Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 14, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Penalty u/s 129(1)(b) - Part-B of the e-way bill was not filled up - The High Court held that, upon a perusal of the order in appeal, it is crystal clear that the petitioner could not justify the reasons for non production of the invoice and the e-way bill. In such cases, a presumption automatically arises that there was an intention to evade tax. This presumption would be rebuttable. However, the petitioner was not able to bring any evidence to rebut the said presumption of evasion of tax.
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Validity of notification granted second extension of time to issue show cause notice under Section 73(10) of the U.P. GST Act, 2020 - The High court finds that the matter requires consideration based on the submissions and facts presented. - Pending further proceedings, an interim order is granted, allowing proceedings in pursuance of the impugned notice dated 21.12.2023 to continue, but restraining the passing of a final order without leave of the Court.
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Declination to accept the recommendation made by the Chief Commissioner of Persons with Disabilities by his order dated 06.04.2023 - seeking direction to the respondents to grant GST Concession Certificate to the petitioner so that petitioner can avail concessional rate of GST - The petitioner's contention that their application should be considered under the 2018 policy, as it was submitted before the amendment to the policy in 2019. - The High Cdourt observed that there were no restrictions regarding the length of the vehicle or the date of purchase under the 2018 policy. - The court found that the petitioner's application should have been considered under the 2018 policy, and the subsequent amendment to the policy did not affect the validity of their application.
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Seeking grant of anticipatory bail - After considering arguments from both sides and examining the materials on record, the court finds that the petitioner's apprehension of being taken into custody upon appearance is not reasonable. Additionally, the court holds that the application under Section 438 of Cr.P.C. cannot be entertained at a stage when only a summons has been issued under Section 70 of the O.G.S.T. Act.
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Taxability under GST - rent received from the Govt. SWCBH - pure services or not - The AAR analyzed the exemption clause of Notification No. 12/2017, which exempts pure services provided to government entities in relation to functions entrusted to municipalities under Article 243W of the Constitution of India. The AAR interpreted the phrase "in relation to" based on legal precedents and found that there must be a direct and immediate link between the services provided and the functions enumerated under Article 243W. - Accordingly, AAR held that, these services do not qualify for exemption under Notification No. 12/2017, making the rent received taxable.
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Eligibility for GST Exemption by All India Institute of Medical Sciences - pure services received from Vendors - The Authority for advance ruling examines the evidence provided by AIIMS to determine its status as a Governmental Authority. While AIIMS argues its eligibility based on various factors, including its establishment by an Act of Parliament and financial support from the Central Government, the Authority concludes that AIIMS does not qualify as a Governmental Authority as per the relevant GST notification.
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Scope of Advance Ruling - Tax payable as RCM under Notification issued u/s 9(3) of GST Act, 2017 - “State Tax due” under SGST Act, 2017 or not? - Rajasthan Investment and Promotion Scheme-2019 (RIPS-2019). - The ruling concluded that the question raised by the applicant was more aligned with the provisions of the RIPS-2019 scheme rather than the GST Act. Therefore, it deemed the application for advance ruling under the GST Act as not maintainable and rejected it accordingly.
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Taxability - activity relating to Sale/Transfer of leasehold Land and building and also to obtain permission for such sale - GST on upfront called premium amount as a cost of land and building - The AAR held that, the activity of assignment is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the applicant's rights as per the Deed stands extinguished. Neither does it create fresh benefit from land other than the leasehold right. It is like a compensation for agreeing to do the transfer of the applicant's rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable @ 18%.
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Scope of supply - transfer of leasehold rights in respect of Noida Authority allotted land - The AAR held that, The activity of assignment is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the applicant's rights as per the Deed stands extinguished. - The Authority for Advance Ruling ruled that the transfer of leasehold rights constitutes a supply under the CGST Act and that GST is applicable on the consideration received for the transfer. However, they did not comment on the eligibility of input tax credit for the recipient of the service.
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Classification of goods - HSN code - rate of GST - Sterilization Reels and Pouches manufactured - The authority for advance ruling evaluates the applicability of the suggested HSN codes and determines that the product qualifies under Tariff item 39.23.90.90, "Articles for the conveyance or packing of goods, of plastics," with a GST rate of 18%.
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Classification of supply - activity of printing of Question Paper, OMR Sheets, Answer Sheets, Marks sheets, Certificate, and other documents related/ required by the Board as well as Universities on behalf educational Institutions - The Authority for Advance Ruling, Uttar Pradesh, rules in favor of the applicant, stating that their printing activities for educational institutions constitute a supply of services. They are eligible for exemption under Sr. No. 66 of Notification No. 12/2017-CT (Rate) for services related to the conduct of examinations.
Income Tax
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Rejection of application filed in form no. 10AB for grant of registration u/s 12AB and 80G(5) - The ITAT found that the CIT(E) had grounds for dissatisfaction based on the deficiencies and non-compliances reported by the CAG. However, the material effect of these issues on the Assessee's objectives was not explicitly addressed. The matter was remanded to the CIT(E) for a detailed examination and to provide a reasoned decision on whether these issues affect the Assessee's eligibility for registration under sections 12AB and 80G.
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Revision u/s 263 - The ITAT held that the AO had conducted adequate inquiries into the sales promotion expenses, as evidenced by the issuance of specific queries to the assessee. The AO's decision to accept the assessee's claims was based on the responses and documents provided. The ITAT found that the PCIT's revision under Section 263, alleging non-verification of the said expenses, was not justified as the AO had made necessary inquiries and applied his mind to the information available.
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Validity of notice proposing for Best Judgement assessment u/s 144 - Failure to file ITR in response to notice u/s 148 r.w.s. 142(1) due to medical reasons and recovery proceedings against the company under the provisions of SARFAESI Act - The High court granted the petitioner six weeks to file returns and submit required documents in response to the latest notice. Failure to comply would lead to finalizing the assessment under Section 144 of the Income Tax Act.
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Validity of re-opening of assessment u/s 147 - Procedure of recording satisfaction for reopening assessment - notice beyond period of four years - The ITAT observed that, in the income tax return assessee has disclosed long term capital gain, but AO in the reasons recorded has mentioned short term capital gain/loss which means that he was not sure of the transactions for which the reopening is carried out. Further, AO has mentioned the figure as long term capital gain/short term capital loss. This observation is also factually incorrect. - The ITAT held that the re-opening of assessment u/s 147 was invalid due to non-compliance with procedural requirements and lack of independent application of mind by the AO.
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Deduction u/s. 80IB(10) - non filling of return on time - the ITAT held that the return filed beyond the due date cannot claim deduction under section 80IB(10) as per the Supreme Court's decision in Wipro Ltd. vs. Pr. CIT. - The ITAT further observed that, the reasoning given by the assessee that within a period of six months from the date of filing of return of income for assessment year 2006- 07, the assessee have filed return of income for assessment year 2007-08 will not help the assessee as the assessee was very well aware of mandatory date of filing the original return of income.
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Unaccounted investment u/s. 69C - The ITAT observed that the confusion arose because the assessee had treated the total booking amount (creditors) as closing work in progress, which the AO considered as unexplained investment. - The ITAT upheld the CIT(A)'s decision in deleting the addition, stating that the amount had already been offered for tax as gross profits.
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Determination of income - The Tribunal agreed with the Ld. CIT(A)'s finding that the assessee, a real estate developer, has consistently followed the Project Completion Method (PCM) for revenue recognition, which was accepted by the department in earlier years. The Tribunal referenced various judicial precedents to assert that the PCM is a recognized method of accounting for real estate developers and that changing the accounting method based on the Guidance Note on Accounting for Real Estate Transactions (Revised 2012) was not justified.
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Accrual of income in India - PE in India or not? - Agency PE - whether assessee has a business connection in India under Section 9(1)? - The ITAT Delhi ruled in favor of the assessee, finding that the business model post-2005 did not create a Permanent Establishment (PE) or an Agency PE in India for Sabre GLBL Inc., as the operations and agreements post-2005 significantly differed from the earlier model. The Tribunal differentiated the current business operations from those evaluated in the case of Galileo International Inc., where a PE was established due to the presence of an intermediary.
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Depreciation on goodwill - Business acquired in amalgamation - The ITAT held that, the excess consideration discharged over the net assets, representing goodwill, is eligible for depreciation under Section 32 of the Income Tax Act. The Tribunal found that the scheme of amalgamation was not a device for tax evasion, emphasizing that when a scheme is sanctioned by the court, it is deemed to be in public interest and not opposed to it. The ITAT directed the AO to allow the claim of depreciation on goodwill for the assessment years 2016-17 to 2018-19
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Validity of reopening of assessment - jurisdiction of AO over the assessee for framing of assessment -The Tribunal held that, as the assessment in the case of the assessee had been framed by the ACIT, Circle-3(1), Raipur, who in light of the CBDT Instruction No.1/2011 (supra) r.w. CBDT Instruction No.6/2011 was not vested with any jurisdiction for framing of assessment in the case of the assessee who had declared Nil income; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself.
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Penalty u/s 271(1)(c) - additional income in the return filed in response to notice u/s 153A/153C - The tribunal dismissed the appeal of the assessee, upholding the imposition of the penalty by the Assessing Officer and confirmed by the learned CIT(A). It concludes that the penalty is legitimate under the provisions of Explanation 5A to section 271(1)(c) of the Act, considering the circumstances of the case and relevant legal interpretations.
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Validity of assessment order - The tribunal questioned the effectiveness and fairness of the assessment procedure, particularly the timing and practicality of issuing notices and summonses to recipients across different locations within a short timeframe. It criticized the Assessing Officer's dormant approach followed by hurried completion of proceedings. - The ITAT held that, we are satisfied that these expenses were incurred for the business purposes during the course of business. The assessee has submitted all basic details. - Additions deleted.
Customs
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Suspension of petitioner's Customs Broker License under Regulation 16 of the Customs Brokers Licensing Regulations (CBLR), 2018 - Extension of period of 90 days - Though, COVID 19 pandemic, did not abate and there was a 2nd wave till May-June, 2021, no notification has been brought to the attention of this Court that the time was further extended by the Central Board of Indirect Taxes, similar to the Notifications issued by the Central Board of Direct Taxes under the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 for the Purpose of Income Tax Act, 1961 - The HC held that, Proceedings have to therefore abate, since there was a failure in complying with the requirements of Regulation 17(5).
Indian Laws
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Dishonour of 5 Cheque - admissibility of joint trial - The High Court held that, when all the cheques were issued by the husband and wife for the same cause of action and cheques were dishonoured, a common notice was issued against the accused. Such being the case, instead of filing the multiple complaints, single complaint for dishonour of multiple cheques are maintainable. Therefore, the impugned order of dismissing of the complaint by trial court is liable to be set aside.
IBC
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CIRP - Approval of resolution plan - Entitlement to carry forward accumulated losses as per Section 79(2) of the Income Tax Act - Adjudicating Authority has issued direction to the Successful Resolution Application to approach the concerned statutory authority for the concessions - NCLAT found no error in the order of NCLT.
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Admission of section 7 application - initiation of CIRP against the Corporate Debtor - existence of debt and default or not - When the Financial Creditor had repeatedly made it clear that they were strictly relying on the terms and conditions of the Settlement Agreement and that NoC would be released only after settlement amount was received, levelling of allegation by the Corporate Debtor that the Financial Creditor was responsible for their default is devoid of force and substance. - The moment the Adjudicating Authority is satisfied that a default has occurred, the Application is to be admitted unless it is incomplete. - NCLT rightly admitted the application.
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Dismissal of section 9 application - Initiation of CIRP - pre-existing dispute - NCLAT held that, When there is no proof of completion or delivery of the services or works in the appeal paper book or Application and with the afore-mentioned background, it can be safely concluded that with multiple events as discussed herein, there is sufficient evidence of pre-existing dispute regarding the product and services in the form of e-wallet and also incorrect raising of final invoice. - NCLT rightly dismissed the application.
Service Tax
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Demand of service tax on the interest earned from hire purchase finance transactions. - The Tribunal observes that the ownership of the goods remains with the customers, and the Appellant only finances the purchase. There is no clause providing customers an option to purchase the product at the end of payment of all installments. Relying on the Supreme Court's decision, the Tribunal distinguishes between hire purchase agreements and hire purchase finance agreements. - Demand set aside.
Central Excise
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Classification of goods - scrap-veg-refuse - The tribunal held that, the physical form of 'scrap-veg-refuse' as a wet paste differs from the white powdered form specified for potato starch. It notes that the presence of starch alone does not classify the product as potato starch and that sufficient evidence is needed to establish it as such. Additionally, the process of manufacturing potato starch differs significantly from the recycling process employed by the appellant. - Demand of duty set aside.
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Interest on delayed Refund claim - “relevant date” - The Tribunal held that, Section 11 BB, does not talk or uses the phraseology “relevant date,” what it alone speaks is “the date of receipt of application under subsection (1)” of Section 11B. The term relevant date is made use of in Section 11B and that too, in the context of the limitation for making of such an application for filing of a refund claim and provides for a series of situations like export of goods, goods returned for certain specified reasons, etc. or even situations not pertaining directly to manufacturers, provisional payments of duty, judicial ruling and the like. The usage of the term “relevant date” therefore, does not have any impact with reference to the date of proclamation of the admissibility of the refund claim.
Case Laws:
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GST
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2024 (2) TMI 659
Penalty u/s 129(1)(b) of Uttar Pradesh Goods and Services Tax Act, 2017 - Part-B of the e-way bill was not filled up - vehicle was carrying invoice showing that the goods being transported was sindoor , upon detention, it was found that there was no sindoor in the vehicle and there were 21 other items - resumption to evade tax - HELD THAT:- In the appeal, certain benefit was granted to the petitioner with regard to sindoor as it was found that though an invoice was present, however, no such sindoor was present in the truck. Accordingly, the penalty for the sindoor was reduced. In relation to other items, there is a clear fact finding by both the authorities that goods were not accompanied by any invoice or e-way bill. Upon a perusal of the order in appeal, it is crystal clear that the petitioner could not justify the reasons for non production of the invoice and the e-way bill. In such cases, a presumption automatically arises that there was an intention to evade tax. This presumption would be rebuttable. However, the petitioner was not able to bring any evidence to rebut the said presumption of evasion of tax. There are no reason to interfere with the impugned orders - petition dismissed.
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2024 (2) TMI 658
Validity of notification granted second extension of time to issue show cause notice under Section 73(10) of the U.P. GST Act, 2020 - Validity of the Notification No. 09/2023 dated 31.3.2023 and Notification No. 515/SI-2-23-9(47)/17-T.C215-U.P. Act- 1-2017-Order-(273/2023) dated 24.4.2023 - time limitation - HELD THAT:- In any case, no parallel notification has been issued under the UP GST Act, 2017. All respondents are represented. They pray for and are granted six weeks' time to file counter affidavit. Petitioner shall have two weeks, thereafter, to file rejoinder affidavit - In view of interim order granted in the lead case, proceedings in pursuance of the impugned notice dated 21.12.2023 may go on but no final order may be passed except with leave of the Court.
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2024 (2) TMI 657
Seeking GST Concession Certificate so that they can avail of a concessional rate of GST and seek a refund for the GST paid on the purchase of a vehicle. - Declination to accept the recommendation made by the Chief Commissioner of Persons with Disabilities by his order dated 06.04.2023 - HELD THAT:- The petitioner submits that the applicants were permitted refund of duty even after the vehicle was purchased and there was no mandatory requirement of obtaining an entitlement certificate before purchase, which has only been introduced in the 2019 policy. Learned counsel further submits that respondents have even permitted similar refund pertaining to applications made before the 2019 policy was notified - Be that as it may, since the application of the petitioner was submitted before the policy was amended, the same was liable to be considered under the 2018 policy and could not have been returned on 24.10.2019. Petitioner had also approached the Chief Commissioner of persons with Disabilities and the Commissioner by order dated 06.04.2023 had issued directions to the Respondent to apply the 2018 policy but by order dated 05.06.2023, the Respondents have held that the said policy is not applicable. The order dated 05.06.2023 of the Respondents is not sustainable - this petition is disposed of, directing the respondents to consider the application of the petitioner dated 17.08.2019 in terms of the 2018 policy.
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2024 (2) TMI 656
Cancellation of GST registration of the petitioner - failure to furnish the GST returns - HELD THAT:- It is clear that both the petitioner and the concerned Commissioner want the GST registration to be cancelled, though for different reasons. The order of cancellation is modified to the extent that the same shall operate with effect from 23.02.2023, i.e., the date on which the petitioner made an application for cancellation of registration and the registration was suspended - the petition is allowed.
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2024 (2) TMI 655
Penalty order passed under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 - only part B of the e-way bill could not be generated - intent to evade tax or not - HELD THAT:- Upon consideration of the arguments made by counsel appearing on behalf the parties and upon perusal of the documents, it is clear that the department has been unable to indicate any intention of the petitioner to evade tax. In the present case, the defect was of a technical nature only and without any intention to evade tax. Accordingly, the penalty imposed under Section 129(3) of the UPGST Act is unsustainable. The orders dated March 6, 2020 and September 16, 2023 are quashed and set aside - The writ petition is allowed.
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2024 (2) TMI 654
Time limitation for making pre-deposit - Validity of assessment order - validity of notice by which the appellate authority declined to receive the statutory appeal - HELD THAT:- The documents on record include the receipt evidencing payment of a sum of Rs. 2,53,540/- by the petitioner. The tax liability, as per the impugned assessment order, is a sum of Rs. 10,14,136/-. Thus, the amount paid is about 25% of the disputed tax. This pre deposit satisfies the requirements of Section 51 of the TNVAT Act. The appellate authority refused to receive the payment because the limitation period prescribed in the TNVAT Act is 60 days unlike the TNGST, which prescribes the limitation period of 90 days. Given the fact that there is some basis to contend that there was confusion as to whether the proceedings are under the TNVAT Act or the TNGST Act and taking into account the fact that the requisite pre-deposit was made, this is an appropriate case to direct the appellate authority to receive and dispose of the appeal on merits without going into the aspect of limitation. The appellate authority is directed to receive and dispose of the statutory appeal on merits after providing a reasonable opportunity to the petitioner - Petition closed.
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2024 (2) TMI 653
Recovery of excess ITC claimed - petitioner had availed ITC on valid tax invoices raised by the supplier and had also made payment of taxes to the supplier - HELD THAT:- The matter would require further examination - As sought by the learned counsel for the parties, list the case on 22.02.2024. Having regard to the submissions of the learned counsel for the petitioner, it is observed that the respondents shall not act upon the impugned Show Cause Notice dated 11.01.2024 till the next date of listing.
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2024 (2) TMI 652
Maintainability of petition - availability of alternative remedy - Transitional Credit - violation of Section 140 read with Rule 117 of the CGST Act and Rules made thereunder - appellant submits that appeal could be futile exercise inasmuch as the claim of the petitioner is in respect of the excise duty component allegedly paid by the petitioner - HELD THAT:- This Court does not find any substance in the submission of the learned Counsel for the petitioner. The appellate authority will examine all the documents and evidence submitted by the petitioner/assessee while deciding the appeal. Therefore, the contention of the learned Counsel for the petitioner that since there is no express provision for remanding the matter back to the assessing authority, the appeal would be futile exercise, cannot be agreed upon. Hence, considering the provision of statutory appeal available to the petitioner against the impugned order in Exhibit P-7, the present writ petition is dismissed on the ground of availability of alternative remedy.
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2024 (2) TMI 651
Seeking grant of anticipatory bail - Arrest in connection Spot Summons No.1662 of CT GST issued under Section 70 of the Odisha Goods and Services Tax Act, 2017 - HELD THAT:- On going through the materials on record including the copies of the summons issued as also the ratio of the case in State of Gujurat vs. Choodamani Parmeshwaran Iyer [ 2023 (7) TMI 1008 - SUPREME COURT ], this Court is of the view that the apprehension of the petitioner of being taken to custody on appearance does not appear to be reasonable. Moreover, as per the settled position of law, the application under Section 438 of Cr.P.C cannot be entertained at a stage when only a summon has been issued under Section 70 of the O.G.S.T. Act. Appeal disposed of directing the petitioner to abide by the summons and to render full cooperation in the ongoing investigation.
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2024 (2) TMI 650
Taxability under GST - rent received from the Govt. SWCBH - pure services or not - agreement with the Scheduled Castes Development Department, Hyderabad District, Government Welfare Departmental Hostels, Government Social Welfare College Boys Hostel (Govt SWCBH) to rent out the property to run Social Welfare College Boys Hostel) - HELD THAT:- Under serial no. 3 of Notification No. 12/2017 pure services provided in relation to any function entrusted to a municipality under Article 243W of the Constitution of India is eligible for exemption from GST. Clearly the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed under 12th schedule. The Schedule 11 to the constitution of India contains Education including primary and secondary schools at serial no. 17. However the Schedule 12 does not contain such specific entry. Therefore the applicant is not eligible for this exemption. The applicant is providing renting of buildings to GHMC and in municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017. Thus, the rent received from the Govt. SWCBH is taxable.
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2024 (2) TMI 649
Eligibility for GST Exemption by All India Institute of Medical Sciences - pure services received from Vendors - Applicant is Governmental Authority - HELD THAT:- The applicant is not Central Government but a Governmental Authority as it is established by the Government by the Act of Parliament. The Sl.No. 3 3A of Notification 12/2017 as amended with effect from 01.01.2022 have omitted the phrase Governmental Authority from the description of the services. Hence the applicant is not eligible for exemption under these two serial numbers.
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2024 (2) TMI 648
Scope of Advance Ruling - Tax payable as RCM under Notification issued u/s 9(3) of GST Act, 2017 - State Tax due under SGST Act, 2017 or not? - Rajasthan Investment and Promotion Scheme-2019 (RIPS-2019). - HELD THAT:- The Authority for Advance Ruling can provide rulings on various matters, including the classification of goods or services, the applicability of a notification issued under the Act, the liability to pay tax on a particular transaction, and the determination of time and value of supply, and the clarification sought by the applicant is not related to the ascertainment or determination of liability to pay tax on any goods or services or both, as no such goods or service is specified in the application. The applicant has sought ruling with reference to the RIPS Scheme-2019. There is no term State Tax due under GST Act, 2017. The applicant, at one hand, is giving relevant facts of RIPS Scheme-2019 and on the other hand, seeks advance ruling under GST Act, 2017 - Since the question raised by the applicant about State Tax due , is related to RIPS Scheme, 2019 of Government of Rajasthan and also of procedural nature, it is not covered in Section 97(2) of GST 2017. Thus the application does not qualify for advance ruling under GST Act, 2017.
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2024 (2) TMI 647
Taxability - Activity relating to Sale/Transfer of leasehold Land and building and also to obtain permission for such sale - GST on upfront called premium amount as a cost of land and building - Transfer of plot originally allotted to the appellant by Noida Authority - ITC will be eligible to buyer or not - Applicability of N/N. 12/2017 serial no. 41 Heading 9972 - HELD THAT:- Scope of supply under section 7 (I) of the GST Act includes all forms of supply of goods and services, including a sale, transfer, barter, exchange, license, rental, lense or disposal made or agreed to be made. Section 7 (1A) read with Schedule II under the GST Act provides which of such supplies shall be treated as supply of goods or services. Paragraph 2 of Schedule II provides that with respect to transactions relating to land and buildings, any lease, tenancy, easement, license to occupy the land, letting out of a building including a commercial, industrial or residential complex for business or commerce is the supply of services. In the instant case, the applicant wants to sell industrial plot to M/s S.K. Industries and transfer the lease rights with the approval of Noida Authority. The moment the lease right is to be transferred from the applicant to M/s S.K. Industries, the part has provided service of transferring the leasehold rights and thus action of the applicant is very well covered under Paragraph 2 of Schedule II of CGST Act 2017. The applicant's interest in the benefits arising out of the Demised Premises is limited to sub-leasing in terms of the Deed, and he is capable of transferring the benefits only to that extent. The assignment, therefore, does not amount to transfer of any benefit other than leasehold rights in terms of the Deed for the unexpired period of the lease and is no transfer of any immovable property in the context of the GST Act - Exemption vide Entry No. 41 of Notification No. 12/2017-CT dt. 28th June 20-17 is also not applicable in the instant case. Entry No. 41 holds that one time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units is exempted from service lax. The emphasis is on one time upfront amount on industrial plots provided by State Government Industrial Development Corporations or Undertakings. The activity of assignment is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the applicant's rights as per the Deed stands extinguished. Neither does it create fresh benefit from land other than the leasehold right. It is like a compensation for agreeing to do the transfer of the applicant's rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable @ 18% under SI No. 35 of Notification No. 11/2017 CT (Rale) dated 28/06/2017.
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2024 (2) TMI 646
Scope of supply - transfer of leasehold rights in respect of Noida Authority allotted land from applicant to M/s S.K. Food Equipments Pvt. Ltd. - GST is payable on the transfer of leasehold rights in respect of the consideration of Rs. 6,60,00,000/-to be received by them from M/s S.K. Food Equipments Pvt. Ltd. for the land allotted by Noida Authority or not - Eligibility of input tax credit in the hands of M/s S.K. Food Equipments Pvt. Ltd - HELD THAT:- Scope of supply under section 7 (1) of the GST Act includes all forms of supply of goods and services, including a sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made. Section 7 (I A) read with Schedule 11 under the GST Act provides which of such supplies shall be treated as supply of goods or services. Paragraph 2 of Schedule II provides that with respect to transactions relating to land and buildings, any lease, tenancy, easement, license to occupy the land, letting out of a building including a commercial, industrial or residential complex for business or commerce is the supply of services. In the instant case, the applicant had entered into lease deed with Noida Authority for 99 years. Subsequently, the applicant has entered into agreement with M/s S.K. Food Equipments Pvt. Ltd and has transferred the lease rights with the approval of Noida Authority. The moment the lease right has been transferred from the applicant to M/s S.K. Food Equipments Pvt. Ltd, the party has provided service of transferring the leasehold rights and thus action of the applicant is very well covered under Paragraph 2 of Schedule II of CGST Act 2017. The applicant, apart from the conditional possession of the Demised Premises enjoys no title or ownership, which is central to sale of any immovable property within the meaning of section 54 of the Transfer of Property Act, 1882. The applicant's interest in the benefits arising out of the Demised Premises is limited to sub-leasing in terms of the Deed, and he is capable of transferring the benefits only to that extent. The assignment, therefore, does not amount to transfer of any benefit other than leasehold rights in terms of the Deed for the unexpired period of the lease and is no transfer of any immovable property in the context of the GST Act. The activity of assignment is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the applicant's rights as per the Deed stands extinguished. Neither does it create fresh benefit from land other than the leasehold right. It is like a compensation for agreeing to do the transfer of (he applicant's rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable @ 18% under SI.No. 35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017.
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2024 (2) TMI 645
Classification of goods - HSN code - rate of GST - Sterilization Reels and Pouches manufactured - to be classified under Chapter 39 of the CGST Tariff or under Chapter 30 of the CGST Tariff? - HELD THAT:- The applicant is a ISO 13485, ISO 11607 and CE certified company and manufactured micro barrier sterilization reels and pouches use by medical devices companies, Pharmaceutical Industries and Hospitals. From the plain reading for the explanatory notes and the section notes it can be said that the product under consideration is neither for medical, surgical, dental or veterinary purposes nor it is the product put up for retail sale. It is the product for use in packing of medical equipment and for end use at institutional level and not for retail sale or retail packing - Therefore, the heading 3005 is ruled out for the product under consideration. Whether the product can be classified under HSN code 39239090? - HELD THAT:- The product under consideration is not excluded under the explanatory notes to the heading 39.23 and the product is squarely covered under the sub-heading 39.23.90 - On going through the Tariff item 39.23.90.20, it is observed that the description is Asecptic bags . The term Aseptic is commonly known as the state of being free from disease causing micro-organisms. There are two categories of asceptic : medical and surgical. General asceptic fields are used when key parts can be easily protected using a combination of micro-critical fields and non-touch technique. Examples of general asceptic fields include sterile dressing packs, IVC starter kits etc. Therefore, the product manufactured by the applicant i.e sterilization reels and pouches may be classifiable under Tariff item 39.23.90.20. However, the product manufactured by the applicant is Sterilization reels and pouches and therefore the product is not limited to Asceptic Bags as specified in Tariff item 39.23.90.20. But the applicant is manufacturing sterilization products which safely fall under residual Tariff item i.e Others of 39.23.90.90.
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2024 (2) TMI 644
Classification of supply - supply of goods or supply of services - activity of printing of Question Paper, OMR Sheets, Answer Sheets, Marks sheets, Certificate, and other documents related/ required by the Board as well as Universities on behalf educational Institutions - benefit of serial no 66 of the notification 12/2017-CTR dated 28.06.2017 or serial no 119 of exempted list nil - classifiable under chapter heading / sub-heading of 49011010 of printed matters? - covered by schedule I at serial no 201 liable to tax at 2.5 CGST under Broachers, leaflets and similar printed matter whether or not is single sheets or not. HELD THAT:- It is seen from the records that the applicant is engaged in the activity of Security printing/confidential printing of Examination papers, Answer Sheets OMR Sheets, Mark sheets and Certificates for supply to educational institutions like State Education Board and Universities - As per the circular No 11/ 11/2017 GST dated 20.10.2017, if the activity of printing gives essential character to the printed product, it will be supply of service. If the usage of the product gives essential character, it will be supply of goods. In the case of the applicant, the activity of printing gives essential character to the printed product, hence it can be classified as supply of service. There is no restriction of upto higher secondary level' in respect of exemption covered in entry 66(b)(iv) of the Notification no 12/2017-CT (Rate) dated 28.06.2017 - Hence services relating to activity of printing of Question Paper, OMR Sheets, Answer Sheets, Marks sheets, Certificate, and other documents related/ required by an educational institution, within the meaning of educational institution as defined under Notification 12/2017-CT (Rate) pertaining to admission to, or conduct of examination by educational institutions is exempted from GST vide Notification 12/2012-CT (Rate). Whether the activity of printing of the following terms of stationery on behalf of Educational Board and Universities constitute a supply of services? - whether the same would be covered serial no 66(heading 9992) of Notification no 12/2017-Central tax (Rate) as amended and subject to nil rate of tax? - HELD THAT:- All the above mentioned articles are covered within the ambit of services relating to admission to, or conduct of examination by, such institution. Hence all the services relating to admission to or conduct of examination, by an educational institution, within the meaning of educational institution as defined under Notification 12/2017-CT (Rate) will qualify for exemption as provided vide Sr no 66 of Notification 12/2017-CT (Rate).
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Income Tax
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2024 (2) TMI 661
Rejection of application filed in form no. 10AB for grant of registration u/s 12AB and 80G(5) - CIT(E) thoroughly discussed various discrepancies reported by the CAG to the assessee university for the FY 2021-22 wherein it is specifically observed that the loans, advances and deposits are without prior sanction of MoE/UGC HELD THAT:- Assessee university was found in default in terms of certain deficiencies and non-compliances as reported by CAG, which were examined by the Ld. CIT(E) and has culminated the order of rejection by recording her dissatisfaction under the provisions of section 12AB(1)(b)(ii)(B), however Ld. CIT(E) have not doubted or commented adverse about the objects, nature of activities and genuineness of the activities and also have not commented as to how the non-compliances /deficiencies noted are material for the purpose of achieving the objects of the assessee university which is necessary as mandated under the provisions of section 12AB(1)(b)(i)(B), still Ld. CIT(E) has valid reasons for her dissatisfaction on the basis of reported deficiencies and non-compliances on the part of assessee which may adversely affect the objects, therefore, the impugned order of cancellation cannot be squarely suffering with error of law and thus, the request of assessee to struck down the same cannot be accepted. Since the material effect of deficiencies and non-compliances on the accomplishment of objects of the assessee are not specifically brought on record by the Ld. CIT(E), therefore, in the interest of justice, for the sake of verification and clarification regarding effect of the deficiencies and non-compliance towards the achievement of the objects of the assessee university, we find it appropriate to restore the issues raised back to the Ld. CIT(E), to revisit the application of the assessee for grant of registration u/s 12AB - Assessee appeal partly allowed by way of remand.
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2024 (2) TMI 660
Revision u/s 263 - scope of revisionary jurisdiction u/s 263 - as per CIT main issue of expenditure relating to incentive on sales remained unverified and only an expenditure relating to sales promotion were examined for which the assessee had furnished details - HELD THAT:- The provision contained in section 263 does not allow PCIT to impose his view over judicious view adopted by the AO unless the view adopted by the ld. AO is established to be not at all sustainable in law. In the present case the bench noted that the ld. AO has raised as many as 9 questions only on the sales promotion expenses and the AO in the present case on appreciation of the facts and using his judicial wisdom allowed sales promotion expenses claimed by the assessee. On the view taken by the ld. AO the PCIT tried to impose his view that the AO could not understand the exact claim of the assessee and in that process even the PCIT even issued two notices to the assessee under the confusion. Thus, confusion while issuing the notice does not lead that the assessment is made without making any query in fact we note that the AO has raised as many as 9 questions to the assessee and after careful consideration of the facts and considering the reply of the assessee ld. FAO taken a considered view. PCIT is merely based on the reason that the AO has raised a doubt on the figure computed by the ld. AO and not clarified in the assessment order does not lead the assessment order as erroneous and prejudicial to the interest of the revenue. Further the bench also noted that the assessment in this case is completed in the faceless manner by NFAC. It is a fact that any faceless assessment is carried out through a teamwork of assessment unit, technical unit, review unit, verification unit. Since all these four units are headed by PCIT and the order is to be tested in this regime normally there cannot be a case of prejudice of lack of enquiry because there is application of mind by multiple officers of Department and not by a single officer is involved. Here as it is clear that since the assessee was confronted on all the facets of the claim and he has furnished the requisite information and the NFAC/FAO has completed the assessment after considering over all aspect of the case. Therefore, the order passed by the FAO cannot be termed as erroneous or prejudicial to the interest of the revenue. Even the assessee has placed on record and clarified the confusion of the figure noted and based on that details the ld. PCIT did not established that the order is prejudicial. As held in the case of CIT V. K. Ramachandran [ 2003 (3) TMI 769 - MADRAS HIGH COURT] it was held that Record does not mean only record available with ITO at time of passing of assessment order. It would include the records available with the Commissioner at the time of passing of the order by the Commissioner. Manner of conducting enquiries - It is worthwhile to note here that the phrase which should have been made here in no way means that enquiries should have been made in manner as desired by PCIT, rather it means that before holding an order to be erroneous, PCIT should have conducted necessary enquiries or verification which brings on record certain material in order to show that the finding given by the assessing officer is erroneous. Thus, looking to these aspect of the case here in this case the ld. FAO has called for the details on the various facets as many as 9 areas and has examined the issue and thereafter the claim of the assessee was allowed. Thus, once the ld. FAO based on the details placed on record takes a plausible view of the matter the same cannot be subjected to revision u/s. 263 even after the addition of explanation 2 in the Act - Decided in favour of assessee.
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2024 (2) TMI 643
Reopening of assessment against company dissolved - company (since dissolved) had applied for striking off its name under Section 560 of the Companies Act, 1956 because the company was inoperative from two years and there was no feasible opportunity available to carry on its business - HELD THAT:- We would agree with Petitioners that as held in Maruti Suziki India [ 2019 (7) TMI 1449 - SUPREME COURT] where the Court has also considered Saraswati Industrial Syndicate Ltd. [ 1990 (9) TMI 1 - SUPREME COURT] once a company is dissolved it ceases to exist in the eyes of law. Though the case of Saraswati (supra) was involving a scheme of amalgamation that would not change the legal position that once a company is dissolved it ceases to exist in the eyes of law. Thereafter, it cannot be treated as a person against whom assessment proceeding can be initiated under the Act. The notice issued u/s 148 cannot be a valid notice and consequently, the assessment order passed, which is also impugned in this petition pursuant to the liberty granted by the Court to amend the petition, also has to be quashed.
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2024 (2) TMI 642
Validity of notice proposing for Best Judgement assessment u/s 144 - Failure to file ITR in response to notice u/s 148 r.w.s. 142(1) due to medical reasons and recovery proceedings against the company under the provisions of SARFAESI Act - unexplained income under Section 69A - HELD THAT:- Managing Director of the company is suffering with certain kind of mental illness and for that reason the relevant documents could not be submitted by the petitioner s company before the Income Tax Department. The petitioner company maybe granted a further time of six weeks for producing the relevant documents, as a last chance. Considering the illness of the Managing Director. As respondents submits, that for the past one year the petitioner has been seeking time and has not complied with the notices issued to him. The petitioner has not filed its return. There is an unexplained income of the petitioner Present writ petition is disposed of, with liberty to the petitioner to file return and submit all the requisite documents in response to the notice dated 09.01.2024, within a period of six weeks from today (16.02.2024), failing which, the revenue will proceed to finalize the assessment u/s 144 of the Income Tax Act.
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2024 (2) TMI 641
Validity of re-opening of assessment u/s 147 - Procedure of recording satisfaction for reopening assessment - notice beyond period of four years - bogus long term capital gain/short term capital loss - Borrowed satisfaction v/s independent application of mind - as argued no application of mind by the AO for framing the reasons and the reopening is merely on the basis of borrowed satisfaction in the form of information received from the investigation wing - HELD THAT:- We notice that the AO has not adhered to the standard procedures. Firstly, we notice that AO has only referred to the information received from the Investigation wing and assessee is stated to be one of the beneficiaries of receiving accommodation entry to avail bogus short term capital gain/loss. Now, admittedly, the return of income already stood filed by the assessee on 26/07/2013 and very much available before the AO. As incumbent upon him that after receiving the information from the investigation he should have first layed his hands on the Income tax return filed by the assessee and then should have examined the information vis- -vis the computation of income furnished and then has to form the belief that income subject to tax has escaped assessment. Now, in the income tax return assessee has disclosed long term capital gain, but AO in the reasons recorded has mentioned short term capital gain/loss which means that he was not sure of the transactions for which the reopening is carried out. Further, AO has mentioned the figure as long term capital gain/short term capital loss. This observation is also factually incorrect because the sum is merely a sale consideration and exempt income u/s 10(38) of the Act has been claimed and it is a case of long term capital gain and not short term capital loss. The above factual observation clearly indicates that the AO has not made application of mind for re-opening the case of the assessee after four years as the assessee has furnished all the details of the alleged transactions in its income tax return. It is also evident that the AO has not adhered to the standard operating procedures framed by the CBDT to record the reasons for re-opening. As there is no independent application of mind by the AO which forms the basis of reason to believe that income has escaped assessment then such reopening of assessments is merely on borrowed satisfaction. We are inclined to hold that the reopening u/s 147 was invalid as proper procedure to record the reasons for reopening of assessment have not been followed by the Assessing Officer and there is no independent application of mind before forming the reason to believe that income chargeable to tax has escaped assessment - Appeal of the assessee is allowed.
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2024 (2) TMI 640
Accrual of income in India - receipts on account of logistic support services, reimbursement of global account management charges and lease line charges - Fee for Technical Services/Fee for Included Services ( FTS'/ FIS ) as per the provisions of section 9(1)(vii) and Article 12 of the India-USA DTAA - HELD THAT:- As decided in assessee own case [ 2023 (5) TMI 1296 - ITAT DELHI] these issues has been consistently decided in favour of the assessee in all these years, while holding that the amount received are not in the nature of FTS/FIS either under the Act or under treaty provisions. Accordingly, the addition was deleted. Decided in favour of assessee.
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2024 (2) TMI 639
Validity of Reopening of assessment - additions with respect to other items surfaced in the course of the re-assessment proceedings - information so provided by the DDIT (Inv.-I) Faridabad goes to show that certain transactions through banking channel has been carried out by the assessee with R.K. Trading Company and Netwest Trade Link - HELD THAT:- Noticeably, the information supplied by the DDIT is merely advisory in nature whereby the AO was advised to check the copy of the account of the assessee with both these firms and examine them from an angle as to whether entries are in the nature of accommodation entries with such parties and carry necessary action as a consequence of any adverse observation. In essence, the AO was advised to make proper inquiries into such hugely suspicious entries. AO appears to have straightaway took recourse to reopen the assessment without any intermittent inquiry to ascertain the propriety of comments emerging from such information to make prima facie opinion of escapement of chargeable income on such purportedly suspicious transaction. No transaction claimed to have been carried out by the assessee from R.K. Trading Company at all as appearing in the reasons recorded. No addition has been made by the AO on this score either. The transaction was carried out with Netwest Trade Link but such transaction is wholly different. Thus, both the transactions forming part of the reasons have not been carried out by the assessee at all. The very basis for reopening the assessment is thus vitiated at the threshold. Addition qua high sea sale transactions executed with Netwest Tradelink Pvt. Ltd. supra which has no similarity with the transaction alleging escapement in the reasons recorded. The Assessing Officer has not bothered to link these transactions with the existing transaction in the course of re-assessment proceedings. The re-assessment made is thus totally divorced from the basis for which the case was reopened. This course is not permissible in law. In the absence of any addition/disallowance made qua the reasons recorded, the Assessing Officer is not entitled to make additions with respect to other items surfaced in the course of the re-assessment proceedings as held in Jet Airways [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] and Ranbaxy Laboratories [ 2011 (6) TMI 4 - DELHI HIGH COURT] Addition u/s 68 - As the transactions with Netwest Trade Link Pvt. Ltd. were offered as turnover / sales whereas the additions has been made under Section 68 of the Act without reducing the corresponding sales. Such an act of the AO tantamount to double additions (i) under the head turnover and (ii) under Section 68 of the Act. Such course of action is manifestly unsustainable and cannot be countenanced in law even while testing the merits of additions. Reopening of assessment - Bogus purchases - accommodation entries receipts - Assessment Year 2010-11 - HELD THAT:- As regards purchases from R.K. Trading Company the assessee demonstrated before the AO that corresponding sales have been recorded in the books of account against such purchases and the assessee has factually earned an income of Rs. 3,13,688/- on sale of goods which were purchased from R.K. Trading Company. Consequently, there is no escapement of income per se. Purchases made from Global Trade Corporation alleged to be in the nature of accommodation entries - transactions were shown to be duly accounted for and corresponding sales made to two parties namely Silver Tulip Impex Pvt. Ltd. and Tanish International. The consequent profits arising on sale of goods have been duly recorded in the books of account. A part of the payment against the sale of goods to these two parties were received from Global Trade Corporation alleged to be entry provider but however the assessee has not entered into any purchase transaction with such party alleged in the reasons recorded. The transactions are backed by purchase bill as well as the corresponding sale bill, the stock register and the bank statement. Appeal of the assessee is allowed.
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2024 (2) TMI 638
Unaccounted investment u/s. 69C - assessee could not substantiate its claim had inflated the cost of WIP without incurring any expenses so as to claim higher deduction u/s. 80IB - CIT(A) deleted the addition - HELD THAT:- It is pertinent to note that the whole confusion is because that the assessee has taken the total booking amount (creditors) as closing are in work in progress and the balancing figure was offered by the assessee as cost profit and the balancing figure was taken by the AO as unexplained investment. Thus, the CIT(A) was right in deleting this addition thereby holding that the amount of unexplained income has already been offered for tax as gross profits of the respective projects and therefore the question of invoking section 69C is not warranted. There is no need to interfere with the finding of the CIT(A) on this issue. Hence, the appeal filed by the Revenue is dismissed. Deduction u/s. 80IB(10) - non filling of return on time - as argued merely because return of income is not filed within the time limit prescribed u/s. 139(1) that by itself cannot be the reason for rejecting the claim of deduction u/s. 80IB(10) - HELD THAT:- In the present case, the assessee is claiming deduction u/s. 80IB(10) and the Income Tax Statute u/s. 80IB(10) is also uses the word shall and therefore the condition of filing the return of income within the due date is mandatory in nature. Though the decision of H.P. Housing and Urban Development [ 2023 (12) TMI 1267 - HIMACHAL PRADESH HIGH COURT ] states that the assessee is entitled to claim specifically the computed deductions despite late filing of belated return of income, in the present case, the statutory date for filing the return of income was that of 30-09-2007 and the search operations took place on 19-02-2005 and the details were available in the month of Nov, 2006 as stated by the assessee before the CIT(A) as well as before us. The reasoning given by the assessee that within a period of six months from the date of filing of return of income for assessment year 2006- 07, the assessee have filed return of income for assessment year 2007-08 will not help the assessee as the assessee was very well aware of mandatory date of filing the original return of income. The plea of Assessee that within short time the assessee cannot file return will not come to rescue the assessee because the records were available with the assessee before the due date of filing return for A.Y. 2007-08. - Decided against assessee. Addition u/s. 40(a)(ia) - non deduction of tds - as submitted amount of expenses on which TDS has not been paid and disallowed by the assessee himself in assessment year 2006-07 which are not paid and claimed in the present year - HELD THAT:- Though it appears that the Assessing Officer has disallowed the said amount for assessment year 2006-07 and whether the same is now paid and claimed in the present year and how that has to be quantified needs verification. Therefore, we direct the Assessing Officer to verify the same and if entitled grant the credit of the same as per income tax statute to the assessee. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground allowed for statistical purposes.
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2024 (2) TMI 637
Determination of income - Accounting of real estate transactions - Correct method of accounting adopted for revenue reorganization - Addition by applying percentage of completion method (AS-9) - AR submitted that the assessee has consistently followed the Project Completion Method which has been accepted by the department in earlier years and Principle of Resjudicata applies to the case of the assessee. The project is still going on - CIT(A) deleted addition - HELD THAT:- CIT(A) has recorded the finding that the assessee is a builder and not a contractor and that in view of the stipulations of the agreement it cannot be said that significant risks and rewards on ownership had been transferred to buyer prior to execution of the sale deed. As stipulated in the agreement to sell that no property during construction shall stand transferred or deemed to be transferred to the allottee(s) and the apartments under construction shall continue to be sole property of the owner and it is only the duly completed apartment there in the property that shall be transferred on registration of the Apartment in his name. AR s contention is that the assessee has neither conflicted Guidance note on Accounting for Real Estate Transactions (Revised 2012) while following Project Completion Method for revenue recognition nor ICDS-III is applicable to the assessee. These contentions of the assessee could not be refuted by the Revenue. CIT(A) has followed the decisions of Paras Buildtech India Private Limited [ 2015 (11) TMI 1217 - DELHI HIGH COURT ] and Sabh Infrastructure Ltd. [ 2012 (4) TMI 621 - ITAT DELHI ] We do not find any reason to interfere with the decision of the Ld. CIT(A). Appeal of the Revenue is dismissed.
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2024 (2) TMI 636
Computing the presumptive income for the purposes of Section 44BB - Service tax/ GST being statutory levy inclusion in the gross receipts for the purpose of section 44BB or not? - HELD THAT:- This issue has been considered by various Hon ble High Courts (including the Hon ble jurisdictional High Court of Delhi) and Tribunals. The impugned issue stands settled in favour of the assessee - CIT(A) has rightly deleted the addition made by the Ld. AO relying on the decision of Mitchell Drilling International Pvt. Ltd [ 2015 (10) TMI 259 - DELHI HIGH COURT] and Schlumberger Asia Services Ltd. [ 2019 (4) TMI 1177 - UTTARAKHAND HIGH COURT ] We have also perused the decision of Dehradun Bench of the Tribunal in DCIT vs. M/s. Transocean Offshore International Ventures Ltd [ 2021 (11) TMI 1179 - ITAT DELHI] wherein the Tribunal relying on the decisions (supra) in Mitchell Drilling International Pvt. Ltd. and Schlumberger Asia Service Ltd. held that the service tax receipts do not form part of receipts for computation of income in section 44BB. Decided against revenue.
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2024 (2) TMI 635
Accrual of income in India - PE in India or not? - Agency PE - whether assessee has a business connection in India under Section 9(1) ? - Primary business activity of assessee in India which facilitates the booking of airline reservations for and on behalf of participating airlines and another set of services is relating to Hotel bookings instead of Airlines - case of assessee is that under the participating carrier distribution and service agreement, the assessee earns booking fees from various participating airlines when travel reservations are made using its CRS - as per A0 100 percent of profits from fee earned by the assessee from customers in India are attributable to the alleged PE of assessee in India HELD THAT:- We have no hesitation to hold that having regard to various clauses and recitals of the agreements of the participants in the case of Galileo [ 2007 (11) TMI 329 - ITAT DELHI-B] as the Tribunal has reached the finding of fixed place PE, the changed model in case of assessee dilutes all those reasons. No more computers of travel agents are found to be installed or configured under any agreement of the assessee with any of its participant global subscribers. Galileo through Interglobe was exercising complete control over the computers installed at the premises of the travel agents which may have been the case of the assessee also prior to 2005 when it was working through intermediary NMD. At presently after 2005 the agent codes access to Sabre CRS is through global subscribers and the agents themselves arrange for the communication link which was also earlier provided in case of Galileo by Interglobe. Thus, we are of the considered view that Ld. Tax Authorities below having failed to examine the Sabre s Participating Carrier Distribution and Service Agreement or Service Provider Agreement with entities like American Express Travel and thus have fallen in error to follow the earlier years orders in case of assessee which themselves were completely based on the factual matrix examined in case of Galileo. As rightly pointed by the Ld. AR that principles of Res judicata are not applicable in assessment and the burden is all the way is on the Revenue to establish the existence of a PE. In the case in hand the Ld. Tax authorities have utterly failed in discharging the burden. Not even by rebutting the case of assessee on the basis of changed model of business. Rather a very mundane approach was adopted by DRP by holding that gateway is business vehicle. No doubt about it but what is to be seen is if the same is functional by way of some auxiliary purposes of assessee being performed by alleged PE. Agency PE - As we have concluded that the business model post 2005 does not have an intermediary in the form of NMD and as in the case of Galileo International Inc. there was active intermediary, as Interglobe, so there is no question of existence of Agency PE. In case of Galileo International Inc. (supra), the terms of agreement provided that Galileo International had appointed Interglobe as a sole and exclusive distributor of Galileo International CRS Services for the Indian market and in those circumstances, the Tribunal had held that Interglobe was authorized to enter into contract with the subscribers in terms of authority generated under the distribution agreement. This authorization to bind Galileo gave an agent status to Interglobe. In the case in hand, there is no such intermediary. Further, there is no exclusiveness of the entities like American Express who have entered into global subscriber agreements. They are unrelated parties acting in their ordinary course of business with no exclusiveness to each other. Ld. DRP has appreciated this aspect by holding that the travel agents in India are not exclusive to the assessee while considering the question of fixed place PE but that somehow goes against the concept of Agency PE and for that reasons, nothing specific was held with regard to the Agency PE by DRP. This itself was sufficient to conclude that there was no entity which was habitually procuring contracts for the assessee or to bind the assessee for the contracts to be entered by that entity independently. Thus, we are inclined to hold there was no Agency PE, also.
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2024 (2) TMI 634
Depreciation on goodwill - Business acquired in amalgamation - HELD THAT:- In the instant case, the business of KSPL was acquired by KIPL by way of a court approved scheme of amalgamation and it is for this acquisition of business, KIPL had discharged the consideration in form of issue of equity shares to the shareholders of KSPL. In order to determine the consideration, the enterprise value of the business undertaking of KSPL was arrived at Rs. 289.30 crores on the basis of the valuation report obtained from SSPA Co. Chartered Accountants, which represents the fair value to be paid for acquiring the business undertaking as a whole Including all tangible assets and intangible assets. KSPL was engaged in stock broking business as well as other business relating to depository participant. The company had a strong customer base, and had a wide network and efficient technological process systems. These benefits represent any other business or commercial rights of similar nature being intangible assets as referred to in section 32(1) of the Act which is eligible for depreciation under the Act. The amount of consideration (in form of issue of shares) paid in excess of net assets of KSPL is attributable to such intangible benefits which is nothing but represents payment towards goodwill. The excess consideration discharged by KIPL over net assets of KSPL represents the amount paid by KIPL towards acquisition of bundle of business and commercial rights which represents goodwill. In the absence of such intangible asset, KIPL would have to commence the business from scratch and go through the gestation period whereas by acquiring the aforesaid business rights along with the tangible assets, the appellant got an up and running business. Such excess payment thus denotes goodwill which in no way can be regarded as outcome of revaluation of any amount. Considering the ratio laid down by the Hon'ble Supreme Court in case of Smits Securities [ 2012 (8) TMI 713 - SUPREME COURT] thus, KIPL is eligible for depreciation on goodwill recognized in course of the Scheme u/s 32 of the Act and as a consequence, the Appellant is also eligible to claim depreciation u/s 32 of the Act as the case made out by the appellant appears to have merit and deserves to be allowed. This particular aspect of the matter has not been considered by the Ld. CIT(A) in its proper perspective rather he was not correct in forming an opinion that the main object of amalgamation was to create to claim depreciation and the scheme of arrangement was only a device of tax evasion and such claim of depreciation was not a genuine one, giving a complete go by to the sanction given by the Hon ble Jurisdictional High Court upon considering various aspects of the Scheme, the documents and also the representations received from different regulatory authorities including the report of the Official Liquidator and Income Tax department and furthermore, the affidavit filed by the RD, holding that the arrangement is in the interest of the shareholders and the creditors of all the companies as well as in public interest. Depreciation on goodwill claimed by the predecessor for the period from 01.04.2015 to 14.03.2016 has been allowed by the ITAT. Accordingly, the claim of depreciation by the appellant on the very same goodwill for remaining period (from 15.03.2016 to 31.03.2016) deserves to be allowed by following order of ITAT passed in the case of the predecessor - we allow the appeal preferred by the appellant with a direction upon the Ld. AO to allow the claim of depreciation on goodwill made by the appellant. The appeal preferred by the appellant is, thus, allowed.
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2024 (2) TMI 633
Validity of reopening of assessment - jurisdiction of AO over the assessee for framing of assessment - jurisdiction over the assessee vested with ITO or ACIT-3(1), Raipur - HELD THAT:- The multi-facet issues pertaining to the assumption of jurisdiction by an A.O. in light of the pecuniary/monetary limits contemplated in CBDT Instruction No.1/2011 r.w. CBDT Instruction No.6/2011 remains the same as had been looked into at length by the SMC of the ITAT, Raipur, in assessee s own case for the immediately succeeding year, i.e. A.Y,.2010-11, [ 2023 (10) TMI 1360 - ITAT RAIPUR] as held we are unable to comprehend on what basis the case of the assessee de-hors any order as per the mandate of Section 127 of the Act was initially transferred by the ITO, Ward-1(2), Raipur on 05/02/2014 to the DCIT, Circle-1(1), Raipur. At this stage, it would be relevant to observe that as per sub-section (3) of Section 127 of the Act, even in case there is a transfer of any case from any A.O or AOs (whether with or without concurrent jurisdiction) to any other A.O or AOs (whether with or without concurrent jurisdiction), the requirement of passing an order of transfer under the aforesaid statutory provision is required and the same cannot be dispensed with. We may further observe that the order of transfer of the assessee s case by the ITO-Ward 1(2), Raipur to DCIT-Circle 1(1), Raipur on 05.02.104 was much prior to Notifications No. 1/2014-15, dated 15.11.2014 and Notification No. 1/2014-15, dated 15.11.2014, based on which jurisdiction over the case of the assessee was vested with the DCIT/ACIT- 3(1), Raipur, as brought to our notice by the A.O. As the assessment in the case of the assessee had been framed by the ACIT, Circle-3(1), Raipur, who in light of the CBDT Instruction No.1/2011 (supra) r.w. CBDT Instruction No.6/2011 was not vested with any jurisdiction for framing of assessment in the case of the assessee who had declared Nil income; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. Thus, the Ground of Appeal No.1 raised by the assessee is allowed in terms of my aforesaid observations. Thus the assessment framed by the A.O u/s. 147 r.w.s. 143(3) dated 28.10.2016 is quashed for want of valid assumption of jurisdiction. Decided in favour of assessee.
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2024 (2) TMI 632
Penalty u/s 271(1)(c) - additional income in the return filed in response to notice u/s 153A/153C - HELD THAT:- In the instant case, the assessee on the basis of various entries mentioned in the seized diary admitted additional income of over and above the returned income which was accepted by the Assessing Officer. As relying on Sarita Kaur Manjeet Singh Chopra vs. Income Tax Officer [ 2015 (12) TMI 1025 - ITAT PUNE] in absence of any decision brought to our notice the assessee to the proposition that penalty cannot be levied u/s 271 (1)(c) of the Act in a case where search has taken place after 1.7.2007 and the assessee has declared the additional income in the return filed in response to notice u/s 153A/153C, we do not find any infirmity in the order of the learned CIT (A) in confirming the penalty levied by the Assessing Officer. Accordingly, the grounds raised by the assessee are dismissed.
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2024 (2) TMI 631
Validity of reopening of assessment - prima facie belief of the AO - assessee had purchased a residential house property - whether there was relevant material on which a reasonable person could have formed a requisite belief? - HELD THAT:- We found that the AO has invoked the provisions of Section 148 after coming to know about the agreement to sell dated 12-02-2012. Even the existence of the said agreement to sell dated 12-02-2012 is not disputed and the copy of the same has also been annexed by the ld. AR which means that the same was already in the possession of the assessee. Thus the decision referred by the ld. AR in the case of Micro Marbles (P) Ltd [ 2023 (1) TMI 282 - RAJASTHAN HIGH COURT] is not applicable in the case of the assessee. Even otherwise the case of Nova Promoters and Finlease (P) Ltd. [ 2012 (2) TMI 194 - DELHI HIGH COURT] had laid down the principle that prima facie belief of the AO that income had escaped assessment is enough at the stage of reopening and merits of the matter are not relevant at this stage. In the case of ACIT vs Rajesh Jhaveri Stock Brokers (P) Ltd. [ 2007 (5) TMI 197 - SUPREME COURT] it was held by the Hon ble Court that at the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Therefore, whether the materials would conclusively prove that the escapement is not concern at that stage. This is so because the formation of belief by the AO with the realm of subjective satisfaction. Thus keeping in view the above principles, we hold that AO s action in reopening the assessee s assessment for A.Y.2012-13 is found to be in accordance with the provisions of the law. Therefore, these grounds raised by the assessee stands dismissed. Denial of admission of additional evidences under Rule 46A by the ld. CIT(A) - These evidences are in the shape of affidavits of the cash creditors who provided financial help to the assessee and of witnesses to the sale transaction - We find that the AO in response to the confirmations filed by the assessee before him in some cases straight forwardly made the impugned addition without disclosing his mind, which made the assessee to file these affidavits. Even otherwise the evidences go to the root and are necessary for a decision on the controversy in hand. Pertinently, the ld. CIT(A) himself has considered the same and adjudicated the issue on merits based thereon. The denial to admit the evidences is thus, not justified. The assessee thus, succeeds on this ground No. 2. Addition of undisclosed income earned from undisclosed sources - Onus to prove - AO alleged that the assessee had purchased residential plot pursuant to sale agreement dated 12.02.2012, in which the assessee agreed to pay Rs. 34, 71,000/- to purchase a house property, against which Rs. 6 lacs were paid in cash as advance at the time of signing of agreement and rest of Rs. 28,71,000/- was assured to be paid by 15.03.2012 - HELD THAT:- It is not disputed that these cheque numbers find place in the registered sale deed hence, the fact of making payment by these persons directly to the seller is established. Although these affidavits were before the AO as sent during the remand proceedings, however, the AO failed to controvert the averments made therein hence as per the law well settled in the case of Mehta Parikh Co. [ 1956 (5) TMI 4 - SUPREME COURT] the averments are binding upon the authorities. It is also settled that the AO cannot ask to prove source of source, once the existence, identity of the Creditor and the affirmation of getting loan from them, are established . We draw support from Labhchand Bohra V/s ITO [ 2008 (4) TMI 731 - RAJASTHAN HIGH COURT] and Aravalli Trading Co. v/s ITO [ 2007 (1) TMI 567 - RAJASTHAN HIGH COURT] . Thus, the appellant having discharged the initial onus and the AO failed to discharge the burden by making enquiries and bringing cogent evidence on record, we do not find any justification behind the addition made. As regards the balance amount which was paid in cash to the seller by the appellant, the facts are not disputed that she has been filing a return of income in the past ranging between Rs. 1.65 to 2.02 Lakh and keeping in mind that being a female she was not supposed to incur expenditure, saving of a small amount of Rs. 2,50,000/- was not something abnormal. Looking to the totality of facts and circumstances she could have saved around Rs. 3.50 lacs to 4 lacs. Hence the source of Rs. 2.50 lacs stand explained. Similarly, the payment towards the stamp duty and registration charge being small amount and could be made out of the past savings of the family. We thus, find no justification behind the addition and the same hereby deleted. This ground of the assessee is allowed. Addition of cash deposit in the bank account - only basis of the addition is ITS details wherein the Assessee was found to have deposited cash of Rs. 5 lacs on 15.12.2012 - HELD THAT:- The source of cash deposit was explained out of the past saving of the appellant which could be around Rs. 5 to 6 lakhs from her business and Streedhan; from the past saving of her husband, Navender Kumar, who has been a central government employee and partly from the savings of Shri Umesh Kumar Sharma s/o the appellant. While considering the source of payment of sale consideration of Rs. 2.50 Lakh by the appellant herself, we have held that looking to the totality of facts and circumstances she could have saved that amount. In addition, the fact is not denied that her husband Navender Kumar was a central government employee and retired from the Post and Telegraph department after serving as a postman getting salary more than Rs. 3 Lakh annually as claimed and thus considering the saving for a period of 10 years, only his past savings could be considered around Rs. 2.5 Lakh as reasonable. However, we find that son Umesh Kumar Sharma has already contributed towards the payment of sale consideration of Rs. 1,50,000/- Further contribution from him cannot be expected. Thus, it would be reasonable that source is considered explained up to Rs. 3,00,000/- and the balance Rs. 2,00,000/- is considered as without any source and thus, addition to the extent to Rs. 2,00,000/- is hereby sustained. The appellant thus, get relief of Rs. 3,00,000/-. This ground of the assessee is partly allowed.
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2024 (2) TMI 630
Disallowance of commission payment - ex-parte order paased by CIT(A) - HED THAT:- Assessee had made most of the payments through RTGS or Account Payee Cheque. It has given the details of those recipients including copies of their income tax returns. Validity of assessment order - Enquiry by Assessing Officer - AO issued notice u/s 143(2) on 04.09.2014. Thereafter he issued a questionnaire on 23.11.2015, i.e. the proceeding remains dormant more than one year. He started the inquiry in November, 2015 and passed the assessment order on 08.03.2016. According to him, he has issued notice under section 133(6), which was returned back. Thereafter he has issued summons u/s 131 dated 04.02.2016 directing those individuals to appear before him on 11.02.2016. Looking at recipients, first party is in Kolkata, but the next party is from Jaipur, Rajasthan and third one is from Delhi. How these summons u/s 131 could have been served upon them within a week and they could revert back to AO. It is practically impossible. It is not ascertainable whether these summons have ever served upon or not. Therefore, the inquiry at the end of the ld. Assessing Officer is a flawed one. AO nowhere examined how this expenditure was not necessary for the business. What are the products obtained by the assessee as a commission agent and how these were sold with the help of different parties across India. Assessee has not shown losses rather it has shown profit. Instead of approaching the controversy with that approach, AO all of a sudden took help of jurisprudence which deals with unexplained share application money from paper companies. This shows the careless attitude at the end of AO while framing the assessment order. On appeal, ld. CIT(Appeals) has totally ignored all these submissions, which are available on the Portal but dismissed the appeals for want of prosecution. It is very difficult to make understand the grievances of the assessee before the authority on an overall appreciation of the evidence available before us. We are satisfied that these expenses were incurred for the business purposes during the course of business. The assessee has submitted all basic details. The Officer failed to cross verify these details - Assessee appeal allowed.
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2024 (2) TMI 629
Exemption u/s 11 - claim denied as there was a delay in filing Form 10B i.e. audit report - procedural defect or mandatory compliances - HELD THAT:- We note that this Tribunal in identical facts and circumstances in the case of Hari Gyan Pracharak Trust [ 2023 (6) TMI 923 - ITAT AHMEDABAD ] has decided the issue in favour of the assessee stating that non filing of Audit Report along with return of income is a procedural omission and cannot be an impediment in law in claiming the exemption, we allow this appeal condoning the delay in filing the Audit Report in Form No. 10B. Thus we condone the delay and restore the matter to the file of ld. CIT(A) to allow exemption u/s 11 of the Act to the assessee as per the provisions of law. Hence, the grounds of appeal of the assessee are allowed for statistical purposes.
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2024 (2) TMI 628
Validity of assessment order without quoting DIN - HELD THAT:- This issue of DIN has been squarely covered by the order of the Co-ordinate Bench of ITAT in the case of Nirmala Devi Vs. DCIT [ 2023 (11) TMI 1224 - ITAT DELHI] who is the other individuals of the family covered u/s 153A wherein held if the assessment order does not follow the mandate of DIN the same has to be treated as invalid nonest in law as if it has never been issued. Board has made it very clear that in cases where communication is issued manually, it may be done only after obtaining necessary approval of the relevant authorities and communication so issued must indicate the exceptional circumstances provided in the Circular itself. It has been made very clear by the Board that any communication which is not in conformity with Para 2 and 3 of the Circular shall be treated as invalid and shall be deemed to have never been issued. Thus no hesitation to hold that the assessment order framed u/s. 143(3) r.w.s. 153C of the Act is null and void and nonest. Appeal of assessee allowed.
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Customs
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2024 (2) TMI 627
Seeking direction to the respondent not to pass final order on the Show Cause Notice dated 20.10.2022 - petitioner had filed an interim reply to the Show Cause Notice - denial of opportunity to cross-examine certain witnesses - HELD THAT:- Keeping in view the facts and circumstances of the case and specially in view the fact that the Tribunal has already heard the appeal of the petitioner and order is reserved, it is directed that hearing on the Show Cause Notice be deferred till the order is pronounced by the CESTAT. Once the order is pronounced and subject to the said order, a period of two weeks be granted to the petitioner to file a final reply to the Show Cause Notice and thereafter, the Adjudicating Authority may proceed further with the conclusion of the Show Cause Notice after giving an opportunity of personal hearing to the petitioner. Petition disposed off.
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2024 (2) TMI 626
Provisional release of 26 gold dore bars weighing 5 kg - import of 27 gold dore bars from Republic of Rwanda, which is one of the Lesser Developed Countries covered by the N/N. 96/2008- Customs - HELD THAT:- It is noticed that 25 out of 26 gold dore bars have tested with a purity of less than 95% and 1 gold dore bar has tested with a purity of 95.05%, which is within the permissible margin of error of +/- 0.25%. Learned counsel for Appellant submits that the Tribunal has erred in holding that even if the goods are found to be restricted or prohibited at the time of import, they would still be subject to provisional release - It is held that observation of the Tribunal that even if the goods are found to be restricted or prohibited at the time of import would still be subject to provisional release, would not amount to expression of opinion and is held to be restricted to the facts of this case. The issue is purely factual and no substantial question of law arises for consideration - Appeal dismissed.
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2024 (2) TMI 625
Validity of SCN - impugned SCN is issued without jurisdiction - the authority issuing the show cause notice has acted with a pre-determined mind - Violation of principles of natural justice - HELD THAT:- Considering the facts and circumstances of the case, it would be appropriate that the Petitioner responds to the show cause notice. The learned counsel for the Petitioner has fairly stated that the reply to the show cause notice would be submitted to the Designated Officer within a period of four weeks from today. If that be so, the Designated Officer shall follow the procedure, and after opportunity of hearing is granted to the Petitioner, pass appropriate orders on the show cause notice in accordance with law. As the show cause notice itself is of the year 2020, it would be in the interests of justice that it is adjudicated as expeditiously as possible, and, in any event, within a period of two months from the reply to the show cause notice being filed by the Petitioner. Petition disposed off.
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2024 (2) TMI 624
Suspension of petitioner's Customs Broker License under Regulation 16 of the Customs Brokers Licensing Regulations (CBLR), 2018 - forfeiture of security deposit - levy of penalty - serious lapse on the part of the Inquiry Officer in forwarding the report dated 30.12.2020 within the stipulated time - whether the petitioner had no role to play in the alleged fraud committed by the exporter, who allegedly wrongly claimed Duty Draw Back under the provisions of Section 75 of the Customs Act, 1962 read with Customs, Central Excise and Service Tax and Drawback Rules, 2017? HELD THAT:- Ordinarily the Inquiry Officer ought to have submitted a report by 20.9.2020 with the 1st respondent in accordance with Regulation 17 (5) of the Customs Broker Licensing Regulation, 2018. However, the report was made ready only on 30.12.2020. By this time, the Government had already promulgated the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020 on 31.3.2020. The Ordinance was replaced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The Act and the Ordinance came into force with effect from 31st day of March 2020 - 30th day of December, 2020 was the end date of the period during which the time limit specified in, or prescribed or notified under, the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962) (except sections 30, 30A, 41, 41A, 46 and 47), the Customs Tariff Act, 1975 (51 of 1975) or Chapter V of the Finance Act, 1994 (32 of 1994) for the completion or compliance of such action as specified under clause (a) or (b) of Section 6 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No.38 of 2020). 31st day of December 2021 was construed as the last day to which the time limit for completion of compliance of such action was extended. The 1st respondent has given approval for transmitting the enquiry report only on 02.02.2021. Thus, it cannot be said that the Enquiry Report dated 30.12.2020 was communicated to the 1st respondent within 90 days from the issuance of the show cause notice and within the extended period as specified in the above notification issued for the purpose of section 6 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Though, COVID 19 pandemic, did not abate and there was a 2nd wave till May-June, 2021, no notification has been brought to the attention of this Court that the time was further extended by the Central Board of Indirect Taxes, similar to the Notifications issued by the Central Board of Direct Taxes under the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 for the Purpose of Income Tax Act, 1961 - Since the time was not extended by any other notifications by the Central Government under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020 on 31.03.2020 as was replaced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the proceedings initiated under the provisions of the Customs Broker Licensing Regulation, 2018 has to abate. Therefore, the failure on the part of the enquiry Officer to communicate the enquiry report within the period of 90 days stipulated in Regulation 17 (5) of the Customs Licensing Broker Regulation, 2018 is fatal - Proceedings have to therefore abate, since there was a failure in complying with the requirements of Regulation 17 (5) of the Customs Broker Licensing Regulation, 2018 and the enquiry report was not communicated in time, the question of 1st respondent considering the report and the representation of the petitioner would have risen. Petition allowed.
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Insolvency & Bankruptcy
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2024 (2) TMI 623
CIRP - Approval of resolution plan - Entitlement to carry forward accumulated losses as per Section 79(2) of the Income Tax Act - Adjudicating Authority has issued direction to the Successful Resolution Application to approach the concerned statutory authority for the concessions - HELD THAT:- In event the Appellant is entitled for benefit of Section 79(2) to carry forward accumulated losses, it shall be open for the Appellant to file an appropriate application before the competent jurisdictional Income Tax Authority to claim the benefit - thus, no error has been committed by the Adjudicating Authority by directing the Successful Resolution Application to approach the concerned statutory authority. In so far as, other reliefs and concessions, the Adjudicating Authority has allowed the application and direction has been issued in Para 13 and 14. In fact, virtually, the application has been allowed by the Adjudicating Authority, hence, there are no reason to entertain this Appeal challenging the second part of the order as contained in Para 14. The directions are only for the purpose that the Corporate Debtor may carry on the business in accordance with law - there are no ground to interfere in the impugned order - appeal dismissed.
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2024 (2) TMI 622
Admission of section 7 application - initiation of CIRP against the Corporate Debtor - existence of debt and default or not - parties had reached an out of court amicable settlement - It is also been strenuously contended that the Financial Creditor has misused the provisions of IBC to use the Adjudicating Authority as a recovery forum - HELD THAT:- Having examined the terms and conditions of the Settlement Agreement, there are no hesitation in mind that the Settlement Agreement does not make any mention of any form of NoC to be provided by the Financial Creditor with respect to mortgaged properties or any release of security by the Financial Creditor before the payment of the settlement amount. The Settlement Agreement at Clause 3(ii)(b) makes it amply clear that the security was to be released only on payment of the entire settlement amount. Furthermore, when the security provided by the Corporate Debtor had been charged to the Financial Creditor to secure the loan facility, the Financial Creditor cannot be compelled to accede to issue of NoC for sale of these mortgaged properties prior to payment of debt and that too sans any such specific arrangement provided for in the Settlement Agreement. When the Financial Creditor had repeatedly made it clear that they were strictly relying on the terms and conditions of the Settlement Agreement and that NoC would be released only after settlement amount was received, levelling of allegation by the Corporate Debtor that the Financial Creditor was responsible for their default is devoid of force and substance. It is a well settled proposition of law that only two alternative courses of action are available to the Adjudicating Authority under Section 7(5) of the IBC which is to either admit the application under Section 7(5)(a) or reject the petition under Section 7(5)(b). The moment the Adjudicating Authority is satisfied that a default has occurred, the Application is to be admitted unless it is incomplete. On the question as to whether debt and default was adequately demonstrated before the Adjudicating Authority, basis the records made available before it, the Adjudicating Authority has rightly concluded that it was satisfied with the evidence and material produced before it by the Financial Creditor to prove that a debt had arisen; that a default has occurred and the default is above the threshold limit of Rs. 1 crore. Since debt and default is clearly established, it is opined that there is no infirmity in the impugned order admitting the Section 7 application. Thus, no error has been committed by the Adjudicating Authority in allowing the Section 7 application and admitting the Corporate Debtor into the rigours of CIRP - there are no reason to interfere with the Impugned Order - appeal dismissed.
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2024 (2) TMI 621
Dismissal of section 9 application - Initiation of CIRP - application dismissed on the ground that there is a pre-existing dispute between the parties - whether in the facts of this case, there is a pre-existing dispute or not and whether this Appeal can be allowed or not? - HELD THAT:- The e-mail exchange dated 15.06.2021, 21.06.2021, 04.07.2021 and 05.07.2021 brings out clearly that the End Client is very concerned about the delay and the delivery of the final product and services. The End Client had conveyed its dissatisfaction on 04.07.2021 and also on 05.07.2021- much before the issue of Demand Notice under section 8 IBC 2016 and the Section 9(1) proceedings under the IBC, 2016 initiated on 12.11.2021 and all this is clear evidence that there is a dispute on the delivery of the product and services, in the form of e-wallet, which is part of the Software Development Agreement - In the meantime, the Appellant raised a consolidated invoice of Rs 1,46,32,000/- dated 21.07.2021 for all the remaining 11 milestones under schedule III of the agreement. Since there was no delivery of the services beyond milestone 4, it is difficult to comprehend the issuance of this invoice and also adds to another dimension of the pre-existing dispute. Later on, ignoring all the emails exchanged between the Appellant, Respondent and the End Client, which was clear evidence of the poor quality of the software programming and also the non-delivery of the product and dis-satisfaction of the End Client, for which the product was being made, which is much more than a feeble dispute, still the Appellant proceeded against the provisions of Section 8(2)(a) of the IBC and sent a demand notice to the Respondent on 08.10.2021 - It is worth noting that the Respondent had also sent an indemnity notice dated 29.10.2021 to the Applicant, mentioning about the ongoing dispute for faulty services, with payment platform programming code being defective and highly risky to go live as a payment platform. Further, Respondent had initiated the process for filing a claim petition before the Delhi High Court Mediation Centre as per Section 12A of the Commercial Courts Act, 2015. This fact is part of the record before the Adjudicating Authority. Even the Appellant has accepted its participation in the mandatory pre-institution mediation proceedings under Section 12A of the Commercial Courts Act, 2015. Appellant has further claimed that the disputes need to be handled as per Clause 3.4 as per the Agreement and unless the same has been raised in accordance with the clauses of the agreement, any reference of the Adjudicating Authority to any e-mail is a wrong assumption of pre-existing dispute - this is not a tenable argument for identifying a pre-existing dispute for the reasons that Adjudicating Authority is well within its rights to identify any pre-existing disputes, howsoever feeble it may be, basis the evidence available before it. When there is no proof of completion or delivery of the services or works in the appeal paper book or Application and with the afore-mentioned background, it can be safely concluded that with multiple events as discussed herein, there is sufficient evidence of pre-existing dispute regarding the product and services in the form of e-wallet and also incorrect raising of final invoice. Adjudicating Authority has rightly held that pre-existing dispute regarding outstanding unpaid balance was raised by the Respondent before issuance of the notice u/s 8 of the IBC, and hence this application is liable to be dismissed u/s 9(5)(ii)(d) and accordingly the Company Petition filed by the Operational Creditor was dismissed. Appeal dismissed.
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PMLA
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2024 (2) TMI 620
Maintainability of petition - Seeking cancellation of bail which is granted by the High Court - High Court in [ 2021 (12) TMI 78 - KARNATAKA HIGH COURT] earlier held that The petitioner is not required to be detained in custody for any other purpose except to ensure his presence before the Trial Court and to see that he will not commit such offence while on bail. Under such circumstances, his further detention in custody would amount to infringement of his valuable right to life and personal liberty. Therefore, the petitioner is entitled to be enlarged on bail. HELD THAT:- Since the petitioner seeks cancellation of bail which is granted on 28th October, 2021 by the High Court and there is no allegation against the respondent that he is misused the liberty after granting the bail, we are not inclined to entertain the present petition. The special leave petition is, accordingly, dismissed.
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Service Tax
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2024 (2) TMI 619
Refund claim relating to Special provision for exemption in certain cases relating to construction of Government buildings - time limitation - refund claim filed beyond the time period of six months prescribed under Section 102(3) of the Finance Act, 2016 - HELD THAT:- The refund claim in this case has accrued on account of the provisions of Section 102 of the Finance Act, 2016. The Finance Act has provided a specific time-limit of six months from the date of assent to the Finance Bill for filing the refund claim. Accordingly, the refund claim should have been filed on or before 14.11.2016. However, the appellant has filed the refund claim only on 23.01.2017, which is beyond the time period of six months prescribed under Section 102(3) of the Finance Act, 2016. Hence, the ld. Commissioner (Appeals) has rightly upheld the rejection of refund claim by the original adjudicating authority. The Hon ble Madras High Court in the case of M/S MDP INFRA (INDIA) PVT. LTD. VERSUS COMMISSIONER, CUSTOMS, CENTRAL EXCISE CGST [ 2019 (2) TMI 208 - MADHYA PRADESH HIGH COURT] has held that The exemption was revived by notification dated 1-3-2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest. It was only by virtue of subsequent legislation the notification was made effective from retrospective date with the stipulations that refund can be claimed within specific time provided. There was thus no ambiguity nor any dispute as would have prevented the appellant from seeking refund within the period of limitation. There are no infirmity in the impugned order passed by the ld. Commissioner (Appeals) - the impugned order upheld - appeal dismissed.
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2024 (2) TMI 618
Levy of service tax - interest on hire purchase finance under Banking and Other Financial Services - interest on assignment of receivables under Recovery Agent s Service - dealer discount under Business Auxiliary Service - scope of Hire Purchase Agreement and Hire Purchase Finance agreements - HELD THAT:- The Appellant enters into financing agreements with the customers wherein the customers purchase the assets in their name and approach the Appellant for the purpose of financing the same. the ownership of the goods vests with the customers and the Appellant merely finances the purchase of such products by the owner. The ownership solely vests with the customers and there is no clause in the agreement providing the customers an option to purchase the product at the end of payment of all instalments. When a customer who is the owner of the goods enters into an agreement for financing the purchase of such goods, it is in effect a loan transaction and the lender is just given a license to seize the goods in case of breach/ default. In the present case, the ownership of the goods vests with the customers and the Appellant merely finances the purchase of such products by the owner. The ownership solely vests with the customers and there is no clause in the agreement providing the customers an option to purchase the product at the end of payment of all installments. Therefore, by relying on the decision of the Hon ble Supreme Court in SUNDARAM FINANCE LTD. VERSUS THE STATE OF KERALA AND ANOTHER [ 1965 (11) TMI 123 - SUPREME COURT] which has been relied upon in BAJAJ AUTO FINANCE LTD VERSUS COMMISSIONER OF C. EX., PUNE [ 2007 (5) TMI 28 - CESTAT,MUMBAI] , it is held that the transaction between the Appellant and its customers is not hire purchase agreements and are merely hire purchase finance agreements which is not under the ambit of service tax as held in the case of Bajaj Finance. The demands of service tax along with interest and penalty confirmed in the impugned order is not sustainable - Appeal allowed.
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2024 (2) TMI 617
Refund claim - time limitation - date of service of the order - determination of delay - appeal filed belatedly beyond the prescribed period of 60 days in terms of Section 85(3A) of Finance Act, 1994 or not - HELD THAT:- There is no specific date mentioned either in the face of the order or the date of the order in the preamble. Further, there is no evidence on record before me to state that the appellant had received the original order in time and there was delay in filing the appeal beyond the prescribed 60 days time. In the absence of any evidence or documents produced by the Department for dispatch of the original order and its receipt by the appellant; or by any independent evidence, such as records of the postal authorities to support the same, the stand taken in the impugned order cannot be accepted that the original order was sent in time and the delay in filing appeal is on account of the appellant. By taking note of the claim of the appellant that the said original order was received on 26.11.2018, it is found that the appeal before the Commissioner (Appeals) had been filed on 23.01.2019 i.e. within 57 days. Thus, appeal filed by the appellant is eligible to be considered under Section 85(3A) of the Finance Act, 1994. The appeal is allowed by of remand to the Commissioner (Appeals) for fresh decision on merits.
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2024 (2) TMI 616
Levy of service tax - Commercial Coaching or Training Services - conducting training and providing certificates to the students without the approval of either University Grants Commission (UGC) or by All India Council for Technical Education - period from April, 2015 to June, 2017 - HELD THAT:- The facts of this appeal are squarely covered by the Final Order No.70251-70252/2021 dated 11.11.2021 [ 2021 (11) TMI 514 - CESTAT ALLAHABAD] decided in the case of the Appellant where it was held that levy of service tax on the education and training provided by parallel college indirectly falls on the students, which is discriminatory. The Appellant (ASMS) is not liable to service tax during the period from April, 2015 to June, 2017 - It is also held that extended period of limitation is not attracted and the SCNs are not found to be in accordance with law for invocation of extended period of limitation - the impugned order is set aside - appeal allowed.
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2024 (2) TMI 615
Recovery of the Service Tax alongwith interest and penalty - appellant had not discharged service tax on Goods Transport Agency (GTA) services under Rule 2(1)(d)(v) of Service Tax Rules, 1994 even though being the consignor of the goods - HELD THAT:- A person who provides service in relation to transport of goods and issues consignment note could be called as goods transport agency and the service provided by him is Goods Transport Agency (GTA) service. Undisputedly in the present case, the appellant had hired autorickshaws, tempos, trucks for transportation of the goods from their factory to the customers premises. The said hired transporters have not issued consignment notes to the appellants but transported the goods on cash basis being small consignments. In those cases where consignment note has been issued viz., by M/s. Speedway against 5 bills, the appellant had conceded the liability of Rs.5,603/-. Since the amendment has enlarged the scope of consignment note and the said amendment is applicable prospectively, therefore, the judgment cited by the learned Authorised Representative for the Revenue is not applicable to the facts of the present case. On the other hand, the judgments cited by the learned advocate in Ultra Tech Cement Ltd. vs. CCE, Kolhapur [ 2017 (11) TMI 297 - CESTAT MUMBAI] and the Board Circular No.104/7/2008-ST dated 6.8.2008 are squarely applicable to the period of dispute. The impugned order is modified to the extent of upholding demand of Rs.5,603/- along with interest and penalty under Section 78 of the Finance Act, 1994; and the order confirming the balance amount of demand with interest and penalty imposed under Section 77 of the Finance Act, 1994 cannot be sustained, accordingly set aside - Appeal allowed in part.
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Central Excise
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2024 (2) TMI 614
Classification of goods - scrap-veg-refuse - classifiable under Chapter Heading 23080000 as vegetable waste as claimed by the Appellant or potato starch classifiable under Chapter Heading 1108 as claimed by the Department? - HELD THAT:- The HSN explanatory notes clearly provide that the potato starch falling under Chapter Heading 1108 shall be physically in white powdered form, however, in the present case, the scrap-veg-refuse is physically in the form of a wet paste. It is seen that the only reason for upholding demand against the Appellant No.1 is on the basis that the said scrap-veg-refuse has starch contents in it. Here, it is noted that just because the product has some starch contents does not qualify it as potato starch classifiable under Chapter Heading 1108. It has been held by the Tribunal in the cases cited supra that mere presence of certain elements of starch in the residue or scrap does not take it out of the purview of a waste or residue and the Department has to bring sufficient evidence to establish that the said product is not residue or waste. The impugned goods is not a manufactured product as per Section 3(1) of the Central Excise Act, 1944, which mandates that excisable goods must come into existence as a result of manufacturing process so as to attract the levy of excise duty; whereas in the present case, scrap-veg-refuse came into existence pursuant to process of recycling of waste water, undertaken only to reuse the reusable water content in the waste water - further, test report of Central Revenue Control Laboratory produced by the Revenue, is not conclusive as it only states that the sample tested positive for starch without going into the details of the composition of the sample and has not given any conclusive proof. The impugned orders are not sustainable in law and therefore, are set aside - Once, the demand itself is set aside, the question of interest and penalties on the Appellant No.1 and Appellant No.2 does not arise - appeal allowed.
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2024 (2) TMI 613
CENVAT Credit - duty paying documents - existence of cause of action or not - credit availed on the strength of supplementary invoices issued by the supplier as per Rule 9(1) (b) of the CENVAT Credit Rules, 2004 - fraud, collusion or wilful misstatement or suppression of facts or not - HELD THAT:- The entire cause of action against the appellant herein being that the supplementary invoices were issued by NEI in respect of the duty short paid by reason of fraud, collusion, wilful misstatement or suppression of facts. Once the order against NEI has been set aside by this Tribunal, nothing survives to support the allegations in the SCN, the Order in Original or the impugned order in this appeal. The impugned order, therefore, needs to be set aside as the cause of action no longer exists and the appellant had correctly availed CENVAT credit on the strength of the supplementary invoices issued by NEI. The impugned order is, accordingly, set aside - Appeal allowed.
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2024 (2) TMI 612
Interest on delayed Refund - Interpretation of the term relevant date, - Relevant date, whether having a bearing with the date of the order, permitting the refund or the date of filing of the application - HELD THAT:- Section 11 BB, does not talk or uses the phraseology relevant date, what it alone speaks is the date of receipt of application under subsection (1) of Section 11B. The term relevant date is made use of in Section 11B and that too, in the context of the limitation for making of such an application for filing of a refund claim and provides for a series of situations like export of goods, goods returned for certain specified reasons, etc. or even situations not pertaining directly to manufacturers, provisional payments of duty, judicial ruling and the like. The usage of the term relevant date therefore, does not have any impact with reference to the date of proclamation of the admissibility of the refund claim. It is therefore obvious that what clause (ec) of Section 11B refers to, is only to enhance the limitation period, to a case where the duty becomes payable as a result of an order of the court or a direction from the appellate authority - there are no merit in the said interpretation of the learned Commissioner (Appeals). The Hon ble Gujarat High Court in the case of Kamakshi Tradexim (India) Pvt. Ltd. Vs. Union of India [ 2017 (4) TMI 223 - GUJARAT HIGH COURT] . clearly held that the liability of the department to pay interest in terms of Section 11BB, of the Central Excise Act commences from date of expiry of three months from the date of receipt of application for refund under Section 11B(i) of the act ibid - It is found that appellant is entitled to payment of interest, three months from the date of the refund application made by them. The appeal filed by the assessee/appellant is allowed, who shall be entitled for payment of interest three months from the date of refund applications - the order of the lower authority is set aside - Appeal allowed.
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Indian Laws
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2024 (2) TMI 611
Dishonour of 5 Cheque - admissibility of joint trial - cheques were issued by the husband and wife for the same cause of action - insufficiency of funds - whether filing single complaint is maintainable, instead of filing 5 complaints, for 5 cheques? - HELD THAT:- The Hon'ble Supreme Court in the DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] has held (B) Dishonour of cheque - Cheques issued in one transaction - Filing of multiple complaints - causes tremendous harassment and prejudice to drawer of the cheque . It has held the complainant should file an affidavit stating that he has not filed any other complaint for the same cause of action. In another case by High Court of Andhra Pradesh, in case of Rajini Chandra Vs State of Andhra Pradesh [ 2010 (2) TMI 1324 - ANDHRA PRADESH HIGH COURT] has taken the similar view, that both the accused have committed same offence in the course of same transaction, as the transaction is arising out of land dealing for which advance was paid and after the settlement, the cheques were issued by both the accused towards discharging the liability which is of legally enforceable debt. Therefore, a joint trial can be conducted. Thus, when all the cheques were issued by the husband and wife for the same cause of action and cheques were dishonoured, a common notice was issued against the accused. Such being the case, instead of filing the multiple complaints, single complaint for dishonour of multiple cheques are maintainable. Therefore, the impugned order of dismissing of the complaint by trial court is liable to be set aside. Accordingly, answered the point raised above in favour of the complainant. This Criminal petition is allowed.
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