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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter February 18, 2022 Case Laws in this Newsletter: GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Articles VIRTUAL DIGITAL ASSET No service tax payable on amount of notice pay recovered from employer in lieu of sudden termination of employees News Setup of ‘GST Refund Help Desk’ in the office of Pr. CCA, CBIC Notifications GST - States 14/2021 – State Tax (Rate) - dated 2-2-2022 - Jharkhand SGST Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017 13/2021 – State Tax (Rate) - dated 2-2-2022 - Jharkhand SGST Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017 Circulars / Instructions / Orders SEBI SEBI/HO/MRD2/DDAP/CIR/P/2022/20 - dated 17-2-2022 Corrigendum to Master Circular for Depositories dated February 05, 2021 on Opening of demat account in case of HUF FEMA 24 - dated 17-2-2022 Exim Bank's Government of India supported Line of Credit (LoC) of USD 50 million to the Government of the Republic of Maldives 25 - dated 17-2-2022 Exim Bank's Government of India supported Line of Credit (LoC) of USD 40 million to the Government of the Republic of Maldives Highlights / Catch Notes GST Confiscation of goods - there was neither any delivery challan nor any invoice accompanying the goods - It is the settled position of law that this Court cannot interfere under Article 226 of the Constitution when there are disputed facts, especially in matters of taxation. Petitioner has an alternative and efficacious remedy under Section 107 of the CGST Act to prefer an appeal and therefore, no prejudice would be caused to the petitioner, even. - HC Visit to Get Source Classification of goods - rate of GST - Mango Pulp/puree - fresh fruit or not - As there is no specific description of “mango pulp/puree.”, under GST tariff notification, the entry no. 453 of Schedule-III of Notification No.1/2017 is applicable, which is a residuary entry covering goods which are not specified in Schedules I, II, IV, V, VI of the Notification, attracting the tax rate of 18%. - AAAR Visit to Get Source Levy of GST - Supply or not - liquidated damages recoverable by the applicant from Belectric India on account of delay in commissioning - time of supply - The contract itself prescribes the date on which the damage has to be determined and paid. The date on which the liquidated damage is determined as per the formula prescribed in the clause 6 of the contract is the time of supply of service entry in 5(e) of Schedule II by the applicant. - AAR Visit to Get Source Works Contract - applicable rate of GST - AMC services - principal supply or not - Composite supply or not - bundled supply or mixed supply - it is a naturally bundled supply where in the liability to pay tax on the entire consideration will be the liability relatable to the principal supply. If the applicant is delivering goods to the recipient in other State that State will be the place of supply and the liability to pay tax will arise in such State where the delivery is made - the executing partner of Joint Venture will have the same liability as the Joint Venture firm which was allotted the contract by South Central Railways. - AAR Visit to Get Source Taxable supply of services or not - privity of contract - income earned from conducting Guest Lectures - income earned from Research and Training Projects funded by Ministries of Government of India and State Government of Karnataka - Since no information is forthcoming with regard to the recipient of services, the service in question merits classification under SAC 9983 and attracts GST at the rate of 18%. - AAR Visit to Get Source Classification of supply - rate of GST - supply of Outboard Motors to unregistered fishermen - marine engines and spare parts used for fishing vessels (being part of the fishing vessel) attract 5% GST. If marine engine is supplied for use other than as parts of fishing vessels, the rate of GST is applicable under the respective Customs Tariff Headings in which they are classified. - AAR Visit to Get Source Exemption from GST - It is clear that the applicant is only acting as a liaison agent between the health care professionals on one side and their professional organisations and content providers on the other side and are charging their charges in addition to the content charges and fees of the professional bodies. The applicant per se does not provide any education to the professionals - the services provided by the applicant to the doctors and other health care professionals is not covered under any exemptions and hence is taxable.- AAR Visit to Get Source Income Tax Reopening of assessment u/s 147 - Change of opinion - TP adjustment addition - Courts have repeatedly held that once a query is raised and that has been explained by the assessee, even if there is no discussion on that aspect in the assessment order still the Assessing Officer is deemed to have consider these points and applied his mind. - All these only indicate one thing that re-opening is proposed on the basis of change of opinion. - HC Visit to Get Source Approval for exemption u/s 10 (23C) (vi) denied - existing solely for the educational activities or not - If the surplus is utilized for educational activities then it cannot be said that it is an institution existing for the profit. In the present case, the surplus was utilized only for educational purposes. No evidences lead before us to show that any of the income earned by the assessee institution has been spent for non-educational purposes. This is in consonance with paragraph number 3 of the circular issued by the central board of direct taxes. Thus on this basis, rejection of the exemption claim of the assessee is not justified. - AT Visit to Get Source Interest incurred claimed as a deduction u/s. 57(iii) out of interest earned from mutual funds - In our opinion, unless funds are borrowed for making deposit to earn interest income, such interest paid on borrowings cannot be allowed as deduction in the computation of income from other sources, which in this case, is interest earned from mutual funds. In the facts stated above, there is no doubt that the funds borrowed from HSBC Bank was never used for investment to earn interest income. On the other hand, it has been used to make investment in CGDA Scheme and interest paid on borrowings cannot be set off against interest earned from mutual funds, as borrowed fund is not converted into mutual fund which yielded interest income. - AT Visit to Get Source Disallowance of interest paid on service tax - interest on delayed payment of service tax - It is settled proposition of law that the entries made in the books of account are not relevant for determining total income of the assessee. Hence, it cannot be said that the service tax collection and remittance is not related to the business carried on by the assessee, merely for the reason that they are not routed through the Profit and loss account. - Claim of deduction allowed - AT Visit to Get Source Disallowance of legal expenses - The fact remains undisputed before us that the assessee has not done any business activities during the year and that there is no business income shown also by the assessee. Therefore, the legal expenses claimed cannot be wholly and exclusively for the purposes of business of the assessee. In such a scenario, the decision of the subordinate authorities is held to be correct. - AT Visit to Get Source Disallowance of foreign exchange loss on restatement of working capital loans and gold loans - In this case, the assessee has taken foreign currency working capital for the purpose of business of the assessee and thus, profit or loss arisen on account of restatement of such loan is in nature of revenue expenditure which can be allowed as deduction. - AT Visit to Get Source Assessment of trust - Rectification of mistake u/s 154 - exemption u/s 80G/80GGA denied by CPC in 143(1) - The assessee had furnished relevant documents evidencing the donations made eligible for deduction under section 80GGA/80G of the Act. The same were not disputed by the Department. It is not a case where the assessee's donations were suspected or the institutions/funds to whom donations were made were under lens of suspicion, therefore, the observations made by CIT(A) for dismissing assessee's appeal are unsustainable. - AT Visit to Get Source Assessment u/s 153A - Bogus LTCG - exemption u/s. 10(38) - assessing officer has not brought or proved anything on record that the assesse was involved in manipulation of prices or taken benefit by having any relationship with the persons involved in such activities. Even the SEBI order does not mention the name of the assessee to have been involved in the artificial price rigging of shares. Hence the entire addition has been made in the hands of the assessee merely by surmise and conjecture and not backed by any evidence. - AT Visit to Get Source Customs Levy of Anti-Dumping duty - goods have been imported and warehoused - The appellant-importers have argued that as they have warehoused the goods that have been put to the disadvantage forcing the importers to have imported during intervening period i.e. after the goods have been imported and warehoused and the same are cleared from the warehouse. However, it is found that taxation does not work on the principle of the equity, if the appellant has availed the facilities under the warehousing provisions, they have to bear with the associated disadvantages, if any. It is not open for the appellant-importer to claim best of both ends - AT Visit to Get Source Rejection of refund claim - finalization of provisional assessment or not - A provisional assessment will always remain as a provisional one. There is no shortcut as a deemed finalization since the authorities can only collect the tax/duty as permissible under law. Hence, the non-finalization of the provisional assessment has lead to a situation where the duty paid by the unsuspecting assessee has been retained in full without following the process of law since it is observed that a provisional assessment will not automatically become final but the same has to be taken to its logical conclusion by passing a final order. - AT Visit to Get Source IBC Approval of the Resolution Plan approved by the Committee of Creditors (CoC) - Commercial Wisdom of the CoC with respect to viability and financial decision taken while evaluating the Resolution Plan has to prevail, unless the Plan approved by the CoC is in conflict with any provision of the law and the distribution mechanisation suppressed the interest of the stakeholders besides taking care of the maximisation of the value of the assets of the corporate debtor, judicial intervention would not be warranted. - AT Visit to Get Source Service Tax Refund of service tax - duty free shops in airport - Undoubtedly, stocking and display is impossible without space and the sole issue that remains in the dispute is the finding of the lower authorities that space has been provided to the appellant and that the payment flow is ‘rent’ which is taxable within the meaning ‘airport service’ or ‘service’, as the case may be, for the period in dispute. - ‘Duty free’ shops in airports are a global market competing among themselves in a ‘tax exempt’ environment - Refund allowed - AT Visit to Get Source Classification of services - Cargo Handling Service or not - Only because of same containers were transported by sea in the vessel by other service provider and payment of sea transportation received by them against the invoice raised by them for reimbursement of actual basis, it cannot be said that it had not provided service of transport of goods by road. It is also not disputed that the respondent were registered as service provider under the category of Goods Transport Agency and paying service tax wherever payable by them under the Finance Act, 1994. In the registration, there is no mention of either cargo handling service or they had not provided any service of cargo handling nor transportation of goods by sea, etc. - AT Visit to Get Source Case Laws: GST 2022 (2) TMI 719 Levy of Interest under section 50 sub-section (1) of the GST Act - HELD THAT:- The impugned demand arising out of the impugned adjudication order dated May 14, 2019 is not sustainable and accordingly the impugned order of the appellate authority dated March 6, 2020 in connection with the demand relating to interest is set aside. Petitioner further submits that it had paid ₹ 1,35,14,156/- on May 30, 2019, against the demand raised in the adjudication order dated May 14, 2019. Since the adjudication order is being set aside due to the retrospective change in law, petitioner is entitled to get refund of the same, and accordingly respondent concerned shall verify the refundable amount as claimed by the petitioner which, according to the petitioner, is 1,35,14,156/-; and on verification, if it is found that claim of the petitioner is correct, in that event respondent concerned shall refund the same, within a period of four weeks from the date of communication of this order by taking into consideration the aforesaid amendment. Petition disposed off. 2022 (2) TMI 718 Confiscation of goods - there was neither any delivery challan nor any invoice accompanying the goods and hence proceedings under Section 130 of the CGST Act was invoked - HELD THAT:- Several factual aspects have been narrated by the officer, while arriving at a conclusion of 'intent to evade tax'. All those aspects are factual matters which require an appreciation of disputed facts. It is the settled position of law that this Court cannot interfere under Article 226 of the Constitution when there are disputed facts, especially in matters of taxation. Petitioner has an alternative and efficacious remedy under Section 107 of the CGST Act to prefer an appeal and therefore, no prejudice would be caused to the petitioner, even. This writ petition shall stand dismissed. 2022 (2) TMI 717 Classification of goods - rate of GST - Mango Pulp/puree - fresh fruit or not - mango pulp/puree falls under the heading 20079910 or 0804? - exemption from GST - rate of tax payable on outward supplies of Mango fruit Pulp/ Puree under the GST Act - HELD THAT:- The appellant reiterate that technically there is no difference between 'puree' and 'pulp'. The appellant quoted the reference of Memorandum issued by Ministry of Food Processing Industries, Government of India in F.No.E-12/2/2019-ED dt: 06.10.2021, which states that Mango Pulp and Mango Puree are the same thing from a technical angle. With reference to the nomenclature of the product, this authority does not differ with the above opinion. But, the Memo cited has been issued for a different purpose, not on the classification of the product or it's chapter heading. The claim of the appellant in this regard stating that clarification has been issued on the tariff code of the product is out of place. Rate of duty applicable on the Mango Pulp - HELD THAT:- As there is no specific description of mango pulp/puree. , under GST tariff notification, the entry no. 453 of Schedule-III of Notification No.1/2017--Central Tax (Rate) dt: 28.06.2017 is applicable, which is a residuary entry covering goods which are not specified in Schedules I, II, IV, V, VI of the Notification, attracting the tax rate of 18%. Thus, 'Mango Pulp /Puree' is classifiable under Tariff Item 0804 50 40 and chargeable to GST 18%, by virtue of entry No.453 of Schedule III in Notification No.1/2011-Central Tax (Rate) Dated 28.06.2017. 2022 (2) TMI 716 Classification of goods - rate of GST - Mango Pulp/puree - fresh fruit or not - mango pulp/puree falls under the heading 20079910 or 0804 or 2008? - exemption from GST - rate of tax payable on outward supplies of Mango fruit Pulp/ Puree under the GST Act - HELD THAT:- The appellant reiterate that technically there is no difference between 'puree' and 'pulp'. The appellant quoted the reference of Memorandum issued by Ministry of Food Processing Industries, Government of India in F.No.E-12/2/2019-ED dt: 06.10.2021, which states that Mango Pulp and Mango Puree are the same thing from a technical angle. With reference to the nomenclature of the product, this authority does not differ with the above opinion. But, the Memo cited has been issued for a different purpose, not on the classification of the product or it's chapter heading. The claim of the appellant in this regard stating that clarification has been issued on the tariff code of the product is out of place. Rate of duty applicable on the Mango Pulp - HELD THAT:- As there is no specific description of mango pulp/puree. , under GST tariff notification, the entry no. 453 of Schedule-III of Notification No.1/2017--Central Tax (Rate) dt: 28.06.2017 is applicable, which is a residuary entry covering goods which are not specified in Schedules I, II, IV, V, VI of the Notification, attracting the tax rate of 18%. Thus, 'Mango Pulp /Puree' is classifiable under Tariff Item 0804 50 40 and chargeable to GST 18%, by virtue of entry No.453 of Schedule III in Notification No.1/2011-Central Tax (Rate) Dated 28.06.2017. 2022 (2) TMI 715 Levy of GST - Supply or not - liquidated damages recoverable by the applicant from Belectric India on account of delay in commissioning - time of supply when liability to pay GST is triggered - HELD THAT:- Liquidated damages are demanded by the applicant from the contractor due to the delay in commissioning of the project and postponement in the taking over date beyond the milestones fixed for completion of project - A combined reading of the provisions (1) (3) of Section 55 of the Indian Contract Act, 1872 reveals that a failure to perform the contract at the agreed time renders it voidable at the option of the opposite party and alternatively such party can recover compensation for such loss occasioned by non-performance. In the case of the applicant, liquidated damages are imposed for covering the loss of revenue and costs borne by a project SPED due to delay according to a formula. Thus liquidated damages are claimed by the applicant from the contractor due to the delay in commissioning of the project and the taking over date by the contractor beyond the milestones fixed for completion of project. These damages are consideration for tolerating an act or a situation arising out of the contractual obligation - Further Section 2(31)(b) of the CGST Act mentions that consideration in relation to the supply of goods or services or both includes the monetary value of an act of forbearance. Therefore such a toleration of an act or a situation under an agreement constitutes supply of service and the consideration or monetary value of such toleration is exigible to tax. The contract itself prescribes the date on which the damage has to be determined and paid. The date on which the liquidated damage is determined as per the formula prescribed in the clause 6 of the contract is the time of supply of service entry in 5(e) of Schedule II by the applicant. The Consideration received for such forbearace is taxable under CGST and SGST @9% each under the chapter head 9997 at serial no. 35 of Notification No.11/2017- Central/State tax rate. 2022 (2) TMI 714 Works Contract - applicable rate of GST - AMC services - principal supply or not - Composite supply or not - bundled supply or mixed supply - setting up of TCAS since both are under one work order - rate of GST for supply of goods under TCAS and supply of goods and services under AMC as the quantity and prices are provided in the work order separately - rate of GST for services (erection and commissioning) under TCAS and AMC involving civil works as the prices for the same are provided in the work order separately - requirement for separate registration in other states - levy of GST on the supply of goods like components, parts, spares etc., to SCR, Secunderabad, Telangana as a part of whole contract of supply, installation commissioning in Maharashtra and Karnataka State - applicable rate of GST to sub-contractors and sub-suppliers of goods. HELD THAT:- As seen from the counter offer issued by south central railway dated: 13.11.2019 the contract is for design, supply, installation, testing and commissioning of onboard TCAS equipment in locomotives and track side. The counter offer also contains schedule of description mentioning various items to be utilized quantity and value wise in it. There is also a payment schedule for the contract. There is a specific clause 7 regarding GST which mentions that the contractee i.e., South Central Railway shall reimburse the GST if a higher rate is determined even after completion of the contract - the definition of works contract under the CGST Act at Section 2(119) is restricted to supplies of goods services pertaining to immovable property only. This contract being an agreement for installation of equipment onboard the locomotives which are movable property, the said supply does not qualify to be a works contract under the GST law. A composite supply is essentially a naturally bundled supply where two or more different supplies invariably exist along with each other. As against this a mixed supply is a bundled supply is not a bundled supply where the goods / services though supplied together are distinct and separately identifiable. However a supply can be a mixed supply only if it is a single price - As seen from the illustration the supply of service i.e., insurance and goods go alongside each other. As against this the illustration given in the context of mixed supply clearly indicates that each of the items therein can be supplied separately and are not dependant of any other. The supply made by the applicant against the counter offer of the South Central Railway is a composite supply and the rate of tax applicable is the rate at which the principal supply has to be taxed i.e., Electrical signalling equipment with HSN code 8530 - AMC is clearly a different contract and will be enforced separately so that the failure to perform the promises under AMC will not put the promises under main contract in breach, more so because the main contract would have been completed by the time AMCs are separately entered with the authorities indicated. Therefore mere mentioning of a future AMC in the original contract will not make such future AMC contracts a part of the original contract. Further the details of Annual Maintenance Contract are not provided by the applicant, however the applicant submitted that the AMC involves the same services and goods for the maintenance of the TCAS system. In view of the submissions, AMC is also a composite contract and GST payable will be the GST applicable to the principal supply i.e., 9% under CGST SGST respectively on Maintenance service of Electrical signalling equipment - It is also informed by the applicant the South Central Railway has awarded the supply contract to their joint venture firm and that one of the partners of the Joint venture M/s. Kernex Microsystems (I) ltd will execute the contract for the Joint venture. In this connection it is observed that if the entire contract is executed all the attributes of the contract discussed above will remain the same for the executing partner. Therefore the liability of the executing partner will also remain the same as discussed. Thus, to conclude, the subject work is a composite supply and not works contract under GST - Being a composite supply, the rate applicable to principal supply is the rate applicable to the entire contract i.e., 9% CGST and also SGST - the AMC contract is a separate contract from the original contract - this contract is a composite contract and the rate of tax applicable to principal supply is the rate applicable to the entire contract i.e., 9% CGST and also SGST - this contract is a composite contract and the rate of tax applicable to principal supply is the rate applicable to the entire contract i.e., 9% CGST and also SGST - As the applicant makes supplies in other States and is liable to pay CGST SGST in those states as he is required to take separate registration in other States - applicant is making a composite supply other than supply of works contract or food and beverage. Therefore it is a naturally bundled supply where in the liability to pay tax on the entire consideration will be the liability relatable to the principal supply. If the applicant is delivering goods to the recipient in other State that State will be the place of supply and the liability to pay tax will arise in such State where the delivery is made - the executing partner of Joint Venture will have the same liability as the Joint Venture firm which was allotted the contract by South Central Railways. 2022 (2) TMI 713 Taxable supply of services or not - privity of contract - income earned from conducting Guest Lectures - income earned from Research and Training Projects funded by Ministries of Government of India and State Government of Karnataka - taxable supply of service to be taxed at Nil rate as per Heading 9992 or not - income earned from Research and Training Projects funded by Ministries of Government of India and State Government of Karnataka - taxable Supply to be taxed at (Integrated Tax) 18% under Heading 9983 or not - HELD THAT:- The applicant states that he is a Professor of Law at National Law School of India University, Bengaluru and is engaged in classroom teaching and training for students and other personnel. He also states that he is also invited by multiple Universities and Colleges of National Repute to deliver Guest Lectures. The applicant states that he provides teaching and training and interconnected activities under Research and Training Projects granted by the Government of India and State Government of Karnataka and International Institutions such as UNDP - The applicant likes to know whether the income earned from conducting guest lectures amounts to taxable supply of service. The applicant is of the opinion that guest lectures rendered by him on law and legal awareness acts as a refreshment or diversion from the usual monotony and hence the services provided by him by way of training are recreational activities relating to arts or culture and as such, is non-taxable as the same falls under Entry No.80 of Notification No.12/2017 Central Tax (Rate) dated: 28.06.2017, chargeable at 'NIL'. The applicant states that he provides teaching and training and interconnected activities under Research and Training Projects granted by the Government of India and State Government of Karnataka. The applicant likes to know whether the income earned from Research and Training Projects funded by Ministries of Government of India and State Government of Karnataka, amounts to taxable supply of service to be taxed at Nil rate as per Heading 9992 or amounts to or results to as taxable supply to be taxed at Integrated Taxed 18% under Heading 9983 - It is seen that there is no privity of contract between the applicant and the Government and hence this entry is not applicable for the services rendered by the applicant. The applicant has provided a copy of MOU signed between Ministry of Environment, Forest and Climate Change, Government of India and Centre for Environmental Law Education, Research and Advocacy (CEERA), National Law School of India University. But there is no privity of contract between Ministry of Environment, Forest and Climate Change, Government of India and the Applicant. Hence the same is not covered under item 72 of the said Notification - Since no information is forthcoming with regard to the recipient of services, the service in question merits classification under SAC 9983 and attracts GST at the rate of 18%. 2022 (2) TMI 712 Classification of supply - rate of GST - supply of Outboard Motors to unregistered fishermen - to be classified under 8407 or 8408? - HELD THAT:- The transaction relating to the question sought by the applicant is verified. It is an admitted fact that marine engines under Customs Tariff Heading 8407 21 00- Outboard motors -Marine Propulsion engines. Further the Fishing vessels, factory ships and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902 and is liable to GST at the rate of 5% as per entry at SI.No.247 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017 - In the instant case, the applicant admitted to be supplying marine engines (HSN 8407 21 00) and spares for fishing vessels (HSN 8902) as parts of the same. Thus, marine engines and spare parts used for fishing vessels (being part of the fishing vessel) attract 5% GST. If marine engine is supplied for use other than as parts of fishing vessels, the rate of GST is applicable under the respective Customs Tariff Headings in which they are classified. The Outboard motors (marine engine) and its spare parts supplied for fishing vessel (for use as part of the fishing vessel- CTH 8902) shall attract GST at the rate of 5% as per entry at Sl.No.252 of Schedule I of Notification No.01/ 2017 Central Tax (Rate) dated 28.06.2017. If it is supplied for use other than as parts of fishing vessels GST shall be applicable at the rate of tax on such goods under the respective Customs Tariff Heading classified. 2022 (2) TMI 711 Exemption from GST - paid educational content, which is used by health care professionals or students to fulfill a mandatory demand by their professional body or institute - fee for the portfolio management - HELD THAT:- The applicant is providing services to doctors to maintain the professional standards as required by law and guidelines issued by the Medical Council. The consideration charged by the applicant is also verified and found that the applicant is charging ₹ 999-00 per year plus 15% of the content charges if chargeable plus whatever the fee the Medical Council charges - the transactions reveal that the recipient of services is health care professionals and it is not for obtaining a degree as prescribed by law. The services provided by the applicant is not covered under Entry No. 74 of the Notification 2017- Central Tax (Rate) dated 28.06.2017 as it is not a health care service nor the applicant is a clinical establishment. The services provided is also not covered under the Entry No. 66 of the said Notification, as it is not an educational institution as per the definition given to it in clause (y) of paragraph 2 of the said Notification. As far as the services of the applicant are concerned, the applicant claims that the professional bodies can track the progress of their members in their online portfolio and there would be no need to check the paper certificates. The health care professionals would no longer required to submit the certifications and await approval of the professional bodies. The portfolios are secure and are accessible only after permissions are given by the members to align with privacy regulations - it is clear that the applicant is collecting the charges on behalf of the professional bodies and are paying it to them. The amounts are paid by the health care professionals. It is clear that the applicant is only acting as a liaison agent between the health care professionals on one side and their professional organisations and content providers on the other side and are charging their charges in addition to the content charges and fees of the professional bodies. The applicant per se does not provide any education to the professionals - the services provided by the applicant to the doctors and other health care professionals is not covered under any exemptions and hence is taxable. Income Tax 2022 (2) TMI 710 Deduction u/s 10A - excluding the foreign Travel Expenditure and Telecommunication expenses both from the Export turnover and also from the Total turnover while computing deduction - HELD THAT:- Issue decided in favour of assessee as relying on HCL TECHNOLOGIES LTD. [ 2018 (5) TMI 357 - SUPREME COURT] if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well. - Decided against revenue. 2022 (2) TMI 709 Initiating proceedings u/s 148 to a dead person - HELD THAT:- Taking into consideration the submission of learned counsel for the petitioner that this Court has already taken a view that such notices against those persons could not be made basis to proceedings under Section 148 of the Act as held in the cases of Dr. Bhaskar Sharma Vs. The Commissioner of Income Tax-I and Anr.. [ 2017 (12) TMI 1830 - RAJASTHAN HIGH COURT] and Smt. Kesar Devi Vs. Commissioner of Income Tax [ 2009 (2) TMI 351 - RAJASTHAN HIGH COURT] and similar view taken by various High Courts, we are inclined to stay further proceedings pursuant to impugned notice dated 30.03.2021 (Annexure-3) till the next date of hearing. Notice be also issued on prayer for stay by registered post as well as ordinary mode both on payment of P.F. within one week, returnable within three weeks.It is made clear that if P.F. is not paid as directed above, the interim order shall lose its efficacy. 2022 (2) TMI 708 Reopening of assessment u/s 147 - Change of opinion - TP adjustment addition - HELD THAT:- Petitioner had made available all details and documents relating to the issue raised in the reasons for re-opening. As per the Jurisdictional AO(JAO) petitioner had entered into a transaction with a related party being Nelco Limited. Tax Auditor and Transfer Pricing Auditor reported the transaction with Nelco Limited. Perusal of creditors details submitted during the course of assessment proceeding showed that the transaction entered into with Nelco Limited during the year were and therefore there is escapement of income. It is therefore clear that relying on the same set of documents and facts already considered before the original assessment proceeding re-opening is proposed to take a view different from the view already taken earlier. Courts have repeatedly held that change of mind cannot be the basis for re-opening. Courts have repeatedly held that once a query is raised and that has been explained by the assessee, even if there is no discussion on that aspect in the assessment order still the Assessing Officer is deemed to have consider these points and applied his mind. All these only indicate one thing that re-opening is proposed on the basis of change of opinion. - Decided in favour of assessee. 2022 (2) TMI 707 Vivad Se Vishwas Scheme - Application filed under Vivad Se Vishwas Scheme has been rejected on the basis that the revision petition filed - HELD THAT:- Income Tax Officer has no authority or power under the DTVSV Act to dispose of the revision application filed by petitioner u/s 264 of the Act. Petitioner had filed the revision application u/s 264 with a request for condonation of delay and that revision application has not been rejected and was still pending on the date petitioner filed the declaration under the DTVSV Act. DTVSV Act only requires that the application under Section 264 must be pending on the specified date. Mr. Walve submitted that time limit for disposal of the revision petition expired long before the specified date and that before filing the application under Section 264, petitioner had also withdrawn the appeal that he had filed before the CIT(Appeal) and, therefore, application under Section 264 itself was not maintainable. In our view, that was for the Commissioner before whom the application under Section 264 was pending to decide and pass the order, which has not been done. Whatever may be the merit of the application under Section 264, the fact is that application was still pending on the date the declaration under DTVSV Act was filed. Therefore, in our view, the rejection of petitioner s declaration under DTVSV Act for A.Y.-2006-2007 as contained in the Form-1 filed on 25th December 2020, is incorrect. Respondents are directed to process the application as contained in Form-1 filed on 25th December 2020 and pass such orders as required in accordance with law. Mr. Bora states petitioner had already made payments as per Form-1. If that is so, he may tender the same to the concerned authority, who shall examine the documents and give credit for the amount already paid. 2022 (2) TMI 706 Reopening of assessment u/s 147 - Notice issued after the expiry of four years from the end of the assessment year - allowability of franchisee fee paid by petitioner to BCCI as revenue expenditure - HELD THAT:- To a specific query raised by respondent no.1, petitioner by its said letter dated 17th November 2014 also submitted a statement received from the BCCI for sharing of the central rights income which was to be shared with petitioner, wherein BCCI adjusted the amount that was payable by petitioner to BCCI on account of IPL played during the year and thereafter, paid the balance amount to petitioner. Final appeal has been disposed by ITAT vide its order pronounced on [ 2020 (12) TMI 1058 - ITAT MUMBAI] holding that the franchisee fee paid by petitioner to BCCI was revenue expenditure and directed the Assessing Officer to delete the addition. All figures were all available before the AO, who has considered the same and after applying his mind, passed the original assessment order dated 26th March 2015. Therefore, in our considered view, the reason to reopen on change of opinion, which as held by this Court, the Apex Court and many other Courts, is not permissible. We will have to hold that the AO had in his possession all primary facts and it was for him to make necessary enquiries and draw proper inference, which he did. AO had all materials facts before him when he made the original assessment. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the Assessing Officer, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. - Decided in favour of assessee. 2022 (2) TMI 705 Approval for exemption u/s 10 (23C) (vi) denied - assessee contested that assessee being an Association of person can be granted exemption u/s 10 (23C) (vi) of The Act as thereis no requirement of getting itself registered u/s 12 A - whether the assessee as an Association of person is entitled to claim exemption u/s 10(23C) (vi) of the act or not? - HELD THAT:- In the case of the assessee before us, it is evident that undisputedly it is an association of two charitable trusts. Both these charitable trusts are also registered with the income tax authorities. Objects of Assessee / Appellant AOP is education. The Sharda Sikhshna Seva Samiti is a charitable trust registered Under the provisions of The Bombay Public Trust Act 1950 and registered since 24/5/1954. The Lodha trust is also a public trust registered Under The Bombay Public Trust Act 1950. This trust is also engaged in various charitable activities including educational activities and is operating schools at different places. These facts are already available in the management agreement entered into by the entities on 12th day of August 2014. Thus, There is evidence that both these members of the association of persons are regulated entities by the Charity Commissioner. Appellant AOP has also filed its return of income. In view of this the reasons given by the learned CIT that assessee is an Association of person, an unregulated entity and does not have any control over it, therefore cannot be registered for exemption, is fallacious. Even if the arguments of the revenue is accepted, then the proviso to Section 10 (23C) clearly says that that the moment there is a violation of the provisions, the exemption granted to the assessee trust can be withdrawn immediately. Though the counsel of the assessee has submitted that till date there is no distribution of profit amongst any of the members of the association and after the amendment to the deed of association of persons therein, there is no question of distribution of profit and all the surplus has been utilized for the educational activities and not for any other activity. Revenue authorities are at always liberty to invoke such provisions the moment the violation is found. It is a fact on the basis of the information produced before us that there is no distribution of profit between the members of the Association of person. The learned departmental representative has merely doubted the supplementary deed only because of the reason that one of the signatories of the supplementary deed has already merged with another trust, but has not shown us any evidence that there is any allocation of profit between the members of even a single rupee. Whether the assessee is existing solely for the educational activities or not? - There is no other revenue earned by Assessee. The expenses incurred by the assessee are also met and are with respect to the educational activities only and running of the school. At the end of the year, gross receipt of ₹ 4,54,73,382/ was earned and surplus of ₹ 1,254,386/ remained which went into recoupment of the earlier loss of ₹ 1,634,128/ . The fixed assets schedule of the assessee also shows that it has created assets for education of ₹ 4,62,67,463/ out of the funds generated by the Association of person through its members. Therefore, it is apparent that mere generation of surplus in the income and expenditure account is not the basis for determination that whether the assessee exist not for the purposes of profit. If the surplus is utilized for educational activities then it cannot be said that it is an institution existing for the profit. In the present case, the surplus was utilized only for educational purposes. No evidences lead before us to show that any of the income earned by the assessee institution has been spent for non-educational purposes. This is in consonance with paragraph number 3 of the circular issued by the central board of direct taxes. Thus on this basis, rejection of the exemption claim of the assessee is not justified. Whether the Association of person is running an educational Institute or not? - Undisputedly as on 28 February 2019, one of the members of the AOP was merged with another trust and therefore instead of the member of the AOP, trust in which the member of AOP amalgamated is mentioned. Further, in certificate dated 7 March 2019 , name of both the members of the Association of person are mentioned. The fees have been received by the Association of person, the educational activities are also carried out by the Association of person, and fixed assets created for education purposes are in the name of AOP, which fact is evident by the annual accounts placed before the CIT. The fact also mentioned in form number 10 BB filed before him. Form number 56D in column number 3 clearly shows that the Association of person is formed to run and manag an English medium public school. In the same form, the total income is also shown which clearly shows that that assessee is running a school. Thus all these facts cumulatively s shows that assessee Association of person is running the school and in all these certificates issued by the educational department Maharashtra clearly mentions the name of both the members of the assessee AOP. In view of these facts, we find that finding of the CIT exemption that the school is run by one of the members of the AOP and not by the AOP is not correct. If any of the conditions are violated based on which the exemption is granted to the assessee, the provisions of the law itself gives authority to prescribed authority to withdraw the exemption already granted. This is also mandated and explained in detail in the circular issued by the central board of direct taxes. So far this year is concerned, there is no violation of any of the conditions prescribed u/s 10(23C) by the assessee. None is shown to us by the revenue authorities. It is also not shown that even for any of the subsequent years; there is any violation of the conditions. In view of this, we are of the opinion that, the assessee is an educational Institute running solely for the purpose of education and not existing for the purposes of the profit. It satisfies all the conditions mentioned u/s 10(23C) (vi) of the act. We allow appeal of the assessee directing the learned CIT E to grant exemption to the assessee u/s 10 (23C) (vi) of the act. 2022 (2) TMI 704 Revision u/s 263 by CIT - deduction claimed in respect of interest paid on loan borrowed from HSBC Invest Direct Financial Services [India] Ltd., against the interest received from the CGDA scheme deposit was not proper and the Assessing Officer ought to have disallowed the same - HELD THAT:- In the present case, there is no full enquiry on the impugned issues. The AO has accepted the claim of assessee which is not correct as seen from the facts of the case. The claim of set off of interest by the assessee is not examined by the AO in proper perspective. Being so, the order passed by the AO on an incorrect assumption of facts and incorrect appreciation of law without applying the correct principles of law and without making full enquiry, the order being erroneous insofar as it is prejudicial to the interests of revenue, the PCIT rightly assumed jurisdiction u/s. 263 . Interest incurred claimed as a deduction u/s. 57(iii) out of interest earned from mutual funds - In this case, the assessee received the sale consideration on sale of shares. The sale consideration was used for purchase of mutual funds - For making deposit under CGDA Scheme, the assessee has taken loan from HSBC Bank and paid interest thereon. The interest paid on loan has been claimed as deduction out of interest received from fixed deposit parked under CGDA Scheme u/s 57(iii) In the present case, the borrowings were made by the assessee to deposit in the CGDA Scheme so as to avail the benefit u/s. 54F of the Act. The assessee has paid interest on the loan availed for the purpose of making investment in CGDA scheme. The assessee used the sale consideration receive on sale of shares in mutual funds and earned interest out of it. The assessee wants to set off the interest paid on loan amount out of interest income received from mutual funds. As seen from the above, the borrowings are not made to make investment in the mutual fund and earn interest therefrom. The borrowed amount was used to make investment in CGDA scheme. The interest income was received by the assessee from mutual funds only was totally independent of the borrowings. The interest expenditure is incurred not for the purpose of earning income, but it is on the borrowings used for investment in CGDA scheme. In our opinion, unless funds are borrowed for making deposit to earn interest income, such interest paid on borrowings cannot be allowed as deduction in the computation of income from other sources, which in this case, is interest earned from mutual funds. In the facts stated above, there is no doubt that the funds borrowed from HSBC Bank was never used for investment to earn interest income. On the other hand, it has been used to make investment in CGDA Scheme and interest paid on borrowings cannot be set off against interest earned from mutual funds, as borrowed fund is not converted into mutual fund which yielded interest income. Therefore, in our opinion, there is no merit in the arguments of the assessee that interest incurred is to be allowed as a deduction u/s. 57(iii) of the Act out of interest earned from mutual funds which was taxed under the head income from other sources . Accordingly, the grounds of the assessee on this issue are rejected the appeal is dismissed. 2022 (2) TMI 703 Income accrued or deemed received in India - Permanent Establishment in India - profits attributable to operation in India - income earned by the assessee from the business of money-transfer services in respect of remittances made to individuals in India is not liable to tax in India - India - USA DTAA - HELD THAT:- As decided in own case [ 2021 (9) TMI 1169 - ITAT DELHI] agents engaged by the assessee were independent agents under Article-5(4) of the India US-DTAA and they did not have the necessary authority to conclude the contracts of the assessee and, on that premise, it was held that there is no agency PE of the assessee in India. Under similar circumstances, the Co-ordinate Bench of the Tribunal held that though the assessee had business connection, it did not have any fixed placed PE nor agency placed PE in India, and, in the absence of any such PE in India, the profits, if any, attributable to India operations could not be assessed as business profits under Article-7 of the India US DTAA. - Decided against revenue. 2022 (2) TMI 702 Penalty u/s 271(1)(c) - disallowance of depreciation on plant machinery lease out to the tenant - HELD THAT:- In the present case, the assessee throughout proceeding, the claim that the asset on which depreciation was claimed is existed and was sold only in AY 2018-19 and earned Short Term Capital Gains/Loss thereon was offered to tax. The assessee while filing its return of income offered the rental income as business income . Assessing Officer treated the rental income as business income primarily on the fact that the assessee was not doing any business activities and that plant machinery were not shown in the lease deed. The Hon'ble Jurisdictional High Court in ROYALE MANOR HOTELS IND. LTD. [ 2012 (8) TMI 1106 - GUJARAT HIGH COURT] held that where there was no intention of the assessee to claim wrong deduction of depreciation on hotel building, and mistake was bona fide penalty could not be imposed. In present case as the claim of assessee is that they have let out its business premises to various parties alongwith plant machinery and income earned on letting out was offered for tax under the head business income from business profession and the assessee was under bonafide belief that the depreciation is allowable of the block of asset, we find merit in the submission of Ld. AR for the assessee that the assessee made a bonafide claim and mere disallowance thereof would not lead to conclusion that the assessee furnished inaccurate particulars. Thus, in view of the above factual and legal discussion, the grounds of appeal raised by the assessee are allowed. 2022 (2) TMI 701 Assessment u/s 153A - Undisclosed income on deposits in the foreign bank account - assessment completed in the instant case on the basis of joint locker held by the assessee jointly with her sister - contention of the assessee that no incriminating material was found or seized during the course of search relating to the issue of deposits in the foreign bank account of the appellant resulting in the impugned addition - HELD THAT:- Search warrant issued on the locker so jointly held and consequential proceedings under Section 153A was found to be illegal and consequentially set aside in the case of one of the joint holder, i.e., sister Shah-E-Naaz Judge. The ratio of the decision would naturally apply mutatis mutandis in the case of other holder of the locker namely, the assessee herein where the search warrant on such locker was found to be in violation of Section 132(1) of the Act. The search warrant and consequential assessment u/s.153A in the case of other joint holder thus cannot be seen differently. Hence, on the basis of judgment rendered in the case of Shah E Naaz Judge vs. Additional Director of Income Tax (Inv)-Unit-VI, [ 2018 (12) TMI 292 - DELHI HIGH COURT] we find merit in the Ground no.1 of the Cross Objection. Consequently, we hold that the search authorization warrant issued u/s.132 of the Act and consequential assessment framed u/s 153A of the Act is arbitrary and devoid of any legal basis and thus wholly unsustainable in law. This being so, the entire assessment order in question requires to be set aside and quashed at the threshold. 2022 (2) TMI 700 Disallowance of interest paid on service tax - interest on delayed payment of service tax - A.O. noticed that the assessee did not route the service tax collection and payment through profit and loss account and since the service tax paid is not claimed as expenditure, A.O. took the view that the interest paid on service tax is also not an expenditure in connection with the business carried on by the assessee. Accordingly, he disallowed the above said claim of the assessee - HELD THAT:- It is a settled principle of law that any tax collected along with sales/services is a trading receipt and hence remittance of the same to the credit of the government shall constitute trading expenditure. It is also settled proposition of law that the entries made in the books of account are not relevant for determining total income of the assessee. Hence, it cannot be said that the service tax collection and remittance is not related to the business carried on by the assessee, merely for the reason that they are not routed through the Profit and loss account. Whether the interest paid on delayed payment of service tax is allowable as deduction or not? - As decided in the case of M/s. EMDEE Digitronics Pvt. Ltd. [ 2019 (7) TMI 86 - ITAT KOLKATA] interest expenditure on late deposit of VAT, service tax, etc. are allowable as deduction u/s 37(1) of the Act. Accordingly, following the above said decision, we hold that the interest paid on delayed payment of service tax is a business expenditure to the assessee and accordingly allowable as deduction. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete this disallowance. Disallowance of software subscription charges - AO noticed that the assessee has incurred expenses on software purchases and claimed the same as deduction - HELD THAT:- Whether the payments made by the assessee for upgrading the software would constitute revenue or capital expenditure, we may gainfully refer to the decision in the case of IBM Ltd. [ 2013 (10) TMI 1225 - KARNATAKA HIGH COURT] wherein the Hon ble High Court has taken the view that payment of application software though there is an enduring benefit, it does not result into acquisition of any capital asset and merely enhances the productivity or efficiency and hence has to be treated as revenue expenditure. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the above amount as revenue expenditure. SAP license renewal charges - We noticed that the Ld CIT(A) has held it to be revenue expenditure. However, he has directed the AO to examine the applicability of sec.40(a)(ia) of the Act. Before us, the Ld A.R has placed reliance on the notification no.21/2012 dated 13th June, 2020 issued by CBDT in order to contend that the TDS is not required to be deducted when the software license is acquired from a Resident. We have gone through the same and notice that the CBDT has laid down certain conditions. Further, the Hon ble Supreme Court, in a recent decision rendered in the case of Engineering Analysis Centre for excellence [ 2021 (3) TMI 138 - SUPREME COURT] has explained the law on deduction of TDS on payments made to non-residents on purchase of software licenses. Hence the above said notification has to be read along with the decision rendered by Hon ble Supreme Court in the above said case. Accordingly, we modify the order passed by Ld CIT(A) on this issue and direct the AO to examine this issue Disallowance of bad debts claimed - A.O. noticed that the assessee has claimed bad debts against the amount due from a sister concern - HELD THAT:- We noticed earlier that the Ld. CIT(A) has given a categorical finding, which is also evident from the ledger account extracted by him in his order, that the transactions recorded in the second ledger are not related to the business carried on by the assessee. The transactions are in the nature of financial accommodation or financial support given by the assessee to its sister concern. Such kind of transactions, in our view, cannot said to relate to the business carried on by the assessee. Hence, the balance written off by the assessee, under these set of facts, cannot be considered as a case of write off of trading advance or a case of trading loss. Accordingly, we confirm the order passed by Ld. CIT(A) on this issue. 2022 (2) TMI 699 Addition u/s 68 - Unexplained sundry creditors - HELD THAT:- During the appeal proceedings, the assessee filed confirmation letters from various parties including copies of ledgers and bank statement in respect of assessee's claim that sundry creditors are genuine creditors. These documents were sent to AO calling for remand report from him. AO instead of sending a remand report, objected vide his letter dated 8.2.2019 that the fresh evidence filed by the assessee shall not be admitted on the reason that letters issued to creditors calling for information u/s.133(6) of the Act to the address provided by the assessee were returned unserved and the assessee has not furnished correct address even after sufficient opportunities to give the particulars during the hearing. Being so, when the assessee failed to furnish requisite details even after giving adequate opportunity of hearing to the assessee, the fresh evidence by the assessee shall not be admitted by the CIT(Appeals). CIT(Appeals) overlooked the objection of the AO and considered the various additional evidence filed by the assessee before him and decided the issue in favour of the assessee on merits. When the AO objected to admission of additional evidence before the CIT(Appeals) vide his letter dated 8.2.2019, the CIT(Appeals) decided the issue on merits overlooking the letter written by the AO that fresh evidence should not be admitted. As appropriate for the CIT(Appeals) to point out to the AO that he is not going to consider the objections raised by the AO for not admitting additional evidence and he is going to decide the issue on merits. For this purpose, he should have called the comments of the AO merits of the additional evidence filed by the assessee. In the present case, the CIT(Appeals) failed to do so. Appeal of the revenue is allowed for statistical purposes. 2022 (2) TMI 698 Disallowance of excess claim of agricultural income - AO has given his reasons and more specifically he has relied on a data published by National Horticultural Board (NHB) - HELD THAT:- As in the instant case, natural justice has been clearly violated and the A.O's order was clearly indicative of possible bias and therefore, the impugned order passed by the A.O was set aside and the Revenue was directed to serve copies of reports which were sought to be relied upon by the A.O against the assessee to the assessee. This issue was decided in favour of the assessee. Reverting to the facts of the present case, the A.O had relied on NHB reports which were never given to the assessee for his response or submissions. The mandate of principles of natural justice is thus violated in this case. In view thereof, in the interest justice, we set aside the order of the ld. CIT(A) on this ground and remand the issue back to the file of the A.O to re-adjudicate as per law while complying with the principles of natural justice. Disallowance of 20% of depreciation on luxury cars - AO observed that the assessee was not having any business income during the year. However, he claimed huge depreciation on the luxury cars such as BMW, ETC. No log book was also maintained - HELD THAT:- CIT(A) confirmed the addition made by the A.O and even before us, the assessee was unable to bring out on record any evidence or material to support his case on this issue. We are therefore, of the considered view and after going through the entire details that no business activity was carried out by the assessee and when he could not establish the business connection for the use of the luxury vehicles in relation to his business in such a scenario the stand of the revenue is correct. This ground is therefore, dismissed. Disallowance of legal expenses - AO has clearly mentioned that there was no business co-relation between the legal expenses claimed and the business of the assessee - HELD THAT:- On perusal of some of the sample bills, it is seen that majority of the payments have been made to M/s. Vidhi Partners for handling various writ petitions. During the appellate proceedings, the assessee has failed to bring any evidence which could prove that the same were related wholly and exclusively for the purpose of the business of the assessee. Particularly keeping in view of the fact that no business operations were carried on by the assessee during the year as no business income has been shown, therefore, the learned CIT(A) upheld the disallowance of legal expenses as made by the A.O. The fact remains undisputed before us that the assessee has not done any business activities during the year and that there is no business income shown also by the assessee. Therefore, the legal expenses claimed cannot be wholly and exclusively for the purposes of business of the assessee. In such a scenario, the decision of the subordinate authorities is held to be correct. Ground No. 4, therefore, dismissed. 2022 (2) TMI 697 Income accrued in India - income of the assessee from contracts entered into on or after 1st April, 2003 - whether effectively connected to PE of the assessee and 'not FTS' and liable to tax on net basis as per provisions of section 44DA? - HELD THAT:- As decided in own case [ 2018 (6) TMI 401 - ITAT DELHI] assessee's receipts from the contracts in India are not effectively connected with PE in India. Accordingly,as directed the Assessing Officer to tax such receipts on net basis as per section 44DA of the Act. - Decided against Revenue. 2022 (2) TMI 696 Expenditure for project related activities and also incurred other fixed administrative costs - AR made limited alternative submissions that the business expenditure is genuine and therefore, the same may be allowed to be capitalized during this year - allowable business expenditure - HELD THAT:- It could be gathered that whether the business had been set up/commenced or not would not be much germane to the facts of the case since AO has already allowed admissible depreciation to the assessee which would establish that the fact of commencement of business has been accepted by AO. The finding that the expenditure has been claimed as deferred revenue expenditure in the books whereas full expenditure has been claimed in the computation of income, is not a correct finding. The perusal of details of other expenses as debited in Profit Loss Account and the details of construction expenses would show that the set of expenditures are altogether different and therefore, it is not a case where the assessee has claimed deferred revenue expenditure. The findings rendered by Ld. AO are not correct. We are convinced with Ld. AR's submissions that since the genuineness of the expenditure is not under question, the capitalization of the same as work-in-progress may be allowed. These submissions find all the more favor in the background of the fact that the assessee is following percentage of completion method of accounting. Therefore, we direct Ld. AO to allow capitalization as 'other expenses'. No other ground has been urged before us. 2022 (2) TMI 695 Disallowance of foreign exchange loss on restatement of working capital loans and gold loans - Assessee has borrowed foreign currency working capital loan from Indian Overseas Bank - HELD THAT:- When the assessee has taken foreign currency working capital loan for business purpose, then loss on account of any appreciation or depreciation in the value of foreign currency at the end of the relevant accounting year is in the nature of revenue expenditure which can be allowed as deduction. This principle is supported by the decision of M/s.Sutlej Cotton Mills Ltd. [ 1978 (9) TMI 1 - SUPREME COURT] where it was categorically held that profit or loss arises to an assessee on account of appreciation or depreciation in the value of foreign currency held by it, on conversion into another currency, such profit or loss would ordinarily be a trading profit or loss, if foreign currency is held by the assessee on revenue account or as a trading asset or as a part of capital embarked in the business. See CIT Vs. Woodward Governor India Pvt. Ltd [ 2009 (4) TMI 4 - SUPREME COURT] In this case, the assessee has taken foreign currency working capital for the purpose of business of the assessee and thus, profit or loss arisen on account of restatement of such loan is in nature of revenue expenditure which can be allowed as deduction. The learned CIT(A), without appreciating those facts has simply confirmed additions made by AO. Hence, we set aside order of the learned CIT(A) and direct the Assessing Officer to allow deduction towards foreign exchange loss claimed by the assessee on account of restatement of foreign currency working capital loan and gold loan taken from Indian Overseas Bank. Disallowance of travelling expenses - Assessee failed to file necessary evidences before the AO to justify for travelling expenses claimed in books of account with reference to nexus between expenses and business activities of the assessee - HELD THAT:- It is well settled position of law that businessmen are required to incur travelling expenses. Therefore, it cannot be said that total expenditure incurred by the assessee is for personal purposes, but not for business purposes. At the same time, the assessee has also not filed necessary evidences to prove that total expenditure incurred for travelling purpose is for purpose of business. Therefore, we are of the considered view that both parties have failed to justify their cases with necessary reasons. Hence, to settle dispute between the parties, we deem it appropriate to direct the Assessing Officer to restrict disallowance of travelling expenses to 50% of expenses claimed by the assessee for relevant assessment year. Hence, we direct the Assessing Officer to restrict disallowances to 50% of total travelling expenses claimed by the assessee. Ad-hoc disallowance @ 25% of general expenses - AO has disallowed 25% expenses like sale promotion expenses, incentives, vehicle expenses, business promotion expenses etc. on the ground that the assessee has failed to file necessary supporting bills and vouchers to prove expenses incurred for purpose of business of the assessee - HELD THAT:- AO has made 25% ad-hoc disallowance of expenses, but failed to give proper reasons for making such adhoc disallowances. It is well settled principle of law that unless the Assessing Officer points out specific defects in books of account maintained by the assessee for certain expenditure, then he cannot make ad-hoc disallowance of expenses. Since both the parties have failed to justify their cases, we are of the considered view that the possibility of incurring certain expenses for personal purposes cannot be ruled and therefore, to resolve dispute between the parties, we direct the Assessing Officer to restrict disallowance of those expenses to 10% of total expenses incurred by the assessee for the assessment year. Appeal filed by the assessee is partly allowed. 2022 (2) TMI 694 Assessment of trust - Rectification of mistake u/s 154 - whether the assessee's claim of exemption under section 80G/80GGA denied by CPC in 143(1) proceedings is allowable and the denial of same is a mistake apparent on record? - HELD THAT:- We find that in the preceding AY i.e. AY 2013-14 and in the succeeding AY i.e. AY 2015-16 the assessee's claim of deduction under section 80G/80GGA has been accepted by the Department. Ostensibly, the assessee has been making similar donations in the preceding and the succeeding AYs towards Chief Minister's Relief Fund, and donation to some other eligible institutions and the consequent benefit of deduction under section 80G has been allowed to the assessee. In AY 2013-14 in scrutiny assessment proceedings, the assessee's claim was allowed and in AY 2015-16, the assessee's claim of deduction under section 80GGA was accepted by the CPC as is evident from the intimation under section 143(1) of the Act dated 02.08.2016. Thus, disallowance of assessee's claim of deduction under Chapter-VIA in the impugned AY was purely a computational error which could have been rectified under section 154 - The assessee had furnished relevant documents evidencing the donations made eligible for deduction under section 80GGA/80G of the Act. The same were not disputed by the Department. It is not a case where the assessee's donations were suspected or the institutions/funds to whom donations were made were under lens of suspicion, therefore, the observations made by CIT(A) for dismissing assessee's appeal are unsustainable. Consequently, the impugned order is set-aside and the appeal of assessee is allowed. The AO is directed to grant benefit of deduction claimed by the assessee under Chapter-VIA of the Act. Appeal of assessee is allowed. 2022 (2) TMI 693 Interest u/s 234B - HELD THAT:- We find that the interest levied u/s 234B of the Act was deleted by the DRP relying upon the decision of GE Packaged Power [ 2015 (1) TMI 1168 - DELHI HIGH COURT ] in which the Hon'ble High Court followed the decision in the case of Agence France Press [ 2015 (4) TMI 1331 - DELHI HIGH COURT] From the scrutiny report, on DRP s directions, the AO has accepted the deletion. But since the matter is subjudice before the Hon'ble Supreme Court, these appeals have been preferred. 2022 (2) TMI 692 Disallowance being late remittance of employees contribution to PF and ESI under the respective Acts - As contended that assessee has paid the employees contribution prior to the due date of filing of return under section 139(1) - HELD THAT:- Scope of amendment by Finance Act, 2021, to section 36[1][va] and 43B - HELD THAT:- As in Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - Also further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction - Decided in favour of assessee. 2022 (2) TMI 691 Assessment u/s 153A - Bogus LTCG - AO disallowed the claim of exemption claimed u/s 10(38) treating the same as a non-genuine gain - Also added as commission at the rate of 6% on the amount of capital gains claimed as exempt by the Assessee - HELD THAT:- It is fact on record that whatever addition made by the AO relating to share capital and share premium which are already available on record and assessee has already disclosed the same while filing the return of income and balance sheet. There is nothing on record which shows that new incriminating material was found during search. Therefore, the courts have held that no addition can be made in the case of unabated assessment years without there being incriminating material found during search. We observe from the various decisions and particularly the Hon ble Jurisdictional High Court in the case of Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] which observed that the expression incriminating material would mean any evidence or material found during search which were not submitted or produced in the course of filing return of income / original assessment and any undisclosed income or property discovered during search. But in the given case, we observe that no such material or income was found during search but AO relied completely on the information forwarded by the investigation wing post search. Therefore, the assessments made in A.Y. 2011-12 in the case of Shripal Raj Lodha and in A.Y. 2010-11 in the case of Smt Sarita Lodha , being unabated assesments, and hence no addition towards denial of exemption u/s 10(38) could be done. Accordingly, the additions made thereon are hereby deleted. Allowability of long term capital gain and claimed the exemption u/s. 10(38) - In the given case , it clearly shows that no such opportunity was given to the assessee and further we observe that the Assessing Officer decided to proceed by relying on information contained in the SEBI report without establishing the connection of direct or indirect involvement of the assessee in the tainted transactions and proceed to apply concept of preponderance of human probability. Therefore, in our considered view, assessee has submitted all the information relating to buying and selling of the scrips and the Assessing Officer has not found any discrepancies in the documents submitted by the assessee and it is a case of the AO that assessee is involved in directly or indirectly in manipulation of the prices of the scrips and taken direct or indirect benefit by manipulation of the above said scrips. However, assessing officer has not brought or proved anything on record that the assesse was involved in manipulation of prices or taken benefit by having any relationship with the persons involved in such activities. Even the SEBI order does not mention the name of the assessee to have been involved in the artificial price rigging of shares. Hence the entire addition has been made in the hands of the assessee merely by surmise and conjecture and not backed by any evidence. Therefore, we do not find any reason to sustain the addition made by the Assessing Officer and confirmed by the Ld.CIT(A). Accordingly, the grounds raised by the assessee are allowed 2022 (2) TMI 690 Validity of assessment u/s 153C - entitled to file reply/objection to the satisfaction note furnished - Denial of natural justice - whether before passing the impugned Assessment Orders, the objections/ representations of the petitioner against initiation of the impugned proceedings u/s 153C were required to be considered or not and if not done, whether it is a violation of principle of natural justice? - HELD THAT:- Where any proceedings u/s 153C is initiated against the person, other than the searched person in whose case the power under Section 132 the search has been carried out, is entitled to file reply/objection to the satisfaction note furnished to that person by the Jurisdictional Assessing Officer (other than the Assessee Searched) and once those objections are furnished, a reasonable time is to be furnished. In the case of Vijaybhai N. Chandrani [ 2013 (7) TMI 740 - SUPREME COURT] the Apex Court though directed alternative remedy to be resorted to, it had permitted 15 days time once the objections were filed and the Assessing Authority is held duty bound to consider such objections and thereafter, to direct the Assessee to file a return of Assessment year in question. Thus, giving of an opportunity is a must before proceeding against the person other than searched person after providing note of satisfaction and passing of a reasoned and speaking order after such opportunity is made available and the assessee avails such opportunity to file objection. In the instant case, we could notice from the material which has been furnished and the objections were raised against the satisfaction note supplied by a speaking order and those objections have been disposed of on 27.12.2021. This Has happened subsequent to the filing of the present petition and therefore, this petition would not survive as the essential prayer was to direct the authority concerned to consider the objections. Request of one week time is made to reply to the final show cause notice dated 27.12.2021 which has been issued after disposing of the objections, as the apprehension on the part of the petitioner is of framing of the Assessment on or before 31.12.2021 and the demand raised in the last show cause notice has been almost doubled. Noticing the disposal of the objections on 27.12.2021 and issuance of demand on 27.12.2021 itself, the petitioner shall be at liberty to make a request to the authority concerned of grant of reasonable time of minimum one week for him to reply and let the same be considered by the authority concerned. As this petition is disposed of without issuance of notice in the circumstances mentioned above which developed during pendency, petition is though not entertained, request to permit the adjournment before the Assessing Officer is permitted considering the date of disposal and final show cause notice. 2022 (2) TMI 689 Revision u/s 263 by CIT - TDS u/s 194A - Associate Members of Co-operative Society - assessee has not deducted tax at source from the payment of interest made on deposits - Demand u/s 201(1) 201(1A) - HELD THAT:- In the present case there is no dispute that the Ld.CIT(TDS) sought to revise an order passed by the Ld.AO which has been set aside by this Tribunal by its order [ 2021 (1) TMI 831 - ITAT BANGALORE ] We also note that the Ld.CIT(TDS) noted the view of this Tribunal, still sought to revise an order which is not in existence as on the date of passing of impugned order. He proceeds to discuss applicability of provisions of Section 80P, which has been considered by this Tribunal in its order dated 18/01/2021. Thus in our view, the Ld.CIT(TDS) sought to revise an inoperative order. We therefore, hold the impugned order passed by Ld.CIT(TDS) u/s. 263 of the Act, to be bad in law and deserves to be quashed. - Decided in favour of assessee. 2022 (2) TMI 688 Revision u/s 263 by CIT - Whether no inquiry conducted by the A.O. in allowing the provision for bad and doubtful debts? - HELD THAT:- On perusal of the assessment order, which was subjected to revision u/s 263 of the Act, we notice that there is no inquiry conducted by the A.O. in allowing the provision for bad and doubtful debts. CIT was correct in invoking his revisionary powers u/s 263 . On merits, we notice that the assessee has charged off to its profit and loss account provision for doubtful debts and has simultaneously reduced the same from the value of total sundry debtors in its audited balance sheet. The details of the same are placed from pages 7 to 10 of the paper book filed by the assessee. The Hon ble jurisdictional High Court in the case of CIT v. M/s.Sandvik Asia Limited [ 2013 (2) TMI 900 - KARNATAKA HIGH COURT] by following the judgment of the Hon ble Apex Court in the case of Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] held that provision for doubtful debts, which has been debited to the profit and loss account and simultaneously been reduced from the value of the total sundry debtors in its audited balance sheet would be sufficient requirement for write off of bad debts. In the instance, the assessee has reduced the amount of provision for bad and doubtful debts from the amount of sundry debtors in the balance sheet, which is sufficient compliance of write off of bad debts going by the dictum laid down by the Hon ble jurisdictional High Court, cited supra. Therefore, the A.O. cannot make the addition of provision for bad debts in view of the Hon ble jurisdictional High Court judgment in the case of CIT v. M/s.Sandvik Asia Limited. [ 2013 (2) TMI 900 - KARNATAKA HIGH COURT] Hence, there cannot be any prejudice caused to the Revenue. In such circumstances, we hold that the order passed u/s 263 of the Act is to be quashed and we do so. Appeal filed by the assessee is allowed 2022 (2) TMI 687 Revision u/s 263 by CIT - no enquiry or lack of enquiry - HELD THAT:- Although the ld. Pr. CIT reproduced the entire submissions made by the assessee in writing in his impugned order passed u/s 263 of the Act, he did not give any finding or observation thereon and without arriving at any conclusion to show that the order of the AO was erroneous on merit, he simply set aside the same on the ground that the Assessing Officer failed to consider the various aspects and did not apply his mind to the facts of the case, which action of the PCIT cannot be countenanced for the reasons discussed infra. Before us, assessee reiterated the submissions made before the PCIT to demonstrate on the basis of relevant facts and figures that there were no errors in the order of the AO accepting the claim of the assessee on the relevant three issues on merit and we find that even the ld. CIT D/R has not been able to rebut or controvert the same. He has simply contended by relying on the impugned order of the ld. Pr.CIT that no enquiry or verification was made by the Assessing Officer during the course of assessment proceedings on this issue and, therefore, it was a case of lack of enquiry. According to this Section if a fact is likely to have happened: i) in common course of natural events ; ii) according to general human conduct; iii) according to public and private business; iv) due to the relation to the facts of the particular case. Accordingly, the Court can presume the existence of that fact i.e. in this case we take the aid of illustration (e) to section 114 of the Indian Evidence Act, which helps us presume judicial and official acts have been regularly performed . So we presume in the facts and circumstances, and after going through the relevant pages of the PB that AO has regularly performed his duties. Since from perusal of the papers filed before the AO itself (PB) we are convinced that there was no error as wrongly assumed by Ld. PCIT. Therefore the Ld. PCIT erred in assuming revisional jurisdiction to interfere with the action of AO - the impugned order passed by the ld. Pr. CIT u/s 263 of the Act is without jurisdiction and so liable to be quashed. - Decided in favour of assessee. 2022 (2) TMI 686 Revision u/s 263 - transaction of equity shares and working of short term capital gain/long term capital gain - HELD THAT:- We observed on identical situation when once the AO has issued questionnaire and specific information was sought on transactions and assessee furnished the details as called for and assessee has filed all the details of purchase of shares which is through banking channel. Once the issue is addressed by the assessee to the satisfaction of the AO, in this scenario, the Coordinate Bench of the Tribunal in the case of Mrs. Manisha Ajay Shah [ 2020 (10) TMI 660 - ITAT MUMBAI ] considered the facts on record and quashed the order passed by the Ld. Pr.CIT. In our considered view the facts in the present case applicable mutatis mutandis to the above case. Therefore, we set aside the order passed u/s. 263 of the Act. - Decided in favour of assessee. 2022 (2) TMI 685 Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in M/S. R.E.I. AGRO LTD. [ 2013 (12) TMI 1517 - CALCUTTA HIGH COURT] only the value of investment on which exempt income was actually earned by the assessee during the year under consideration should be taken into consideration while computing the disallowance under Clause (ii) of Rule 8D(2). Keeping in view the said decision of the Hon ble Jurisdictional High Court, we direct the Assessing Officer to recompute the disallowance to be made u/s 14A of the Act as per Clause (ii) of Rule 8D(2). Ground No. 2 of the assessee s appeal thus is partly allowed. Belated payment of employees contribution to Provident Fund beyond the due date specified in the relevant Act but within the period of filing of the return of income - HELD THAT:- As decided in LUMINO INDUSTRIES LTD. [ 2021 (11) TMI 926 - ITAT KOLKATA] delete the addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of delayed payment of employees contribution towards Provident Fund. Disallowance u/s 14A while computing the book profit of the assessee company u/s 115JB - HELD THAT:- Special Bench of the Tribunal at Delhi in the case of ACIT v Vireet Investments Pvt Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it is held that no disallowance u/s 14A r.w.r. 8D can be made while computing book profit of the assessee company u/s 115JB - However, Clause (f) of Explanation 1 to Section 115JB of the Act provides that the amount or amounts of expenditure relatable to any income to which Section 10 [other than the provisions contained in Clause (38) thereof] is required to be added while computing the book profit u/s 115JB and this amount has to be worked out by the Assessing Officer independently without reference to Section 14A or Rule 8D. Accordingly restore this issue to the file of the Assessing Officer for recomputing the amount to be added on account of expenditure relatable to any income exempt u/s 10 [other than u/s 10(38)] as per Clause (f) of Explanation 1 to Section 115JB. 2022 (2) TMI 684 Addition of cash outgo u/s 69 - on-money receipts - whether there is any negative cash balance in the parallel books of accounts maintained by the assessee? - HELD THAT:- We find that the assessee had submitted that the excess on-money reversals were made out of cash loans taken by Shri Jagdish Ahuja. We also find that assessee had duly explained that the said cash loans had been independently added on peak basis in the hands of Shri Jagdish Ahuja by the order of Hon ble Income Tax Settlement Commission. The purpose of refund of on-money receipts to the customers has been duly explained by the assessee together with its modus-operandi as detailed hereinabove. This is also further confirmed by Shri Jagdish Ahuja in his statement recorded u/s.132(4) of the Act on 28/06/2015. We find that the ld.AO had merely considered on-money receipts portion alone on the receipts side to arrive at the availability of cash with the assessee for making on-money reversal payments. If the cash loans of ₹ 26 Crores which has been independently added in the hands of Shri Jagdish Ahuja is considered on the receipt side, there would be no negative cash balance at all in the parallel books of accounts maintained for the whole group. Assessee submitted various details of additions made on account of net on-money in the case of various group entities of the Ahuja group for A.Y.2014-15 and also on account of inflation of expenses and other income. These facts clearly go to prove that there is lot of force in the submission of the ld. AR that there was absolutely no negative cash balance in the parallel books of accounts maintained in the Tally package. Hence, we hold that there is absolutely no infirmity in the order of order of the ld. CIT(A) granting relief to the assessee as there is no negative cash balance in the parallel books of accounts maintained for the whole Ahuja group which is the primary basis for making an addition per se. Grounds raised by the Revenue are dismissed. 2022 (2) TMI 662 Revision u/s 263 by CIT - Deduction claimed in respect of interest paid on loan borrowed from HSBC Invest Direct Financial Services [India] Ltd., against the interest received from the CGDA scheme deposit was not proper and the AO ought to have disallowed the same. Accordingly the AO had failed to examine this aspect and had allowed the claim without inquiring into the same - extent of enquiry which was made by the AO while framing the assessment - HELD THAT:- In the present case, there is no full enquiry on the impugned issues. The AO has accepted the claim of assessee which is not correct as seen from the facts of the case. The claim of set off of interest by the assessee is not examined by the AO in proper perspective. Being so, the order passed by the AO on an incorrect assumption of facts and incorrect appreciation of law without applying the correct principles of law and without making full enquiry, the order being erroneous insofar as it is prejudicial to the interests of revenue, the PCIT rightly assumed jurisdiction u/s. 263 . Interest incurred to be allowed as a deduction u/s. 57(iii) out of interest earned from mutual funds - In this case, the assessee received the sale consideration on sale of shares. The sale consideration was used for purchase of mutual funds - For making deposit under CGDA Scheme, the assessee has taken loan from HSBC Bank and paid interest thereon. The interest paid on loan has been claimed as deduction out of interest received from fixed deposit parked under CGDA Scheme u/s 57(iii) In the present case, the borrowings were made by the assessee to deposit in the CGDA Scheme so as to avail the benefit u/s. 54F of the Act. The assessee has paid interest on the loan availed for the purpose of making investment in CGDA scheme. The assessee used the sale consideration receive on sale of shares in mutual funds and earned interest out of it. The assessee wants to set off the interest paid on loan amount out of interest income received from mutual funds. As seen from the above, the borrowings are not made to make investment in the mutual fund and earn interest therefrom. The borrowed amount was used to make investment in CGDA scheme. The interest income was received by the assessee from mutual funds only was totally independent of the borrowings. The interest expenditure is incurred not for the purpose of earning income, but it is on the borrowings used for investment in CGDA scheme. In our opinion, unless funds are borrowed for making deposit to earn interest income, such interest paid on borrowings cannot be allowed as deduction in the computation of income from other sources, which in this case, is interest earned from mutual funds. In the facts stated above, there is no doubt that the funds borrowed from HSBC Bank was never used for investment to earn interest income. On the other hand, it has been used to make investment in CGDA Scheme and interest paid on borrowings cannot be set off against interest earned from mutual funds, as borrowed fund is not converted into mutual fund which yielded interest income. Therefore, in our opinion, there is no merit in the arguments of the assessee that interest incurred is to be allowed as a deduction u/s. 57(iii) of the Act out of interest earned from mutual funds which was taxed under the head income from other sources . Accordingly, the grounds of the assessee on this issue are rejected the appeal is dismissed. Benami Property 2022 (2) TMI 683 Benami transaction - real owners of suit property - non-consideration of the Will set up by the defendants - When the 1st defendant has died pending suit and the suit properties will devolve on the legal heirs whether the Will pleaded by the defendants have to be proved or not for claiming exclusive right? - HELD THAT:- Though the first defendant has not produced any relevant document to show how can she purchased the property, that would not defeat the case of the first defendant. In fact, the pleadings set out in the plaint, the plaintiffs have not averred about the income derived from the joint family property. Therefore, on that score alone, the evidence let in by the plaintiffs cannot be taken into account. Therefore, in view of the above, this Court cannot be termed that the suit schedule property, is the joint family property of the plaintiffs and the defendants' family. As far as the relief of injunction also, being the reason that the plaintiffs have not proved their case, as the suit property is the joint family property of the plaintiffs and the defendants, they cannot ask such a relief as against the first defendant, who is having a title. Therefore, in all, the evidence let in by the plaintiffs have not shown that the property has been purchased by utilising the funds realised from the ancestral property of the plaintiffs and defendants. Since the title and possession have not been proved by the plaintiffs, they are not entitled to the relief of injunction. The Courts below had also traversed in the same line and concurrently held that the plaintiffs have not proved their case. While at the time of framing the substantial questions of law, the alleged Will executed by the first defendant has been mentioned as the same has not been answered. In this regard, on going through the judgment rendered by the Court below, after the death of the first defendant, the plaintiffs have not taken any steps to amend the plaint, and impleaded the legal representatives of the deceased first defendant. It is well settled that without any pleading, the evidence let in on that score, cannot be looked into. Herein also, without producing the alleged Will and without amending the pleading in respect to the death of the first defendant and in respect to the execution of the Will, it is not necessary for the Court below to decide whether the suit property will devolve upon the legal representatives of the deceased first defendant. In this regard, the only option available for the plaintiffs is to file a suit for partition and in otherwise, answering the said issue, is not necessary in this Second Appeal. Substantial questions of law, are all answered in favour of the respondents and thereby, the Second Appeal is dismissed. Customs 2022 (2) TMI 682 Levy of Anti-Dumping duty - clearance of goods which have been imported and warehoused before the issue of Notification imposing Anti-Dumping Duty is issued - Confiscation - interest - penalty - HELD THAT:- It is very clear that Section 15 applies squarely to goods warehoused under Section 68 as it applies to goods presented for clearance for home consumption under Section 46 of the Customs Act. Sub-section (8) of Section 9A of the Customs Tariff Act, 1975 which provides that provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to the date for determination of rate of duty, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act. In view of Section 3 of the Customs Tariff Act, 1975, Antidumping Duty is to be construed as Customs duty and therefore in view of the amendment that was carried out in 2009 all the provisions of Customs Act and the Rules made thereunder are squarely applicable to Antidumping Duty and as such in case of warehoused goods duty applicable as on the date of clearance from warehouse is to be recovered in terms of Section 15 of the Customs Act, 1962 - ratio of case of COMMISSIONER OF CUSTOMS, CHENNAI VERSUS SUJA RUBBER INDUSTRIES [ 2002 (1) TMI 174 - CEGAT, CHENNAI] and INDO RAMA SYNTHETICS (I) LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI [ 2003 (2) TMI 109 - CEGAT, MUMBAI] are not applicable as the same are rendered before the amendment in sub-section (8) of Section 9A of Customs Tariff Act, 1975 in 2009. The appellant-importers have argued that as they have warehoused the goods that have been put to the disadvantage forcing the importers to have imported during intervening period i.e. after the goods have been imported and warehoused and the same are cleared from the warehouse. However, it is found that taxation does not work on the principle of the equity, if the appellant has availed the facilities under the warehousing provisions, they have to bear with the associated disadvantages, if any. It is not open for the appellant-importer to claim best of both ends - the observations of Commissioner in distinguishing between import and importation are at best superfluous and do not in any way help or harm the conclusions arrived at. Levy of Interest - HELD THAT:- When all the provisions of Customs Act are made applicable to Antidumping Duty, Section 28 is also squarely applicable. Therefore, there are no infirmity as far as demand of duty is concerned. However, we hold that interest, if any, for the delayed payment, interest is to be paid from the date of ex-bonding by the appellant-importer as payment of interest is consequential to the demand of duty in respective manner. Confiscation - imposition of redemption fine - HELD THAT:- The confiscation and imposition of redemption fine are not warranted as here was nothing that the appellant-importers have consciously suppressed or misrepresented. If ADD escaped assessment, the department is free to demand the same as per provisions of Customs Act, 1962. However, for the same reason, goods cannot be confiscated and penalty cannot be imposed. Therefore, the confiscation of the goods, imposition of redemption fine and various penalties are set aside. Appeal disposed off. 2022 (2) TMI 681 Smuggling - Baggage Rules - gold ornaments - prohibited goods or not - jurisdiction of the authority - Burden of proof - absolute confiscation - penalty - HELD THAT:- When the gold ornaments were found on his body, which were not declared and hence seized, it was the reasonable belief of the authorities that the same were smuggled, at which point of time the burden under Section 123 of the Customs Act, 1962 shifted on to the appellant. Hence, it was for him to discharge the onus. The appellant has, in his statement given under Section 108 ibid., stated that the gold ornaments in question were given to him by Imran , whose phone number was also mentioned by him, but nowhere has he tried to offer any explanation with regard to the source of acquiring the gold ornaments in question, proof for his employment in Dubai, proof of purchase like invoices of the said gold ornaments, etc., which means that the he has never discharged the onus on him in terms of Section 123 ibid. Moreover, mensrea may not be relevant in such cases since in this case, the gold was found well-concealed. It is also immaterial whether the gold in question belonged to him or he was doing it for someone else. Gold was found in his possession and hence, he is answerable, in terms of Section 123 ibid. Hence, the only recourse for the authorities was to treat the same as smuggled goods and confiscate, as provided under the relevant statutory provisions. Absolute Confiscation - HELD THAT:- In the first place appellant did not declare to the authorities and did not seek to pay applicable duty on the gold. He also did not prove the bona fide purchase of the gold in question and all throughout his claim was that one Imran had given him the gold. Under these circumstances, there are no reason to interfere with the discretion exercised by the Commissioner in not allowing the goods to be redeemed. Penalty - HELD THAT:- This is a case where a passenger was found in possession of gold to such extent that is not permissible under any law, the same was found hidden without declaring, which made the said gold in question liable for confiscation within the meaning of Section 111 ibid and therefore, the imposition of penalty under Section 112(b) of the Customs Act, 1962 is justified. But however, since the appellant has identified/treated him as a carrier for Imran and the revenue has not brought on record any updates on further investigation about said Imran, thus the penalty imposed on the appellant is very much on the higher side. Hence, that as a deterrent, penalty be restricted to ₹ 100,000/-. Appeal allowed in part. 2022 (2) TMI 680 Rejection of refund claim - finalization of provisional assessment or not - refund claim was rejected on the ground that the PD bonds executed had been finalized/cancelled - HELD THAT:- It is clear that the exporter shall pay any fine or penalty, which is imposed in adjudication proceedings, if the Fe content is more than 63.99%. There is no dispute as regards the Fe content in the export consignment, from the report of the Chemical Examiner CRCL, Cochin, which showed Fe content to be less than 63.99% and which has been accepted by both the appellant as well as the Revenue. The liability to pay fine or penalty arises only when the Fe content is more than 63.99% but when it is proved that the Fe content was much below the threshold, naturally the PD bond will have no effect and the same stood cancelled. This is just the starting point, the same requires the finalization of the provisional assessments since the actual duty liability is involved and hence adjudication has to take place to determine the same. The requirement of law is that a provisional assessment, if treated as such, shall be treated as provisional for all practical purposes. The statute mandates the passing of the final assessment since a provisional assessment will have to be taken to its logical conclusion, by passing a final assessment order after obtaining necessary information or any report or any other document that the Officer may require, as prescribed under Section 18(1) ibid.It is also for the reason that a provisional assessment is in the nature of an interim order, which is not enforceable. Otherwise, granting of time as in Section 18(4) becomes otiose. Other than this, law does not recognize any deeming fiction to treat a provisional assessment as the final one. Hence, a provisional assessment will always remain as a provisional one. There is no shortcut as a deemed finalization since the authorities can only collect the tax/duty as permissible under law. Hence, the non-finalization of the provisional assessment has lead to a situation where the duty paid by the unsuspecting assessee has been retained in full without following the process of law since it is observed that a provisional assessment will not automatically become final but the same has to be taken to its logical conclusion by passing a final order. Appeals are allowed by way of remand to the adjudicating authority with a direction to pass a speaking order finalizing the assessment. 2022 (2) TMI 679 Jurisdiction - proper officer to issue SCN - officer of DRI is proper officer to issue SCN or not - Valuation of imported goods - rejection of declared value - entire case in the show cause notice is built on the ground that the appellant had mis-declared the value of the imported plywood in the current and past consignments and the proposals for confiscation, penalty and demand of differential duty and interest emanate from them - HELD THAT:- It is unnecessary to examine the merits of the case as the show cause notice itself was issued under Section 28 by an officer of DRI who is not the proper officer to issue the show cause notice in this case as per Cannon India followed by a catena of judgments some of which were cited above. Thus, if the show cause notice is without authority, regardless of the merits of the case, the order cannot be sustained. Even if we examine the merits of the case the outcome is irrelevant whether it is found in favour of Revenue or in favour of the appellant. The impugned order still needs to be set aside. Following ratio of Canon India, it is found that the impugned order cannot be sustained - appeal allowed - decided in favor of appellant. 2022 (2) TMI 678 Seeking release of seized goods - recovery of dues - Department apprehended trouble at the end of Vora, if all 1821 TV Sets would have been handed over to the opponent herein - HELD THAT:- Let 1307 TV sets be now released subject to the conditions imposed by this Court. So far as the claim of the opponent herein over 514 TV sets is concerned, the same is kept open. It shall be open for the opponent herein to avail appropriate legal remedy before the appropriate forum in accordance with law so far as the 514 TV sets which the department is going to retain. This application is disposed off with a further direction that the department shall at the earliest release 1307 TV sets in favour of the opponent herein. Corporate Laws 2022 (2) TMI 677 Sanction of Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- All statutory requirements of the provisions of Sections 230-232 of the Act are satisfied. The present company scheme appears to be genuine and bona fide and it appears to be in the interest of its shareholders and creditors. There are no merits in the contentions of the Transferor Company that the Building is given on lease to the Transferee Company, hence depreciation is not required to be provided. The other submissions from the Petitioner are that no lease rent has been charged as it does not have any income; the ultimate object of the lease is only for the satisfaction of the banker. The company will be merged so no lease rent has been charged - the Transferor Company is hereby directed to show the Lease Rental as Income, Provide Depreciation of the Building, pay building taxes etc., dues if any, prepare cash flow statement from 2016-2017 to 2019-2020 and file revised Balance Sheet as on 31/03/2020 with the Registry and RoC within 45 days from today. The present Company Scheme Petition deserves to be allowed - Application allowed. Insolvency & Bankruptcy 2022 (2) TMI 676 Maintenance of status quo - main petition has not yet been considered - difference of opinion - HELD THAT:- The effect of the proceeding is that the main Company Petition has not been finally heard due to the facts noticed in the order of both Division Bench and Single Member. The order of this Tribunal dated 24.08.2020 is clear that the matter is to be placed before a Bench comprising of Judicial Member or Technical Member, therefore, the matter ought to have been placed before a Bench comprising of Judicial Member or Technical Member for deciding the main Company Petition. The original order dated 30.01.2020 clearly records that the Judicial Member has recused, hence that order cannot be read any difference of opinion. After refusal there are no two opinions available to find out any difference of opinion. The matter has to be listed before a Bench consisting of Judicial Member and Technical Member as has already been held by this Tribunal in its judgment dated 24.08.2020 - the Learned President of the NCLT may take appropriate Administrative decision for listing the matter before a Bench consisting of Judicial Member and Technical Member. The copy of this order be placed by the Registrar before the Hon ble President for passing appropriate order within a week from today. The Adjudicating Authority in the impugned order has noticed the aforesaid fact that matter is still awaiting order of the President, hence, during this status quo has to be maintained. There are no reason to entertain this Appeal against the said order which is order of interim nature and is subject to any further order passed by the Adjudicating Authority - Appeal is disposed off. 2022 (2) TMI 675 Liquidation of Corporate Debtor - Appellant contends that the Adjudicating Authority had failed to appreciate that the Corporate Applicant should have remained as a Going Concern under the I B Code with a view to arrive at a suitable Resolution Plan - section 33 of IBC - HELD THAT:- The Liquidation Process will be triggered as per Section 33 of the Code, if (a) either no Resolution Plan is filed within the time prescribed under Section 12 of the Code or a Resolution Plan was rejected by the Adjudicating Authority; (b) where the Resolution Professional, before affirmation of the Resolution Plan, informs the Adjudicating Authority of the decision of the Committee of Creditors to liquidate the Corporate Debtor or (c) where the Resolution Plan approved by an Adjudicating Authority is violated by the concerned Corporate Debtor. The reality of the matter is anyone, other than the Corporate Debtor, whose interest are vitally affected by such breach may apply to the Adjudicating Authority, who may then pass a liquidation order, on such application. Section 65 of the I B Code, 2016 mentions penalty for fraudulent or malicious initiations of proceedings, which can be levied by the Adjudicating Authority if a person initiates the IRP or liquidation proceedings either fraudulently or with malicious intent or for any other aim other than the resolution of insolvency or liquidation - To impose a penalty, under Section 65 of the Code, an adjudicating authority is to arrive at an ex facie opinion in the subject in issue. No such penalty under sub-section (1) or sub-section (2) of Section 65 can be saddled upon a person, by an adjudicating authority without recording an opinion for arriving at an conclusion that the prime facie case is made out to suggest that the person fraudulently or with malicious intent for the purpose, other than the resolution insolvency or liquidation or with the intent to defraud any person has filed the application. It is pertinently pointed out that Section 424 of the Companies Act, 2013 is applicable to the proceedings under the I B Code. To settle the Corporate Debtor /Company s Debts adequate opportunities were provided by the Adjudicating Authority and they proved Otiose . Undoubtedly, the 1st Respondent has right in law, qua the subject property as per the terms of mortgage, created by the Guarantor of the 3rd Respondent/Santosh Hospitals Pvt. Ltd. This Tribunal , considering the entire conspectus of the facts and circumstances of the instant case, in an encircling manner and also on going through the impugned order passed by the Adjudicating Authority (National Company Law Tribunal Division Bench, Chennai) and delivered on 17.12.2019 comes to a consequent conclusion that in view of the fact that the Committee of Creditors had already passed a Resolution for liquidation of the Corporate Debtor with 73.44% voting share on 18.10.2019 and in the teeth of the same, the order of liquidation of the Company passed by the Adjudicating Authority is free from legal infirmities. Resultantly the Appeal fails. 2022 (2) TMI 674 Approval of the Resolution Plan approved by the Committee of Creditors (CoC) - Sections 31(1) and 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case as recorded by the Adjudicating Authority, the liquidation value of the Corporate Debtor as per the valuation report is 4.25 crores and the amount proposed in the Resolution Plan is ₹ 4.50 crores which is more than the liquidation value. We address to the contention raised by the Learned Counsel for the Appellant that the valuation itself is erroneous and therefore allotting ₹ 50 lacs when the claim is ₹ 6,29,18,121/- is unjustified. The Hon ble Supreme Court in Duncan Industries Pvt Ltd. Vs. State of U.P. Ors. [ 1999 (12) TMI 857 - SUPREME COURT ] has held that the question of valuation is basically question of facts and this Court is normally reluctant to interfere with the finding on such a question of fact if it is based on relevant material on record . Be that as it may, the record shows that the average of two closest estimates given by the valuers was taken into consideration as a fair value and the liquidation value. It is an admitted fact that the Plan has successfully been implemented and all payments due under the said Resolution Plan have been paid. It is a well settled preposition of law by the Hon ble Supreme Court in a catena of Judgments that the commercial wisdom of CoC is non-justiciable except on the grounds of Section 30(2). In the instant case, we do not find any material on record to substantiate that the approval of the Resolution Plan is in contravention of any law for the time being in force - It is well settled that Insolvency and Bankruptcy Code overrides other law and under Section 31 of the Code, the Resolution Plan approved by the CoC and meeting the requirements under Section 30(2) has to be approved by the Adjudicating Authority. Commercial Wisdom of the CoC with respect to viability and financial decision taken while evaluating the Resolution Plan has to prevail, unless the Plan approved by the CoC is in conflict with any provision of the law and the distribution mechanisation suppressed the interest of the stakeholders besides taking care of the maximisation of the value of the assets of the corporate debtor, judicial intervention would not be warranted. Appeal dismissed. 2022 (2) TMI 673 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- As per the Insolvency and Bankruptcy Code, 2016 the definition of Financial Creditor under Section 5(7) means any person to whom a Financial Debt is owed and includes a person to whom such debt has been legally assigned or transferred to; thereby the applicant herein is a Financial Creditor. It is manifest and seen from the Loan Agreement dated 13.06.2016 annexed along with the application in page number 18 that money had been lent by the Financial Creditor herein in accordance with the loan agreement dated 13.06.2016 which would have the commercial effect of borrowing on the part of the Corporate Debtor. Thereby, on verification of the documents annexed it is clear that the amount disbursed is a debt on the part of the Corporate Debtor. Thus, it is evident that there exists a 'debt' between the parties and the said debt qualifies to be a 'financial debt' as defined under 5(8)(c) of IBC, 2016 and also the Corporate Debtor has defaulted in repayment of the said 'financial debt' which is due and payable to the Financial Creditor - in view of absence of any objections by the Corporate Debtor this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. Taking into consideration the facts and circumstances of the case as well as the position of Law, this Application as filed by the Applicant, Financial Creditor is required to be Admitted under Section 7(5) of the IBC, 2016 - Application admitted - moratorium declared. 2022 (2) TMI 672 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Threshold amount of debt - HELD THAT:- As can be seen from Notification No. S.O. 1205 (E) dated 24.3.2020, the threshold limit of debt has been raised from ₹ 1 lakh to ₹ 1 crore. Accordingly, the application under section 7 or section 9 will be admissible only if the debt in default is more than the threshold amount of ₹ 1 crore - Since the present application under section 9 was filed on 15.09.2021, which is after 24.03.2020, therefore the threshold limit of ₹ 1 crore of debt will be applicable in the present case. This application stands dismissed. 2022 (2) TMI 671 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is an undisputed fact that the goods were supplied to the Corporate Debtor and invoices were raised against the Corporate Debtor. It is also noted that the Corporate Debtor has confirmed the balance amount of ₹ 50,00,000/-. It is also noted that the amount of ₹ 3,50,000/- has been paid by the Corporate Debtor on 28.05.2019. Though, the Corporate Debtor has contended that no such cogent evidence on record has been produced by the Operational Creditor before this Authority in support of his claim but the Corporate Debtor has not denied that such amount is not due towards the Corporate Debtor. The amount of ₹ 50,00,000/- was acknowledged on 01.04.2014 by the Corporate Debtor. Thereafter, no such acknowledgment or payment or part payment in respect to the default amount was made by the Corporate Debtor till 28.05.2019, which is beyond three years from the date of acknowledgement of debt. The contention of the Operational Creditor that the amount of ₹ 3,50,000/- was paid on 28.05.2019 by the Corporate Debtor, which extends the period of limitation for filing and adjudication in the present petition does not sustain. The Limitation Act, 1963 is applicable in the petition filed under Section 7 or 9 under IB Code, 2016, and that the petition should be under the period of three years from the date of default. Limitation is extends under Section 18 and Section 19 of the Limitation Act, 1963 only in case of acknowledgment or payment or part payment made within three years from the date of default. The payment of ₹ 3,50,0000- made by the Corporate Debtor on 28.05.2019 to the Operational Creditor is beyond the prescribed period of limitation. Section 19 of Limitation Act, 1963 states that the period of limitation shall be computed from the date of payment in case the payment of debt or interest is made before the expiry of the prescribed period. Sub-section (j) of Section 2 of the Limitation Act, 1963 states that the period of limitation means period of limitation prescribe for any suit or appeal or application by the schedule and computed as per the provision of the Act. The date of default was on the date on which the invoices were raised wherein the last date of invoice is 24.04.2012. The acknowledgment was made on 01.04.2014 which extended the Limitation till 01.04.2017. Thereafter the payment of ₹ 3,50,000/- was made on 28.05.2019, which is beyond the period of three years, hence, Section 18 and 19 are not applicable in the present case - for filing the application under Section 9 of IB Code, 2016 the delivery of demand notice is mandatory. The proof of delivery of the said notice is not on record. The present application is not within the period of Limitation as per the applicable provision of the Limitation Act, 1963. The present petition is rejected as it is not maintainable being barred by limitation and also for want of evidence of delivery of demand notice to the Corporate Debtor which is mandate of law to maintain application under Section 9 of the IB Code - petition dismissed. 2022 (2) TMI 670 Seeking to remove and replace the Respondent 2 as resolution Professional or Respondent 1 immediately on account of suppression of facts about the contempt proceedings - seeking to report to the IBBI w.r.t. the conduct of Resolution Professional - stay on frivolous arbitration proceedings at Madras High Court filed by the Respondents - imposition of cost on the Resolution Professional for filing frivolous against the applicant - HELD THAT:- At the first instance, the Applicant herein is not entitled to file an Application seeking replacement of RP since such a provision for replacement of RP has been envisaged only under Section 22 and 27 of IBC, 2016. Secondly, the MA/96/2019 which is relied on by the Applicant in the present case came to be dismissed by this Tribunal vide an order dated 11.01.2022 and also the order dated 20.02.2019 passed by this Tribunal was also stayed by the Hon'ble High Court of Madras. Further, it has been time and again held by the Hon'ble Appellate Tribunal that this Adjudicating Authority cannot enforce disciplinary proceedings against the IRP/RP and only IBBI would be the competent authority to initiate disciplinary proceedings against the IRP/RP. Further, Section 217 of the IBC empowers a person aggrieved by the functioning of an RP to file a complaint to the IBBI. If the IBBI believes on the receipt of the complaint that any RP has contravened the provisions of IBC, or the rules, regulations or directions issued by the IBBI, it can, under Section 218 of the IBC, direct an inspection or investigation. Under Section 220 of the IBC, IBBI can constitute a disciplinary committee to consider the report submitted by the investigating authority. If the disciplinary committee is satisfied that sufficient cause exists, it can impose a penalty. The present Application filed by the Applicant for change of RP is devoid of merits and not sustainable before this Tribunal - Application dismissed. 2022 (2) TMI 669 Seeking extension of CIRP for a further period of 60 days beyond 270 days - two resolution plans submitted by Resolution Applicants were rejected by Committee of Creditors(CoC) and two fresh resolution plans are pending consideration by the CoC - Whether extension of time beyond 270 days by way of second extension can be granted, when there is no concrete resolution plan before CoC for its consideration? - HELD THAT:- This application is filed for extension of period for 60 days for completion of CIRP, anticipating receipt of some plans for the resolution of the Corporate Debtor. The record before us reveals that the RP had taken one-time extension earlier. However, till date, no plan has been accepted for resolution and the RP wants to start the process afresh after expiry of 270 days - Section 12 of the Code mandates that the CIRP of a Corporate Debtor must conclude within 330 days from the insolvency commencement date. This period of 330 days includes: (a) normal CIRP period of 180 days, (b) one-time extension, if any, up to 90 days of such CIRP period granted by the Adjudicating Authority, and (c) the time taken in legal proceedings in relation to the CIRP of the CD. In the instant case, this Tribunal already granted one extension of 90 days besides excluding 45 days in the wake of covid induced lockdown. The resolution professional in this case, failed in placing any other concrete plan for resolution of the Corporate Debtor within the timeline of 270 days, as such, it is difficult for the Adjudicating Authority to accept the request of the RP for an extension of 60 days to start the entire process afresh, on the ground that the RP received an enquiry from one Mrs. Butta Renuka, Promoter of MSME enterprise - there are no purpose in extending the time for another 60 days. It is needless to say that this order does not prevent the Liquidator to sell the Corporate Debtor as a going concern within 90 days during liquidation, as enshrined in the IBC Rules, 2016. Taking into consideration the fact that the IBC timelines are to be strictly followed, especially during Corporate Insolvency Resolution Process (CIRP), it is firmly concluded that this is not a fit case to grant time. Application dismissed. Service Tax 2022 (2) TMI 668 Refund of service tax - duty free shops in airport - taxable territory in transactions involving goods sold to outbound passengers - principles of unjust enrichment - time limitation - HELD THAT:- The appellant, admittedly, was not fastened with the statutory responsibility to deposit service tax in the Consolidated Fund of India but was liable to discharge the tax component of the payments, contractually claimed by the airport concession-holder, in periodical bills. However, under section 11B of Central Excise Act, 1944 as applied to Finance Act, 1994, appellant, having thus been saddled with the burden, is entitled to seek extraction of tax collected from the Consolidated Fund of India on establishing the absence of legislative intent. As the statutory enactment stipulates time-period beyond relevant date for preferring such claims, that constraint on the assessee liable to tax, which, by default, is date of payment of tax, is similarly applicable to bearer of tax burden. The appellant filed the claims within one year from the date on which the Tribunal interpreted the law on levy of service tax as not intended to cover the business of the appellant - there was, thus, no legal ground to reject the claim as barred by limitation of time. In the meanwhile, the leviability of the impugned activity to tax was sought to be disputed through the refund route; the appellant, not being the assessee, was excluded from appellate remedy under Finance Act, 1994 against the charging of tax and claim for refund was the only alternative under the statute. It is not controverted that appellant sells goods and is, thereby, beyond the pale of tax on service on such sales. Without the duty free specialist, the airport concession-holder would have to undertake this necessary, and cardinal, facilitation of international airports with such activity too being beyond the pale of tax on service. The goods stocked in these duty free outlets are not liable to duties at the transaction stage and it has been consistently held that exemption from duty liability in the hands of the duty free outlet flows from taxable event occurring later on the arrival side and having occurred before access is afforded to the departure side - Undoubtedly, stocking and display is impossible without space and the sole issue that remains in the dispute is the finding of the lower authorities that space has been provided to the appellant and that the payment flow is rent which is taxable within the meaning airport service or service , as the case may be, for the period in dispute. Duty free shops in airports are a global market competing among themselves in a tax exempt environment and the compulsions of this business segment, wherein the consumers are not only knowledgeable but also sensitive about pricing, set it apart from a normal trading model which permits the underlying presumption of cost plus implicit in the legislatively nuanced unjust enrichment relied upon by lower authorities. It is also on record that the certificate of chartered accountant, an option that has been sanctified by judicial endorsement, was furnished with the claims for refund and is reasonable explanation for such impediment not having been alleged in the show cause notice. There is no finding on insufficiency or non- acceptability of this evidence of having borne the incidence of tax - The finding of applicability of unjust enrichment is, thus, not only beyond the sanction of law but is also entirely superfluous as the notice issuing authority, cognizant of deficiencies factual and cognitional in the claim, had already mapped the boundaries within which claim would be adjudicated. Submissions on the interpretation of principle of restitution by the original authority that did not render a finding on bar of unjust enrichment is too remote a crutch to substitute for the statutory mandate of section 128A(3) of Customs Act, 1962 which the first appellate, admittedly, did not resort to. The claims for refund were filed within the period permitted under section 11B of Central Excise Act, 1944, relate to levy which the law did not authorize for collection and which had been borne by the appellants - Appeal allowed - decided in favor of appellant. 2022 (2) TMI 667 Classification of services - Cargo Handling Service or not - classifiable under Cargo Handling Services under Section 65(105)(zr) read with Section 65(23) of the Finance Act, 1994 prior to 01.07.2012 and after 01.07.2012 under Handling of Cargo or under Goods Transport Agency under Section 65(105) (zzp) read with Section 65(50b) of the Finance Act, 1994 prior to 01.07.2012 and after 01.07.2012 under Section 65B(26) of the Finance Act, 1994? - inclusion of cost of road transportation as well as sea transportation shown separately in the invoices in the value of Cargo Handling Services - arrangement of services of Coastal Sea Transportation of Containerized Cargo and/or Handling of Cargo at load port and discharge port on payment of such amount - reimbursement of expenses - inclusion of cost or expenditure viz. payment towards transportation and handling charges incurred (after 2012-13 to 2014-15) in assessable value - invocation of extended period of limitation. HELD THAT:- On plain reading of definition of Cargo Handling Service, it is clear that to classify the service under Cargo Handling Service there must be provision of services of loading, unloading and it includes handling of cargo for freight in special containers or for non containerized freight, for all mode of transport. It means service of loading, unloading and handling of cargo whether in container or otherwise may merit classification under the said category irrespective of fact of mode of transportation but by any means transportation of goods in container whether by road and/or sea cannot be classified under the Cargo Handling Service. It is a fact on record that respondent had provided services of transportation of goods by road in a container in the capacity of Goods Transport Agency and arrange services of handling of cargo at load port and dispatch port as well as sea transportation on reimbursement of amount on actual basis from recipient of services. From Board clarification No.B.11/1/2002-TRU dated 01.08.2002, it is clear that services under the category of Cargo Handling Services are those services provided by the Cargo Handling Agencies who undertake the packing, unpacking, loading and unloading of the goods meant to be transported by any means of transportation. In the instant case, it transpires from the invoice that respondent has not provided any service in the form of handling of cargo to transport goods by road and also outsourced the services of transportation of goods by sea in a vessel. In the present case, the Goods Transport Agency and/or services in relation to transport of coastal goods are more specific service therefore, import classifiable under clause (zzp) of Section 65(105)- Goods Transport Agency read with Section 65(50b) of the Finance Act, 1994 and clause (zzzzl) (zr) of Section 65 (105) Transportation of Coastal Cargo and Cargo Handling Service is general one. Therefore, services provided by respondent are rightly merit classified under GTA - It is not the case of the department that services provided by respondent cannot be classified at specific services as provided under Section 65A(2)(a) therefore, different service provided by the respondent cannot be classified as Cargo Handling Service . The respondent has provided the service of Goods Transport Agency Service during the period under dispute and also issued consignment note and not provided any sort of service as alleged of Cargo Handling Service , etc. The service is not chargeable to service tax under Cargo Handling Service . Without prejudice to the above, we also find that the show cause notice as well as impugned appeal admits that the respondent had provided services of sea transportation as well as handling of cargo at load port and dispatch port in the capacity of pure agent but had doubted about fulfillments of conditions as stipulated in Rule 5(2) of Service Tax (Determination of Value) Rules, 2006 - Only because of same containers were transported by sea in the vessel by other service provider and payment of sea transportation received by them against the invoice raised by them for reimbursement of actual basis, it cannot be said that it had not provided service of transport of goods by road. It is also not disputed that the respondent were registered as service provider under the category of Goods Transport Agency and paying service tax wherever payable by them under the Finance Act, 1994. In the registration, there is no mention of either cargo handling service or they had not provided any service of cargo handling nor transportation of goods by sea, etc. As per the undisputed fact, the service of handling containers at load ports, transportation of containers by vessel from one port of India to another port of India and handling of containers at discharge ports was done by shipping line only. The payment of sea freight handling charges as discussed in paras (Supra) on behalf of the clients to the shipping line and reimbursement on actual basis is not under dispute - For the purpose of levy of service tax there must be a provision of service for consideration, once there is no provision of service and receipt of consideration there cannot be any levy of service tax for making a payment on behalf of the client and raising invoices. Respondent has simply arranged payment on behalf of service recipient i.e. Consignor or consignee to the shipping line and taken reimbursement on actual basis from the receiver of service hence, the same cannot be considered as provision of service on consideration basis. Time Limitation - HELD THAT:- There is also the issue that whether the transportation of goods involved in respect of agricultural produce and whether the same is exempted, levy of Service Tax. The respondent also made a submission on the issue of limitation submitting that there is no suppression of fact hence, the demand beyond normal period is otherwise time barred. Since we are deciding the matter on merit, we are not going into the other issue including limitation. Appeal dismissed - decided against Revenue. 2022 (2) TMI 666 Levy of service tax - Business Auxiliary Service - Business Support Service - Cargo Handling Service - Transport of Goods by Road Service - reimbursable expenses - HELD THAT:- The impugned order cannot be sustained. Further in absence of any breakup of the differential income shown in the book of accounts, we are also not in position to determine whether any portion/ part of the differential income would be attributable to any service provided under the taxable category being provided by the appellant. However it is observed that the those portion of incomes which are held to be non taxable/ exempted and the reimbursable expenses cannot be subjected to any service tax, in the manner as has been proposed in the impugned order to 01.07.2012 when the service tax was levied by defining the category of taxable services. The matter needs to be remanded back to the original authority, for redetermination of amount that can be subjected to service tax on the basis of the information that needs to be provided by the appellant in respect of the breakup of differential income between their financial records and ST-3 returns - Appeal allowed by way of remand. Central Excise 2022 (2) TMI 665 Recovery of tax - inputs used in the manufacture of Sugar Syrup - as the finished goods are exempt from payment of duty, Revenue was of the view that the appellants were required to discharge the duty as the benefit of exemption Notification No. 67/95-CE dated 16.03.1995 was not admissible to them - HELD THAT:- The issue decided in the case of VENUGOPAL FOODS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE II [ 2018 (12) TMI 1172 - CESTAT MUMBAI] where it was held that In the absence of any test report to contradict the fructose content in the sugar syrup produced by the appellant, it is not sufficient reasons found to consider the impugned goods to be excisable within the meaning of section 2(d) of Central Excise Act, 1944. Since the issue is squarely covered by the above decision, after consideration of the arguments as advanced in the impugned order and by the learned AR during the course of argument, there are no reason to sustain the impugned order - appeal allowed - decided in favor of appellant. 2022 (2) TMI 664 Waiver of pre-deposit - violation of principles of natural justice - Opportunity not given for cross examination - HELD THAT:- Under the same set of facts, in a common investigation along with the present case, a case of M/S ATITHI GOKUL AUTOMOBILE WORKS VERSUS CCE AHMEDABAD-II [ 2014 (6) TMI 486 - CESTAT AHMEDABAD] where it was held that there is a violation of principles of natural justice due to there being no findings on either granting or rejection of the plea for cross-examination of the persons. Accordingly, without expressing any opinion on the merits of the case, keeping all the issues open, we set aside the impugned order and remand the matter back to the adjudicating authority to reconsider the issue afresh. It is clear that the Adjudicating Authority has not followed the principles of natural justice in as much as the cross-examination was not allowed - matter remanded to the Adjudicating Authority for passing afresh order - appeal allowed by way of remand. 2022 (2) TMI 663 Maintainability of appeal - non-prosecution of the case - HELD THAT:- As the appellant has not been appearing for the last several dates, in spite of repeated notices by this Tribunal, this appeal is dismissed for non-prosecution. Thus, the appeal is dismissed.
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