaining to preceding year. He pointed out this fact from the audit report for the financial year 2016-17, which refers to due date of payment as 15-05-2015 and the actual date of payment as 12-05-2016. This shows that inadvertently the auditor recorded due dates for payment as pertaining to the preceding year and actual date of payment for the current year for the purposes of indicating the disallowance of expenditure u/s.36(1)(va). The AO is directed to verify this fact and make the disallowance u/s.36(1)(va), if warranted, as per the correct figures. The second case is Exfo Electro Optical Engineering (I) Pvt. Ltd - AR contended that the auditor inadvertently mentioned the amount of employees share as well as the employer s share in point 20(b) of the audit report. The AO is directed to verify the factual position in this regard and make disallowance only in respect of employees share. Appeal allowed for statistical purposes.
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2022 (12) TMI 353
TP Adjustment - interest on trade receivables - TPO proposed to compute the interest on delayed trade receivables by using weighted average method - TPO computed the interest by using LIBOR six months + 400 basis points - HELD THAT:- As we direct the TPO to compute the interest on receivables based on the principle enunciated hereinabove. The directions of the DRP of granting credit period of 90 days is to be granted for year under consideration. In the event, it is found that the interest so computed stands subsumed in the Working Capital Adjustment, no further disallowance has to be made, as has been observed in case of Orange Business Services India Solutions Pvt. Ltd. [ 2018 (2) TMI 1151 - ITAT DELHI] Set off of brought forward business losses and unabsorbed deprecation, set off of MAT credit, and non-granting of foreign tax credit - HELD THAT:- We direct the Ld.AO to consider the above claim in accordance with law. The assessee is directed to furnish relevant information / details in support of the claim. Accordingly, these grounds filed by assessee stands allowed for statistical purposes. Levy of interest u/s. 234A B and levy of penalty u/s. 271(1)(c) - AR submitted that 234A interest is not applicable as the assessee filed its return of income within the period of limitation for year under consideration - HELD THAT:- We direct the AO to verify the submission of assessee and to consider the claim in accordance with law. Interest u/s. 234B 271(1)(c) penalty are consequential in nature and do not require adjudication.
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2022 (12) TMI 347
Taxability of the gain arising out of the Development agreement - JDA - transfer u/s 2(47)(v) - recognition of revenue - HELD THAT:- As the owner shall retain legal possession, domain and control over the property till the same is developed and sold either in whole or in parts to prospective purchasers as provided in the said agreement. It is also noted that from the commercial arrangements and the risk rewards attributable to land owners and developers, it is clear that the essence of share of revenue derived for the land owner is from transfer of the undivided share of right, title and interest in the entire land and the developer share of revenue is from construction and transfer of the super built and development of common area in the project. The reliance placed by ld. D.R on the Guidance note on accounting for real estate transaction (Revised) 2012 to hold that percentage completion method has to be followed is incorrect proposition as even the Guidance note states that revenue should not be recognized till such time legal title is validly transferred to the buyer. In our opinion, the assessee has been following project completion method of recognition of revenue and this system of accounting has been followed by from year to year which can be seen from the assessment order in assessment year from 2014-15 passed u/s 143(3) dated 19.5.2015. Thus, it was the submission ld. AR that it is not open to the department to change the method of accounting in the middle of the period of completion of the project even percentage competition method is applicable. He submitted that rule of consistency has to be followed. For this purpose, he relied on various judgements. In our opinion, the additions made under the income from business by computing the income based on percentage completion method will result in double taxation which is impermissible in law. The proposition of the learned Assessing Officer that the income offered in the subsequent years is income of the impugned assessment year will result in double taxation which is impermissible in law. It is a settled position of law that department cannot collect tax twice on the very same income and observation of the AO is absolutely contrary to the scheme of the Act that income can only' be taxed once more so when the revenue has accepted the income determined using the same method in two earlier assessment years and once subsequent assessment year. Further the information has been given to the Investigation Officer during the course of investigation. Therefore, it is more than reasonably correct to follow the same method of revenue recognition as there is an implied formidable fortified concurrence of the revenue on the method adopted by the assessee. The observation of the AO is further not under the spirit and the scheme of the Act. Department is excepted to assist the assesses in computing taxable income as per the provisions of the Act as enunciated by the CBDT in Circular No. No. 14 (XL-35) of 1955, dated 11.04.1995 and amplified by the decision Rajeshwari Cotton Ginning Pressing Industries [ 2015 (11) TMI 1819 - KARNATAKA HIGH COURT] . Therefore, the officers of the department ought to have atleast guided the assessee in offering income correctly. Failure to even suggest the same during the course of enquiry and therefore, the statement of the CIT(A) that the assessee was not directed to offer income in subsequent years is absolutely not within the spirit and intent of the Act and also unsustainable in law. Joint Development agreement and the method of revenue recognition of the assessee are details/ information which were already available with the department during the course earlier assessment proceedings and other proceedings and the department has accepted the method of computation of income from the Habitat project as declared by the assessee i.e. completion contract method. On same set of facts, now onwards, the department wanted to change the method of computation of income by following percentage contract completion method instead of project completion method. As regards the argument of ld DR that advance received from the prospective buyers vide sale agreement represent the receipts in respect of the contracts undertaken, it was found that this was not supported by facts and figures. The assessee is not a contractor who has undertaken the construction activity. On the other hand, is a land owner who has given the land for construction to M/s. G-Corp Homes Pvt. Ltd.. He is getting his share of constructed area and against which assessee entered into sale agreement with various parties. The sale agreement is different from sale deed. In case of sale deed, the right in property transferred from seller to buyer immediately. However, it does not transfer in case of sale agreement. Sale deed is an executed contract. On the other hand, sale agreement is executory contract. In case of sale deed, seller can sue the buyer for breach of the contract. However, in the case of sale agreement, seller can sue the buyer only for damages but not for the price. In case of sale, if the property is destroyed, loss is borne by the buyer himself as he is the owner of the property. In case of agreement to sell, loss falls on the seller even though possession in the hands of buyer. Therefore, the contention that the amounts received from the prospective buyer through agreement to sell should be treated as sale was fallacious. The facts in the instant case, showed that there was no construction work done by assessee itself and it was the developer i.e. M/s. G-Corp Homes Pvt. Ltd. and there was no handing over of the constructed area by present assessee to prospective purchasers. What was received from the prospective buyers was in the nature of advance, therefore, it cannot be considered as amount received towards absolute transfer of price of flats intended to be sold. The system of accounting of working out profits on completed contract basis was an accepted system of accounting and such system had been followed consistently in the past by the assessee, which had been accepted by the department in earlier years, therefore, there was no justification, whatsoever to reject this system by invoking the provisions of section 145 of the Act and making estimate of profit by AO. Thus, in case of JDA the assessee being landlord share the proceeds arising from the development of immovable property belonging to the land owner share at specified percentage of constructed area and retains the legal ownership, domain and control of the land with him being a land owner and no portion of it will be transferred to the developer or his nominee, as the case may be. There is no allocated area designated as owner share or developer share as the case may be. The revenue shall be recognized by land owner being present assessee only at the point of transfer of risk and rewards of ownership of divided/undivided shares of land to the purchaser of unit i.e. at the point of conveyance or possession, whichever is earlier. Assessment u/s 153C - Income recognition of one business cannot be applied to another - Whether the addition could be made merely on the basis of admission made by the assessee in the statement recorded u/s 132(4) of the Act? - The date of search in the case of M/s. Ramaiah Developers Builders Pvt. Ltd. was on 23.8.2016 and the assessment has already been concluded. Thus, for the assessment year 2014-15 which is a concluded assessment, to frame assessment u/s 153C of the Act the seized material is must. In the present case, the assessing officer relying only on the basis of sworn statement recorded u/s 132(4) as well as 131 of the Act without valid seized material. In our opinion, that should be a valid seized material found during the course of search and the sworn statement of the Directors cannot substitute this seized material found during the course of search, though sworn statement is a piece of evidence to frame the assessment but it is not conclusive evidence to frame the assessment or sustain the addition. For the assessment year 2015-16 and 2016-17, these assessments were framed u/s 143(3) r.w.s. 153D of the Act and there was no valid seized material found during the course of search to frame the assessment. The ld. AO cannot rely only on the sworn statement recorded from Shri M.R. Seetharam to frame the assessment. In our opinion, as discussed in earlier para, sworn statement is not conclusive evidence to frame the assessment or to sustain the addition. The addition shall be based on the evidence found during the course of search action or during the course of assessment. CIT(A) after verifying the detailed submissions, had allowed the appeals filed by the Respondent holding that the sale of flats (received under Development Agreement) are to be taxed in the year of execution of sale deed and not in the year of advances received. In view of this, we confirm the order of the CIT(A) in all these years in deleting the addition made by AO. Since we have confirmed the deletion of additions by ld. CIT(A) made by ld. AO, at this stage, we refrain from commenting on the head of income under which the income to be taxed as there is no accrual of income in these assessment years. Appeals of the revenue are dismissed. Proceedings u/s 153C in the absence of any incriminating material is bad in law - In the present search and impugned assessment proceedings no new / hidden fact has come to light. The learned assessing officer has only changed the opinion and has now sought to tax the receipts in the year of receipt as against the year of registration. Thus, the additions in the impugned order are purely based on a change in legal opinion and not on any incriminating material . The predominant condition for satisfaction under 153C of the Act is the incriminating nature of evidence found. Though there has been change in the wordings of the section, the intention behind the section is not changed and the presence of document or evidence with incriminating nature is necessary before a notice u/s. 153C is issued. Non-recording of satisfaction u/s 153C invalidates the entire proceedings - Recording of satisfaction by Assessing Officer of searched person is a necessary pre-condition for initiation of proceedings u/s. 153C - Section 292B and 292BB would be of no use or avail to the department in the matter for the reason that the satisfaction of preconditions U/s. 153C are pre-requisite for assumption of jurisdiction u/s. 153C of the Act and department cannot take shelter u/s. 292B / 292BB of the Act, as jurisdictional defect / lacuna cannot be cured u/s. 292B /292BB of the Act. CIT(A) not dealt these grounds in his orders for these assessment years and hence all the legal grounds raised by the assessee herein remitted back to Ld. CIT(A) for his adjudication. The COs filed by the assessee are partly allowed for statistical purposes.
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2022 (12) TMI 346
Assessment u/s 153A - unsecured loan taken by the assessee - addition u/s 68 treating the unsecured loan as non genuine loan - addition on account of alleged commission paid u/s 69C - Addition basis of the statement of third party - HELD THAT:- AO in remand report observed that there is no incriminating documents found during the course of search has also been accepted by the CIT (A). AO observed that Gemini Commerce Pvt. Ltd. is the shell providing accommodation to various persons and in view of the statement of Arpit Khandenwal recorded u/s 132(4) of the Act the assessee contended that no question was asked regarding the list and advances made by Gemini Commerce Pvt. Ltd. to the assessee and that Arpit Khandenwal in his statement as never stated that Gemini Commerce Pvt. Ltd. is a shell company and providing only accommodation entries to various persons in the case to guise unsecured loans. The statement of Arpit Khandenwal if found correct then no question was asked to Arpit Khandenwal in his statement regarding providing entry to various persons in cash of loans and he never even admitted that Gemini Commerce Pvt. Ltd. is shell company. We are of the opinion that on the basis of the statement of Arpit Khandelwal and Harsh Agrawal the AO has no jurisdiction to make the additions and that in the proceedings u/s 153A of the Act when the assessment was not pending. The Assessing Officer failed to note that merely on the statement without any corroborative evidence to a conclusion that the AO to make the addition which is not sustainable in law. When the Assessing Officer and ld. CIT(A) has accepted that the assessments were completed and books of account were verified, returns were filed, the entire record are persuaded by the AO and the ld. CIT(A) when there is no incriminating material found then the statements recorded during the assessment proceedings has no evidentiary value when it is not supported with corroborative evidences. Assessee has made the submissions which are supported by M/s Mantri Share Brokers (P) Ltd. in 2017 (9) TMI 1668 - RAJASTHAN HIGH COURT Subsequently the SLP filed by the Revenue against the said judgment has been dismissed by the Hon ble Supreme Court 2018 (7) TMI 200 - SC ORDER Whereas, the ld. DR has supported his submissions by the Hon ble Supreme Court in the case of Bannalal Jat Constructions (P) Ltd. 2019 (7) TMI 137 - SC ORDER and in jurisdictional High Court decision in the case of Pr.CIT vs. Roshan Lal Sancheti 2018 (11) TMI 953 - RAJASTHAN HIGH COURT We have noted that the facts of the case law relied upon by the ld. DR are on the facts difference with the case of the assessee. The fact remains that the Revenue itself is not disputing that in respect of the unsecured loan taken by the assessee no incriminating documents were found in the search proceedings and the finding of the ld. CIT(A) on this very fact is not challenged before us in any of the grounds raised by the revenue. The requirement that the incriminating material to have the co-relation to the particular addition sought to be made is a logic that will hold good not only for Section 153 C of the Act but in relation to Section 153A of the Act as well. No error having been committed by the ld. CIT(A) in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the unsecured loan accepted and reflected in the return of income filed by the assessee. Therefore, the jurisdictional requirement of Section 153A of the Act was not satisfied. - Decided in favour of assessee.
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2022 (12) TMI 345
Disallowance of premium payable on redemption of debentures - addition on account of claim of premium on non-convertible debentures on proportionate basis - assessee paid the entire amount due on redemption of such debentures along with premium in the relevant Financial Year and claimed a deduction for the premium payable made in the year of actual redemption of debentures - AO treated the same as future expenditure provisional in nature and not allowable [ 2012 (4) TMI 128 - BOMBAY HIGH COURT] HELD That:- the issue under consideration has already been decided by the co-ordinate bench in Assessee s own case [ 2021 (9) TMI 743 - ITAT DELHI] - the moment the debentures were issued, the liability had arisen against the assessee which would constitute on expenditure allowable under section 37 of the Act. - What is important is that the liability to pay premium arises in the year in which the debentures were issued and could be proportionately spread over the period prescribed for maturity of such debentures. It matters little whether the debentures were redeemable at will or only upon maturity. Decided against the revenue.
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2022 (12) TMI 339
Reopening of assessment u/s 147 - Unexplained investment u/s 69A - income of assessee to the extent of cash deposit has escaped assessment - As argued not allowing reasonable opportunity to the assessee - HELD THAT:- The assessee failed to show or substantiate about the alleged denial of reasonable opportunity. Failed to appreciate that despite giving more than reasonable opportunity and fixing the appeal for more than eight times, the assessee is casual in making appearance. Not a single document is filed to substantiate such grounds of appeal or to disclose reasonable cause as to how the sufficient opportunity was not granted or any submission was filed before the ld. CIT(A)/NFAC. Thus, in absence of any submission written or oral, find no merit in the grounds of appeal raised by assessee and dismiss the same. In the result, grounds No. 1 and 2 of the appeal are dismissed. Addition of interest income and addition of cash deposit in the bank account - HELD THAT:- We find that the assessee neither before the Assessing officer nor before the First Appellate Authority or before the Tribunal has filed even a single document to substantiate the source of cash deposit or whether interest earned from Punjab National Bank was offered to tax. In absence of any documentary evidence or any submission oral or writing, no reason to deviate from the orders of the lower authorities. Accordingly, grounds No. 3 and 4 of the appeal are dismissed. Period of limitation to issue notice for reopening - A.Y. 2012-13 - HELD THAT:- As find that the assessment was re-opened on 27.03.2018. The assessment order was passed on 27.08.2019, thus, the assessment order was passed well in time period prescribed under the Act, i.e. nine months from the end of financial year when notice under section 148 was served. Therefore, no merit on this ground as well, which was dismissed. In the result, all the grounds of appeal raised by the assessee are dismissed. Both these appeals of the assessee are dismissed.
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2022 (12) TMI 338
Grant of recognition u/s 80G - substance over form - assessee is also registered u/s 12AA - assessee is substantially a religious trust or not - As per AO assessee failed to substantiate genuineness of charitable activities and therefore, did not fulfil the conditions as required u/s 80G(5) - HELD THAT:- In the present context given the facts when the assessee is registered u/s 12AA of the Act and when the provision of section 80G(5)(vi) of the Act has been complied with, we do not see any reason for refusing the assessee the grant of exemption u/s 80G of the Act. Department has also not brought out a case where they can prove through evidences that the assessee-trust has violated the stipulations contained in sec. 80G(5B) - revenue authorities have not demonstrated anything showing substantial expenditures of the fund received in donation by the assessee for religious purposes and whether it is exceeding the permissible limit of 5%. It has also been mentioned by the ld. CIT (Exemption) that the assessee has not provided head-wise details of various expenditure but all these details have been submitted before him and as annexed before us in the paper book. While exercising the power to reject or accord approval u/s 80G(5) the Commissioner acts as a quasi-judicial authority. Therefore, the conclusion arrived at by him is expected to be supported by valid and cogent reasons. It is also expected that he should apply his mind to the facts of each case and give reasons either to grant or refuse recognition/approval. This requirement is very much imperative on the part of the Commissioner particularly having regard to the statutory provision under which he functions. This proposition has been observed and upheld by the Hon‟ble Andhra Pradesh High Court in the case of Tirumala Tirupati Devasthanam [ 2001 (8) TMI 108 - ANDHRA PRADESH HIGH COURT] If Trust/Institution incurs expenses for religious purposes which is inclusive and is only a small part of the income, and if the substantial work done by the trust is charitable in nature benefitting the public at large then the institution or trust has to be granted exemption u/s 80G of the Act. In the present case of the assessee, the department has not been able to make out a case through facts that the assessee is substantially a religious trust. That on examination of the facts and circumstances we set aside the order of the ld. CIT (Exemption) and direct him to grant exemption/approval u/s 80G of the Act to the assessee-trust. Grounds of appeal are allowed.
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2022 (12) TMI 337
Penalty u/s 271(1)(c) - defective notice u/s 274 - Allegation of non specification of limb under which the penalty proceedings having initiated - disallowance of prior period expenses - burden of proof on the assessee - HELD THAT:- Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. In this background of the above said legal position and having regarded to the manner in which A.O issued the notice u/s 274 which the A.O. has fail to specify the limb under which the penalty proceedings having initiated and proceeded with, apparently goes to prove that above notices have been issued in a mechanical manner without applying the mind. Being so, the said notice issued u/s 271(1)(c) of the Act is bad in law consequently the penalty levied there under cannot be sustained. - Decided in favour of assessee.
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2022 (12) TMI 336
Revision u/s 263 by CIT - Bogus share transactions - AO has dropped the penalty proceedings u/s 271(1)(c) - failure to levy penalty was because the assessee surrendered an income - capital gain surrendered u/s 143(3) - HELD THAT:- Facts on record and even the notesheet entry made by the Ld. AO would reveal that the explanation offered by the assessee in penalty proceedings was acceptable to the Ld. AO. If that be so, dropping of penalty proceedings initiated by him cannot be branded as erroneous - when the Ld. AO examined and considered the issue of imposing the impugned penalty or not, though not mentioned in so many words, his decision to drop the penalty proceedings cannot be said to be erroneous. A mere possibility of a different view does not justify assumption of revisional jurisdiction. Decision by the Ld. AO not to levy penalty and drop the penalty proceedings cannot be said to be prejudicial to the interest of the Revenue as penalty which is not levied cannot be put on par with income that has not been brought to tax. Hon ble Supreme Court has observed in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the AO, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interest of Revenue. In the case before us the Ld. AO has collected tax and interest relatable to the impugned addition. Assessment and penalty proceedings are distinct and separate. To our mind, when the Ld. AO has dropped the penalty proceedings after due consideration of facts and circumstances of the case, the direction of the Ld. Pr. CIT to consider levying penalty under section 271(1)(c) afresh was not in order. We are of the view that in the case before us the twin conditions to assume jurisdiction suo moto by the Ld. Pr. CIT, namely that the order of the Ld. AO is erroneous in so far as it is prejudicial to the interest of Revenue are not satisfied. In CIT vs. Subhash Kumar Jain [ 2010 (9) TMI 772 - PUNJAB AND HARYANA HIGH COURT] held that where failure to levy penalty was because the assessee surrendered an income, subject to no penalty being levied, there can be no justification for a revisional order for purposes of levy of penalty. The impugned order of the Ld. Pr. CIT under section 263 of the Act is hereby vacated. - Decided in favour of assessee.
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2022 (12) TMI 335
Disallowance of Capitalization of CENVAT credit on capital goods - assessee is a nationalized bank in which majority of the shares are held by Central Government - whether CENVAT credit cannot be capitalized and no depreciation on the same can be claimed? - Appellant bank charged off 50% of the CENVAT credit as per the provisions of the Finance Act. 1994 - HELD THAT:- As identical issue came up for consideration in assessee s own case in Assessment Year 2015-16 2022 (3) TMI 1131 - ITAT BANGALORE holding that unutilized CENVAT credit has to be capitalized to the cost of the Asset in relation to which the CENVAT credit became available to the assessee, the Revenue authorities were justified in rejecting the claim of the assessee for deduction on account of unutilized CENVAT credit which was claimed as deduction in computing income from business of the assessee. Consequently, ground No.2 raised by the assessee is dismissed. Disallowance paid to Corporation Bank Economic Development Foundation u/s 37 - HELD THAT:- provisions of section 37(1) and 80G of the Act are not mutually exclusive if the contribution by the assessee in the form of donation of the category specified in section 80G of the Act but if it could be termed as an expenditure of the category falling under section 37(1) of the Act, then the right of the assessee to claim the whole of it as allowance under section 37(1) of the Act cannot be denied but such money must be laid out wholly or exclusively for the purpose of business. The decision of the Hon ble Calcutta High Court in the case of CIT Vs. Eastern Coalfields Ltd. 2022 (11) TMI 982 - CALCUTTA HIGH COURT where Government of India framed guidelines on corporate social responsibility for central public sector enterprises, such public sector is bound to formulate a policy in terms of the said guidelines and if an obligation springs from complying with the said guidelines, it has to be regarded as expenditure incurred on grounds of commercial expediency and allowed as a deduction. Therefore the expenditure in question, on the facts of the present case, satisfies the requirements of Sec.37(1) of the Act. In view of the facts and circumstances of the given case, we are of the view that the deduction claimed by the assessee should be allowed in full. We hold and direct accordingly and allow ground No.3 raised by the assessee. Deduction u/s 36(1)(vii) on account of Bad Debts written off - Additional claim made by the Appellant Bank u/s 36(1)(vii) 36(1)(viia) at the time of Assessment proceedings by holding that it is an alternate ground - HELD THAT:- Since the CIT(A) has not rendered any decision on ground No.5, the parties prayed that the issue may be set aside to the CIT(A) for fresh adjudication. Accordingly, ground No.4 in this appeal is set aside to CIT(A) for consideration afresh after giving due opportunity of being heard to the parties.
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2022 (12) TMI 334
Unexplained credits in the foreign bank accounts - addition on account of peak balance lying in the foreign bank accounts - most of the credit entry corresponded to the salary and interbank transfer within the account held by the assessee and loan payment by the friends and colleagues - CIT-A deleted the addition - HELD THAT:- As rightly observed by the CIT(A) that out of the total addition made by the A.O on account of peak balance lying in the foreign bank accounts only the interest income credited to the Natvest Account 954336157165 was not accounted for the return filed by the appellant. It is also noticed by the A.O. in his remand report dated 08/11/2017 that most of the credit entries corresponding to salary, which was already offered to tax in the ITR for the period under consideration: inter bank transfers within the accounts held by the assessee and loan repayment by friends/relatives which is not an income of the assessee for the period under consideration. A.O. has noticed that only income of Rs. 11,76,379/- had not been shown by the assessee in his return of income for the year under consideration, which has been later offered by the assessee himself for taxation and paid the tax. Therefore, the Ld.CIT (A) has rightly restricted the addition of Rs. 11,76,379/. The approach of the Ld.CIT(A) is in order which is not erroneous and the same requires no interference at our hands. Thus, we do not find any merit in the grounds of appeal of the Revenue.
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2022 (12) TMI 333
Allowable business expenses - commencement of business - Disallowance of project expenses, depreciation and addition made of interest and misc income earned from the certain projects undertaken by the assessee - AO found assessee not commenced operations - Disallowance for the reason that it was entirely new project set up by the assessee; process of construction was going on, and had not commenced production or generation of electricity - HELD THAT:- We hold that all three projects i.e. Akrimota Power Projects, Lignite projects at Bhavnagar and Tadkeshwar are nothing but the continuation of existing projects of the assessee only, and all its expenses incurred therefore in the setting up of these, prior to the commencement of the business in these projects, are to be treated as revenue expenses. Accordingly, the claim of project expenses vis- -vis all three projects along with claim of depreciation on assets in the Tadkeshwar and Bhavnagar lignite projects are directed to be allowed. Claim of depreciation - We find that the assessee s case for claiming depreciation rests entirely on the fact that it had conducted trial run of its machinery during the impugned year. The Revenue does not dispute the allowability of claim of depreciation on the machinery on the basis of trial run conducted. The contention/basis for denying depreciation is refuting the claim of any trial run conducted by the assessee. Assessee had substantiated carrying on trial run, by pointing out that the power generated during the trial run had been sold to GEB which was evidenced by copy of invoices issued by the GEB, meter reading confirmed by the GEB and fact that power generation from the plant being reported in the newspaper. Authorities below clearly chosen to ignore all these very valid evidences. On the contrary, they have arrived at a finding of no trial run for generation of power according to their own whims and fancies ,that there is a huge gap between trial run and production of power, being seven months, for which no reasonable explanation was apparently given by the assessee. Assessee had demonstrated carrying on trial runs with valid evidences, which have not been controverted by the Revenue despite being placed before both the authorities below, we cannot agree with the finding of the Revenue authorities that no trial run was conducted by the assessee. In view of the same, we hold that the assessee had rightly claimed deprecation. Claim of prior period expenses - Assessee fairly admitted that for the Asst.Year 2003-04 also, the ITAT had restored this issue of claim of prior period expenses back to the AO with identical direction to examine which expenses had crystalised during the year and allow claim of the expenses accordingly. He drew our attention to the order passed in the Asst.Year 2003-04 in the case of the assessee [ 2015 (1) TMI 1461 - ITAT AHMEDABAD] - In view of this, the ld.counsel for the assessee fairly admitted that he had no grievance against the direction of the ld.CIT(A) on the impugned issue. Ground of appeal raised by the assessee is therefore dismissed. Disallowances made on account of lease and buy-back arrangement entered into by the assessee with Gujarat State Road Transport Corporation (GSRTC) - denial of depreciation on leased assets - HELD THAT:- Since in the present case the assesees lease and buy back arrangement has been held to be a colorable device on the basis of the special bench decision of the ITAT in IndusInd Bank [ 2012 (3) TMI 212 - ITAT MUMBAI] which blanket proposition vis a vis lease and buy back arrangements has since been reversed by the Hon ble apex court and the Ld.DR has not distinguished the said case before us, applying the decision of the Hon ble apex court [ 2013 (1) TMI 344 - SUPREME COURT] . we hold that the assesses is entitled to claim depreciation on leased assets .The order of the Ld.CIT(A) upholding the disallowance of depreciation is set aside and the AO is directed to allow the same. Taxing the lease rentals on accrual basis as held by the Revenue or on cash basis as claimed by the assessee - We find that the solitary basis with the Revenue for taxing lease rentals on accrual basis is that the assessee was following mercantile system of accounting and even section 145 of the Act directs following of either cash or mercantile system and not hybrid system. But as rightly pointed out by assessee, even as per the accrual basis only those amounts certain for recovery are to be accounted for. In the present case the contention of the assessee was that GSRTC being in stringent financial position was not paying lease rentals .This is evident from the fact that the assessee had written off lease rentals of earlier years unrecovered of Rs. 11.75 Crs. Therefore even as per the accrual system of accounting the assessee was not required to account for lease rentals which were not certain of recovery and the method therefore adopted by the assessee of accounting for such income on cash basis was, we hold, justified - Addition made on account of lease rental income and interest on delayed rentals accordingly is directed to be deleted. Claim of bad debts with respect to lease rentals written off - HELD THAT:- What derives is that GSRTC was not paying up the amounts due from it to the assessee. And for this reason the assessee had resorted to accounting for lease rental income from GSRTC on cash basis which aspect we have dealt with above. Besides, the assessee had filed resolution of Board of directors approving the write off of debts. The facts on record themselves establish the fact of debts from GSRTC becoming bad. The assessee therefore, we hold, is entitled to claim bad debts -The finding of the Revenue that the assessee had renewed lease agreement with GSRTC which proved that the debts were capable of recovery, has been duly explained by the assessee as being on account of expiry of earlier agreement which in no way effected the recovery of earlier lease rentals. Disallowance of contribution made by the assessee to the Office of Commissioner of Geology Mining, Gandhinagar - HELD THAT:- There is no doubt that the contribution made by the assessee to the Office of Commissioner of Geology Mining, Gandhinagar was to assist and for the benefit of the business of mining only. The assessee need not demonstrate derivation of any direct/actual benefit on account of any expenditure claimed as long as intention for deriving benefit from the said expenditure is there. Intention to derive benefit is sufficient to treat the claim as allowable revenue expenditure on commercial principle itself. As rightly pointed out by assessee, the Hon ble apex court ,in the case of Sri Venkata Satyanarayana Rice Mill Contractors Co. [ 1996 (10) TMI 2 - SUPREME COURT] settled the proposition with regard to claim of expenses for business, holding that the correct test for such claims is that of commercial expediency alone . That as long as payment is made for the purpose of business and not for infraction of any law ,the same would be allowed as deduction. We hold that the assessee s claim of contribution to the Office of Commissioner of Geology Mining, Gandhinagar being for the purpose of business, is allowable as expenditure under section 37(1). Nature of expenses - Disallowance of claim of expenditure incurred for excavation of river diversion - CIT-A upheld to the extent of 80% by the ld.CIT(A) - sole reason for treating the expense incurred on diversion of a river as capital was that it gave rise to enduring benefit - HELD THAT:- As the expense was incurred only for enabling conduct of the business of the assessee, admittedly without any expenditure being incurred on capital account. The ratio settled by the Hon ble apex court in the case of Empire Jute [ 1980 (5) TMI 1 - SUPREME COURT] will therefore squarely apply in the facts of the present case. Accordingly therefore, we hold, that the impugned expenditure is to be treated as revenue in nature.Thus we hold, the assessee s claim of expenses incurred for excavation of river diversion as allowable revenue expense. Addition u/s 14A - disallowance of interest incurred for the purpose of earning exempt income - HELD THAT:- As it is a settled law that where sufficient interest free funds are available the presumption is that the investments have been made out of such funds calling for no disallowance of interest under section 14A of the Act. Hon ble Supreme Court in the case of Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] has laid down the above law. In the present case, therefore, invocation of Rule 8D by the ld.CIT(A), we hold is not in accordance with law. Further, noting that the assessee had sufficient owned interest free funds for the purpose of making the impugned investment, as demonstrated both to the Ld.CIT(A) and also before us and which fact has remained uncontroverted by the Revenue, we hold no disallowance of interest under section 14A of the Act is warranted. Further noting that in identical facts and circumstances the ITAT in the case of the assessee in A.Y 2003-04 had deleted entire disallowance made u/s 14A of the Act, we hold that the disallowance u/s 14A is unwarranted, not in accordance with law and direct the same to be deleted in entirety. Penalty u/s 271(1)(c) - HELD THAT:- Additions on which the impugned penalties are challenged by both the Revenue and the assessee since are extinguished, the impugned penalties have no leg to stand, they are accordingly cancelled. In other words, assessee s penalty appeal challenging confirmation of penalty under section 271(1)(c) of the Act is allowed, whereas Revenue s appeal is dismissed.
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2022 (12) TMI 332
Exemption u/s 80P(2)(a)(i) - eligibility of an assessee registered under Karnataka Souharda Sahakari Act, 1997 for exemption - HELD THAT:- The Hon ble Karnataka High Court in the case M/S. SWABHIMANI SOUHARDA CREDIT CO. OPERATIVE LTD. [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT] held that a cooperative society registered under Karnataka Souharda Sahakari Act, 1997 also fall within the definition of cooperative society as defined u/s 2(19) of the Act. Therefore, the reasoning of the ld. CIT(A) that the appellant society is not a cooperative society, cannot be accepted. Therefore, the income earned by the appellant society from its members on the credit is exempt from tax u/s 80P(2)(a)(i) of the Act. Thus, this ground of appeal stands allowed. As regards to the exemption of income earned from another cooperative society, this issue is no longer res integra as the issue was decided by the Co-ordinate Bench of the this Tribunal in the case of The Ugar Sugar Works Kamgar Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society [ 2021 (11) TMI 1117 - ITAT PANAJI] - Decided in favour of assessee.
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2022 (12) TMI 331
Levy of penalty u/s 272A(2)(k) - technical breach of the provisions - TDS return for the 3rd quarter filed belatedly - there was a slight delay in filing the appeal before the learned CIT(A) - HELD THAT:- Assessee submitted as follows Due to the lack of knowledge and at the same time non availability of Professional person in the Rural Area i.e. at Sonar Pada village Dombivli East, Thane Rural . Thus it is evident that the assessee had no assistance from any professional person to guide them regarding the compliance of statutory provisions. These facts clearly show that the assessee had a reasonable cause for failure to comply with the provisions of law. On filing the belated returns/statements, Revenue has not suffered any loss because the tax deducted was already deposited on time with the Revenue Department. It was, therefore, a technical breach of the provisions contained in the Act for submitting the return statement of tax deducted at source. The above reasons are sufficient to hold that the penalty need not be levied in the facts and circumstances of the case. Accordingly, the ground raised in the present appeal is allowed and the Assessing Officer is directed to delete the penalty, as affirmed by the learned CIT(A). Appeal by the assessee is allowed.
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2022 (12) TMI 330
TP Adjustment - comparable selection - MAM - Revenue submitted that since there is only one comparable remaining and hence only one price the tolerance range of 5% is not applicable as it is applicable only when there are more than one price and an arithmetic mean has been arrived at - HELD THAT:- The first proviso itself envisages that there can be only one price determined by most appropriate method. The second proviso mentions about application of tolerance range to the arm s length price so determined. So the reference to so determined is with regard to first proviso and as already explained by first proviso contemplates that there can be only one price or more than one price. Hence, the objection of the ld. DR is rejected. Accordingly, we remit the issue to the file of AO to reject the two comparables already found uncomparable by ITAT in assessee s own case and thereafter make the computation as per law as discussed by us hereinabove. Disallowance of bad debt - Taxpayer s claim of bad debt was disallowed with respect to related entities on the ground that sufficient proof of their becoming bad has not been established - HELD THAT:- We find that the law in this regard has already been settled in the case of TRF Ltd [ 2010 (2) TMI 211 - SUPREME COURT] . The AO is directed to follow the same.
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2022 (12) TMI 329
Rectification u/s 154 - Wrongful withdrawal of interest on income tax refund - interest u/s 244A - whether or not the assessee is responsible for delay in refund? - HELD THAT:- We find guidance from section 244A(2) itself which inter alia provides that where any question arises about the period to be excluded (for which interest is to be declined), it shall be decided by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whose decision thereon shall be final . Clearly, therefore, final call about the period to be excluded for grant of interest is to be taken by the higher authority and that exercise is admittedly not done in the present case. We uphold the plea of the assessee to the extent that given the limited scope of section 154 for rectification of mistakes apparent on record and given the fact that the period to be excluded for grant of interest has not yet been taken a call on by the PCCIT/CCIT/PCIT or the CIT, the impugned withdrawal of interest u/s 244A(2) is beyond the scope of rectification of mistake under section 154. The order under section 154 is set aside. Appeal is allowed.
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Customs
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2022 (12) TMI 328
West Bengal Industrial Promotion Assistance to Industrial Enterprises (scheme) - Rejection of application for granting the incentive in respect of fourth quarter up to 31.10.2012 - denial of grant of benefit on the ground that the form was filed well beyond the period fixed in the scheme - HELD THAT:- The conclusion arrived at by the learned Writ Court that the claim of the appellant was barred by latches is on account of the correct facts not been placed before the Court. At the first instance, when we heard the matter we were also of the opinion that the claim made by the appellant was a stale claim as it pertained to the quarter ending October 2012. However, after carefully going through the facts we found that the claim made by the appellant for the remaining quarters for the year 2012 was sanctioned and paid only in the year 2016. The appellant s case is that during 2016, when he had received the payment for three quarters and did not receive the payment for the quarter ending 30.06.2012. Once we are steer clear of this issue, the next aspect which we have to see is as to whether the application filed by the appellant in the manual format could have been accepted though filed beyond the period of four months stipulated under the scheme. In the absence of any power conferred on the authority to entertain an application beyond the period stipulated, we will be required to examine as to whether the discretion vested in this court under Article 226 could be exercised in the given facts and circumstances - Exercise of discretion by the authority concerned in such a matter should be in a manner to promote the purpose for which the scheme was introduced and not to the contrary. The purpose of the scheme as spelt out is for encouraging manufacturing activities expansion etc. which would go to generate direct and indirect employment in the state. Thus, any interpretation which is given which will stultify the objects of the schemes has to be frowned upon. The learned Government Counsel submitted that earlier the appellant had filed the writ petition which was affirmed on 13.02.2017 but there after the appellant did not pursue the said writ petition and it is only in the year 2019, the appellant had filed the present writ petition. It is not clear as to why the petitioner or the erstwhile counsel did not pursue the matter - the bonafides of the appellant have not been doubted by the respondents, the eligibility is also not in dispute and if that be a factual position on account of a technical ground such incentive or benefit extended by the Government should not be denied. The appeal is allowed the order passed in the writ petition is set aside - the respondent authority is directed to take into consideration the manual form submitted by the appellant on 04.11.2012 and grant the admissible incentive to the appellant as expeditiously as possible preferably within a period of three months from the date of the receipt of the server copy of this order.
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2022 (12) TMI 327
Principles of natural justice - cross-examination of 18 persons - non-reliance on any of the statements to reach to a conclusion - HELD THAT:- Interestingly in paragraph 62 of the order while considering the request made by the respondents for cross-examination of 18 persons, the adjudicating authority states that he has not relied upon any of their statements to arrive at a conclusion. However, this finding recorded by the adjudicating authority is contrary to what he has held in the aforementioned paragraphs, which we have pointed out in those paragraphs. The statements have been referred to and conclusion has been arrived at by the authority against the respondents. Thus, going by what has been stated by the adjudicating authority in paragraph 62, we are of the view that if the authority does not propose to rely upon any of the statement of those 18 persons, then obviously a fresh order need be passed on the available material excluding the statements of those 18 persons in the light of the specific stand taken by the adjudicating authority that he is not relying upon any of those statements. The appeal stands allowed in part and the order passed in the writ petition is modified by setting aside the order in original dated 14th June, 2019 and remanding the matter back to the adjudicating authority to pass a fresh order on merits and in accordance with law without placing any reliance on the statements recorded from those 18 persons.
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2022 (12) TMI 326
Seeking provisional release of imported goods - import of Magnesium Carbonate from M/s.Sea Hawk International LLC located in the United Arab Emirates - It is the grievance on the part of the respondent that the exporters at Dubai are reluctant to share the details of the supplier from Turkey or any documents related to goods movement - HELD THAT:- Noticing the fact that for the two years the goods have arrived and also because the investigation has not been completed as yet, the provisional release of the goods as requested for is reconsidered. What we find is the doubt lurking in the mind of the authority concerned with regard to the certificate of Country-of-Origin. According to the authorities, they have reason to believe that the Country-of-Origin is not shown in the certificate of Dubai Chamber of Commerce which has been given an authority by the UAE Government to issue all types of certificates for origin of goods and products exported or re-exported from UAE in accordance with the relevant rules and procedures adopted by the Dubai Chamber of Commerce. Number of correspondences we could see where inquiry has been made with the petitioners seeking various documents. The goods are not of a perishable nature nor of hazardous character. They are the goods which could have been seized and in that eventuality, the petitioners could have taken recourse to the provision of Section 110A of the Customs Act for the provisional release of the goods, the extension could have been also possible with six months and further six months by the authority of the Principal Commissioner of Customs or Commissioner of Customs, after reasons to be recorded in writing, who would choose to extend the period. Instead of following this, the goods have been simply detained and the inquiry has been initiated, which is continuing for the period of two years. This would surely defeat the right of the party concerned to even take recourse to the provision of Section 110A of the Customs Act and ask for the provisional release of the goods - Undoubtedly, Section 110(2) of the Customs Act provides for some sort of inquiry where the order for extension is to be passed applying the mind and not in a routine manner. If, otherwise, the officer is of the opinion that for some satisfactory and bona fide reasons within the time frame provided under Section 110(2) of the Customs Act, the investigation could not be completed. Here, there is no seizure at all and what has happened is only the detaining of the goods on the ground of the authority concerned questioning the Country-of-Origin certificate - Without further dilating the issue, the petition deserves to succeed. The petitioners would be entitled to have a release of the goods completely without any fetter, however, the goods are alleged to be from Pakistan as the Country-of-Origin Certificate is doubted. Let the inquiry be expedited and with a word of caution to all concerned to follow the statute. We are releasing the goods provisionally - petition allowed.
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2022 (12) TMI 325
Eligibility to the exemption from Custom Duty - Value-based Duty Exemption Entitlement Certificate - Fulfillment of the condition relating to CaO content under the Advance License provisions and consequently to the Exemption Notification or not - the Department alleged to have found less than 53% CaO, which in view of the Department, is not eligible for allowance of exemption under the DEEC Scheme. HELD THAT:- After recording the findings that there was no contravention of other conditions laid in the Exemption Notification vis- -vis the Advance License issued under the DEEC Scheme and holding that there was no scope for revisiting the issue with regard to percentage of CaO in Low Silica Limestone, the Commissioner had nullified the impugned demands of customs duty. On perusal of record, it is seen that the Commissioner in his de novo Order dated 31.03.2005 has come to the conclusion that there was no other violations and has placed reliance on the test done by M/s. S.K. Mitra, which is an independent and Government recognized inspection agency. It has been stated that the Department having not questioned the findings of the Commissioner with regard to other conditions there was no scope for it to examine the issue of percentage of CaO in Low Silica Limestone - Whereas, the Department has accepted the Order dated 26th June, 2002 of the learned CESTAT, by virtue of which the matters were remanded for passing de novo order by the Commissioner, it is, thus, held that neither the Original Authority nor the CESTAT could travel beyond what was observed and directed in the Order dated 26th June, 2002. Therefore, the learned CESTAT is correct in its approach by holding that it cannot entrench upon the sample issue particularly when there is no dispute with regard to other conditions stipulated in the Exemption Notification issued in connection with the DEEC Scheme. A Court or a Tribunal cannot review its own decision and it is permitted to do so by statute. The Court having general jurisdiction like Civil Court has inherent power; nonetheless, the Court or the Tribunal of limited jurisdiction created under special statute have no inherent power - this Court is of the considered opinion that the questions of law as posed in the present appeals do not fall for consideration, especially when the department having accepted the order of remand passed by the learned CESTAT on 26th June, 2002, the Original authority has rendered his findings. In the aforesaid premises, it is held that the learned CESTAT has committed no error while rejecting the appeals of the Appellant vide Order dated 13th April, 2010. Application dismissed.
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2022 (12) TMI 324
Seizure of assorted diamond studded jewellery - Section 111(l) of the Customs Act, 1962 - HELD THAT:- Section 14 of Customs Act, 1962 states that the valuation of import and export goods shall be the transactional value of such goods, i.e. the price actually paid or payable when they are sold. This is the primary criteria for the valuation of goods. All the three Authorities have given effect to this primary position. The fact that the Petitioner arrived in India from South Africa, and was intercepted and found in possession of the jewellery in contravention of the provisions of the Act, has been established. We are not shown any statutory provision that mandates the Respondent Custom Authorities that if they call for Trade Panel's Report, they are bound by the same, and the basic principle of transactional value no longer applies. Even otherwise, if the report of the Trade Panel is to be made the foundation of, the same is not found reliable. The Authorities have commented on the same. The Commissioner has observed that from the Trade Panel's Report, it is unclear whether they had valued the goods for import or export purposes, and it is not clear whether these are domestic prices or the goods prevailing in South Africa. The Commissioner thus observed that the report lacks material and does not meet the requirements for giving the status of reliable evidence having a probative value. Therefore, the Authorities, as a matter of fact, have found that the report is not satisfactory. The Respondent cannot be directed to accept the report when it was found to be unreliable. The Respondent Authorities have gone by the basic criteria of valuing the goods in question by considering the transactional value based on invoices found in possession of the Petitioner himself. Despite the same, Authorities at each stage have taken a lenient view and have reduced redemption and personal fines. Petition dismissed.
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2022 (12) TMI 323
Violation of principles of natural justice - delay in adjudication of show cause notice - whether the Respondent Nos. 1 and 2 were justified in law by keeping the adjudication of the show cause notice pending for a period of 9 years and that whether they were justified in reviving the show cause notice? HELD THAT:- Perusal of the show cause notice shows that the breach alleged for initiating action for demanding the forgone import duty was on the ground of irregular exports by the exporters and breach of the provisions committed by the exporters. It is not in dispute that the Petitioner had promptly replied the show cause notice well within time in the year 2014 itself. It is further not in dispute that the Petitioner was never intimated in respect of any adjudication of the show cause notice and/or any decision of keeping the adjudication pending. Thus, the Petitioner is justified in submitting that the Petitioner was under bonafide belief that the Respondents were not interested in adjudicating the show cause notice and that the same was dropped. There are sufficient merit in the submissions made on behalf of the Petitioner that delay in adjudication of the show cause notice constitutes breach of principle of natural justice. In the present case, show cause notice issued in the year 2013 was replied by the Petitioner well within time in the year 2014 itself. The Petitioner has specifically pleaded that the previous Director of the Petitioner, who was looking after the day to day management including the import of goods expired on 19th May 2019 and that no other person was aware about the proceedings of the show cause notice. There is no dispute that the Petitioner was never intimated with respect to adjudication on the show cause notice or the same being kept in the call book - Petitioner is also right in contending that even otherwise pendency of proceedings was not in respect of the Petitioner. Hence it is obvious that revival of show cause notice will seriously prejudice the Petitioner. In the present case, reasons given by the Respondents for the delay caused in seeking to revive the show cause notice do not constitute any reasonable ground and the delay caused is not sustainable, as the same is in breach of the principles of natural justice. Though in Affidavit-In-Reply it is sought to be contented that the period of limitation prescribed by the amending Act, 2018 is not applicable to the present show cause notice of the year 2013, nothing was argued before us in support of this contention - even otherwise the powers of such nature of adjudicating the show cause notice are required to be exercised within reasonable time. There are no justification for the inaction on the part of the Respondents for keeping the adjudication of the show cause notice pending and for seeking revival of the same after a period of 9 years - the show cause notice impugned in the Petition is required to be quashed - petition allowed.
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2022 (12) TMI 322
Condonation pf delay in filing appeal - approaching a wrong forum, (revisional forum), instead of the appellate forum - appellant under a bonafide belief had filed Revision Application before Revisionary Authority - HELD THAT:- The appellant has made out a case of sufficient cause for condoning the delay. It is apparent from the record that the appellant, on legal advise, preferred a revision application before the Central Government under the provisions of Section 129DD of the Customs Act. Appellant prosecuted the said revision application before the Revisional Authority until order dated 7th December 2021 was passed by the Revisional Authority, which is, without entering into the merits of the matter, holding that it had no jurisdiction to proceed with the revision application. It is only after the order of rejection of the revision application passed, the appellant obtained a certified copy thereof on 13th December 2021 and lodged Appeal before the CESTAT on 12th January 2022, along with the concerned application for condonation of delay, setting out therein the facts and circumstances under which the appeal came to be filed beyond the period of limitation. This itself would constitute sufficient cause under Section 129A(5) of the Act. The reasons given by the appellant in approaching a wrong forum, i.e. the revisional forum, instead of the appellate forum are sufficient cause for condoning the delay in filing appeal before the CESTAT. The impugned order is set aside - appeal allowed.
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2022 (12) TMI 321
Denial of redemption fine in lieu of confiscation of goods - Wilful mis-declaration of imported goods - Low Sulphur Waxy Residue (fuel oil) - violation of of paragraph 2.7 of Foreign Trade Policy 2009-2014 read with Rule 13 (4) or not - Confiscation - levy of penalty u/s 112 (a) of the Customs Act - HELD THAT:- The facts are not in dispute. The imported good, declared as low sulphur wax residue fuel oil was on testing, found to be waste oil . Import of waste oil is prohibited under the Rules. The appellant had no licence or permission to import and process waste oil . Therefore, the confiscation of the goods under section 111 (d) and 111 (m) must be upheld as there was not only misdeclaration of the goods but the import itself was in violation of the prohibition under the Rules. Since import of the disputed good was prohibited, the Adjudicating Authority had the discretion to either allow redemption or not. In our considered view, the Adjudicating Authority has correctly exercised its discretion not to allow redemption of hazardous waste to the appellant and the Commissioner (Appeals) has, in the impugned order, correctly upheld it. Section 112 (a) of the Customs Act provides for penalty for acts or omissions which render goods liable to confiscation under Section 111. The amount of penalty imposed is Rs. 1,00,000/- which, is fair and proper considering that the value of the confiscated goods is Rs. 10,98,772/-. Appeal dismissed.
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2022 (12) TMI 320
Condonation of time limit for filing appeal - appeal filed beyond the statutory period of filing the Appeal before the Tribunal - HELD THAT:- The Order-in-Original dated 28.02.2019 was communicated to the Appellant on 07.03.2019 and accordingly he was required to file Appeal before the First Appellate Authority within 60(sixty) days i.e. on or before 07.05.2019, but however, the Appeal was filed only on 04.06.2019 i.e. after expiry of the statutory period of 60(sixty) days from the date of communication of the order. Though the Appellant had filed Appeal beyond the statutory period of 60(sixty) days, but it was filed within the condonable period of 30(thirty) days. However, the Ld.Commissioner(Appeals) chose not to condone the delay and rejected the Appeal before him without going into the merits of the case. The limitation period has been calculated from the date of order instead of date of communication of the order. The delay in filing the Appeal before the Ld.Commissioner(Appeals), is condoned and it is found appropriate to remand the matter to the Ld.Commissioner(Appeals) for deciding the Appeal on merits without further visiting the aspect of limitation. Appeal allowed by way of remand.
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Corporate Laws
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2022 (12) TMI 319
Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC) - section 252 of companies Act - HELD THAT:- In view of the fact that the Appellant Company have purchased the lands between 2011-2013 and Audit Reports along with Balance Sheet and Financial Statements of the Appellant Company from 2012-2013 to 2019-2020 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the NCLT (Cuttack Bench, Cuttack) as well as RoC, Odisha is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed - application allowed.
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2022 (12) TMI 318
Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC) - section 252 of Companies Act, 2013 - HELD THAT:- In view of the fact that the financial statements 2016-2017, 2017-2018, 2018-2019, 2019-2020 and Income Tax Return of the Appellant Company shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the NCLT, New Delhi as well as RoC, NCT Delhi Haryana is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the conditions imposed - application allowed.
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2022 (12) TMI 317
Seeking restoration of the name of the Appellant Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - Section 421(1) of the Companies Act, 2013 - HELD THAT:- In view of the fact that the Audited Balance Sheet for the year ended 31.03.2016, 31.03.2017, 31.03.2018 31.03.2019 and Income Tax Return of the Appellant Company shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, we are of the view that the order passed by the NCLT, New Delhi as well as RoC, NCT Delhi Haryana is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed - application allowed.
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Insolvency & Bankruptcy
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2022 (12) TMI 352
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - HELD THAT:- On looking into the Letter of Intent which has been relied by the Counsel for the Appellant, Clause 1 to 7, it is clear that the agreement which was sought to be entered between the parties was for premises for the use of the Appellant and the LoI contemplated execution of the lease deed on the rent basis. The amount of Rs.1.2 Crore was advance by the Appellant in pursuance of the LoI which is clear from Clause 7 of the LoI. There can be no quarrel to the preposition laid down by the Hon ble Supreme Court in Orator Marketing Pvt. Ltd. [ 2021 (8) TMI 314 - SUPREME COURT] . The use of the word if any clearly makes that it is not essential for all financial debt to be with interest. However, the essential condition which is required to be fulfilled for a debt to be a financial debt is disbursement for time value of money which has to be fulfilled for all transactions referred to in clauses (a) to (f) in sub-section (8) of Section 5 of the Code. The amount advance of Rs.1.2 Crore cannot be held to be financial debt and no error has been committed by the Adjudicating Authority in rejecting the Section 7 Application - the Appellant in view of the facts cannot invoke the provisions of the IBC but it is always open for the Appellant to take recourse of the law and remedy as available in law for his debt, if any. Appeal dismissed.
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2022 (12) TMI 351
Seeking refund to the Corporate Debtor with interest being the amounts illegally retained by them and which amounts were given during moratorium period for supply of goods/components - punishment for contravention of Section 14, 31 and Section 74 of IBC for siphoning off proceeds of Corporate Debtor in contravention of Moratorium imposed by this Hon ble Tribunal - HELD THAT:- It is an admitted case that the Resolution Plan was approved by the Adjudicating Authority on 02.04.2019 and thereafter, I.A. No. 3927 of 2020 was filed on 14.09.2020 before the Adjudicating Authority approximately after 18 months of approval of the Resolution Plan. Keeping in view of the aforenoted facts, we agree with the reasons given by the Adjudicating Authority, therefore, the impugned order dated 16.08.2021 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-II) in (IB) 334(ND)/2017 in IA/3927/2020 1356/2021 is hereby affirmed. The instant Appeal is hereby dismissed.
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2022 (12) TMI 316
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- The contractual dispute between the parties if arise, during the contract provisions are made in all contracts for resolution of such disputes. The dispute between the parties are not supposed to be decided, examined and adjudicated in IBC proceeding. Only question to be looked in Section 9 Application is as to whether the objection raised by the Corporate Debtor opposing claim of the Operational Creditor is not a moonshine defense. We have looked into the emails which were sent by the Corporate Debtor and which are part of the Appeal Paper Book. We are of the view that the issues raised in these emails are not moonshine defense, the issues regarding quality of work were raised much prior to the issuance of Section 8 notice. The Adjudicating Authority did not commit any error in rejecting Section 9 application filed by the Appellant - The Adjudicating Authority had to examine the defence of the Corporate Debtor to find out if there is pre-existing dispute. If the Adjudicating Authority is satisfied on those emails, it is not necessary to refer to explanations given by the Appellant. Appeal dismissed.
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2022 (12) TMI 315
Maintainability of application preferred by the Financial Creditors under Section 7 of the Code - initiation of CIRP - application dismissed on the ground that it is barred by Limitation - HELD THAT:- Keeping in view that there is no denial by the Counsel for the Respondent that the amount was reflected in the Balance Sheets coupled with the fact that the Appellant had filed the Balance Sheet for the Financial Year 2019 which reflects these amounts under unsecured loans, this Tribunal is of the considered view that the acknowledgement in the Balance Sheet squarely falls under acknowledgment of debt as provided for under Section 18 of the Limitation Act, 1963. The Hon ble Supreme Court in LAXMI PAT SURANA VERSUS UNION BANK OF INDIA ANR. [ 2021 (3) TMI 1179 - SUPREME COURT] and in DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. [ 2021 (8) TMI 315 - SUPREME COURT] has held that if the debt is reflected in the Balance Sheet/ Financial Statements of the Corporate Debtor Company, it is to be construed as acknowledgment under Section 18 of the Limitation Act, 1963. In the instant case it is an admitted fact that the Appellants had disbursed the last tranche of the loan on 28.03.2017 and on 29.03.2017 respectively and have filed the Section 7 Application in the month of February, 2021. However, the Balance Sheet of the FY 2019-20 reflects these amounts - the Section 7 Application is not barred by Limitation and hence this Appeal is allowed.
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2022 (12) TMI 314
Direction to Corporate Debtor to pay the balance amount of fees and expenses of Interim Resolution Professional - Section 19(2) of the IBC - HELD THAT:- After hearing the parties and in view of the order passed by this Tribunal on 03.02.2020 where liberty was granted that in default IRP/RP may move this Tribunal for recalling the order. Keeping in view of the fact that pursuant to the order passed by this Tribunal, the NCLT considered the case of the IRP and directed the Corporate Debtor to pay the CIRP costs. In view of the above, there is no occasion to move the application before this Tribunal for non-compliance of the order passed by the NCLT. Therefore, the instant application i.e. I.A. No. 313 of 2021 is hereby dismissed.
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PMLA
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2022 (12) TMI 313
Money Laundering - scheduled offences - In the light of the law laid down by the Supreme Court in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] , the learned counsel for the petitioner prayed for quashment of the proceedings before the Enforcement Directorate. HELD THAT:- It was held in the case of in Vijay Madanlal Choudhary that The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. This Writ Petition is allowed and impugned order passed by the respondent in his proceedings is quashed.
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Service Tax
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2022 (12) TMI 312
Classification of services - Cargo Handling Service or not - classifiable under Cargo Handling Services under Section 65(105)(zr) read with Section 65(23) of the Finance Act, 1994 prior to 01.07.2012 and after 01.07.2012 under Handling of Cargo or under Goods Transport Agency under Section 65(105) (zzp) read with Section 65(50b) of the Finance Act, 1994 prior to 01.07.2012 and after 01.07.2012 under Section 65B(26) of the Finance Act, 1994?. HELD THAT:- Mr. N. Venkataraman, learned Additional Solicitor General, appearing for the Union of India, submits that in the peculiar facts and circumstances of the case on record, the instant appeals may be dismissed leaving all questions of law open. Appeal disposed off.
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2022 (12) TMI 311
Condonation of inordinate delay - sufficient cause has been shown by the appellant for condonation of inordinate delay or not - HELD THAT:- It is not clear as to whether the appellant had placed the order passed by the Assistant Commissioner, Bidhannagar CGST CX Division dated 10th April, 2019 accepting the classification as adopted by the appellant in respect of the specified services. In the order passed by the learned Tribunal dated 4 th February, 2021, there is no indication as regards the submission, which were made by the appellant. Though we do not fully approve of the conduct of the appellant in not pursuing the matter in a time bound manner, considering the fact that the present claim for refund is for the subsequent period, i.e., from October, 2008 to December, 2008, we are of the view that this aspect of the matter can be taken note of by the learned Tribunal while considering the application for condonation of delay - taking note of the peculiar facts and circumstances, we are inclined to interfere with the order passed by the learned Tribunal. Appeal allowed.
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2022 (12) TMI 310
Condonation of delay of 7 days has occurred in filling the restoration application - non-removal of office objections - HELD THAT:- In the totality of facts and circumstances, sufficient cause is made out to condone the delay of 7 days. Delay of 7 days iss condoned. Recall order - HELD THAT:- It is trite that the technicalities should not come in way in permitting the party to agitate the case on merits before the court of law. It would be proper that the applicant appellant is permitted to contest appeal on merits - Application allowed.
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2022 (12) TMI 309
Taxability - activities undertaken on coal mined and before shipment to conform to size agreed upon in the contract of sale with their customers - overlapping for different areas of operation - section 65B(44) of Finance Act, 1994 - It is the main contention on behalf of appellant that the issue is covered by the decision of the Tribunal in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS MAHANADI COALFIELDS LTD. [ 2017 (8) TMI 1625 - CESTAT KOLKATA] , where it was held that In the instant case undisputedly, the appellant has paid the sales tax/vat, when it is so then crushing charges are not leviable. Regarding the payment of sales tax/vat, the Ld. Counsel for the appellant has shown proof to the Ld. Counsel for the Department. HELD THAT:- On perusal of the facts leading to the dispute and the findings in the impugned order, we do find the circumstances to be identical. Appeal allowed.
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Central Excise
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2022 (12) TMI 350
SSI exemption Notification No. 8/2003-CE dated 01.03.2003 as amended by Notification No. 8/2006-CE dated 01.03.2006 - power driven pumps which does not bear BIS specification and the appellant did not obtain ISI certificate - HELD THAT:- Admittedly the appellant s product is not in conformation to BIS standard as specified in the notification. They have not obtained any ISI certificate. Therefore, exemption of SSI notification 08/2003-CE as amended, is not admissible to the appellant. The issue decided in the case of M/S BORANA PUMPS VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS CENTRAL EXCISE, JODHPUR-I [ 2021 (6) TMI 1034 - CESTAT NEW DELHI] where it was held that it is not possible to agree with the contention of the learned Chartered Accountant for the appellant that the appellant was eligible for the benefit of exemption notification even though it had no BIS certificate, because the certificate was issued much later in 2014 which means that their products met the standards of BIS all through - since the appellant does not have ISI certification to conform the BIS Standard, the appellant is not eligible for SSI exemption Notification No. 8/2003-CE. Cum-duty price claimed by the appellant - HELD THAT:- As of now the issue has been settled that in any case where the duty is demanded, the principle of cum-duty price shall be applicable. The appellant have taken support from the decision of Hon ble Gujarat High Court in the case of COMMISSIONER OF C. EX. CUS., DAMAN VERSUS POONAM PLASTICS INDUSTRIES [ 2010 (12) TMI 993 - GUJARAT HIGH COURT] . Therefore, we are of the view that appellant is entitled for cum-duty price benefit. Accordingly, the Adjudicating Authority shall recalculate the duty by extending the benefit of cum-duty price. The demand of duty subject to recalculation by extending cum-duty price benefit is sustainable. Since duty shall be re-quantified, the appellant shall be entitled to the option of reduced penalty of 25% subject to payment of re-quantified duty, interest, if any and 25% penalty within one month from the date of communication of re-quantified duty to be made by the Adjudicating Authority to the appellant - Appeal allowed by way of remand.
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2022 (12) TMI 349
Levy of equal amount of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act - appellant have not utilised the amount of credit as is evident from their cenvat record and is reversed - HELD THAT:- The appellant did not contest the amount of Rs.2,07,598/- from the very beginning and have reversed the same and also deposited 15% penalty as early on 07.04.2016, which is almost one year prior to issuance of show cause notice. Further, it is evident that the said amount remained unutilised till the date of reversal. It has also been held by the Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ], that where any cenvat credit has been reversed without utilisation of the same, amounts to credit having not been taken at all. Accordingly, appellant is not liable for interest penalty for this amount. The disputed amount of Rs. 2,07,598/- stood concluded in terms of Section 11AC(1)(d) of the Central Excise Act. Accordingly, no show cause notice should have been issued to this amount. Therefore, the penalty imposed under Section 11AC is set aside alongwith demand of interest. Appeal allowed.
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2022 (12) TMI 348
CENVAT Credit - common inputs and common input services which were used in the manufacture of the dutiable and exempted products - non-maintenance of separate records - pharmaceutical industry. Whether furnace oil used in the factory which gets consumed in the manufacturing process whether it is the manufacture of dutiable goods or exempted ones - HELD THAT:- The total amount of dispute of CENVAT credit which has been taken on this furnace oil and common input services is only Rs. 2,80,049/-. Evidently, the appellant would be entitled to part of the credit to the extent it was used in the manufacture of dutiable goods. Nevertheless, the appellant reversed the entire amount of CENVAT credit on these common inputs and input services. This fact was recorded in the reply to show cause notice itself. Therefore, the entire basis of the show cause notice that the appellant had taken CENVAT credit on common inputs and input services no longer exists. In the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] , the Supreme Court has held that reversal of MODVAT credit after having taken it is as good as not taking the credit at all. In this case, similarly the credit taken by the appellant has been reversed and nothing survives. Therefore, the original adjudicating authority and the Commissioner (Appeals) were not correct in demanding an amount equal of 10% of value of the exempted goods under Rule 6 (3) of CCR. The impugned order cannot be sustained and needs to be set aside - Appeal allowed.
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2022 (12) TMI 308
Disallowance of service tax cenvat credit - disallowance of more than the amount received from the ISD (Head Office) - HELD THAT:- The appellant had taken cenvat credit of Rs. 1,10,11,284/-, out of which the amount disallowed by court below is (Rs.2,06,485/- (-) 16,716) or Rs. 1,89,769/-. That I find that the court below have wrongly disallowed cenvat credit of Rs.10,09,135/-. Thus the impugned order is modified and the amount of disallowance of cenvat credit is restricted to Rs. 1,89,769/-. It is been stated by the learned counsel that this amount has already been deposited with the revenue. Further, I find that the appellant is entitled to cenvat credit on broker services and depository service , as held by the Commissioner(Appeals). The appeal is allowed and the impugned orders are modified - The penalty imposed is also set aside.
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CST, VAT & Sales Tax
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2022 (12) TMI 307
Validity of assessment order - inclusion of the turnover of liquor sold in the petitioner's hotel while computing taxable turnover for the purpose of Section 3-D of the Tamil Nadu General Sales Tax Act, 1959 - typographical mistake or not - Whether the expression total turnover for the purpose of Section 3-D of the TNGST Act, 1959 would include the turnover of alcoholic liquor sold in the hotel of the petitioner along with other food items? HELD THAT:- A reading of Section 3-D of the TNGST Act, 1959 as it stood during the period in dispute makes it clear that it is an exception to Section 3(1) of the TNGST Act, 1959. As per Sub-Section (1) to Section 3-D of the TNGST Act, 1959, every dealer whose whose total turnover is not less than Rs.25,00,000/- for the year on the sale of food and drinks in Hotels, Restaurants, Sweet Stalls and any other eating houses other than those falling under item 20 of Part-C of the I Schedule, was required to pay tax at the rate specified in Part-A of the IX Schedule. The petitioner is liable to pay tax only on foods and drinks in terms of Entry in Sl.No.20 of Part-C of the Fist Schedule to the TNGST Act, 1959 at 8%. Entry in Sl.No.20 of Part-C of the Fist Schedule to the TNGST Act, 1959 does not include goods specified elsewhere in the other Schedules as is evident from a reading of Entry in Sl.No.20 in Part- C of the Fist Schedule to the TNGST Act, 1959 as the expression used is other than those falling elsewhere under the Schedule . Therefore, if alcoholic liquor is liable to tax in any other Schedules, then the turnover of alcoholic liquor cannot be included in the turnover of food and drinks at 8% in terms of Entry in Sl.No.20 of Part-C of the First Schedule to the TNGST Act, 1959. The facts on record do not reveal that the petitioner has paid tax on alcoholic liquors sold in its return at 30% for the period between 17.07.1996 and 26.03.1998, at 40% for the period between 27.03.1998 and 11.11.1999 and at 50% for the period between 12.11.1999 and 31.11.2001 as specified in the Sixth Schedule to the TNGST Act, 1959 - Prima facie the petitioner appears to have evaded tax on sale of alcoholic liquor sold which were manufactured in the State at the rate specified in the Sixth Schedule. As both the Appellate Assistant Commissioner and second respondent Appellate Tribunal have failed to look into the same, we are of the view that the petitioner is liable to pay tax. We however accept the contention of the petitioner that the petitioner is not required to include the turnover relating to the sale of alcoholic liquor sold in its restaurant into the turnover of foods and drinks as sale of alcoholic liquor are separately liable to tax as specified in the Part I J and Part J K of the First Schedule and Sixth Schedule to the TNGST Act, 1959. At the same time, the petitioner is required to pay tax on the sale of alcoholic liquor sold in its restaurant in terms of the Sixth Schedule to the TNGST Act, 1959. The case remitted back to the original authority namely, Commercial Tax Officer / the first respondent, for re-determination of the tax liability of the petitioner on sale of alcoholic liquor at the rate specified in the Sixth Schedule to the TNGST Act for the alcoholic liquor purchased within the State of Tamil Nadu, within a period of six months from the date of receipt of a copy of this order - petition allowed by way of remand.
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2022 (12) TMI 306
Maintainability of petition - alternative remedy of appeal - Validity of assessment order - exemption of sales returns - HELD THAT:- The petitioner would request that the petitioner be permitted to file an appeal before the statutory authority with all materials in support of its claim of exemption for sales return. Learned Government Advocate does not object to this submission which is also supported by an endorsement made by learned counsel for the petitioner on behalf of petitioner - the request is acceeded to. Appeal, if filed within a period of four (4) weeks from today, shall be admitted without reference to limitation but ensuring compliance with all other statutory conditions, including pre-deposit. Addition made on account of miscellaneous income - resale of software licence - rewards - freight charges and packing forwarding charges - HELD THAT:- The assessing authority has not even bothered to advert to the explanation that has been set out and has rejected the same in a single line. Since the Court finds the explanation put forth by the petitioner tenable in law, the addition on this score is set aside - Petition disposed off.
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