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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter February 14, 2022 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles PMC bank scheme of amalgamation: was it not a travesty of justice? CAN THE TITLE OF A BOOK BE REGISTERED AS A TRADE MARK? News India and Australia plan to finalize the Interim Trade Agreement in next 30 days- Shri Piyush Goyal SPMCIL celebrates 17th Foundation Day More than 6.2 crore Income Tax Returns(ITRs) and about 21 lakh major Tax Audit Reports(TARs) filed on the new e-Filing portal of the Income Tax Department Notifications DGFT S.O. 624 (E). - dated 11-2-2022 - FTP Amendment in Notification No. S.O. 5317(E) dated 20.12.2021 Highlights / Catch Notes Income Tax Exemption u/s 11 - registration u/s 12A withdrawn - the donee trust will treat the donation as towards its corpus and can only utilise the accruing income from the donated corpus for religious and charitable purposes, and that the question whether the gifted income is to be utilised by the donee trust fully for its religious and charitable purposes or whether the donee trust had to keep intact the corpus of the donation and has to utilise only the income therefrom for its religious and charitable purposes, would not make the slightest difference so far as entitlement of the donor trust for exemption under Section 11(1) - HC Visit to Get Source Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. - HC Visit to Get Source Addition u/s 68 - The Tribunal not only took note of the legal position but also the factual position. The Tribunal held that the legal effect after amalgamation of the 14 companies with the assessee company is that the amalgamating companies loses its identity and since the assessee company is different juristic entity, cannot be taxed by applying Section 68 of the Act for the share capital and premium which these 14 amalgamating companies have shown in their respective books from financial year 2008-09 onwards.- HC Visit to Get Source Treatment to Forex loss incurred by the assessee on account of derivative transactions as speculative transactions - When the assessee enters into a hedging transaction to minimize the possible loss from fluctuation in foreign currency, then profit or loss arises on account of appreciation or depreciation in the value of foreign currency held by it on conversion into another currency, such profit or loss would ordinarily be a trading profit or loss, if the foreign currency is held by the assessee on Revenue account or as a trading asset or as a part of circulating capital embarked in the business, if the underline asset is more than the amount of forward contracts entered into by the assessee. - AT Visit to Get Source Deduction u/s 54F or u/s 54 - mere sale of land instead of land and building - The cost of the property declared by the assessee includes an amount for making the house habitable which includes certain items as per serial No.1 to 16 of the table at para 5.5. of the CIT(A) which in our opinion is not allowable as a deduction for making the house habitable because these are all luxury items.CIT(A) has rightly determined the amount for making the house habitable. Therefore, the assessee is entitled to get the benefit of deduction u/s 54 of the Act to the extent including amount for making the house habitable. - AT Visit to Get Source Undisclosed investment u/s.69 - unaccounted payment on purchase of impugned land - Recording of the statement by survey team under section 131(1) is not valid. Thus, no cognizance of such statement could be taken. Hence, the addition which is solely based on the stamen is not legally sustainable. - AT Visit to Get Source Rejection of books of accounts - Estimation of income - The case laws relied upon by the ld. AR are not applicable as per facts of the present case, therefore, considering the totality of facts and circumstances, we found that the ld. CIT(A) has passed a speaking and reasoned order discussing all the details of the case of the assessee, as far as the rejection of books of account, thus we uphold the order of ld. CIT(A) to the extent it has upheld the rejection of books of account of the assessee. - AT Visit to Get Source Customs Confiscation of goods - insulated copper cables - failure to produce the shipping bill before the ‘proper officer’ - goods had indeed been loaded on board without ‘let export order (LEO)’ - The regularisation of the process for export is on record. Moreover, the vessel had been allowed to depart in accordance with section 42 of Customs Act, 1962 after issue of ‘port clearance’ by the ‘proper officer’ though it was well within the authority of such officer to offload the offending goods. Therefore, it cannot be said that the appellant was in any way connected with illicit shipment of export cargo. Consequently, the imposition of penalty under section 114 of Customs Act, 1962 is unjustified - AT Visit to Get Source 100% EOU - served from India scheme (SFIS) - Recovery of duties of customs foregone - There is no finding in the order of the original authority holding the goods liable to confiscation; the imposition of penalty under section 112 of Customs Act, 1962 is without authority of law. Neither is there any finding on the confiscability of goods under rule 25 of Central Excise Act, 1944 and the imposition of penalty thereunder is, therefore, without authority of law. - AT Visit to Get Source Indian Laws Dishonor of Cheque - multiplicity of/parallel proceedings - The businesses are conducted on trust but the petitioner failed to maintain the trust and committed breach without payment of money after receiving the goods. He also closed the business and kept himself absconding in the case under Section 138 NI Act due to which LPC proceedings were initiated against him. As it is not only a simple case of failure to repay the value of the goods but also shows his dishonest intention to deceive the 1st respondent not to pay the money after receiving the property and caused wrongful loss to the 1st respondent and wrongful gain to himself, it is considered not a fit case to quash the proceedings. - HC Visit to Get Source Service Tax Extended period of limitation - Recovery of service tax - service being taxable but the liability has not been discharged by the appellant - the Department has wrongly invoked the extended period of limitation. - nothing of this sort is apparent on part of the appellant - Department has wrongly invoked the extended period of limitation. Both the SCNs are therefore, held to be barred by the period of limitation. - AT Visit to Get Source Central Excise CENVAT Credit - duty paying invoices - non receipt of the inputs against such documents - diversion of goods - When the investigating offices visited the factory of the respondent as well as that of the job workers, they did not find any discrepancy about the inventory of inputs or final products. There is neither any investigation nor an iota of evidence that the respondent had procured the inputs from open market for substitution of the disputed inputs. - AT Visit to Get Source Case Laws: GST 2022 (2) TMI 554 Permission for withdrawal of petition - Validity of SCN - respondent no. 7, at the stage of show cause notice itself, has already pre-judged and pre-decided the entire issue and has even passed order fasting liability towards tax, interest and penalty upon the Petitioner - ex-parte order - reversal of input tax credit - violation of principles of natural justice - HELD THAT:- The petitioner seeks permission to withdraw this petition with a liberty to avail the alternative remedy of appeal. The writ petition is dismissed as withdrawn. Income Tax 2022 (2) TMI 537 Validity of reopening of assessment u/s 147 - change of opinion - HELD THAT:- Petition was admitted on 14th July, 2014. First of all we have to note that the Assessing Officer has relied upon the order of the special Bench of the ITAT in the case of DCIT vs. Times Guaranty Limited [ 2010 (6) TMI 516 - ITAT, MUMBAI] to form an opinion that Petitioner's income has escaped assessment and therefore it would be a fit case to reopen. This order of ITAT is dated 30th June, 2010 but the assessment of the Petitioner under section 143(3) of the Act was completed on 27 th December, 2010. Therefore, the original Assessing Officer had the legal position with him but still proceeded to pass the assessment order. Therefore, this is a clear case of change of opinion which is not permissible - Decided in favour of assessee. 2022 (2) TMI 536 TDS credit and refund along with up-to-date interest - HELD THAT:- Revenue accepts notice. He states that certain TDS claims made by the petitioner are not reflected in the Form 26AS statement. As petitioner states that in the relevant Assessment Year, the assessee had been incorporated as a subsidiary of Qualcomm Incorporated and some of its vendors had erroneously deposited the TDS of the assessee in the account of Qualcomm Incorporated. This issue has been dealt with by the CIT(A) in its order dated 21st September, 2017 wherein it has directed the Assessing Officer to verify the facts and allow the credit of the TDS claimed if it is paid to the credit of the Central Government and not claimed by Qualcomm Incorporated. In view of the aforesaid direction of the CIT(A), this Court disposes of the present writ petition with the directions to the Assessing Officer to implement the aforesaid direction of the CIT(A) as well as to pass appeal effect order and pay refund, if any, along with up to date applicable interest, if any, to the petitioner/assessee for the Assessment Year 2013-14 within twelve weeks. 2022 (2) TMI 535 Revision u/s 264 - Scope of jurisdiction u/s 264 - claim of refund of excess DDT - HELD THAT:- First, the assessee had not claimed refund in the original and revised return and, thus, there was no error in the assessment order passed under Section 143(3) on 18th December, 2018. Second, respondent no.1 was of the view that the jurisdiction under Section 264 was confined to correct the order which is found to be apparently erroneous. Respondent no.1 was justified in recording that the assessee had not claimed refund of excess tax paid by it in the original and revised return. However, respondent no.1 committed an error in constricting the scope of revisional jurisdiction, in the backdrop of the said undisputed factual position. In fact, the very foundation of the application under Section 264 of the Act, 1961 was that the assessee had inadvertently failed to claim the benefit of Article 10 of the India Kuwait DTAA, under which the dividend distribution was taxed at a lower rate. We are of the view that the approach of respondent no.1 in refusing to exercise the jurisdiction under Section 264 of the Act, 1961 on the premise that it can be lawfully exercised only where such a refund was claimed and considered by the Assessing Officer is neither borne out by the text of Section 264 of the Act, 1961 nor the construction put thereon by the precedents. The aforesaid reasoning indicates that respondent no.1 failed to appreciate the distinction between revisional and review jurisdiction. The principles which govern the exercise of review were sought to be unjustifiably imported to the exercise of power under Section 264 of the Act, 1961 and thereby imposing limitations which do not exist on exercise of such power. Undoubtedly, revisional jurisdiction is not as wide as an appellate jurisdiction. At the same time, revisional jurisdiction cannot be confused with the power of review, which by its very nature is limited. This concurred with the view that Section 264 does not limit the power to correct errors committed by the sub-ordinate authorities and could even be exercised where errors are committed by the assessee and there is nothing in Section 264 which places any restriction on the Commissioner s revisional power to give relief to the assessee in a case where assessee detects mistakes after the assessment is completed. 2022 (2) TMI 534 Exemption u/s 11 - registration u/s 12A withdrawn - entitlement of the donor trust for exemption u/s 11(1) - HELD THAT:- It is settled legal principle that Section 12AA of the Act lays down procedure for registration and does not state that CIT while considering the application for registration shall also see that the income derived by the trust is either not being spent for charitable purpose or such trust is earning profit. The provision requires that the activities of the trust or the institution must be genuine which would mean that they are in consonance with the object of the trust and are not mere camouflage of the proposed objects. Bearing the legal principle in mind, the tribunal once again examined the facts of the case and pointed out that the activities of the assessee have not been doubted in all these years. The activities were duly accepted to be charitable by the revenue and the revenue failed to bring anything on record to controvert the submission made by the assessee. In Sarladevi Sarabhai Trust [ 1988 (3) TMI 53 - GUJARAT HIGH COURT ] as pointed out that when a donor trust which is a charitable trust donates its income to another trust, the provisions of Section 11(1)(a) can be said to have been met by such donor trust and the donor trust can be said to have applied its income for religious and charitable purposes notwithstanding the fact that the donation is subjected to any conditions that the donee trust will treat the donation as towards its corpus and can only utilise the accruing income from the donated corpus for religious and charitable purposes, and that the question whether the gifted income is to be utilised by the donee trust fully for its religious and charitable purposes or whether the donee trust had to keep intact the corpus of the donation and has to utilise only the income therefrom for its religious and charitable purposes, would not make the slightest difference so far as entitlement of the donor trust for exemption under Section 11(1) - Decided against revenue. 2022 (2) TMI 533 Subsidy granted in terms of the West Bengal Incentive Scheme 2000 - Taxation in the assessment years under consideration - Tribunal dismissed the appeal of the revenue holding, that the subsidy cannot be the subject matter of taxation in the years under appeal as the same got released/sanctioned only in the financial year 2009-2010 - HELD THAT:- Subsidy is immaterial and the main eligibility condition of the scheme has to be looked into and if the same is taken note of it is evidently clear from the scheme that the subsidy was for the purpose of encouraging establishment of large, medium and small scale industrial units in the State of West Bengal. As pointed out by the Hob ble Supreme Court the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit and, therefore, the receipt of the subsidy was on capital account. The test to be applied is the object for which the subsidy/assistance is given under the incentive scheme and the form or mechanism through which the subsidy is given would be irrelevant. The decision in Ponni Sugars and Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT] was taken note of and this court has granted relief to the assessee in Rasoi Ltd.[ 2011 (5) TMI 23 - CALCUTTA HIGH COURT] . Subsequently in the case of Principal Commissioner of Income Tax-I, Kolkata Vs. Shyam Steel Industries Ltd. [ 2018 (5) TMI 702 - CALCUTTA HIGH COURT] following the decision in Ponni Sugars and Chemicals Ltd. it was pointed out that the scheme in the said case being available only to new units and units which have undergone an expansion, the real purpose of the incentive has to be seen as capital subsidy and has to be recorded as such, as capital receipt and not a revenue receipt. That apart we also take note of the communication sent by the Joint Secretary to the Government of West Bengal, Commerce and Industries Department to the Managing Director, West Bengal Industrial Development Corporation dated 23rd March, 2007 wherein it has been stated that the State Government has approved the package for the assessee for setting up an Edible Oil Refinery Plant and Captive Power Generation unit and the reimbursement of 75% of the sales tax paid has been termed as Industrial Promotion Assistance. Thus, we have no hesitation to hold that the Tribunal had rightly rejected the appeal filed by the revenue and granted relief to the assessee. Invoking Section 41(1) - Tribunal rightly held that the said provision could be invoked only when assessee had claimed deduction in earlier year at the time of creation of liability and if the said liability ceases to exist then the provision of Section 41(1) of the Act could not be invoked. Taking note of the facts of the assessee s case the Tribunal has held assessee has not claimed any deduction in the earlier year towards the sales tax portion of the subsidy and hence the provision of Section 41(1) of the Act cannot be invoked in the facts of the assessee s case. The findings rendered by the Tribunal clearly point out the correct legal position. - Decided against revenue. 2022 (2) TMI 532 Exemptions u/s 11 - assessee is a trust registered under Section 12AA - Purchases made by the assessee from one Pawansut Trading Company Pvt. Ltd. which was a specified person under Section 13(3) - As per AO substantial purchases made from a related party had to be at arm's length - ITAT allowed deduction - HELD THAT:- We do not see any error in the view of the Commissioner of Appeals and the Tribunal. As is well known Section 11 of the Act pertains to income from property held for charitable and religious purposes. Section 13 on the other hand pertains to cases where Section 11 would have no application. Sub-section (1) of Section 13 provides that nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof under specified circumstances. Sub-section (2) of Section 13 provides that without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section (1), the income or the property of the trust or institution or any part thereof shall for the purposes of that clause would be deemed to have been used or applied for the benefit of a person referred to in sub-section (3), as provided in clauses (a) to (h) of sub-section (2). It is not in dispute that the assessee and the M/s Pawansut Trading Company Pvt. Ltd. are entities covered under sub-section (3) of Section 13. However the question is merely because such sale and purchase transaction took place between two such persons, clause (g) of sub-section (2) of Section 13 would automatically kick in? The answer has to be in the negative. Clause (g) would apply where any income or property of the trust or institution is 'diverted' during the previous year in favour of any person referred to in sub-section (3). The crux of this provision is diversion of income. Mere transaction of sale and purchase between two related persons would not be covered under the expression 'diversion' of income. Diversion of income would arise when transaction is not at arm's length and the sale or purchase price is artificially inflated so as to cause undue advantage to other person and divert the income. In the present case, the assessing officer never examined whether the transactions between the assessee and the said company were at arm's length. He merely referred to statutory provisions and without further discussion came to the conclusion that disallowance had to be made. CIT (Appeals) not only criticised this approach of the assessing officer but also independently examined whether the transaction was at arm's length. It was found that the rate paid to the related person was same as paid to the unrelated party. - Decided against revenue. 2022 (2) TMI 531 Reopening of assessment u/s 147 - reopening has been issued four years after the expiry of the relevant assessment year - HELD THAT:- If the factum of failure to disclose can be culled from the reasons in support of the notice seeking to reopen assessment, that will certainly not be fatal to the assumption of jurisdiction under Sections 147 and 148 of the Act. The Court in Crompton Greaves Ltd. [ 2014 (12) TMI 936 - BOMBAY HIGH COURT ] held However, if from the reasons, no case of failure to disclose is made out, then certainly the assumption of jurisdiction under Sections 147 and 148 of the Act would be ultra vires, being in excess of the jurisdictional restraints imposed by the first proviso to Section 147 of the Act . Having seen the reasons, no case of failure to disclose is made out. The factum of failure to disclose cannot be culled from the reasons in support of the notice seeking to reopen the assessment. Therefore, certainly it will be fatal to the assumption of jurisdiction under Sections 147 and 148 of the Act.- Decided in favour of assessee. 2022 (2) TMI 530 Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - HELD THAT:- As decided in SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. By virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. 2022 (2) TMI 529 Addition u/s 68 - Tribunal upholding the order of CIT (Appeals) deleting the addition on the ground that the assessee company is different juristic entity cannot be taxed by applying Section 68 of the Act for the share capital and premium which these 14 amalgamating companies have shown their respective books from Financial Year 2008-09 onwards - whether after the process of amalgamation the remission/cessation of trading liability can be taxed in the hands of the assessee company? - HELD THAT:- More appropriately the decision of the High Court of Delhi in Commissioner of Income Tax, Delhi-VI vs. Usha Stud Agricultural Farms Ltd. [ 2008 (3) TMI 91 - DELHI HIGH COURT] can be referred to as the facts in the said case would match with that of the facts in the case on hand. As in the case of the assessee before us in Usha Stud Agricultural Farms Ltd. the CIT(A) had recorded a finding of fact that the credit balance appearing in the accounts of the assessee does not pertain to the year under consideration and accordingly held that the assessing officer was not justified in making the addition under Section 68 of the Act. We have not only gone through the order passed by the Tribunal but also the order passed by the CIT(A) dated 15th June, 2017. The CIT(A) as well as the Tribunal not only took note of the legal position but also the factual position. The Tribunal held that the legal effect after amalgamation of the 14 companies with the assessee company is that the amalgamating companies loses its identity and since the assessee company is different juristic entity, cannot be taxed by applying Section 68 of the Act for the share capital and premium which these 14 amalgamating companies have shown in their respective books from financial year 2008-09 onwards. Furthermore, the Tribunal as well as the CIT(A) noted that the assessee company being a different corporate entity cannot be saddled with the share capital introduced by 14 different amalgamating companies in the financial year 2008-09. That apart, the Tribunal also considering the legal position namely, the decision in Saraswati Industrial Syndicate vs. Commissioner of Income Tax [ 1990 (9) TMI 1 - SUPREME COURT] , in the case of Hukumchand Mohanlal [ 1971 (9) TMI 5 - SUPREME COURT] and Usha Stud Agricultural Farms Ltd. [ 2008 (3) TMI 91 - DELHI HIGH COURT] dismissed the appeal filed by the revenue. We find that there is no error committed by the Tribunal in affirming the decision of the CIT(A). - Decided against revenue. 2022 (2) TMI 528 Validity of Reopening of assessment u/s 147 - notice after expiry of four years - Entitlement to deduction on interest paid on housing loan from HDFC Ltd - HELD THAT:- The notice for re-opening has been issued after expiry of four years from the end of the relevant assessment year and the scrutiny and assessment u/s 143(3) of the Act having been done, the proviso to Section 147 of the Act shall be applicable. As per proviso there is a bar to re-open any assessment after expiry of four years from the end of assessment year unless revenue is able to show that there was failure on the part of the assessee to truly and fully disclose all material facts required for assessment for the relevant assessment year. Now, let us examine whether the reasons recorded for re-opening disclose any such information not disclosed by petitioner. In our view, there is nothing to indicate that there was non disclosure on the part of petitioner. Interest expense cannot be allowed as a deduction to the assessee either under Section 24(b) or under section 57 - Mr.Suresh Kumar submitted that by claiming deduction under Section 57 of the Act and not under Section 24(b) of the Act would also amount to nondisclosure. Mr. Suresh Kumar submitted that disclosure of material facts with respect to the setting off of the interest expenses under Section 57 of the Act might be full but it cannot be considered as true and it is failure on the part of the assessee. Mere production of books of accounts or other documents are not enough in view of explanation 1 to Section 147 of the Act. These submissions of Mr. Suresh Kumar cut no ice with us. ll the points raised in the reasons recorded have been considered during the assessment proceeding. In as much as, query was raised regarding the loan taken and utilisation thereof during the assessment proceeding. It is evident from letter dated 5th December, 2008 addressed by petitioner s Chartered Accountants to respondent by which petitioner had forwarded details of Secured Loans alongwith utilisation thereof and balance as per books of accounts as on 31st March, 2006 and details of interest paid as shown under the head Financial Expenses. Of course, with the said letter various other details were also provided. Therefore, there has been query raised and query has been answered. Assessment Order of ITAT has attained finality for A.Y. 2009-10. If the ITAT has held that petitioner was entitled to the housing loan deduction and interest paid for housing loan from HDFC Ltd., thereby reversing the findings of the Assessing Officer as well as CIT (A) for A.Y. 2009-10, the entire basis in the reasons for re-opening for A.Y. 2006-07 also has collapsed. - Decided in favour of assessee. 2022 (2) TMI 527 Treatment to Forex loss incurred by the assessee on account of derivative transactions as speculative transactions - Whether derivative transactions entered into by the assessee with State Bank of India is not in the ordinary course of business of the assessee who is an exporter of granites and the Export bills or receivables of the assessee cannot be linked to the derivative transactions? - HELD THAT:- We ourselves do not subscribe to the reasons given by the AO for the simple reason that the assessee being an export of goods to Japan Company had entered into hedging transactions with State Bank of India by entering into Forex derivatives to minimize possible loss in fluctuation in USD, because the Japanese Companies agreed to make the payments through their Chinese Intermediaries by USD. Further, during the year under consideration, the assessee achieved an export turnover payments through their Chinese Intermediaries by USD. Further, during the year under consideration, the assessee achieved an export turnover. When the assessee enters into a hedging transaction to minimize the possible loss from fluctuation in foreign currency, then profit or loss arises on account of appreciation or depreciation in the value of foreign currency held by it on conversion into another currency, such profit or loss would ordinarily be a trading profit or loss, if the foreign currency is held by the assessee on Revenue account or as a trading asset or as a part of circulating capital embarked in the business, if the underline asset is more than the amount of forward contracts entered into by the assessee. This legal principle is supported by the decision of the Hon ble Supreme Court in the case of CIT v. Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] wherein, it was held that the loss arising in the process of conversion of foreign currency, which is part of trading asset of the assessee, is a trading loss as any other loss. In this case, the facts available on record clearly shows that the assessee being an export of goods had huge receivables from customers entered into a hedging contract with its bankers to minimize the possible fluctuation in foreign currency, which resulted in loss and the same has been treated as Revenue expenditure or business loss. The Ld.CIT(A) after considering the relevant facts has rightly held that loss incurred by the assessee on account of fluctuation in foreign currency, is in the nature of business loss, but not speculative loss, which is covered u/s.43(5) - Decided against revenue. 2022 (2) TMI 526 Addition u/s 69A - Cash found in possession of two persons by the Sundernagar police and subsequently requisitioned and seized by the Income tax Department u/s 132A - HELD THAT:- There is no dispute that the cash had been found in possession of two persons namely, Shri Avdesh Kumar and Shri Jagmohan, however, basis their statements and statement of Shri Amitabh Sharma, the Director of the assessee company, it has been found by the department and which has not been disputed by the assessee company that cash so found seized belongs to the assessee company. Therefore, as far as the first condition for invoking provisions of section 69 A is concerned that during the financial year, the assessee is found to be owner of the cash so seized, the said condition is satisfied in the instant case. Cash so found is not recorded in the books of accounts, if any so maintained by the assessee for any source of income and the assessee offers no explanation about the nature and source of acquisition of the money, or the explanation offered by it is not satisfactory - Findings recorded by the AO that documents so produced in support of sale receipts from tickets sales are not reliable cannot be accepted in absence of any findings recorded either by the Investigation wing or any independent findings recorded by the Assessing officer himself. In light of the same, we are of the considered view that the onus which has been cast on the Assessing officer to record a categorical finding that the cash so found has not be recorded in the assessee s books of accounts has not been satisfied in the instant case and therefore, the second condition for invoking the provisions of section 69 A cannot be held to be fulfilled in the instant case. AO considering the fact that the bank was closed on 09. 11. 2016, had given benefit of average receipt of ropeway from 1st November 2016 to 15 th November 2016 amounting to ₹ 2,85, 562/- to the assessee company without appreciating the fact that Sundernagar police intercepted the vehicle carrying the cash on 09. 11. 2016 and the said cash was requisitioned and seized u/s 132 A of the Act by the Income tax Department subsequently on 17.11. 2016. The position of average receipt of ropeway prior to 8.11.2016 has to be seen and not subsequent to 8.11.2016. In any case, there is no reasonable and justifiable basis for restricting the credit for just one day merely on the basis of finding that there are regular cash deposits in the bank account from 1.11.2016 to 8.11.2016 more so in light of the fact that the assessee has shown cash in hand of ₹ 81. 64 lacs as on 8.11.2016 in its books of accounts and which are represented by corresponding revenues which have been accepted and brought to tax and even deduction u/s 80 IC has been allowed by the Assessing officer. Addition invoking provisions of section 69 A and confirmed by the ld CIT(A) is hereby set- aside and directed to be deleted.- Decided in favour of assessee. 2022 (2) TMI 525 Validity of the reassessment proceedings - assessee is a beneficiary of accommodation entries - HELD THAT:- It is an admitted fact that the original assessment was completed u/s 143(3) of the Act on 23.07.2008 and the assessment year involved is AY 2006-07. AO, during the course of assessment proceedings, had raised various queries and the assessee, vide letter dated 3rd July, 2008 has given the details of monthwise purchase and sales and the details of purchases of more than one lakh as per query No.4 and 5 raised by the AO in the original assessment proceedings. Further, in the reasons recorded, there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. Under these circumstances, the notice issued by the AO beyond a period of four years from the end of the relevant assessment year in a case where the original assessment was completed u/s 143(3) will not be in accordance with law. Therefore, such reassessment proceedings has to be treated as invalid. As in the instant case, the original assessment was completed u/s 143(3) of the IT Act, the issue of purchases was examined by the AO during the course of assessment proceedings, therefore, in absence of any allegation by the AO in the reasons that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, the reassessment proceedings, in our opinion, are not in accordance with the law. We, therefore, quash the reassessment proceedings. The grounds of appeal No.2 to 4 raised by the assessee are accordingly allowed. 2022 (2) TMI 524 Reopening of assessment u/s 147 - undisclosed sources addition u/s 68 - HELD THAT:- As reasons so recorded clearly state that the amount of ₹ 25 lakhs received from Dhanus Technologies Ltd., is dated 25th June, 2011 and does not pertain to assessment year 2011-12, but, pertained to AY 2012-13 and, therefore, no addition could have been made for AY 2011-12. We find, although the assessee has stated the same before the CIT(A), however, the CIT(A) has brushed aside the argument of the assessee without verifying the record himself or calling for the remand report from the AO. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to verify the bank statement of the assessee and the information received. In case the amount pertains to assessment year 2012-13, then the AO could not have made the addition in AY 2011-12 and, accordingly, if it pertains to AY 2012-13, then, to delete the addition for AY 2011-12. Grounds raised by the assessee are accordingly allowed for statistical purposes. 2022 (2) TMI 523 Revision u/s 263 - Disallowance of claim u/s 10B - reasoning given by Ld. Principal CIT was that the A.O. should have set off the brought forward losses before allowing deduction u/s 10B - HELD THAT:- We notice that the Ld. Principal CIT did not follow the binding decision of the jurisdictional High Court by observing that the issue is still not reached finality as the matter is pending before Hon ble Supreme Court. It is a well settled proposition of law that all the authorities below the jurisdictional High Court have to necessarily follow the decision rendered by the Hon ble High Court. Accordingly, the Ld. Principal CIT was not justified in refusing to follow the decision rendered by the jurisdictional High Court. In any case, the decision rendered by Hon ble Karnataka High Court in the case of Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT ] has since been upheld by Hon ble Supreme Court in the case of CIT Vs. M/s. Yokogawa India Ltd [ 2016 (12) TMI 881 - SUPREME COURT ] Hence, the deduction u/s 10B should be allowed without setting off of brought forward losses for the year under consideration. Accordingly, this reasoning od Ld. Principal CIT would fail. R D activity carried out by the assessee in biotechnology services would not qualify as computer software within the meaning given in sec. 10B - We find merit in the said contentions of the Ld. A.R. The Hon ble Bombay High Court in the case of CIT vs. Western Outdoor Interactive Pvt. Ltd. [ 2012 (8) TMI 709 - BOMBAY HIGH COURT ] has held that whether a benefit of deduction is available for a particular number of years on satisfaction of certain conditions and under the provision of Act, then without withdrawing or setting aside the relief granted for the first assessment year in which claim was made and accepted, the AO cannot withdraw the relief for subsequent assessment years. This ratio was laid down in the context of section 10A and the same, in our view, can be applied to sec.10B also. Accordingly, once there is no change in the facts and circumstances of the case from the earlier years from the initial year when the claim has been accepted, then the deduction cannot be disallowed or denied in the subsequent years of claim. The deduction so allowed in assessment year 2005-06 has not been withdrawn. In that case, the PCIT was not justified in directing the AO to deny deduction in the intervening year. Hence, the second reasoning given by Ld. Principal CIT also would fail. - Decided in favour of assessee. 2022 (2) TMI 522 Penalty u/s 271(1)(c) - difference in the receipt shown by the assessee and the payment/ receipt shown in Form-26AS on account of receipt - CIT(A) upheld the action of AO by taking view that no appeal was filed by the assessee against such addition - HELD THAT:- We find that the assessee has no occasion to file appeal, when the assessee himself offered the difference of receipt during the assessment. On the submissions of the assessee, CIT(A) called remand report from the assessee. AO furnished his remand report vide his report dated 12.02.2020. The AO in his remand report submitted that the assessee has not entered bill number in the ledger account of Insecticide India Ltd in the books for AY 2014-15, and that the assessee not raised the issue of double taxation in AY 2014-15 - no appeal in quantum assessment is filed by the assessee in AY 2012-13. As already held that the assessee has no cause of action to file against the addition which was offered by them during the assessment. From the remand report of AO, we find that there is no express denial of AO that the same receipt is not considered and offered for taxation in AY 2014-15. When the assessee has inadvertently not included the said receipt and has already included in AY 2014-15, and has already been taxed twice, therefore, in peculiar facts of the case, the assessee cannot be treated as not guilty of penal action u/s 271(1)(c). Penalty on addition on reconciliation of accounts amongst the appellant and the vendor - We find merit in the submissions of the Ld. AR of the assessee that the addition in assessment was based only due to the difference of reconciliation. We further noted that the assessee had not claimed deduction of such expenses, thus, mere addition of such amount will not attract the penalty under section 271(1)(c). Hence, the A.O. is directed to delete the entire penalty. Thus, the grounds of appeal raised by the assessee are allowed. 2022 (2) TMI 521 Income accrued in India - Income from supply of software embedded in the hardware equipment or otherwise to customers in India - royalty receipts under Section 9(1)(vi) of the Income-tax Act and under Article 13 of the Double Taxation Avoidance Agreement (DTAA) between India and France - HELD THAT:- Tribunal while deciding assessee s appeals for assessment years 2013-14 and 2014-15 [ 2021 (9) TMI 1337 - ITAT DELHI] has held that the amount received for embedded software supplied along with the telecommunication equipments cannot be treated as royalty. Similar is the finding of the Assessing Officer while deciding the issue in assessment year 2019-20. There being no difference in the factual position in so far as it relates to taxability of royalty on embedded software, we respectfully follow the decision of the coordinate benches in assessee s own case, as referred to above, and hold that no ade assessee. Accordingly, we uphold the decision of learned Commissioner (Appealdition on account of payment of royalty can be made at the hands of ths) on the disputed issue. Grounds are dismissed. 2022 (2) TMI 520 Deduction u/s 54F or u/s 54 - property sold as mere sale of land instead of land and building and, thereby denying the benefit of deduction u/s 54 - As since the assessee, in the instant case, has conclusively proved that the property sold was a land with building over it, therefore, merely because in the sale deed only land was mentioned cannot be a ground to deny the benefit of deduction u/s 54 - HELD THAT:- Since the assessee, in the instant case, has sold 1/4th share in the property No. 22, Radice Road, Gokhaley Marg, Lucknow and has filed the requisite details before the AO to substantiate that the property that was sold was, in fact, a building with land appurtenant thereto, therefore we are of the considered opinion that the assessee is entitled to claim the benefit of deduction u/s 54 of the IT Act on account of sale of the property and the subsequent investment in the residential property. Cost of new house property including the cost of improvement to make it habitable - The cost of the property declared by the assessee includes an amount for making the house habitable which includes certain items as per serial No.1 to 16 of the table at para 5.5. of the CIT(A) which in our opinion is not allowable as a deduction for making the house habitable because these are all luxury items.CIT(A) has rightly determined the amount for making the house habitable. Therefore, the assessee is entitled to get the benefit of deduction u/s 54 of the Act to the extent including amount for making the house habitable. The AO shall verify the calculation. The grounds raised by the assessee are accordingly allowed. 2022 (2) TMI 519 TDS u/s 195 - disallowance u/s.40(a)(i) for ship hiring charges and weather report expenses paid to the non residents - chargeability of tax under Section 172 - HELD THAT:- CIT(A) has categorically mentioned that Section 195 of the Act would apply only if payment is made which is chargeable under Income Tax Act 1961. AO has not given any reason as to why the chargeability of tax under Section 172 of the Act does not cover time charter of ships for which payment is made to non-resident. AO totally ignored the NOCs issued by Department allowing the ship for sailing in Indian Port as the payment is for time charter. The provisions of Section 172 of the Act has not at all indicated that there is any liability to pay tax on such receipts by the non-resident recipients. In this case, the charter ship for which payment was made to non-resident. As per the charging Section 172, no liability arises for payment of tax by the non- resident receiving payment for time charter. D.R. could not point out any discrepancy in the order of CIT(A). Therefore, the 1st issue raised in Revenue s ground no.1 is dismissed. Disallowance to weather routing report from the non residents and payment made to them - CIT(A) has given a categorical finding that income received by the non-resident for giving weather routing report in the form of analysis of data in tabular form/graphical representation is not chargeable to tax under any Section of the Income Tax Act including various sub-sections of Section 9(1) of the Act. There is no need to interfere with the findings of the CIT(A). Hence this issue is also dismissed. 2022 (2) TMI 518 Undisclosed investment u/s.69 - unaccounted payment on purchase of impugned land - Recording of the statement by survey team - survey action was carried out at the premises of the assessee-firm, during the survey, the statement of partner was recorded under section 131 who disclosed that he sold the land admeasuring 76,788 square yard in the year 2007 @ ₹ 550 per square yard to the assessee-firm and received consideration of ₹ 4.22 crore - HELD THAT:- We find that the lower authorities while making addition made more reliance on the statement of the partners instead of considering the documentary evidence and the effect of legal fiction under section 45(3) of the Act. Documentary evidence placed on record by assessee, fully corroborate the submissions of assessee that there is no sale of land by Gobarbhai Gondalia to the assess-firm, rather the said land was introduced as capital contribution, and that no money is paid by the assessee firm to the partner. There is no evidence on record about the unexplained investment by the assessee-firm in the impugned land rather it is a part of capital contribution by partner. If there was any remote chance of unexplained investment in the land, it might have been made by partner who had purchased the land in his individual capacity in FY 2007-08. No such investigation is carried out either by the AO or by ld CIT(A). No addition is made in the hand of purchaser of land, though; it was informed to the AO at the initial stage that the said land was purchased by individual partner. It is settled law that statement recorded during the survey action has no evidentiary value unless it is corroborated with material evidence, when the statement made during the survey stand retracted. We find that in Pawan Kumar Goel [ 2019 (6) TMI 52 - PUNJAB AND HARYANA HIGH COURT] held that provision of section 133A(4) prohibits the income tax authority to remove cash, stock or other valuable article and it is only upon non-cooperation or refusal by the person under search that power under section 131(1) can be resorted. Recording of the statement by survey team under section 131(1) is not valid. Thus, no cognizance of such statement could be taken. Hence, the addition which is solely based on the stamen is not legally sustainable. Thus, the assessee also succeeded on this submission as well. Considering the fact that we have allow the appeal of assessee on two primary submissions of ld AR for the assessee, therefore, the consideration and adjudication of other submissions has become academic. In the result, the ground of appeal raised by the assessee is allowed. Appeal of the assessee is allowed. 2022 (2) TMI 517 Delayed employees contribution towards EPF/ESI deposits - Payment before furnishing the return of income under section 139(1) - HELD THAT:- As relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED [ 2021 (11) TMI 370 - ITAT CHANDIGARH] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee. 2022 (2) TMI 516 Correct head of Income - income from warehouse - income from house property or business income - HELD THAT:- As perused the agreement for letting out the warehouse which is an agreement entered into between M.P. Warehousing and Logistic Corporation and the assessee. Ongoing through clause (3) of this agreement we find that the assessee is required to maintain the 24 hours security arrangement, cleaning and fumigation of the premises on regular intervals provide labour on daily wages and also to ensure the compliance of labour Rules and is also responsible to compensate the labourers towards any liability under labour laws arising at the warehouse. Agreement also shows that the assessee is required to provide the equipment for storage of goods. We find merit in the contention of assessee that the alleged gross receipts are not in the nature of rental income from letting out the property but are business receipts received for carrying out warehouse operations as per the terms of the agreement. We set aside the finding of Ld. CIT(A) and hold that both lower authorities erred in treating the alleged receipts as rental income. Finding of Ld. CIT(A) is reversed and the net profit shown from operations of warehouse is directed to be treated as business income. Thus, the addition is deleted. Ground no. 1 of the assessee's appeal is allowed. 2022 (2) TMI 515 Rejection of books of accounts - Estimation of income - HELD THAT:- We uphold the invoking the provisions of Section 145(3) of the Act, as neither the figures of sales reported by the AO in the audited books of accounts are reliable (because in the audited books of accounts, sales declared is of ₹ 9,40,65,836/- and the sales declared in the VAT return is ₹ 9,60,65,836) nor the rate of GP declared by the assessee can be accepted as correct. The assessee had declared gross profit rate of 2.84% in the immediately preceding assessment year and rate of gross profit of 3.24% in the immediately subsequent assessment year. The case laws relied upon by the ld. AR are not applicable as per facts of the present case, therefore, considering the totality of facts and circumstances, we found that the ld. CIT(A) has passed a speaking and reasoned order discussing all the details of the case of the assessee, as far as the rejection of books of account, thus we uphold the order of ld. CIT(A) to the extent it has upheld the rejection of books of account of the assessee. Considering the GP rate of 4% on the estimated turnover - It is important to mention here that the assessee s turnover jumped by 141% at ₹ 9.40 Crores this year from 6.64 Crores last year. We are of the view that to achieve such abnormal increase in the turnover, one has to compromise on its margins and such a fact certainly deserved consideration as far as the matter of fair estimation is concerned. While reaching to this conclusion, we also draw strength from the decision of CIT v/s Amrapali Jewels (P) Ltd. [ 2011 (10) TMI 470 - RAJASTHAN HIGH COURT] - At the same time, we cannot lose sight of the fact that the GP declared even at 1.61% on the turnover of ₹ 11.12 Cr. in assessee s own case in AY 2012-13 was also accepted by the Revenue. Thus, we restrict the addition to the tune of ₹ 10.00 lacs and remaining additions are directed to be deleted. Hence, grounds No. 1 to 1.2 of the Revenue s appeal and grounds No. 1 to 5 of the assessee s C.O. are partly allowed. Addition of various expenses - HELD THAT:- Assessee has maintained complete Books of account and other subsidiary record and all the expenses are fully supported by vouchers. A bare reading of the order of lower authority shall reveal that in almost all the cases the disallowances have been made on ad hoc basis, simply on mere suspicion, surmises and conjectures. No specific instance of any nature whatsoever has been given by the AO in the impugned order to support his contention with the documentary evidence that the expenditures were incurred for non-business purposes, element of personal user was there. An allegation remains a mere allegation unless proved. Freight, Telephone expenses, Petrol Diesel Expenses and Vehicle Expenses were dully supported by Bills and vouchers etc. In these expenses there was no possibility of personal user. It is a settled law that a businessman is the best judge to take care of its own interest to take decisions and the AO is not supposed to intervene therein nor he can replace the assessee. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. Disallowance of depreciation on vehicles is also not warranted with the facts and merits of the case as depreciation being a statutory allowance and hence cannot be restricted on the basis of personal use - Thus we direct to delete the additions confirmed by the ld. CIT(A) with regard to various expenses.- Decided in favour of assessee. 2022 (2) TMI 514 Income accrued in India - Receipts on sale of hardware with embedded software - royalty receipts - DTAA between India and UK - assessee is a non-resident foreign company incorporated in United Kingdom - AR submitted that assessee granted exclusive non-transferrable license to customers in India to enable them to use the software for provision of DTH services to Indian subscribers - HELD THAT:- As decided in own case [ 2021 (11) TMI 1023 - ITAT BANGALORE] that pure reimbursement does not give rise to any income and the decisions cited by the learned AR in this regard lay down the above principle. We find that the revenue authorities have not firstly held that as to whether there was one-toone tally of sums spent by the Assessee that was reimbursed by NDS Pay Tv. Once this factual finding is rendered then there has been no payment for any services whatsoever. The question is can one infer that the sums reimbursed were for services rendered by Assessee when there is one to one tally. In our view it cannot be said so. As we have already mentioned the AO has proceeded to draw inferences on surmises and conjectures. Firstly there is no evidence to show that services were rendered which can be termed as FTS. Under the DTAA FTS can be taxed only when it makes available technical knowledge to the person making payment. On the application of make available clause of the DTAA, there is no finding whatsoever as to what was the technical service made available to NDS Pay TV. We, therefore, deem it fit to set aside this issue and remand the same for consideration by the AO in the light of the observations made above (in particular with regard to actual tally of expenses incurred and reimbursed by NDS Pay Tv to Assessee), in accordance with law, after affording assessee opportunity of being heard. The facts are identical and the arguments advanced by the Ld.AR as well as the Standing Counsel for revenue are similar with that raised in the preceding assessment years. It is noted that the Ld.AO proceeded on identical basis for the relevant assessment year, we are of the opinion that the entire addition in respect of international transaction needs to be looked into afresh having regards the principles laid down by various decisions cited and referred to by coordinate bench of this Tribunal hereinabove as well as the articles under the DTAA between India and UK. Levy of interest u/s. 234B on the proposed addition under international taxation - HELD THAT:- As relying in assessee own case we direct that there shall be no levy of interest u/s. 234B of the Act under the present facts of the case. Accordingly, this ground raised by assessee stands allowed. 2022 (2) TMI 513 Income accrued in India - Royalty receipts - receipts on account of sale of software license and support, maintenance and allied services to its customers in India as liable to tax in India - According to the AO, the said receipts are in the nature of Royalty and liable for tax as per the provisions of section 115 of the Act or as per the provisions of Article 12 of India Singapore DTAA - HELD THAT:- This Tribunal in assessee s own case for A.Y. 2010-11 placing reliance in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] held the receipt derived by the assessee under the sale of software licenses and support services are not chargeable to tax in terms of section 9(1)(vi) of the Act r.w. Article 12 of DTAA. DR fairly conceded that the facts and circumstances in the year under consideration are similar to that of A.Y. 2010-11 in assessee s own case. [ 2021 (9) TMI 462 - ITAT PUNE] Therefore, we hold the receipt under sale of software licenses and support services are not chargeable to tax u/s. 9(1)(vi) of the Act r.w. Article 12 DTAA between India and Singapore. Thus, the final assessment order dated 09-10-2019 passed by the AO/ACIT (IT), Circle-1, Pune is set aside and sole issue raised by the assessee is allowed. Customs 2022 (2) TMI 553 Confiscation of goods - insulated copper cables - loading of goods on board without let export order (LEO) - failure to produce the shipping bill before the proper officer leading to consequent breach of section 35 and section 40 of Customs Act, 1962 by the others - disregard to requirements mandated in section 50 of Customs Act, 1962 - HELD THAT:- The let export order (LEO) , stipulated in section 50 of Customs Act, 1962, had been granted on 19th April 2008. With that, the process of export which was the responsibility of the exporter stood completed even if belatedly. The breach in loading of the cargo on the vessel ahead of grant of let export order (LEO) is attributable to the person-in-charge of the conveyance and not the exporter. Nonetheless, the goods, having been loaded in contravention of the prescription in section 40 of Customs Act, 1962, was liable to confiscation under section 113 (g) of Customs Act, 1962. That finding in the impugned order is without fault - the goods were not available for confiscation by the adjudicating authority and, therefore, as held by the Hon ble High Court of Bombay in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS FINESSE CREATION INC. [ 2009 (8) TMI 115 - BOMBAY HIGH COURT] , the imposition of redemption fine is without authority of law. The regularisation of the process for export is on record. Moreover, the vessel had been allowed to depart in accordance with section 42 of Customs Act, 1962 after issue of port clearance by the proper officer though it was well within the authority of such officer to offload the offending goods. Therefore, it cannot be said that the appellant was in any way connected with illicit shipment of export cargo. Consequently, the imposition of penalty under section 114 of Customs Act, 1962 is unjustified - Appeal allowed - decided in favor of appellant. 2022 (2) TMI 552 100% EOU - served from India scheme (SFIS) - Recovery of duties of customs foregone on imported raw materials and duties of central excise foregone on domestic procurement of raw materials - benefit of exemption under N/N. 34/2006-CE dated 14th June 2006 - HELD THAT:- The appellant was required to discharge duties of central excise in accordance with proviso to section 3 of Central Excise Act, 1944 on clearance of goods into the domestic tariff area (DTA) and that obligation thereto was construed by them as having been duly complied with on supply to holders of scrips entitled to duty-free procurement of goods intended for use in providing eligible services. N/N. 34/2006-CE dated 14th June 2006 does not provide for extending the extension of the benefit of exemption to goods manufactured by 100 % export oriented units (EOU) . Consequently, the clearance of goods has been effected by the appellant without payment of applicable duties. Considering that the procurement of raw materials both imported and domestic had been without payment of duty, against notification no. 52/2003-Cus dated 31st March 2003 and no. 22/2003- CE dated 31st March 2003 issued under Customs Act, 1962 and Central Excise Act, 1944, the clearance of goods against debit of scrip is legalized only by recovery of the duties so forgone which is the primary component of the order of the original authority affirmed in the impugned order. There is no finding in the order of the original authority holding the goods liable to confiscation; the imposition of penalty under section 112 of Customs Act, 1962 is without authority of law. Neither is there any finding on the confiscability of goods under rule 25 of Central Excise Act, 1944 and the imposition of penalty thereunder is, therefore, without authority of law. The appeals is allowed to the extent of setting aside the penalties while the demands of duty along with applicable interest is upheld - appeal allowed in part. 2022 (2) TMI 551 Jurisdiction - rejection of refund claim - power of Commissioner (Appeals) to pass the order remanding the appeal to the Original Adjudicating Authority for reconsideration - entitlement for interest on the sanctioned amount of refund from the date of deposit of the said amount - Section 128 A (3) of the Customs Act, 1962 - HELD THAT:- The perusal of both provisions of Section 128 A (3) of the Customs Act, 1962, makes it abundantly clear that the amendment in these provisions has specifically taken away the power of remand to anymore be exercised by Commissioner (Appeals) to remand the case back to the Adjudicating Authority by deleting the words, May refer the case back to adjudicating authority with such directions as he may think fit for a fresh adjudication . The necessary enactment has taken away the power of Commissioner (Appeals) to sent the matters back to the Original Authority for reconsideration as was held by Hon ble Apex Court in the case of HITENDRA VISHNU THAKUR VERSUS STATE OF MAHARASHTRA [ 1994 (7) TMI 343 - SUPREME COURT] . Hon ble Apex Court has dealt with the need of amendment in Section 128 A(3) of Customs Act. While adjudicating the case of MIL INDIA LTD. VERSUS COMMISSIONER OF C. EX., NOIDA [ 2007 (3) TMI 8 - SUPREME COURT] , it has been held by Hon ble Supreme Court that Under Section 35B any person aggrieved by the order of the Commissioner as an adjudicating authority is entitled to move the Tribunal in appeal. Section 35B indicates that the decision of order passed by the Commissioner (A) shall be treated as an order of an adjudicating authority. In the circumstances the High Court had erred in holding that the assessee was not entitled to agitate the question of dutiability in appeal before the Tribunal - The said decision was immediately taken into consideration by Hon ble Punjab and Haryana in the case of COMMISSIONER OF CUS., AMRITSAR VERSUS ENKAY (INDIA) RUBBER CO. PVT. LTD. [ 2007 (3) TMI 276 - HIGH COURT OF PUNJAB HARYANA AT CHANDIGARH] wherein after applying the MIL decision the matter was sent back to the Commissioner (Appeals) for decision in accordance with the law. The question of adjudication is thus decided holding that the Commissioner (Appeals) was not at all entitled to, any more be empowered to remand the matter back to the adjudication authority on this score the order under challenge is liable to be set aside, with effect from 11.05.2001. Entitlement of interest on delayed refund - HELD THAT:- The refund claim was filed by the appellant on 23.1.2020. The same has been sanctioned by the Department vide Order dated 29.7.2020. Apparently the refund was sanctioned beyond the period of three months as provided under section 11B of the Central Excise Act, 1944. Section 11BB of the Act provides for interest on delayed refund. It states that if any duty ordered to be refunded under sub-section (2) of section 11B is not refunded within three months from the date of receipt of the application, than the applicant shall be entitled to interest after the expiry of three months from the date of receipt of the application at such rate not below 5% and not exceeding 30% as may be notified by the Central Government in the Official Gazette - On-going through the provisions of both Income Tax Act, 1961 and Central Excise Act, 1944, the interest on delayed refund is payable after expiry of 3 months from the date of granting refund or from the date of communication of order of the appellate authority, which are parimateria. As the Hon ble Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] has answered the issue holding that the assessee is entitled to claim interest from the date of payment of initial amount till the date its refund. Therefore, it is held that the appellants are entitled to claim the interest on delayed refund from the date of deposit till its realization. The appellant was wrongly proposed with the duty demand of ₹ 10,88,180/- which was deposited by the appellant even prior to the proposal for said demand. The said demand was later set aside holding the appellant to be entitled to Zero Duty EPCG authorisation. The deposit, therefore, was nothing but the deposit under protest. Accordingly, the appellant is held entitled for the interest at the rate of 12% from the date of deposit of the said amount. Hence the question regarding interest also stands decided in favour of the appellant. Appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2022 (2) TMI 550 Liquidation of the Corporate Debtor - no resolution plan was received - Appointment of liquidator - section 33(2) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- Section 33 of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the resolution professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating Authority of the decision of the CoC approved by not less than sixty-six percent of the voting share, to liquidate the Corporate Debtor - In the present case, the CoC has resolved by 100% voting share to liquidate the Corporate Debtor. Prayers as sought for in application filed by Mr. Anshul Gupta RP of Shamken Cotsyn Limited, the Corporate Debtor, is allowed and the Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - liquidator as provided under section 34(1) of the Code is appointed - application allowed. 2022 (2) TMI 549 Voluntary liquidation of the Petitioner/Corporate Person - section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It appears that the affairs of the Corporate Person have been completely wound up and its assets have been completely liquidated. No liabilities have been left unsatisfied. It is satisfying from the documents on record that the voluntary liquidation is not with the intent to defraud any person. The Corporate Person is eligible for dissolution, and it is ordered accordingly - Liquidator of the Corporate Person is further directed to serve a copy of this order upon the Registrar of Companies (RoC), Kanpur immediately and, in any case, within fourteen days of receipt of this order. The RoC shall take further necessary action upon receipt of a copy of this order - Petition disposed off. 2022 (2) TMI 548 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues or not - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Ld. Adjudicating Authority passed the order in VEJAS POWER PROJECTS LIMITED VERSUS VAAYU INFRASTRUCTURE LLP. [2019 (8) TMI 1786 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI] and admitted the petition filed by the Respondent No. 2 herein (Financial Creditor), 'Vejas Power Project Ltd.' under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Appellant herein (Corporate Debtor), 'Vaayu Infrastructure LLP' and further while dismissing the Application filed by the Appellant herein vide order dated 16.09.2019 in MA 2984/2019 MA 3061/2019 in C.P. 1951(IB) (MB)/2019, the Ld. Adjudicating Authority has not considered the provisions of Rules 37, 49 and 150 of the NCLT Rules. In view of the above, the impugned orders dated 30.08.2019 and 16.09.2019 are hereby set aside and the matter is remitted back to the Ld. Adjudicating Authority (National Company Law Tribunal), Mumbai Bench with a request to hear the parties including the Appellant herein and Respondent No. 1 herein about his fee and expenses for the period he has worked as IRP and pass appropriate orders within six weeks from the date of receipt of this judgment. Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the Ld. Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, forthwith. PMLA 2022 (2) TMI 538 Seeking grant of Bail - commission of economic offence - predicate or scheduled offence - burden to prove guilty - HELD THAT:- There are no reason to interfere with the impugned order passed by the High Court granting bail to respondent No.1 herein. The SLP is dismissed. Service Tax 2022 (2) TMI 547 Maintainability of appeal - power of learned Commissioner (A) to remand the case - said remand was only to the extent of quantification of refund on the services - learned Commissioner (A) had held to be eligible for refund - HELD THAT:- It is found that it is an open remand to the original authority while making it clear that no opinion is expressed on any of the issues and nexus issue in respect of the input services on which refund has been claimed will be considered afresh and for those input services that have been allowed by the Commissioner (A), Revenue is not in appeal. The appeals filed by the department is on two grounds, one is that the commissioner (A) has no power to remand and the other ground is that nexus between input services and services exported is not established. However, we find that Revenue has not filed any appeal against the final order of this Bench on the issue of nexus between certain input services and the export services which have been allowed by the Commissioner (A) - the Commissioner (A) remanded the case to the Original Authority for the purpose of quantification only. The department s appeal on the issue of Commissioner (A) s having no power of remand is not maintainable for two reasons that in the instant case, the impugned order is not a case of normal remand but was only for the limited purposes of quantification - the appeals filed by the department are not maintainable, hence, they are dismissed. 2022 (2) TMI 546 Recovery of service tax - service being taxable but the liability has not been discharged by the appellant - business auxiliary services - Service Tax on Insurance Commission - Service tax on finance pay outs - Service tax on incentive received from MUL - Service tax on handling and logistic charges - Service tax on registration charges and extended warranty - Service tax on consumables used during the course of servicing of the vehicles - Non Reconciliation of ST-3 Return with Balance Sheet and Cenvat Credit on Inadmissible Documents - Reimbursement of Expenses from MUL - Service tax under reverse charge mechanism on the expenses appearing in audited profit and loss account - period 2012-13 to 2016-17 - extended period of limitation - first SCN was adjudicated by the Learned Commissioner Central Excise Service Tax Lucknow and the adjudicating authority through its Order in Original dated 30/10/2009 dropped the demand of Service Tax on Incentive received from MUL amounting to ₹ 36, 52,967/ and confirmed the demand on all the issues raised in the SCN dated 16/10/2008 - Second SCN was adjudicated by the Learned Commissioner Central Excise Service Tax Lucknow and the adjudicating authority through its Order in Original dated 08/02/2017 dropped the demand of Service tax on servicing of Motor Car, Registration Charges sale of extended warranty but confirmed the demand of Service tax on insurance commission, differential Service tax payable on account of reconciliation of ST3 returns - while adjudicating the third SCN, the adjudicating authority had confirmed the entire demand without considering the submissions documents submitted during the course of adjudication made by the appellant - HELD THAT:- It is observed that vide Final Order of this Tribunal bearing No.70112 of 2015 dated 17.12.2015, the entire demand of SCN dated 16.10.2018 on the several issues as mentioned above stands already been set aside. Apparently, no appeal has been filed by the Department against the said order. The said decision, therefore, stands attained finality - With respect to the SCN dated 24.10.2013, Department itself has dropped the demand except for demand of Service Tax on insurance commissions, advertisement expenses, reimbursement from MUL and on different job receipts. However, the adjudicating authority with respect to the third SCN of 20th November, 2017 has again confirmed the demand on all the issues raised in the said SCN despite this fact that most of them are similar to those in the prior two notices where all such demands have been already dropped except for the demand with respect to non-conciliation of ST-3 Returns, Service Tax on reimbursement of expenses from MUL, Cenvat Credit on inadmissible documents, and service tax under reverse charge mechanism on entire expenses appearing in audited and profit and loss accounts - issues which have been already decided by the Final of 17.12.2015, the decision thereof, were to be followed by the adjudicating authorities while adjudicating the impugned both the SCNs. it becomes clear that the adjudicating authorities have absolutely ignored the principles of judicial discipline by not following the binding order passed by this Tribunal. Hon ble High Court of Karnataka while deciding a Writ Petition in XL HEALTH CORPORATION INDIA PVT. LTD. VERSUS THE UNION OF INDIA, DEPUTY COMMISSIONER SERVICE TAX, DIVISION-III SERVICE TAX-I, COMMISSIONERATE [ 2018 (10) TMI 1565 - KARNATAKA HIGH COURT] - the confirmation of demand on such issues, which have already been dealt with by this Tribunal and demand has been set aside stands set aside for the impugned SCNs. Service Tax on Insurance Commission - HELD THAT:- It becomes clear that the recipient of insurance services is liable to pay the service tax. Admittedly appellant herein is the service provider being an insurance agent. The service recipients are the insurance companies for which the appellant had worked. Hence, it were the insurance companies, who were liable to discharge the service tax liability with respect to the amount on insurance commission received by the appellant. A copy of certificate issued by IRDA was also submitted by the appellant. The same has not been considered by the adjudicating authorities below. The confirmation of demand on this issue is therefore held to have been wrongly confirmed. Service tax on finance pay outs - HELD THAT:- The adjudicating authority has failed to consider that the service tax liability with respect to finance pay outs, therefore, stands discharged though partly through cenvat and partly through cash. The demand is, therefore, held to have wrongly been confirmed. Service tax on incentive received from MUL - HELD THAT:- It is observed that the appellant purchases vehicles from MUL and sells the same to the buyers. The agreement between appellant and MUL clarifies that appellant works on a principal to principal basis instead of working as an agent of MUL. Appellant, however, has agreed to undertake certain sales promotion activities as well. In the given circumstances, carrying out of such activities by the appellant is for the mutual benefit of the business of the appellant as well as for the business of the MUL - the amount of incentives received on such account cannot be treated as consideration for any service and the incentives received by the appellant therefore, are wrongly held livable to the Service tax. Service tax on handling and logistic charges - HELD THAT:- The copy of VAT assessment orders were also provided by the appellant. Once the liability of VAT is discharged, the demand of service tax on the same transaction is not permissible under Indian Constitution. The demand on this issue otherwise has already been set aside by this Tribunal in the Final Order dated 17.02.2015. Confirmation of the demand on this is therefore, liable to be set aside. Service tax on registration charges and extended warranty - HELD THAT:- This issue is observed to have already been settled by Tribunal, Mumbai while deciding the case of TOYOTA LAKOZY AUTO PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX/CENTRAL EXCISE MUMBAI -II / MUMBAI - V [ 2016 (12) TMI 541 - CESTAT MUMBAI] wherein it has already been held that the facilitation charges collected from customers for registration of vehicles with RTO do not qualify to be as an amount towards providing business auxiliary service - this issue also remains no more res integra. The confirmation of demand on this count is also held liable to be set aside. Service tax on consumables used during the course of servicing of the vehicles - HELD THAT:- Documents with respect to security expenses, travelling expenses, legal expenses, freight expenses have also been submitted by the appellant but the orders under challenge are observed to not to have considered those documents also the challans amounting to deposit of ₹ 4,16,35,200/- during the entire disputed period. The challans summary as submitted is sufficient to show that excess amount of service tax pertaining to business auxiliary services on this count stands already paid by the appellant. Departments own verification report in respect of the reply submitted by the appellants in respect of SCN dated 20.12.2017 as was called by Superintendent CGST, Lucknow from Jt. Commr., CGST, Lucknow is also produced by the appellant. The said report dated 21.02.2019 also confirms the payment of service tax in lieu of business auxiliary service and repair, reconditioning of motor vehicles by 23 challans as mentioned in the said report which were found duly included in the list of 265 challans amounting to a total of ₹ 4,13,40,105/-. Both the orders under challenge have been passed prior to the said verification report - in the light of said verification report, it stands clear that the demand on this account also cannot be confirmed. Non Reconciliation of ST-3 Return with Balance Sheet and Cenvat Credit on Inadmissible Documents - HELD THAT:- The verification report as mentioned above has verified that total 8 ST-3 Returns were filed by the appellant during the financial year 2012-13 to 2015-16. The said Returns reflect the duty payment. The report also verifies that the duty paid challans mentioned in the ST-3 returns filed are also available in the ACES data. As per those ST-3 Returns, it is verified that the appellant has not availed any cenvat credit against the capital goods except they availed the credit against the input services received directly. Departments own verification report is, therefore, held to have falsify the confirmation of the demand on this count by the adjudicating authorities below. The confirmation is according liable to be set aside. Reimbursement of Expenses from MUL - HELD THAT:- The issue is no more res integra as has already been discussed above with respect to the decision of this Tribunal in M/S. ROHAN MOTORS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, DEHRADUN [ 2020 (12) TMI 1014 - CESTAT NEW DELHI] . The adjudicating authorities below are held to have ignored the decision on this issue arrived at by this Tribunal. The adjudicating authority are held to have violated the principles of judicial discipline - the confirmation of demand on this score also cannot sustain. Service tax under reverse charge mechanism on the expenses appearing in audited profit and loss account - HELD THAT:- The demand of service tax under RCM on repair and maintenance service is also not sustainable as the parties have failed to consider that those expenses pertaining to the purchase of material spare parts and wages paid to the concerned person without deploying any contractor. Travelling expenses also have been wrongly confirmed under RCM, despite the apparent fact that those expenses pertains to the purchase of rail tickets, air tickets and conveyances expenses of the employees of the appellant. Similarly demand of service tax on legal and professional expenses under RCM is not sustainable as the documents produced by the appellant clarifies that those expenses pertain to the payment of the paid to the banks for enhancement and renewal of limits and also for payment to Chartered Accountants and other technical consultants. All such expenses have duly been mentioned in their profit and loss account which were duly got verified vide the verification report of 21.02.2019 as was submitted by Jt. Commissioner, CGST. The demand on this account is also therefore, held not sustainable. Extended period of limitation - HELD THAT:- The question of any evasion which entitles Department to invoke extended period of limitation does not at all arises. It is accordingly, held that the Department has wrongly invoked the extended period of limitation. The Hon ble Apex Court in the case of TAMIL NADU HOUSING BOARD VERSUS COLLECTOR OF CENTRAL EXCISE, MADRAS [ 1994 (9) TMI 69 - SUPREME COURT] has held that powers to extend period from one year to five years are exceptional powers, hence, have to be constructed strictly. It was held that fraud, collusion etc. and intention to evade duty must concur. As already held above, nothing of this sort is apparent on part of the appellant - Department has wrongly invoked the extended period of limitation. Both the SCNs are therefore, held to be barred by the period of limitation. It has been held that the demands on several counts have wrongly been confirmed. The Adjudicating Authority is rather held to have violated the principles of judicial discipline. The SCN is held to be barred by time. Both the orders under challenge are, therefore, hereby set aside - Appeal allowed - decided in favor of appellant. 2022 (2) TMI 545 CENVAT Credit - input services - Management or Business Consultancy Service - credit denied on the premise that the said services do not qualify as input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004 - Professional indemnity insurance - Medical insurance policy - credit of inadmissible service against Bills of M/s Wizcraft for EOY Awards Expenses and Budget Day Programme Expenses - Credit against bills of Perfect Business Centre Services Pvt. Ltd. on cost of travel coupons in February, 2010 - Credit in respect of improper documents - Credit non levy amount against bills of M/s. Perfect Business Centre and M/s Ind Global Corporate Finance Ltd. For Renting of Immovable Service for the period April-May, 2007 - Invocation of extended period of limitation - penalty. Professional indemnity insurance - HELD THAT:- The appellant is providing consulting service and availed professional indemnity insurance against the liability which may arise on account of any dispute arises for providing the services provided by the appellant. The said insurance helps and protect professional advice and service provided by the officials/individuals of the appellant from bearing the full cost of damages awarded in a civil suit to the service recipient. The appellant undertakes to indemnify their clients in respect of certain losses against future claim by their clients against the appellant. In that circumstance, the said service i.e. Professional Indemnity Insurance do qualify as an input service in terms of Rue 2(l) of Cenvat Credit Rules, 2004. Medical insurance policy - HELD THAT:- From the facts of the case, it is coming out that the group insurance has been taken by the appellant not only for their employees but for their family members also. In that circumstances, the service tax paid on premium for group medical insurance paid toward the insurance of family members of the employees of the appellant, therefore, the appellant is not entitled to take credit on the service tax paid on the part of group medical insurance paid towards the family members of the employees of the appellant - it is not coming out how much amount of premium of group medical insurance policy belong to the employees of the appellant and how much amount to the family members of the employees of appellant. In that circumstance, the matter needs consideration at the end of the adjudicating authority to find out the inadmissible cenvat credit of service tax paid of medical insurance towards the family members of the employees of the appellant - The appellant is directed to provide data for the same. Credit of inadmissible service against Bills of M/s Wizcraft for EOY Awards Expenses and Budget Day Programme Expenses - HELD THAT:-The said service is entitled for cenvet credit as input service. Further, an EOY award is an event where top industry leaders, professionals and entrepreneurs who have excelled in their respective fields are appreciated and recognized for their achievements. The event is attended by senior management personnel of the appellant which gives them an opportunity to develop new business relationships which are leveraged in future to generate business - said activity is also termed as service availed in relation to the business of the appellant, the same is entitled to cenvat credit as input service. C redit against bills of Perfect Business Centre Services Pvt. Ltd. on cost of travel coupons in February, 2010 - HELD THAT:- There is bifurcation of the services availed by the appellant. The appellant has failed to provide data and information whether the said travel coupons has been used for business purpose or not? Failing which inference is drawn that the said coupons were used by the employees of the appellant for their personal use. Therefore, the service tax paid on travel coupons do not qualify as input service. Accordingly, on that service the appellant is not entitled to take credit and the same is denied. Credit in respect of improper documents - HELD THAT:- The appellant is having various offices at various other locations, on those locations the appellant is availing the services of repairs, maintenance and renovation, etc. and all these locations have been used for proving output service by the appellant. In that circumstance, the appellant is entitled to avail credit on these services, therefore, the credit denied on account of improper documents is not sustainable - the appellant is entitled to take cenvet credit on the invoices issued by M/s. Woodcraft for maintenance, repairs and renovation ect, of the offices of the appellant. Credit of non levy amount against bills of M/s. Perfect Business Centre and M/s Ind Global Corporate Finance Ltd. For Renting of Immovable Service for the period April-May, 2007 - HELD THAT:- Levy of service tax on renting of immovable property service came into force with effect from 1.6.2007 and the service tax on which cenvat credit availed is pertained to the period prior to that, as no service tax was payable by the service provider and there was no levy of service tax prior to 1.6.2007, the said service prior to 01.06.2007, cannot be held as input service to avail credit by the appellant. The appellant was not required to pay service tax for the April, 2007 and May, 2007 as there was no levy of service tax during the said period. In that circumstance, on merits, the appellant is not entitled to take credit of service tax paid on renting of immovable property for the period for the April, 2007 and May, 2007 - it is evident that the cenvet credit has been availed in the month of March, 2008 whereas the show cause notice has been issued on 18.04.2013 which beyond the extended period of limitation, in that circumstance, we hold that the show cause notice issued beyond 5 years of availment of cenvet credit to deny cenvet credit availed for the period of April-May, 2007 is barred by limitation and the same cannot be recovered. Extended period of limitation - HELD THAT:- For the period 2007-08 to 31.3.2011, an audit took place during the period January, 2013, to February, 2013. If audit could not take place, the availment of inadmissible cenvat credit could not revealed, therefore, after analysing the case laws on the issue, we hold that the extended period of limitation is rightly invoked. Penalty - HELD THAT:- In terms of the provisions of section 80 of the Finance Act, 1994 which provides for immunity from imposition of penalty, the provisions of Sec. 80 of the Finance Act, 1994 is invoked, immunity granted from imposition the penalty on the appellant. Therefore, the penalty imposed on the appellant is set aside. The matter remanded back to the adjudicating authority for computation of demand of amount of cenvet credit recoverable from the appellant - appeal allowed by way of remand. Central Excise 2022 (2) TMI 544 CENVAT Credit - duty paying invoices - wrongful availment of credit on the basis of duty paid invoices of different inputs without actual receipt of the inputs against such documents - diversion of goods - correctness of reliance placed on the third party statements and evidences = entire case of the Revenue is that the respondent have not transported the goods from ICD, Tughlakabad to Daman but the same was diverted somewhere else - Section 14 of the Central Excise Act, 1944 - HELD THAT:- Merely because there is distance between Nhava Sheva to Tughlakabad and then transportation to Daman, it cannot be presumed that the goods might not have transported to Daman. Irrespective of distance there may be various other reasons and it is up to the assessee to take a commercial decision whether to transport the goods directly from Nhava Sheva to Daman or Nhava Sheva to Tughlakabad and then to Daman. At the most, this activity can create a suspicion but only on this basis, it cannot be concluded that goods have not been transported from ICD Tughlakabad to Daman. Therefore, the ground taken by the Revenue on this aspect is on assumption and presumption. Whether statements of transporters are not found to be reliable regarding unloading of the goods? - HELD THAT:- The Adjudicating Authority perused the statements/ explanation of the local transporters of Delhi revealed that they have not indicated any specific place or premises where the goods were unloaded by them except vaguely specifying the areas. The Adjudicating Authority also observed that it would be the drivers of the local transporters who would know the exact place of unloading of these consignments as held in the various decisions on the subject. The Adjudicating Authority also relied upon various decisions in this regard. In the absence of clear statement of the transporters that goods were not unloaded to the respondent s destination only the vague statements cannot be used as conclusive evidence. There are no infirmity in these findings of the Adjudicating Authority inasmuch as the Adjudicating Authority has not found the statements of the transporters to be reliable. There is no investigation and no evidence to establish alleged clandestine disposal of disputed inputs in or around Delhi and not even a single alleged buyer out of 1670 MT is brought on record. Similarly, there is no details of transportation of goods or about financial transactions or about any blow back from the suppliers or from the alleged buyers. Therefore, the alleged clandestine disposal of the disputed inputs remains unsubstantiated, despite some stray evidence relied upon in the show cause notice. There is not a single statement of any supplier to the effect that the disputed inputs were not supplied to the Respondent and were supplied to some third parties. There is no evidence that some third party have made payments to the suppliers of the disputed inputs. The statements of transporters are not corroborated with any evidence. The entire case of the department is based on the record of the transporters and only on the basis of third party statements or record, the demand for denial of Cenvat credit cannot be sustained. It is also fact on record that there is no investigation made at the factory of the respondent and no statement of any production staff or excise/ stores staff is recorded. There is no allegation of flow back of money from the suppliers to the respondent - When the investigating offices visited the factory of the respondent as well as that of the job workers, they did not find any discrepancy about the inventory of inputs or final products. There is neither any investigation nor an iota of evidence that the respondent had procured the inputs from open market for substitution of the disputed inputs. The case of the department is built up mainly on recorded statements of a few transporters of the disputed inputs. As the statements were retracted or contradicted during cross-examination, there has to be some other evidence sufficient to conclude that the disputed inputs was actually not received. The statements of co-accused necessarily need to be corroborated by some independent evidence - Since all these statutory records are not under dispute then the burden rests heavily upon the Revenue to establish with cogent evidence that the inputs were not actually received in the factory. Mere third party evidence like transporter s statements, RTO reports, Check Post records etc. which were not examined cannot suffice to prove the department s case. The department could not establish beyond doubt that the alleged inputs were diverted in or around Delhi and not transported to Daman to the Respondent. Therefore, the Adjudicating Authority has rightly dropped the proceeding of the show cause notice - Appeal dismissed - decided against Revenue. 2022 (2) TMI 543 Reversal of CENVAT Credit - manufacture of electricity which was partly utilised in the factory and partly sold to Government and other parties - dutiable as well as exempt goods - applicability of Rule 6 of Cenvat Credit Rules, 2004 or not - HELD THAT:- As submitted by the learned counsel for the appellants, the issue is no longer res integra. This Bench relying upon the case of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] and GULARIA CHINI MILLS AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2013 (7) TMI 159 - ALLAHABAD HIGH COURT] has decided the issue in favour of the very same appellant albeit in respect of another unit of the appellant. Following the ratio of the above decisions, it can be opined that the appeal survives on merits as well as limitation. Appeal allowed - decided in favor of appellant. 2022 (2) TMI 542 CENVAT Credit - input service credit availed for the unit, for the purpose of repair and maintenance to Captive Wind Mill of the appellant located far from the appellants factory, situated at Surajpur Tehsil at Ratlam, Chittor Section - HELD THAT:- The issue herein is no longer res integra and has been decided in favour of the appellant /assessee by the law laid down by the Hon ble Supreme Court in the case of VIKRAM CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [ 2006 (1) TMI 130 - SUPREME COURT] , wherein the Hon ble Supreme Court has upheld the allowability of the cenvat credit on the inputs or input sevices received outside the factory at the captive mines. Admittedly, in the facts of the present case, the wind mill is a captive unit of the appellant. Admittedly, the appellant have generated power at the wind mill and transferred the power under Wheeling Dealing Agreement in the Western Grid, and thereafter, has drawn power at its factory at Rajnandgaon. Further, from the Bill raised by Western Grid, it is evident that the appellant has been given credit of the units transferred to the grid at the Wind Mill and thereafter, have drawn power at Factory, they were required to make payment and if they have drawn excess power, and if they have drawn some less power, then they were entitled to such credit as per the agreement. The agreement also provides for payment of Wheeling Dealing charges to western grid by the appellant. Thus, the order of the court below is also contrary to the facts and there is clear mis-reading of the agreement between the appellant and the Western Grid. As the appeal is allowed on merits, the issue of limitation is left open - Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (2) TMI 541 Exemption from payment of tax - value of sale within the State was below ₹ 10,00,000/- during the respective Assessment Years - exemption from payment of tax and from filing returns under Section 21 and 3(1)(b) of the TNVAT Act, 2006 - violation of principles of natural justice - HELD THAT:- The submission of the learned Government Counsel for the respondent cannot be countenanced in the light of the specific directions of this court - The said order makes it clear that order has to be passed after giving due opportunity of hearing to the petitioner. The impugned order has straight away proceeded to pass orders. Even otherwise, it is noticed that the impugned order has been passed in violation of Principles of Natural Justice and therefore the case has to be decided afresh. As the impugned order is contrary to the order passed by this Court, the impugned order stands quashed and the case is remitted back to the respondent to pass appropriate orders on merits and in accordance with law after giving an opportunity of hearing to the petitioner. The petitioner is directed to cooperate with the respondent - petition disposed off. 2022 (2) TMI 540 Violation of principles of natural justice - non-speaking order even though a reply of the petitioner was already on record with the respondent as is evident from the discussion in the impugned order under the caption penalty - HELD THAT:- Pursuant to the quashing of the order dated 05.04.2018 in W.P.Nos.4900 to 4905 of 2018, the impugned order has been passed by the respondent. The impugned order precedes a notice dated 22.07.2021. The said notice called upon the petitioner to furnish the details to finalise the revised assessment for Assessment Year 2016-2017. Though the notice was issued and called upon the petitioner to furnish the details, the petitioner failed to file any reply. In the earlier round itself, the petitioner has filed a reply to the original notice issued under Section 27 of the TNVAT Act, 2006. While passing the impugned order, the respondent ought to have considered the same even if the petitioner had failed to file the reply in response to notice dated 22.07.2021, in pursuance of the order of this Court dated 05.04.2018. The impugned order is liable to be declared as non-speaking order and therefore liable to be quashed - the impugned order is quashed and the case is remitted back to the respondent to pass a speaking order within a period of 45 days from the date of receipt of a copy of this order - Petition allowed by way of remand. Indian Laws 2022 (2) TMI 539 Dishonor of Cheque - multiplicity of/parallel proceedings - 1st respondent had proceeded against the petitioner-accused under Section 138 of the NI Act as well as filed a private complaint for the offences under Sections 406, 420 and 506 IPC - contention of the learned counsel for the petitioner was that when the acts alleged attract an offence under a special enactment, the question of the same facts attracting the penal provisions under IPC would not arise - HELD THAT:- The 1st respondent had initiated prosecution against the petitioner-accused under Section 138 of the NI Act apart from filing the private complaint for the alleged offences under Sections 406, 420 and 506 IPC and the facts prima facie would disclose that the petitioner-accused had an intention to deceive since inception of the transaction as he had received goods but failed to pay the amounts and went on issuing cheques without retaining sufficient amount in his account, which shows that he had an intention to cheat the 1st respondent since inception. The businesses are conducted on trust but the petitioner failed to maintain the trust and committed breach without payment of money after receiving the goods. He also closed the business and kept himself absconding in the case under Section 138 NI Act due to which LPC proceedings were initiated against him. As it is not only a simple case of failure to repay the value of the goods but also shows his dishonest intention to deceive the 1st respondent not to pay the money after receiving the property and caused wrongful loss to the 1st respondent and wrongful gain to himself, it is considered not a fit case to quash the proceedings. The Criminal Petition is dismissed.
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