Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 2, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
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Bill:
RATES OF INCOME-TAX for the PY 2022-23 i.e. AY 2023-24 [As per previous year Budget and comparison with Budget 2023 proposals]
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Bill:
TDS - Rates for deduction of income-tax at source during the financial year (FY) 2023- 24 from certain incomes other than “Salaries”.
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Bill:
Rate of TDS on Salaries and Computation of Income for Advance Tax for FY 2023-24 / Assessment Year 2024-25
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Bill:
Rate of Income Tax - Individual, HUF, association of persons, body of individuals, artificial juridical person for the FY 2023-24 i.e. AY 2024-25
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Bill:
Co-operative Societies - Rate of Income Tax
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Bill:
Firms – Rate of Income Tax on Firms / Partnership Firm
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Bill:
Local authorities - Rate of Income Tax
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Bill:
Companies – Rate of Income Tax / Corporate Tax
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Bill:
Income Tax - Rebate under section 87A
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Bill:
AMENDMENTS IN THE CGST ACT, 2017 and IGST Act, 2017
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Bill:
AMENDMENT TO SEVENTH SCHEDULE TO THE FINANCE ACT, 2001
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Bill:
AMENDMENTS TO THE CUSTOMS ACT, 1962
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Bill:
Decriminalisation of section 276A of the Act
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Bill:
Extension of exemption to Specified Undertaking of Unit Trust of India (SUUTI) and providing for alternative mechanism for vacation of office of the Administrator.
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Bill:
Omission of certain redundant provisions of the Act
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Bill:
Set off and withholding of refunds in certain cases
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Bill:
Removal of certain funds from section 80G
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Bill:
Denial of exemption where return of income is not furnished within time
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Bill:
Alignment of the time limit for furnishing the form for accumulation of income and tax audit report
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Bill:
Trusts or institutions not filing the application in certain cases
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Bill:
Specified violations under section 12AB and fifteenth proviso to clause (23C) of section 10
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Bill:
Combining provisional and regular registration in some cases
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Bill:
Omission of redundant provisions related to roll back of exemption
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Bill:
Treatment of donation to other trusts:
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Bill:
Rationalisation of the provisions of Charitable Trust and Institutions
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Bill:
Providing clarity on benefits and perquisites in cash
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Bill:
Non-Banking Financial Company (NBFC) categorization
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Bill:
Specifying time limit for bringing consideration against export proceeds into India
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Bill:
Rationalization of provisions related to the valuation of residential accommodation provided to employees
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Bill:
Bringing the non-resident investors within the ambit of section 56(2)(viib) to eliminate the possibility of tax avoidance
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Bill:
Clarification regarding advance tax while filing Updated Return
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Bill:
Relief from special provision for higher rate of TDS/TCS for non-filers of income-tax returns
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Bill:
Facilitating TDS credit for income already disclosed in the return of income of past year
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Bill:
TDS on payment of accumulated balance due to an employee
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Bill:
Tax treaty relief at the time of TDS under section 196A of the Act
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Bill:
Excluding non-banking financial companies (NBFC) from restriction on interest deductibility
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Bill:
Amendments in consequence to new provisions of TDS
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Bill:
Penalty for furnishing inaccurate statement of financial transaction or reportable account
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Bill:
Provisions relating to reassessment proceedings
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Bill:
Modification of directions related to faceless schemes and e-proceedings
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Bill:
Alignment of timeline provisions under section 153 of the Act
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Bill:
Rationalization of the provisions of the Prohibition of Benami Property Transactions Act, 1988 (the PBPT Act)
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Bill:
Provisions related to business reorganisation
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Bill:
Assistance to authorised officer during search and seizure
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Bill:
Rationalisation of Appeals to the Appellate Tribunal
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Bill:
Reducing the time provided for furnishing TP report
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Bill:
Introduction of the authority of Joint Commissioner (Appeals)
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Bill:
Extension of time for disposing pending rectification applications by Interim Board for Settlement
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Bill:
Defining the cost of acquisition in case of certain assets for computing capital gains
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Bill:
Prevention of double deduction claimed on interest on borrowed capital for acquiring, renewing or reconstructing a property
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Bill:
Alignment of provisions of section 45(5A) with the TDS provisions of section 194-IC
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Bill:
Rationalisation of exempt income under life insurance policies
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Bill:
Preventing permanent deferral of taxes through undervaluation of inventory
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Bill:
Special provision for taxation of capital gains in case of Market Linked Debentures
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Bill:
Limiting the roll over benefit claimed under section 54 and section 54F
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Bill:
Increasing rate of TCS of certain remittances
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Bill:
TDS and taxability on net winnings from online games
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Bill:
Preventing misuse of presumptive schemes under section 44BB and section 44BBB
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Bill:
Removal of exemption from TDS on payment of interest on listed debentures to a resident
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Bill:
Tax avoidance through distribution by business trusts to its unit holders
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Bill:
Removal of exemption of news agency under clause (22B) of section 10
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Bill:
Extending deeming provision under section 9 to gift to not-ordinarily resident
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Bill:
Extending the scope for deduction of tax at source to lower or nil rate
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Bill:
Increasing threshold limits for presumptive taxation schemes
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Bill:
Ease in claiming deduction on amortization of preliminary expenditure
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Bill:
15% concessional tax to promote new manufacturing co-operative society
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Bill:
Facilitating certain strategic disinvestment
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Bill:
Exemption to development authorities etc.
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Bill:
Tax Incentives to International Financial Services Centre
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Bill:
Conversion of Gold to Electronic Gold Receipt and vice versa
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Bill:
Extension of date of incorporation for eligible start-up for exemption
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Bill:
Relief to start-ups in carrying forward and setting off of losses
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Bill:
Penalty for cash loan/ transactions against primary co-operatives
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Bill:
Increasing threshold limit for co-operatives to withdraw cash without TDS
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Bill:
Relief to sugar co-operatives from past demand
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Bill:
Agnipath Scheme, 2022
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Bill:
Promoting timely payments to Micro and Small Enterprises
Articles
News
Notifications
Central Excise
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05/2023 - dated
1-2-2023
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CE
Excise Exemption to Compressed Natural Gas (‘CNG’) when blended with Biogas or Compressed Biogas (‘CBG’)
Customs
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12/2023 - dated
1-2-2023
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Cus
Providing specific end date to exemption notifications - Seeks to amend 32 notifications in order to provide a specific end date for these notifications.
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11/2023 - dated
1-2-2023
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Cus
Extension of validity of 3 Custom tariff notifications up to the 31st March, 2028 - Seeks to amend the notification Nos. 90/2009-Customs, dated the 7th September, 2009, 33/2017-Customs, dated the 30th June, 2017, and 41/2017-Customs, dated the 30th June, 2017 to extend the
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10/2023 - dated
1-2-2023
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Cus
Exemption to Specified sports goods imported by National Sports Federation or by a Sports person of outstanding eminence for training - extend the exemption benefit to Warm blood horse for equestrian sports and extend the validity of said notification up to the 31st March, 2028 - Seeks to further amend notification No. 146/94-Customs, dated the 13th July, 1994.
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09/2023 - dated
1-2-2023
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Cus
Exemption to gold, silver and platinum imported under specified schemes - Replenishment under the Scheme for ‘Export through Exhibitions/Export Promotion Tours/Export of Branded Jewellery’ - Amount of duty for gold and silver both changed to 9.35% - Seeks to further amend notification No. 57/2000-Customs.
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08/2023 - dated
1-2-2023
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Cus
Effect to the first tranche of India UAE CEPA - India-UAE Comprehensive Economic Partnership Agreement - Seeks to further amend notification No. 22/2022-Customs.
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07/2023 - dated
1-2-2023
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Cus
Amendment in Project Imports Regulations, 1986 - To be called the Project Imports (Amendment) Regulations, 2023 as come into force on the 2nd day of February, 2023 - Seeks to further amend notification No. 230/86-Customs related to Project Import Regulations.
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06/2023 - dated
1-2-2023
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Cus
Customs exemption related to specified goods when imported into India for use in the manufacture of the finished goods and goods used by the IT/ Electronics industry - Seeks to further amend notification Nos. 25/1999-Customs, 25/2002-Customs and 57/2017.
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05/2023 - dated
1-2-2023
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Cus
Exempttion to Gold imports from Social Welfare Surcharge and Social Welfare Surcharge leviable on Agriculture Infrastructure and Development Cess on Gold and Silver - Seeks to rescind notification Nos. 13/2021-Customs and 34/2022-Customs.
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04/2023 - dated
1-2-2023
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Cus
Revise/provide Social Welfare Surcharge (SWS) exemption(s) on specified goods - Seeks to further amend notification No. 11/2018-Customs, dated 2nd February, 2018.
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03/2023 - dated
1-2-2023
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Cus
Effective rate of Agriculture Infrastructure and Development Cess for specified goods - levy/exempt AIDC on certain items - Seeks to further amend notification No. 11/2021-Customs dated 1st February, 2021.
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02/2023 - dated
1-2-2023
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Cus
Effective rates of customs duty and IGST for goods imported into India - Revise/provide exemption(s) on the specified goods - Seeks to further amend notification No. 50/2017-Customs, dated the 30th June, 2017.
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07/2023 - dated
31-1-2023
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of GST registration of petitioner - failure to file GST return within the stipulated period of time - the petitioner should be given an opportunity of hearing. But in order to avail of such opportunity, the petitioner shall first make payment of up to date GST with statutory interest and penalty within three weeks - HC
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Refund claim - person ultimately bearing the burden of tax - rejection only for the reason that the tax has been paid/deposited into the Government exchequer by M/s. Eveready and not the appellants - The order passed in the writ petition is set aside and the writ petition is allowed - HC
Income Tax
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Reopening of assessment u/s 147 - Unexplained gain on sale of shares of company abroad - the respondent-revenue cannot go behind the TRC issued by the other tax jurisdiction as the same is sufficient evidence to claim treaty eligibility, residence status, legal ownership and accordingly there is no capital gain earned by the petitioner liable to tax in India - HC
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Revision u/s 264 - It is settled law that an assessee is liable to pay income tax only on the income that is chargeable under the Act. Merely because an assessee has offered a receipt of income in his return does not necessarily make him liable to pay tax on the said receipt, if otherwise the said income is not chargeable to tax. - Amount cannot be taxed twice - HC
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Revision u/s 263 by CIT - Depreciation on road and toll bridge constructed by the assessee - Tribunal has erred in concluding that the Assessing Officer has taken one of the plausible view before for the benefit of depreciation at 25% on “Toll Road” as “Plant”. - In our view, such view was not plausible as “ Toll Roads’ under the concessionaire agreement neither conferred upon the said assessee any “Tangible Assets” nor “Intangible Assets” - Decided in favor of revenue. - HC
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Reopening of assessment against trust - The aspect that the reassessment is bad as having been made on change of opinion, may require investigation into facts in the present case. Therefore, it is only appropriate for the appellant to participate in the proceedings before the statutory authorities. Similarly, whether there is escapement of turnover is again a question of fact which ought to be decided by the statutory authorities on appreciation of evidence. - HC
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TDS u/s 195 - As decided on payment made by GIPL to M/s. Google Ireland Ltd. for purchase of online advertisement phase for onward resale to India advertisers, in terms of distribution agreement dated 12.12.2005, were not in nature of royalty as defined u/s 9(1)(vi) of the Act read with Article 12(3)(a) of TTA between India and Ireland and observed that GIPL was not an assessee in default u/s 201 of the Act, for not deducting the tax at source - AT
Indian Laws
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Various AMENDMENTS IN THE CGST ACT, 2017 and IGST Act, 2017, Explained
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Revised Rate of National Calamity Contingent Duty (NCCD) on certain goods - AMENDMENT TO SEVENTH SCHEDULE TO THE FINANCE ACT, 2001 - Notes
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AMENDMENTS TO THE CUSTOMS ACT, 1962 and Rates of Customs Duties - Amendments Explained and Simplified
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Increasing threshold limit for co-operatives to withdraw cash without TDS - No other change in sec. 194N, only new proviso inserted, If cash recipient is a co-operative society then threshold limit will increased from Rs. One crore to Rs. Three crore.
Service Tax
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Refund claim - Principles of unjust enrichment - only by way of bit in profit and loss account, it does not amount to passing of the burden to a third person or the customer indirectly. An assessee is always at liberty to right back the expenditure debited in profit and loss account by way of adjustment in their capital account. - AT
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Refund of Service Tax paid - unjust enrichment - any amount deposited during the pendency of adjudication or investigation is in the nature of a deposit and, therefore, cannot be considered to be towards payment of service tax or excise duty. The principles of unjust enrichment, therefore, would not apply if a refund is claimed for refund of this amount. - AT
Central Excise
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Valuation of excisable goods - consideration received by the appellant from Honda India under the guise of compensation was liable to be included in the transaction value of goods or not - Appellant failed to show that the amount received towards compensation for the cancellation of the agreement to supply the spare parts which were ultimately sold as scrap - The extended period of limitation contemplated was correctly invoked in the facts and circumstances of the case. - AT
VAT
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Taxability of Selling of food items in the school / hostel - section 2(10) (d) of the VAT Act specifically refers to only a restaurant or eating house or a hotel but the word ‘hostel’ is not specifically included therein. Therefore, the inclusion of the petitioner’s institution in the category of dealer for the purpose of AP VAT Act, 2005 and assessing the same to tax U/s 21 of AP VAT Act is not correct. - HC
Case Laws:
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GST
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2023 (2) TMI 39
Cancellation of GST registration of petitioner - failure to file GST return within the stipulated period of time - It is contended on behalf of the petitioner that due to his physical illness and mental unstability as well as loss in business, he could not file return within the stipulated period of time - HELD THAT:- On factual score it is found that the petitioner was not given opportunity of hearing. The petitioner was under tremendous mental stress at that point of time for which he tried to commit suicide. The extent of his mental stress and physical illness is amply demonstrated in the documents filed by the petitioner with the instant writ petition. This Court holds that the petitioner should be given an opportunity of hearing. But in order to avail of such opportunity, the petitioner shall first make payment of up to date GST with statutory interest and penalty within three weeks from the date - the competent authority, i.e. respondent Nos.1 and 2 shall revive GST number of the petitioner within one week thereafter. Application disposed off.
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2023 (2) TMI 38
Cancellation of registration of petitioner - petitioner has assailed the impugned SCN on the ground that it does not disclose any reason or ground for proposing cancellation of its registration and therefore none that could be addressed by the petitioner - HELD THAT:- The submissions that the concerned officer had no option but to choose from a drop down menu, is clearly not the answer to the challenge laid by the petitioner to the impugned SCN. In the event, the GST portal cannot be adopted to include further explanation as to the reasons for which the proposed action is contemplated, show cause notices such as the impugned SCN would be rendered meaningless and would fail to serve the purpose of issuing a show cause notice, at all. If the concerned authorities find that they are unable to communicate the allegations in respect of which the response is elicited by way of a show cause notice, by selecting the options as available on the electronic system; the concerned authorities may consider issuing a physical show cause notice. The show cause notice must clearly state the allegations that the concerned noticee has to meet. This being the essence of a show cause notice, any notice that does not qualify this criterion, cannot be considered as a show cause notice. The impugned SCN dated 06.10.2022 and, consequentially, the impugned order dated 21.10.2022 are set aside - Petition allowed.
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2023 (2) TMI 37
Refund claim - person ultimately bearing the burden of tax - rejection only for the reason that the tax has been paid/deposited into the Government exchequer by M/s. Eveready and not the appellants and therefore, they are not entitled to maintain an application for grant of relief - Jurisdiction for the appellate authority to frame an issue suo moto - section 54 of the CGST Act and section 107(2) of the CGST Act - HELD THAT:- The appellate authority has stated that the appellants are entitled to maintain the claim for refund. However, the second issue, which was suo motu framed by the appellate authority has been decided against the appellants. Firstly, the appellate authority has ignored the fundamental legal principles while deciding the appellants appeal. The appeal is against an order of rejection for the refund claim only on the ground that the appellants are not the persons, who had remitted the tax. In the said appeal, the appellants cannot be put in a disadvantageous position and cannot be worst off in their own appeal. Jurisdiction for the appellate authority to frame an issue suo moto - HELD THAT:- Assuming the statute provides for a cross appeal to be filed and the State had filed a cross appeal, then the position would have been different. However, CGST Act does not provide for any such provision for filing a cross appeal by the revenue in a statutory appeal filed before the appellate authority under section 107 of the CGST Act. Thus, the issue has to be necessarily set aside. Whether the appellate authority is entitled to go into the other issues in terms of section 107(2) of the CGST Act? - HELD THAT:- If the power under the said provision had to be invoked, then the appellants should have been put on notice. It is not the case of respondents/revenue that the appellate authority thought fit to take up the other issues, that too in an appeal filed by the appellants against an order of rejection of the refund claim. That apart, there is no direction issued to any authority to file an application for considering the other issues. Therefore, assuming appellate authority has exercised its power under section 107(2) of the CGST Act, such exercise is not in accordance with the said statutory provision and being in violation of the said provision as well as violation of the principles of natural justice. Petition allowed.
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2023 (2) TMI 36
Denial of input tax credit - denial on the ground that the registration of the other end dealer was cancelled - HELD THAT:- Considering the fact that the input tax credit has been denied to the appellant on the ground that the registration of the other end dealer was cancelled and according to the appellant, there were sufficient documents to show that the transactions done by them are genuine, it is opined that one more opportunity should be granted by the adjudicating authority and decision should be taken on merits after considering the documents that may be placed by the appellant before the authority. Matter remanded back to the authority for fresh consideration.
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Income Tax
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2023 (2) TMI 35
Reopening of assessment u/s 147 - Unexplained gain on sale of shares of company abroad - assessee claimed gains earned by it on sale of Agile shares were not taxable in India by virtue of Article 13(4) the Double Tax Avoidance Agreement entered into and subsisting between India and Singapore ( India-Singapore DTAA ) based on the Tax Residency Certificate ( TRC ) - Relevance of information from a third party - borrowed satisfaction - AO got information about the petitioner s income from the TDS officer of Igarashi, as all the details were available in the petitioner s return which had been processed under Section 143(1) - whether the respondent-revenue can go behind the tax residency certificate issued by the other tax jurisdiction and issue re-assessment notice under Section 147 to determine issues of residence status, treaty eligibility and legal ownership? - HELD THAT:- Undoubtedly, information from a third party can form the basis for an examination/investigation by the Assessing Officer but the decision to reopen the assessment has to be of the Assessing Officer and not of the third party. In the present case, this Court finds that the respondent has merely done a cut and paste job as it has issued the notice under Section 148 of the Act based on information forwarded by the TDS Officer of Igarashi without any independent application of mind or verification or investigation. Consequently, the impugned notice has been issued on borrowed satisfaction - which is impermissible in law. This Court is of the view that the respondent has incorrectly referred to Explanation 2(b) to Section 147 of the Act as the same applies only if the assessee understates its income or claims excessive loss, deduction, allowance or relief in its return of income. Beneficial ownership under DTAA - Under the India Singapore DTAA, at the relevant time, capital gain was to be taxed on the basis of legal ownership and not on the basis of beneficial ownership. In fact, the concept of beneficial ownership, at the relevant time under the India Singapore DTAA, was attracted for taxation purposes only qua three transactions i.e. dividend, interest and royalty and not for capital gains Applicability of Explanation 2(b) to section 147 - In the case under consideration, the petitioner has claimed benefit in terms of Article 13(4) of the India-Singapore DTAA, which only provides for the allocation of taxation rights among the parties, as held by Supreme Court in the case of Union of India vs. Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT] - Consequently, the claim of benefit in Article 13(4) of the DTAA does not qualify as a deduction, relief or exemption. The claim of benefit in Article 13(4) of the DTAA merely allocates the taxing rights vis- -vis capital gains to Singapore. Consequently, the provisions of Explanation 2(b) to Section 147 of the Act is not applicable. In addition, apart from merely citing the provision, the impugned order does not give any reason as to how the said Explanation applies. In the case of Prashant S. Joshi [ 2010 (2) TMI 271 - BOMBAY HIGH COURT] while dealing with the same Explanation, the Bombay High Court has held that when the Assessing Officer applies the Explanation, he has to provide reasons in the order itself and not supplement it with an affidavit. Companies to be incorporated initially with minimum paid up share capital - This Court takes judicial notice that it is quite common for companies to be incorporated as a special purpose vehicle for a particular investment / project and that too initially with a minimum paid-up share capital of USD 1. It is not in dispute that the petitioner was subsequently adequately capitalized and a genuine investment was made in India which had grown exponentially and from which the petitioner had exited. Live link between the material disclosed and the formation of belief - The powers of the Assessing Officer to reopen assessment, though wide, are not plenary. The words of the statute are reason to believe and not reason to suspect . The reopening of the assessment after the lapse of many years is a serious matter. In the present case, there is no live link between the material disclosed and the formation of belief that any income chargeable to tax has escaped assessment. Form 10K relied by the respondent in the reasons recorded is for the year ended 31 st December, 2011, whereas the petitioner was incorporated on 25th June, 2013. Thus, the said Form 10K does not pertain to the petitioner and does not show any live-link between the reasons and the material shown in the reasons for reopening. Though, the Form 10K for the year ended 31st December 2015 was not before the Assessing Officer and not relied upon by the Assessing Officer at any stage of the proceedings, yet the said Form 10K now produced does not include the petitioner in the list of subsidiaries. The respondent has not furnished any documents to show that the petitioner is a tax resident of USA. The petitioner is incorporated in Singapore and is managed by its board of directors based in Singapore. There is no dispute that Mr.Stephan A. Schwarzmann is not part of the board of directors of the petitioner and there is no material on record to rebut the petitioner s contention that he does not have any participation in the affairs/management of the petitioner. Consequently, the petitioner is neither a US based company nor its affairs are managed from USA. It is an Investment Fund governed by and complying with Singapore law rules and regulations. Reasons recorded cannot evolve or be allowed to grow with age and ingenuity - It is settled law that the reasons recorded cannot evolve or be allowed to grow with age and ingenuity. The reasons which are recorded cannot be supplemented by affidavits. If the reasons are allowed to be added, subtracted or deleted, then by the time the matter reaches the Court, the Assessing Officer would be allowed to change its reasons for believe. The Supreme Court in New Delhi Television Ltd [ 2020 (4) TMI 133 - SUPREME COURT] has held that the Assessing Officer is not allowed to alter its reasons, which must be considered only based on their recordings. Limitation of benefit[ LOB] clause - In the present case, the expenditure has admittedly been incurred in Singapore as required under the LOB clause and is confirmed as per the audited financial statement as well as the independent chartered accountant certificate. The same is also duly reported in the annual filing as required under the respective regulations and has been recognized by the regulators in Singapore, like the Monetary Authority of Singapore as an expense incurred in Singapore. Consequently, all expenses incurred in Singapore, whether directly or indirectly, have to be considered as operational expenditures to satisfy the LOB clause. In the objections the petitioner has furnished the details of compliance with the LOB clause to the India-Singapore DTAA. The Assessing officer has not questioned the satisfaction of the LOB clause or the Independent Chartered Accountant certificate at any stage except in the present proceedings. Consequently, the petitioner is a bonafide entity and not a shell / conduit entity as it complies with the LOB clause to the India-Singapore DTAA as the expenditure has been incurred in Singapore and the same has been certified by an independent chartered accountant and accepted by the authorities in Singapore i.e. Income Tax authorities, Monetary Authority of Singapore. Accordingly, the allegation of treaty shopping is irrelevant in the present case as the India-Singapore DTAA has a limitation of benefit clause which the petitioner satisfies. Revenue cannot go behind TRC - Article 4 of the India-Singapore DTAA states that the term resident of a Contracting State means any person who is a resident of a Contracting State in accordance with the taxation laws of that State. As per Singapore tax laws, a company is resident in Singapore if the management and control of its business is exercised in Singapore. The petitioner has a valid TRC dated 3rd February, 2015 from the IRAS Singapore evidencing that it is a tax resident of Singapore and thereby is eligible to claim tax treaty benefits between India and Singapore. As early as March 30, 1994, CBDT issued Circular No.682 in which it was emphasised that any resident of Mauritius deriving income from alienation of shares of an Indian company would be liable to capital gains tax only in Mauritius as per Mauritius tax law and would not have any capital gains tax liability in India. This circular was a clear enunciation of the provisions contained in the DTAA, which would have overriding effect over the provisions of Sections 4 and 5 of the Act by virtue of Section 90 of the Act. CBDT vide Circular No.789 dated 13th April 2000 once again clarified that the TRC shall serve as sufficient evidence of the taxpayer's residence and beneficial ownership for applying the DTAA. Consequently, the TRC is statutorily the only evidence required to be eligible for the benefit under the DTAA and the respondent s attempt to question and go behind the TRC is wholly contrary to the Government of India s consistent policy and repeated assurances to Foreign Investors. In fact, the IRAS has granted the petitioner the TRC after a detailed analysis of the documents, and the Indian Revenue authorities cannot disregard the same as doing the same would be contrary to international law. The respondent s reliance on the decision in GE Capital Mauritius Overseas Investments [ 2021 (3) TMI 1207 - DELHI HIGH COURT] , is misconceived on facts, as in the case of GE Capital Mauritius Overseas Investments (supra), the Court was concerned with examining the validity of the reasons given in an order under Section 241A of the Act (dealing with withholding refunds). During the course of the hearing before this Court, the assessee, a non-resident, tried to expand its arguments to include that the income earned was not taxable under the treaty. Though accepting the arguments, the Court decided not to intervene in the matter. Accordingly, this Court is of the view that the respondent-revenue cannot go behind the TRC issued by the other tax jurisdiction as the same is sufficient evidence to claim treaty eligibility, residence status, legal ownership and accordingly there is no capital gain earned by the petitioner liable to tax in India. Even the clarificatory press release dated 1st March, 2013 issued by the Finance Ministry pursuant to the 2013 amendment makes it clear that a TRC is to be accepted and tax authorities cannot go behind it. Further, since on the basis of repeated assurances by the Government of India which have been upheld by the Apex Court, the petitioner had invested in India, the respondent is estopped from arguing to the contrary. Conclusion - This Court is of the view that no income chargeable to tax has escaped assessment in the present case. In Indu Lata Rangwala [ 2016 (5) TMI 804 - DELHI HIGH COURT] this Court has held that reopening of assessment based on the return of income must show 'reasons to believe' that income chargeable to tax has escaped assessment. Consequently, the impugned reassessment proceedings are without jurisdiction and the impugned Notice under Section 148 of the Act, impugned Reasons undated and the impugned Order and the subsequent draft Assessment Order under Section 144C are quashed. - Decided in favour of assessee.
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2023 (2) TMI 34
Revision u/s 264 - Addition of income twice - seeking refund with interest - HELD THAT:- Section 264 of Act enables the Principal Commissioner or Commissioner, on its own motion or on an application made by the assessee, to call for records of any proceedings under the Act or to cause such inquiry to be made and, subject to the provisions of the Act, pass such order thereon as the Commissioner thinks fit. The only condition being that such order cannot be prejudicial to the assessee. Undisputedly, if the records for the AY 2014-15 are recalled, it would reveal that the sum received on account of interest on income tax, was assessed as income for the Previous Year 2013-14 relevant to the Assessment Year 2014-15. However, as stated above, the said amount was brought to tax by the Income Tax Authority in the Assessment Year 2012-13. Clearly, the same amount cannot be taxed twice over. It is settled law that an assessee is liable to pay income tax only on the income that is chargeable under the Act. Merely because an assessee has offered a receipt of income in his return does not necessarily make him liable to pay tax on the said receipt, if otherwise the said income is not chargeable to tax. In CIT v. Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT ] the Supreme Court held that if the assessee had, by mistake or inadvertently, included his income or any amount, which was otherwise not chargeable to tax under the Act, the Assessing Officer was required to grant the assessee necessary relief and refund any tax paid in excess. As also well settled that the powers conferred under Section 264 are wide. In Vijay Gupta v. Commissioner of Income Tax Delhi-XIII Anr [ 2016 (3) TMI 977 - DELHI HIGH COURT ] a Co-ordinate Bench of this Court held that powers under Section 264 of the Act were not limited to correcting any errors committed by the authorities but also extended to errors committed by the assessee. Amount cannot be taxed twice. As apposite for the Commissioner to have revised the assessment order for the Assessment Year 2014-15 in light of the reassessment order dated 08.12.2017, whereby the amount was brought to tax in an earlier Assessment Year (Assessment Year 2012-13).
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2023 (2) TMI 33
Constitutional validity of Section 115 BBE - Deposits cash in bank account during the demonetization period - Section 115 BBE as substituted by the Taxation Laws (Second Amendment) Act, 2016 w.e.f. 01.04.2017 pursuant to which the income determined by AO u/s 68, 69, 69A, 69B, 69C and 69D shall attract tax rate at 60% along with the application surcharge penalty - petitioner herein is saddled with the huge tax liability for the assessment year 2017-18 - action of the AO of issuing the notice for recovery of demand raised pursuant to the assessment under Section 143(3) of the Act. Assessee relied on the decision of Pragati Cooperative Bank Ltd [ 2005 (6) TMI 26 - GUJARAT HIGH COURT] to urge that the addition cannot be made in the account of the assessee Bank, which has already furnished the requisite KYC documents for the amount which has been deposited by the concerned account holder. HELD THAT:- Issue Notice, returnable on 31.01.2023. In the meantime, interim relief in terms of prayer clause 23(d) is granted. Over and above the regular mode of service, direct service through e-mode on official email address is also permitted.
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2023 (2) TMI 32
Revision u/s 263 by CIT - Depreciation on road and toll bridge constructed by the assessee - contention of the Income Tax Department that they are not entitled to claim deprecation at all as roads and bridges are neither plant nor buildings - When the assessee had only undertaken the construction of bridges for the Government and the Government is the owner of the land and the bridges, whether the Tribunal was right in setting aside the order of revision passed under Section 263 ? - HELD THAT:- Assessing Officer had accepted the contention of the assessee that the assessee was entitled to depreciation at 25% by treating the Toll Road as a Plant even though, neither the Toll Road belongs to assessee nor it is a Plant . Tribunal allowed the assessees appeals for the Assessment Years 2004-2005 by holding that the issue as to whether the Toll Road were a Building or a Plant was a debatable issue and Assessing Officer having taken one of the plausible view, such view cannot be disturbed under Section 263 of the Income Tax Act, 1961 and therefore set aside the order of the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961. The Commissioner instead of giving final finding remitted back to the Assessing Officer to pass a fresh order. The issue was left open to be decided by the Assessing Officer vide order of the Commissioner while exercising power under Section 263 of the Income Tax Act 1961. It was open order of remand. Admittedly the Commissioner has refrained from passing any order on merits. Tribunal has erred in concluding that the Assessing Officer has taken one of the plausible view before for the benefit of depreciation at 25% on Toll Road as Plant . In our view, such view was not plausible as Toll Roads under the concessionaire agreement neither conferred upon the said assessee any Tangible Assets nor Intangible Assets in the light of answers given to the substantial question Nos.1 and 2 above. Decided in favor of Revenue.
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2023 (2) TMI 31
Reopening of assessment against trust - rejection of the objections to re-opening of assessment - alternative efficacious remedy available - undervaluation of land purchased by the Trustee - HELD THAT:- Writ petitions filed by the Trustees cannot be entertained at this stage as case of the petitioners / Trustees is that the re-opening of assessment is based on change of opinion. There appears to be lack of clarity, if there was application of mind by the assessing officer while making the original assessment with regard to the above issues i.e., undervaluation of land and source of fund for construction of building. This Court has no doubt that reassessment on the basis of change of opinion is bad for want of jurisdiction. There is merit in the submission of the learned counsel for the Revenue, inasmuch as for challenging the initiation of reassessment or assumption of jurisdiction of reassessment on the ground of change of opinion, it may be necessary to show / demonstrate that while framing the original assessment the Assessing Officer had applied its mind and formed an opinion and the reassessment is with reference to the very same issue and on the basis of mere change of opinion, without any new tangible material which in the facts of the present case can be arrived at only on a deep/close scrutiny of the documents and books of accounts. Further, with regard to the assessment year 2012-13 as no assessment has been made, the only requirement for the Revenue is to show escapement of assessment to assume jurisdiction. The present case falls under the latter category and to decide the issue viz., whether the assessment is on the basis of change of opinion, a close scrutiny of documents and books of accounts is necessary. The above aspect viz., reassessment is bad as having been made on change of opinion, may require investigation into facts in the present case. Therefore, it is only appropriate for the appellant to participate in the proceedings before the statutory authorities. Similarly, whether there is escapement of turnover is again a question of fact which ought to be decided by the statutory authorities on appreciation of evidence. Reading of Explanation 1 to Section 147 of the Act appears to suggest that mere production of books of accounts or other evidence would not by itself tantamount to disclosure within the meaning of the foregoing proviso even if material evidence could with due diligence have been discovered by the assessing officer. Whether the above Explanation would apply to the facts of the case again requires examination of books of accounts and other documents by the Assessing Officer and not under Article 226 of the Constitution of India. The above exercise requiring a close look at/ examination of books of accounts and other documents is alien to the jurisdiction conferred on this Court under Article 226 of the Constitution of India. This Court prima facie finds that there is merit in the submissions of the Respondents that assuming that the survey was not legal when the same was conducted on 23.01.2013, the same would not bar the materials from being used. Finally, the cost of construction which is stated to be more than Rs.17 crores on the basis of a valuation report is sought to be explained by the Petitioner /Trust that the source is from corpus donation receipts and fees collected from the students. It is submitted by the learned Senior Standing Counsel for the Respondents that the construction of the building itself was over only in year 2013-14, thus the explanation offered by the Trust that the fees were collected from the students and utilised for construction is factually incorrect and false. The above aspect is a disputed question of fact and it may not be appropriate to examine such disputed questions of fact in a writ petition, as the same is beyond the realm of judicial review. The writ petitions filed by the Petitioner /Trust are dismissed. It is open to the Respondents to proceed with the assessment from the stage of disposal of the objections in accordance with law. The petitioners are at liberty to raise all/ any objections, including lack of jurisdiction on the ground of change of opinion or permissibility/legality of using evidence/material gathered during the course of the alleged illegal search. If any such objection is raised the same shall be dealt with by the Assessing Officer uninfluenced by any of the observation - finding on various questions of law recorded in this judgment are for the limited purpose of holding that the petitioners have an alternative efficacious remedy available under the Act Writ Petitions filed by the Petitioners /Trustees are dismissed for the reasons set-out above, it is open to the Petitioners/Trustees to pursue their statutory remedies by way of an appeal which is availed of by the petitioners/ Trustees and agitate all grounds that may be available, including lack of jurisdiction before the Appellate Authority.
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2023 (2) TMI 30
Stay of demand - order Proceeded on the lone erroneous basis that Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017 does not apply to the writ petitioner - AO had come to the conclusion that there is unaccounted capital drawings and unexplained interest credit both under Section 56 - this Court is informed that the appeal is under Section 246A of IT Act; that pending appeal, writ petitioner moved the first respondent (Assessing Officer) under Section 220(6) of IT Act with an interim prayer - HELD THAT:- The impugned order has been made on one basis and that lone basis is that the writ petitioner's case is not covered under 'Instruction No.1914 dated 02.12.1993 as modified by two Office Memoranda dated 29.02.2016 and 31.07.2017' [hereinafter collectively 'said instruction' for the sake of convenience and clarity]. There is no disputation or disagreement as between the petitioner's counsel and the learned Revenue counsel that this is incorrect. This is evident and obvious from the first and second sentences in the first paragraph of impugned order. The first sentence says that stay of demand is governed by said instruction and second sentence says that writ petitioner is not covered by said instruction. As there is no disputation or disagreement that the writ petitioner's case i.e., writ petitioner's plea that interim order is covered by said instruction read with Section 220(6) of IT Act and as the only ground on which the prayer has been negatived is that the writ petitioner is not covered by said instruction, this Court deems it appropriate to interfere qua the impugned order. Following order is passed: a) the impugned order i.e., order dated 12.12.2022 bearing reference ITBA/COM/F/17/2022-23/1047945987(1) made by the first respondent is set aside. The impugned order is set aside on the sole ground that it has proceeded on the lone erroneous basis that said instruction (Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017) does not apply to the writ petitioner; b) The petition of the writ petitioner seeking interim order is remitted back to the first respondent for consideration on its own merits and in accordance with law inter alia by applying said instruction; c) The above exercise shall be completed by the first respondent as expeditiously as his business would permit and in any event, within three weeks from today i.e., on or before 12.01.2023; d) Though obvious it is made clear that the writ petitioner's petition styled 'petition to keep the demand of tax in abeyance' before the first respondent now gets revived and the same will stand over for consideration by the first respondent as per the aforementioned directive within aforementioned time line.
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2023 (2) TMI 29
Proceedings u/s 144B - best judgment assessment on the count that the petitioner did not file the return of income in response to the notice u/s 148 - as argued variation be not made without availing an opportunity or replying to the request of the petitioner - HELD THAT:- It is not being disputed that the opportunity of hearing is not granted. On the basis of the information received in respect of assessee, verification of material received from DDIT (Inv.) Unit-1(3), assessing officer has finalized the assessment order dated 12.3.2022, which is impugned in the instance case. This being a clear violation of procedure laid down under Section 144B (9), the order is non-est in the eyes of law and hence, the petition is allowed quashing and setting aside the order of assessment. The officer concerned shall take up the matters from the stage where the request was made for availing the opportunity of hearing. Let within two weeks the request be made on the part of the petitioner which shall be responded by the officer concerned within two weeks. The entire process of adjudicating the matter shall be completed within twelve weeks period. This disposal shall not come in the way of the either side.
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2023 (2) TMI 28
Validity of reopening of assessment u/s 147 - addition u/s 68 on account of cash deposited which remained unexplained - HELD THAT:- As correctly held by CIT-A Prima facie there was material available with the AO in the form of information from the from ADIT(lnv.)-02, Kanpur that that huge cash deposits has been credited in the various banks that income had escaped assessment. In spite of number of opportunities afforded, the appellant has not substantiated its assertions raised in the grounds of appeal. Since the appellant has chosen not to attend proceedings before the undersigned or furnished any submission to substantiate the grounds taken, it is held that the AO had validly initiated proceedings by way of issue of notice u/s 148. Commissioner not only considered the factual aspects of the case, while deciding the validity of the initiation of the reassessment proceedings, but also taken into consideration various judgments, and also the amended provisions of Section 147 consequently, we are inclined not to interfere in the conclusion drawn by the learned Commissioner qua initiation of reassessment proceedings and issuance of notice u/s 148 of the Act. Addition u/s 68 - It appears clearly from the orders passed by the authorities below that the Assessee has failed to prove its primary onus lies on it, to prove the identity of the creditor, creditworthiness of the creditor and genuineness of the transaction. Further, the Assessee also failed to substantiate its grounds of appeal qua merits of the case, before the learned Commissioner, therefore, Commissioner in the constrained circumstances, affirmed the addition made by the AO u/s 68 of the Act. Even we do not find any material or reason to controvert the findings of the Ld. Commissioner. Consequently, we are inclined to uphold the order impugned. Appeal filed by the Assessee stands dismissed.
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2023 (2) TMI 27
Penalty u/s 271C - Addition @ 2% of the EDC amount paid to HUDA on which the TDS was to be deducted u/s 194C - debatable issue - whether there was reasonable cause/bona fide reason within the meaning of Section 273B of the Act for not deducting the TDS? - HELD THAT:- Cases of m/s RPS Infrastructure Ltd. [ 2019 (9) TMI 39 - ITAT DELHI ], Shree Vardhman Developers Pvt. Ltd. [ 2022 (11) TMI 1053 - ITAT DELHI ] and Tulip Infratech Pvt. Ltd. [ 2022 (7) TMI 328 - ITAT DELHI ] clearly that on payment of EDC to the HUDA, no TDS is liable to be deducted, hence we are inclined not to interfere with the decision of the learned Commissioner, in deleting the penalty on this count. Appeal filed by the Revenue/Department stands dismissed.
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2023 (2) TMI 26
Revision u/s 263 - Share Premium regarded as Unexplained cash credit u/s 68 - proceedings declared under DTVSV - assessment order passed u/s. 143[3] rws 147 with regard to the amount representing the face value of shares issued by the assessee - HELD THAT:- In assessee s case the declaration under DTVSV is made for the proceedings in which disputed amount pertaining to the allotment of shares to shell company on premium. The assessee has filed the necessary forms under DTVSV and the Form 5 confirming the settlement under the scheme issue by the PCIT. Therefore the impugned transaction in our view has been part of the proceedings declared under DTVSV. We see merit in the argument of the Ld.AR that without verification of the face value, the AO would not have assessed the premium amount and that the amount towards face value of the shares is part and parcel of the entire proceedings for which the assessee has opted DTVSV. Therefore assessee s case is covered by the ratio laid down in Gopalakrishnan Rajkumar [ 2022 (5) TMI 1388 - MADRAS HIGH COURT ] as followed by the decision of Shri Pavan Kandkur [ 2022 (11) TMI 1312 - ITAT BENGALURU] - Respectfully following these decisions, we hold that the PCIT is not justified in initiating the proceedings u/s. 263 when the impugned proceedings are already declared under DTVSV scheme. Accordingly, the order of the PCIT is quashed. Assessee appeal allowed.
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2023 (2) TMI 25
TDS u/s 195 - Disallowance u/s 40(a)(i) - assessee paid the disputed amount to a Malaysian entity for incorporation of a company in Malaysia - HELD THAT:- Admittedly, the Malaysian entity does not have any PE in India. Therefore, the payment made, which is in the nature of business profit is not taxable in India. That being the factual position, there was no obligation on the assessee to withhold tax at source u/s 195 of the Act while making such payment. At this stage, we must observe, AO while disallowing the payment under section 40(a)(i) of the Act has made a general observation that payments are covered under Article 12 of the DTAA, without specifying which particular DTAA he is referring to Article 12 of India-Malaysia DTAA is in relation to income in the nature of royalty. Payment made by the assessee to the Malaysian entity certainly cannot be considered to be in the nature of royalty under Article 12 of the DTAA. Having held so, it is necessary to examine whether the payment made would qualify as Fees for Technical Services (FTS) under Article 13 of the India-Malaysia DTAA. On a reading of Article 13, it is evident, the source country has the power to tax the income in the nature of FTS at beneficial rate of 10%. The service rendered must be managerial, technical or consultancy services. In the facts of the present appeal, the departmental authorities have failed to demonstrate that the payment made was towards rendering of managerial, technical or consultancy services. Withholding of tax u/s 195 - Disallowance u/s 40(a)(i) - payment was made to an entity in Bangladesh for rendering legal services of the Act - HELD THAT:- In the facts of the present appeal, admittedly, the Bangladesh entity has no PE in India. Therefore, income, if considered to be business profit is not taxable in India. As per Article 13 of the DTAA, the payment made by the assessee cannot be treated as royalty. If at all, the payment can be considered to be towards rendering of independent professional services as per Article 15 of the DTAA. However, the payment made towards independent professional services is taxable in the country of residence of recipient, unless, the recipient has a faxed base regularly available to him in the source country for the purpose of performing his activity. In the facts of the present appeal, there is nothing on record to demonstrate that the Bangladesh entity had any fixed base in India from which it is carrying on its activities in India. Thus, in our view, the departmental authorities have failed to establish on record that the payment made by the assessee is taxable at the hands Bangladesh entity in India. That being the case, there was no requirement for withholding tax u/s 195 of the Act. Accordingly, we delete the disallowance made under section 40(a)(i). Disallowance claimed as deduction u/s 35D - expenditure under consideration towards issue of IPO - only reasoning on which assessee's claim has been rejected is, the expenditure does not fall within the ambit of Section 35D - HELD THAT:- Before us, the assessee has made an alternative claim that since the expenditure has been incurred for expansion of its business, it is allowable under section 37 of the Act. Having taken note of the factual position and the nature of expenses, we are of the view that the expenditure is allowable u/s. 35D of the Act as it is for the purpose of expansion of its business. The ratio laid down in the decision cited Dhanaklakshmi Bank Ltd 2018 (12) TMI 836 - KERALA HIGH COURT] by the assessee supports this view. Therefore, we allow the deduction. This ground is allowed. Disallowance of ESOP expenses - HELD THAT:- As observed that the assessee offered the ESOP to the employees at discounted value and the difference between the actual value and the discounted value was debited to the profit and loss account. It is also observed, the assessee has reversed a part of the expenses booked on ESOP and offered the same for tax in subsequent Assessment Years. Thus, in our view, the deduction claimed by the assessee is allowable. Accordingly, we delete the disallowance. Disallowance of write off of sundry balances - Swachh Bharat Cess receivable written off - HELD THAT:- As could be seen, the amount written off represents Swachh Bharat Cess receivable by the assessee. Assessee has failed to demonstrate that the amount was actually paid during the year in terms of section 43B(a) of the Act. Therefore we uphold the disallowance. This ground is dismissed.
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2023 (2) TMI 24
Unexplained cash credit - Unexplained gifts received from a person covered by the definition of relative under Explanation (e) to section 56(2) - assessee has not filed return of income or bank statement of the donor, in the absence of which the genuineness and capacity, i.e., creditworthiness of the donor is not proved - HELD THAT:- As assessee has received gift from Smt Bhanuben B. Patel and Smt Champaben Sojitra by submitting the bank statements, gift deed and other evidences in support of the receipts of the above said gifts which is placed in Paper Book. As relying on Ushaben H. Ghadia case [ 2022 (3) TMI 1487 - ITAT MUMBAI] we are inclined to direct the Assessing Officer delete the additions made in this case. Accordingly, ground raised by the assessee is allowed.
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2023 (2) TMI 23
Disallowance u/s 40(a)(ia) - non-deduction of tax at source - CIT-A deleted the addition - HELD THAT:-Though the assessee had failed to deduct TDS on the impugned amount, the payee on other hand had paid taxes on the same and the assessee had filed the stipulated certificate as per Rule 31ACB of the Income Tax Rules certifying the fact of taxes have been paid by the payee (India Infoline Investment Services Ltd. in the present case) on the impugned payment. CIT(A) in the case of CIT Vs. Ansal Landmark Township Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT ] has held that in such circumstances, where taxes are shown to have been paid by the payee, no disallowance under section 40(a)(ia) of the Act was called for in the hands of the payer for default in taxes deduction at source. DR was unable to convert this factual finding of the ld.CIT(A) that the payer in the impugned case had paid taxes on the impugned sum involved and the certificate, as per Rule 31ACB of IT Rules 1962,certifying the aforesaid fact, had been filed to the AO. He was also unable to controvert or distinguish the decision relied upon by the ld.CIT(A) in the case of Ansal Landmark Township Ltd. (supra). No reason to interfere in the order of the ld.CIT(A) deleting disallowance by invoking provisions of section 40(a)(ia) of the Act. The ground raised by the Revenue is dismissed.
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2023 (2) TMI 22
Royalty - payments made by the assessee to Google Ireland Ltd. - India-Ireland DTAA - liability to withhold tax fastened on the assessee - HELD THAT:- Admittedly, this issue came for consideration before this Tribunal in assessee s own case [ 2022 (10) TMI 1039 - ITAT BANGALORE] wherein held that impugned payment cannot be characterized as royalty under the India-Ireland DTAA. TDS u/s 195 - As decided on payment made by GIPL to M/s. Google Ireland Ltd. for purchase of online advertisement phase for onward resale to India advertisers, in terms of distribution agreement dated 12.12.2005, were not in nature of royalty as defined u/s 9(1)(vi) of the Act read with Article 12(3)(a) of TTA between India and Ireland and observed that GIPL was not an assessee in default u/s 201 of the Act, for not deducting the tax at source, on the payment in question, under the section 195 of the Act and the issue of beneficial ownership which is consequential in nature and as such this issue became academic and the appeal of the revenue is not surviving. Accordingly, the appeal of the revenue is dismissed as infructuous.
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2023 (2) TMI 21
Revision u/s 263 - failure of assessee to substantiate the source of deposit - short assessment by AO HELD THAT:- Here in the present case on limited question of fact Ld. PCIT exercised its jurisdiction u/s 263 of the Act as Ld. PCIT found that the cash deposits in bank account of assessee with ICICI Bank Ld. AO has wrongly taken the figure at Rs.3,00,74,620/- and which even assessee admitted in its reply to the show-cause notice that cash deposit was Rs.3,05,73,196/-. Thus, the short assessment to the extent of Rs.4,98,576/- has been taken into consideration as difference which Ld. AO failed to consider. Certainly as far as the facts are concerned, in spite of having the material information in the form of bank account statement available with him, the Ld. AO had fallen in error in not taking into account the correct figure. The failure of Ld. AO to examine the bank statement in correct perspective had led to under assessment of income - That, certainly makes the assessment order erroneous and prejudicial to the interest of assessee to the extent of amount ignored by Ld.AO. If any observations have been made by Ld. PCIT with regard to failure of assessee to substantiate the source of deposits are superfluous and have no binding effect on Ld. AO as Ld. AO is expected to only comply with the operative part of the order of the Ld. PCIT which merely directs the Ld. AO to add short amount Rs.4,98,576/- to the addition made by Ld. AO u/s 69A of the Act. The enquiry and verification only to the extent of this amount has been directed by the Ld. PCIT and to that extent there is no illegality in the exercise of powers of Section 263 of the Act by Ld. PCIT. Whatever contentions have been raised on behalf of the assessee as to the nature of its business leading to deposit of cash throughout the year or that there was no disproportionate or exceptional high deposit in the period of demonetization are not issues covered and examined by the Ld. PCIT and assessee has already availed the remedy to challenge the addition on merits by preferring appeal against the order dated 10.12.2019. The judgments relied are quite distinguishable on facts as in the present case the admitted state of affairs is that there was factual error committed by Ld. AO and same apparently caused loss of revenue. Thus, the grounds raised have no substance. Consequently, the appeal is dismissed.
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2023 (2) TMI 20
TP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- We notice that the TPO in defining the profile of the assessee has stated that the activities of the assessee are classified into Compliance management, supplier management services, staff welfare support and other support functions. The DRP has stated that Ugam s services falls within the ambit of market support services and a proper comparable. We also notice that the coordinate bench of the Tribunal in the case of Epson India [ 2022 (7) TMI 1377 - ITAT BANGALORE] has excluded Ugam as a comparable company to Epson based on the functions performed by Ugam. Therefore it is important to analyse the functions performed by Ugam during the year under consideration, before applying the ratio laid down by the Hon ble Tribunal. We therefore remit the issue back to the AO/TPO to look into the functions performed by Ugam based on the various details submitted by the assessee and decide accordingly. Axience Consulting Private Limited (Axience) is mainly into analysis and research and is into strategic human capital services. We also notice that the DRP has confirmed the inclusion by stating that the company is into marketing support service and therefore to be included whereas the assessee is mainly into business support services and this fact has been acknowledged by the TPO. In the light of this we are of the considered view that Axience is not functionally comparable to the assessee and we hold accordingly. Platinum Advertising Private Limited (Platinum) is not a comparable company with that of the assessee as Platinum s functions i.e. advertising agency services, and media planning and ancillary services is different from the functional profile of the assessee which is mainly into business support services. We therefore direct the AO/TPO to exclude Platinum from the comparable list. Killick Agencies and Marketing Limited (Killick) and ICC International Agencies Limited (ICC) - We notice that the assessee has not contended the exclusion of ICC before the lower authorities and that the submissions made with regard to exclusion of Killick has not been considered. In view of this we remit the issue back to the TPO/AO for fresh consideration. The TPO/AO is directed to keep the decisions of the coordinate bench in assessee s own case [ 2021 (10) TMI 1392 - ITAT BANGALORE] and Epson India [ 2022 (7) TMI 1377 - ITAT BANGALORE] while deciding the issue after giving a reasonable opportunity of being heard to the assessee. It is ordered accordingly. Concept Public Relations India Ltd (Concept) - We have in earlier part of this order has excluded companies who are into marketing support services for the reason that it is functionally different from the profile of the assessee which is into business support services. Further Concept is in public and media relations which is functionally different from the activities of the assessee. Hence we hold that concept cannot be included as a comparable and the ground raised by the assessee in this regard is rejected. Priya International Ltd - On perusal of the annual report it is noticed that the company is into three different segments Indenting business, Trading business of chemicals and electronics. It is also noticed that the assessee has included the indenting business for the purpose comparison. However the nature of business the revenue of which is reported under indenting business is not coming out clearly from the annual report. The ld AR also could not substantiate that the activity reported under indenting business is functionally comparable to that of the assessee. Considering the overall nature of business of the company which is mainly into trading, we are of the considered view that the company is not functionally comparable with the assessee and need to be excluded. The assessee s ground in this regard is dismissed. EDCIL (India) Limited (EDCIL) - We notice that the coordinate bench in assessee s own case has held that EDCIL be excluded from the comparables for AY 2011-12 by relying on the decision in assessee s own case for AY 2008-09. The year under consideration being AY 2015-16, it is important to verify whether the facts are identical before applying the decision of the Hon ble Tribunal. Therefore we remit the issue back to the TPO/AO to verify the facts and if there is no change i.e. facts are being identical with that of earlier year in which the above decision is rendered, then follow the decision of the Hon ble Tribunal. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly. Assessee seeking for considering the correct margins of the comparable - We direct the TPO/AO to consider the correct margins of the final list comparable that will be arrived at after considering the directions given in the above paragraphs of this order after giving a reasonable opportunity of being heard to the assessee. Working capital adjustment - Respectfully following the above decision of the Co-ordinate Bench in the case of Huawei Technologies India (P.) Ltd. [ 2018 (10) TMI 1796 - ITAT BANGALORE ] we hold that the working capital adjustment is to be allowed as per actuals, after considering the decisions rendered in this order on the exclusion/inclusion of comparable companies out of/into the final set of comparables. The TPO/AO is also directed to consider the submissions made by the assessee in this regard.
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2023 (2) TMI 19
Deduction u/s 36(1)(viia) - provision for Bad and Doubtful debts - HELD THAT:- From perusal of record, we find that combination of this Bench in assessee s own case for the A.Y. 2010-11 [ 2022 (5) TMI 856 - ITAT SURAT] has confirmed the order of Ld. CIT(A), thereby decided the appeal in favour of the assessee as held that that the provisions for bad and doubtful debts should be allowed u/s. 36(1)(viia), to the extent of provision made and available in the books of account, whether made in the current previous year. Thus, in view of the aforesaid factual discussion, we affirm the order of Ld. CIT(A) by adding our aforesaid observation. - Decided against revenue.
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Customs
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2023 (2) TMI 18
Import of Cold Rolled Grain Oriented Electrical Steel Sheets under fake BIS Certificate - HELD THAT:- The Adjudicating Authority had found that the goods imported by the appellant were covered under the fake BIS Certificate and the import did not conform to the standards as specified. The CIT (Appeals) did not disturb any of the findings of the Adjudicating Authority and by an order dated 25.10.2019, rejected the appellant s appeal. This led the appellant to institute an appeal before the learned Tribunal. The learned Tribunal, after hearing the parties, found no merit in the appellant s appeal. The statement made by Mr Manoj Kumar which is not disputed clearly indicates that the BIS Certificate was prepared by him and corroborate the allegation that the BIS Certificate was fake. The communication received from the Indian subsidiary/agent of the manufacturer, M/s Nippon Steel and Sumitomo Metal Corporation confirms that the BIS Certificate, which purportedly issued to it, is fake. There are no merit in the present appeal - appeal dismissed.
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Insolvency & Bankruptcy
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2023 (2) TMI 17
Oppression and Mismanagement - grievance of the Petitioner / Appellant is that, the 1st Respondent / Company, had oppressed him greatly, when he was working with the said Company, as the Managing Director and used him only to meet their ends, through suspicious means - seeking to appoint an independent Auditor to conduct a Forensic Investigation of the Financial Assets of the 1st Respondent / Company and Suspicious Transactions, entered into by the 1st Respondent / Company - Section 241 and 242 of the Companies, Act, 2013 - HELD THAT:- It cannot be forgotten that a Directorial Complaint, cannot be a basis for filing a Petition, under Section 241 242 of the Companies Act, 2013, as complaints, in such a Petition, should relate to the Rights, in the status / capacity of a Member. In the instant case on hand, the Appellant had tacitly admitted that he is / was not a Shareholder of the 1st Respondent / Company (1st Defendant in Suit). When that be the fact situation, and as per Section 241 of the Companies Act, a Petition, can be preferred, only by the Member(s) of the Company, and all the more, the eligibility of the Member(s), who can sustain a Petition, under Section 241 of the Companies Act, 2013, is prescribed, and when the Appellant / Petitioner, has no Right to file a Petition, under Section 241 of the Companies Act, because of his ineligibility (not being a Shareholder / Member of the 1st Respondent / Company), then, in Law, he has no Locus whatsoever, to seek waiver of the requirement, in IA/644/2020 in CP/289/2020, enabling him, to Apply, under Section 241 of the Act. Viewed in that perspective and looking at from any angle, the IA No. 644/2020 in CP/289/2020, filed by the Petitioner / Appellant (before the National Company Law Tribunal, Division Bench I, Chennai), seeking to Waive all the requirements, specified in Clauses (a) and (b) of Section 244 of the Companies Act, 2013, and resultantly, permitting him to prefer a Petition, as per Section 241 and 242 of the Companies Act, 2013, is per se, not Sustainable, in the eye of Law, as held by this Tribunal. Appeal dismissed.
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FEMA
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2023 (2) TMI 16
FERA Proceedings - jurisdiction of Special Director of Enforcement - Transaction against exchange control regulations - penalties payable by the petitioners - proceedings were initiated for violation of the provisions of FERA and when the FERA was in force - alternative remedy - Reserve Bank of India (ROB) provided an information to the Enforcement Directorate to the effect that the bank for foreign trade of the USSR had transferred non-convertible rupee funds into convertible Vostro accounts of Bank of Ireland, UK with the IOB, Madras and in turn, the IOB had transferred about rupees four crores from this account to London - HELD THAT:- In the instant case, on going through the materials placed before us and after carefully considering the order passed by the Special Director of Enforcement, we find that we have to necessarily deal with a lot of documents and get into disputed questions of fact. To avoid such a scenario, the enactment itself provides for further remedies under Section 19 of FEMA before the Appellate Tribunal and thereafter, under Section 35 of the Act, by way of filing a further Appeal before the High Court against the order passed by the Appellate Tribunal. These remedies have been provided to enable an aggrieved person to contest the order passed by the Adjudicating Authority, both on facts and on law. These appellate remedies cannot be bypassed and the doors of the High Court cannot be knocked straight away under Article 226 of the Constitution of India. In the present case, there is no lack of jurisdiction for the Special Director of Enforcement to pass the impugned order, there is no violation of principles of natural justice and this Court does not find any special circumstances to disregard the alternative remedy and to decide the dispute in this Writ Petition. Apart from these reasons, we have already held that the case requires determination of disputed facts based on documents and it will be fit and proper if this exercise is done before the Appellate Tribunal. We are inclined to relegate the petitioners to the Appellate Tribunal to work out their remedy in accordance with law and it will be left open to the petitioners to raise all the grounds before the Appellate Tribunal. The petitioners are permitted to file appeal against the order passed by the Special Director of Enforcement in proceedings within a period of 45 days from the date of the receipt of copy of this order. When these Writ Petitions were entertained, interim orders were passed and thereby, the operation of the order of the Special Director of Enforcement dated 12.03.2009 was stayed. Consequently, the penalty amount was not recovered from the petitioners during the pendency of the Writ Petitions. We are inclined to extend this interim protection till the appeal is filed before the Appellate Tribunal.
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PMLA
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2023 (2) TMI 15
Money Laundering - provisional attachment order - SARFAESI Act will have the primacy/overriding effect over the provisions of the PMLA or not - diversion of funds - HELD THAT:- It has been brought to our notice that all the petitioners have already raised objections both on facts and on law and it has been submitted before the Adjudicating Authority viz., the second respondent. The second respondent is a quasi judicial authority, who can go into both the facts and law while dealing with the objections raised by the petitioners. The provisional attachment order passed u/s.5 of the PMLA has been held to be constitutionally valid by the Apex Court in Vijay Madanlal Choudhary and others v. Union of India and others [ 2022 (7) TMI 1316 - SUPREME COURT ] and hence, the provisional attachment order passed by the first respondent does not suffer from lack of jurisdiction. The provisional attachment order has been placed before the second respondent for confirmation u/s.8(3) of the PMLA. The alternative remedy is only a self-imposed restriction and it is not an absolute one and in appropriate cases, this Court can exercise its jurisdiction under Article 226 of the Constitution of India in spite of the availability of an alternative remedy. Such exercise of jurisdiction is normally done in cases where the authority has initiated proceedings or passed orders without or in excess of jurisdiction or in cases where there is a serious violation of principles of natural justice or where certain extraordinary/special circumstances exist, which require the exercise of extraordinary power and jurisdiction under Article 226 of the Constitution of India. The law on this issue is too well settled. In the facts of the present case, it is already held that the provisional attachment order passed by the first respondent does not suffer from any excess or lack of jurisdiction. The petitioners in both the writ petitions have been put on notice by the Adjudicating Authority and the petitioners have also submitted their objections both on facts and on law and hence, it cannot be held that a decision is taken behind the back of the petitioners and there is no violation of principles of natural justice - the petitioners have an effective, alternative and efficacious remedy and hence, we are not inclined to entertain these writ petitions. If any adverse order is passed by the Adjudicating Authority, an appeal is provided u/s.26 of the PMLA to the Tribunal from where there is a further appeal to the High Court u/s.42 of the PMLA. There are no ground to entertain these writ petitions and we leave it open to the petitioners to raise all the grounds both on facts and on law before the Adjudicating Authority, viz., the second respondent and the same shall be considered on its own merits and in accordance with law - petition dismissed.
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Service Tax
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2023 (2) TMI 14
Benefit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 denied - denial on the ground that investigation is pending against the Petitioner - HELD THAT:- The Division Bench of this Court, in the case of M/S. NEW INDIA CIVIL ERECTORS PRIVATE LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2021 (3) TMI 545 - BOMBAY HIGH COURT] , has dealt with this stand of the Respondents that for the category of voluntary disclosure under Section 125 of the Finance Act, there is no mention to the date of 30 June 2019, and have held that, by adopting liberal interpretation, it will have to be held that the pendency of the investigation/enquiry on 30 June 2019 referred to Section 125 of the Act of 2019 is also relevant for the voluntary disclosure category under Section 125 (1)(f)(i) of the Act of 2019. The impugned rejections of the declarations filed by the Petitioner on 15 January 2020 under the Scheme of 2019 are quashed and set aside. The Respondents will process the declarations filed by the Petitioner for the years 2015-16, 2016-17 and 2017-18 as per law and pass necessary orders within a period of eight weeks from the date order is uploaded. Petition allowed.
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2023 (2) TMI 13
Rejection of declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- The present case falls in the category where the Designated Committee has accepted the amount declared by the declarant. The fact that form SVLDRS-3 is not issued to the Petitioner is an admitted position. This fact is admitted in the reply affidavit filed on behalf of Respondent Nos. 3 to 6 by the Assistant Commissioner of CGST Central Excise, Division VI, Thane Commissionerate. Further, the Petitioner was eligible for availing the benefit of the Scheme is also accepted, and it is further stated in the reply affidavit that if the Petitioner is allowed to deposit the eligible amount it should be with interest at the rate of Rs. 9% per annum, which stand is reiterated before us by the learned Counsel for the Respondents. Therefore, the issuance of form SVLDRS-3 was necessary, and it was not issued to the Petitioner due to the error on the part of the Respondents is an accepted position. The Petitioner therefore is entitled to a direction to the Respondent to accept the eligible amount. Whether the Petitioner should deposit the amount with interest at the rate of Rs. 9% per annum? - HELD THAT:- In the case at hand, admittedly, to date, the Respondents have not issued an electronic form SVLDRS-3 as required. Therefore, the obligation of the Petitioner under section 127 (5) of the Act of 2019 to pay the amount within 30 days had not arisen at all. In the case of M/S LG CHAUDHARY VERSUS UNION OF INDIA [ 2022 (10) TMI 631 - GUJARAT HIGH COURT] before the High Court of Gujarat, form SVLDRS-3 was issued to the Petitioner therein, but the Petitioner did not make payment as there was an error on the part of the Bank and the payment was returned. The facts in this case are entirely different. Admittedly, there is no fault on the part of the Petitioner. The Petitioner is therefore entitled to the relief prayed for as to the benefit of the Scheme. Petition allowed.
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2023 (2) TMI 12
Seeking direction to the Respondents to allow the Petitioner to pay the amount under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and to issue discharge certificate - HELD THAT:- On the aspect of delay in filing the writ petition, the learned Counsel for the Petitioner submitted that the Petitioner attempted various occasions to pay the amount and it took some time to collect that documents from the Bank. Also on this aspect, since the Petitioner has relied upon the decision in the case of M/S LG CHAUDHARY VERSUS UNION OF INDIA [ 2022 (10) TMI 631 - GUJARAT HIGH COURT] on the ground that the facts are identical, it has to be noted that in the case of L.G. Chaudhary, the interest amount as stipulated at the rate of Rs. 9% per annum was directed to be paid Considering the facts and circumstances of the present case, it is opined that the interest at the rate of Rs. 6% per annum would be appropriate. The Respondents are directed to permit the Petitioner to pay the amount of Rs. 7,69,317/- under the Scheme of 2019 along with interest at the rate of Rs.6% per annum from 30 June 2020 till the date of payment - petition allowed.
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2023 (2) TMI 11
Refund claim - Principles of unjust enrichment - whether the amount of refund has been rightly credited to Consumer Welfare Fund on the ground of unjust enrichment? - period October 2013 to March 2016 - HELD THAT:- Admittedly, appellant have not charged service tax under dispute in their invoices. Further, admittedly these amounts were paid under protest at the investigation stage and thereafter, the show cause notice was issued. In these circumstances, it is held that only by way of bit in profit and loss account, it does not amount to passing of the burden to a third person or the customer indirectly. An assessee is always at liberty to right back the expenditure debited in profit and loss account by way of adjustment in their capital account. - Refund allowed. Non-appearance of counsel / Chartered accountant in proper dress before the tribunal - Cost of Rs. 2000/- imposed.
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2023 (2) TMI 10
Refund of Service Tax paid - license fee paid to foreign parties for import of technical know-how and engineering design license - import of intellectual property rights service - rejection on the ground that the appellant had not passed the test of unjust enrichment - reverse charge mechanism - HELD THAT:- A similar issue arose before the Allahabad High Court in EBIZ. COM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX AND ORS. [ 2016 (9) TMI 1405 - ALLAHABAD HIGH COURT] . The assessee was engaged in the business of developing and selling various online/offline educational software packages. The Anti-Evasion Branch of Central Excise Department, NOIDA conducted a search in its premises on 12 January, 2007 and the assessee deposited an amount of Rs. 25,55,000/-. The assessee also deposited an amount of Rs. 2,59,000/- on 21 March, 2007 towards interest. Thereafter, a show cause notice dated 3 July, 2007 was issued to the assessee demanding service tax. The demand was confirmed, against which an appeal was filed which was dismissed by the Commissioners (Appeals) on 29 August, 2008. The assessee filed an appeal before the Tribunal which was allowed by order dated 23 December, 2012 and the matter was remanded to the Commissioner (Appeals). The Commissioner (Appeals), thereafter, by order dated 29 August, 2012 allowed the appeal and set aside the order passed by the adjudicating authority. The assessee thereafter, filed a refund claim on 27 January, 2014. A show cause notice dated 2 April, 2014 was issued requiring the assessee to explain why the refund claim should not be rejected for the reason that it had not been made within one year - The Allahabad High Court examined the provisions of Section 11AB of the Central Excise Act, 1944, which contemplates that the amount shall be refunded to the assessee provided the incidence of such duty had not been passed on by him to any other person. The Allahabad High Court held that any amount deposited during the pendency of the adjudicating proceedings or investigation is in the nature of a deposit under protest and, therefore, the principles of unjust enrichment would not be attracted. This issue was also examined by the Tribunal in COMMR. OF CUS., BANGALORE VERSUS MOTOROLA INDIA PVT. LTD. [ 2006 (4) TMI 390 - CESTAT, BANGALORE] . The Tribunal upheld the view of the Commissioner(Appeals) that the power of unjust enrichment would not be applicable for refund of an amount deposited during investigation. It is, therefore, clear from the aforesaid decisions of the High Courts and the Tribunal that any amount deposited during the pendency of adjudication or investigation is in the nature of a deposit and, therefore, cannot be considered to be towards payment of service tax or excise duty. The principles of unjust enrichment, therefore, would not apply if a refund is claimed for refund of this amount. The method of accounting followed by an assessee does not impact the admissibility of refund, and cannot be made a basis to hold that the incidence of duty had passed - reliance can be placed on the decision of the Tribunal in COMMISSIONER OF CUSTOMS VERSUS M/S. U.T. ELECTRONICS PVT. LTD. [ 2019 (12) TMI 1219 - CESTAT NEW DELHI] . The Tribunal held that merely because the excise duty is booked as expenditure in Profit and Loss account, it cannot be said the incidence of duty had passed. It further needs to be noted that the price of the goods has been fixed by the Government of India. The cost of goods manufactured by the appellant is ascertained on the basis of cost of inputs, which are, gas and cost of production, plus profit. Considering the nature of goods, and for the purposes of extending subsidy thereon, the Government of India determined the Maximum Retail Price of the goods for sale to the ultimate buyers. The difference between the cost of production and the Maximum Retail Price is reimbursed by the Government of India to the appellant. If the price of goods is fixed by the Government of India, such price cannot be altered by inclusion of any duty. Thus, the issue of unjust enrichment would not be applicable. The order dated 22/26.03.2018 passed by the Commissioner (Appeals) cannot be sustained and is set aside - the appellant would be entitled to refund of the amount of Rs.1,26,59,954/- with interest at the applicable rate - appeal allowed.
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2023 (2) TMI 9
Refund of CENVAT Credit - export of goods or not - whether the refund claim filed by the appellant-claimant has been rightly rejected on the ground of absence of express provision in that regard? - HELD THAT:- As per Rule 6(3) of Service Tax Rules, 1994, the builder has an option to take the credit of excess service tax paid by him, if that builder had refunded the payment or part thereof so received alongwith the service tax payable thereon for the service to be provided by him to the person from whom it was received. Undisputedly, the builder has given a declaration under Rule 6(3) ibid vide letter dated 06/04/2018 to the Deputy Commissioner (refund) stating therein that they have not adjusted the amount of Rs.3,34,800/- paid towards service tax / advance service tax on amounts received from appellant-claimant under the provisions of Rule 6(3) and that the advance paid by the appellant-claimant amounting to Rs.24,00,000/- has been refunded on cancellation of booking of the said flat and in support of the declaration the builder has submitted the copies of ST-3 returns filed by them for the period April, 2016 to March, 2017 and April, 2017 to June, 2017. Admittedly, the builder has not refunded the amount of service tax to the appellant-claimant and neither he adjusted the said amount nor claimed refund in respect of the amount in issue. Therefore, the same cannot be adjusted under Rule 6(3) ibid. A perusal of the law laid down by the Hon ble Supreme Court in the matter of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. [ 2016 (8) TMI 1071 - SUPREME COURT] made it clear that the consumer / buyer who has borne the burden of tax is eligible for refund - the learned Commissioner has misdirected himself by observing that there is no provision to refund such Service Tax paid under the existing law as the same is contrary to the law laid down by the Hon ble Supreme Court. It is surprising that on identical facts one authority is passing order in favour of claimant whereas in respect of the same builder on identical facts another authority is taking totally contrary view. There are force in the submission of learned counsel that the authorities below have travelled beyond the show cause notice and that ground itself is sufficient to set aside the order of the authorities below as the show cause notice states that the amount of Rs.2,26,800/- received as advance service tax by the builder from the appellant-claimant has not been accounted by the builder in their ST-3 returns for the period 2016 to March, 2017 and therefore the said amount of Rs.2,26,800/- claimed as refund by the claimant is liable to be rejected, whereas both the authorities below have rejected the entire amount of refund of Rs.3,34,800/-. From the perusal of the builders letters / declaration dated 06/04/2018 and 26/12/2018 respectively along with the copies of ST-3 returns for the period October, 2016 to March, 2017 and April, 2017 to June, 2017, it is clearly established that the service tax liability has been discharged by the builder. Appeal allowed.
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2023 (2) TMI 8
Penalty under Section 78 of FA - appellant was aware about the tax liability on POP charges when they raised the original invoice for the service, or not - wilful suppression of facts or not - HELD THAT:- Although there is default on the part of the appellant in depositing the tax as service tax was payable during the relevant period, on receipt basis and the appellant have received the payment for service in September, 2007. There is no deliberate default as the appellant, on being advised had raised supplementary invoice for the tax amount, they could collect the service tax payment only on 26th September, 2009 and after receiving the payment, they immediately deposited the tax amount on 19.09.2009. All the transactions are recorded in the books of accounts maintained in the ordinary course of business. Thus, the issue is more of correct interpretation of the Statute, and no case of deliberate default is made out. The penalty under Section 78 imposed on the appellant is set aside - appeal allowed.
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Central Excise
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2023 (2) TMI 7
Recovery of CENVAT Credit - it is alleged that the excess credit alleged to have been availed could not be recovered from the recipient unit - revenue neutral situation - time limitation - Rules 3 and 7 of the CCR, 2004 - HELD THAT:- The lower authorities have pressed into service Rules 3 and 7 of the CCR, 2004 to disallow and recover the CENVAT Credit availed by the recipient-appellant unit, but however, when the audit took place at the Head Office unit, which is the ISD unit, nothing is placed on record as to whether any Show Cause Notice was issued to the said unit which chose to distribute (to which Rule 7 of the CCR applies) alleging that the distribution by the ISD was wrong. There is also nothing brought out on record if the appellant, being a recipient unit, had any role or influence in the manner of distribution so that a case of wilful suppression with an intention to evade payment of duty, etc., could be justified. When the appellant took consistent stand inter alia that its Head office-ISD unit was regularly filing its ER-1 return, that the service provider unit at Head Office had Service Tax liability every year, which was paid in cash and that the entire tax liability was paid in cash every year rather than paying through the CENVAT Credit, the lower authorities have not denied anywhere the facts - this is clearly a revenue neutral situation since there is no Revenue loss at all to the Government and hence, the question of wilful suppression, that too with an intent to evade payment of tax, etc., would never arise. Time Limitation - HELD THAT:- It is the settled position of law that the Show Cause Notice in the case on hand has been served beyond the normal period, for which the only allegation levelled is wilful suppression with an intent to evade tax, but however, no supporting document/evidence is placed on record to justify suppression by the appellant, who is only a recipient, and consequently, the demand also cannot sustain being hit by time-bar - It is clear from the facts as borne out of the records and also as forthcoming from the orders of lower authorities that a mere allegation has been made as to the wilful suppression with an intent to evade tax which, if considered for the sake of arguments, may at the most justify invoking the extended period of limitation. But in any case that alone is not sufficient since the Department has to prove that there is a revenue loss to the exchequer. The disallowance of CENVAT Credit in the hands of the recipient-appellant, as confirmed in the impugned order, is incorrect and not sustainable in the eye of law - Appeal allowed.
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2023 (2) TMI 6
Valuation of excisable goods - consideration received by the appellant from Honda India under the guise of compensation was liable to be included in the transaction value of goods or not - extended period of limitation - HELD THAT:- It is clear from the order passed by the Commissioner (Appeals) that even though the agreement between the applicant and the Honda India did not have a condition for payment of compensation if the goods manufactured by the applicant were not received by the Honda India, yet the applicant paid compensation for non-lifting of such goods. The Commissioner (Appeals) also noted that the goods were specifically manufactured for Honda India for its 2CV Model, yet they were sold as scrap and that perusal of the sample invoices showed that the buyers of the goods were not scrap dealers - it was a business arrangement between the applicant, Honda India and the buyers to evade payment of excise duty. In other words, the arrangement between the appellant and Honda India was such that the goods would be sold at a lesser price by declaring them as scrap and the balance amount would be paid by Honda India by terming the amount as compensation‟. Thus, the amount received towards so called compensation‟ was to be included in the transaction value. The Tribunal also recorded such a finding and the Supreme Court has confirmed this finding. The amount received by the applicant from Honda India was not even shown in the ER-I Returns filed by the applicant. Much emphasis has been placed by the learned counsel for the applicant on the balance sheet of the applicant for the financial year 2011-12. All that is recorded in the said balance sheet is compensation from customers- Rs.49,156,375/- . It cannot be gathered from this statement in the balance sheet that this amount was received by the applicant from Honda India towards compensation for the cancellation of the agreement to supply the spare parts which were ultimately sold as scrap. The finding of the Tribunal that it transpires from the business arrangement between the appellant, Honda India and the buyers of scrap that the appellant had received some amount from the buyers of scrap and some amount from Honda India for the value of the auto parts sold by the appellant has been confirmed by the Supreme Court in the judgment and order dated February 14, 2022. The extended period of limitation contemplated under section 11A (4) of the Excise Act was, therefore, correctly invoked in the facts and circumstances of the case. Application dismissed.
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2023 (2) TMI 5
Rejection of claim of remission of duty - rejection on the ground that appellant have not only claimed the tax amount from the insurance but also the excise duty for which the remission of duty has been claimed - HELD THAT:- It is found from the records that the appellant had neither paid any duty on the finished goods nor made any claim in respect of any duty of excise on the finished goods. Therefore, the entire base of the Learned Commissioner for denial of the remission claim is based on the incorrect fact. Since the appellant have admittedly reversed the entire credit on the inputs contained in finished goods, work in progress and input as such, the same being the stock of the raw material and the appellant have correctly made the claim. Since the detailed chart showing the bifurcation was not before the adjudicating authority, in the interest of justice it is appropriate that the adjudicating authority should reconsider the matter - The other appeal bearing No. E/12091/2017 being consequent to the order of the commissioner rejecting the remission also needs to be reconsidered. Appeals are allowed by way of remand to the adjudicating authorities to pass fresh orders by the respective adjudicating authority.
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CST, VAT & Sales Tax
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2023 (2) TMI 4
Exemption from tax - Taxability of Selling of food items in the school / hostel - whether the petitioner s educational institution imparts education on non-profit motive but not on commercial basis and if so, it is exempted from tax under AP VAT Act, 2005? - HELD THAT:- The activity of a person must be a trade, commerce or manufacture so as to bring such activity as business . If such business is carried out for buying, selling, supplying or distribution of the goods, such person who is involved in that business shall be regarded as dealer and under Section 4 of A.P. VAT Act, such dealer shall be excisable to tax. In the instant case, as rightly submitted by the counsel for petitioner, the fundamental or principal activity of the petitioner s educational institution is not that of buying, selling, supplying or distribution of the goods rather its function is to impart education that too on a non-profit motive. The petitioner in its hostel supplies food to the students but the said activity is not done in the course of business of running restaurant, eating house or a hotel. As rightly submitted by the learned counsel for the petitioner, section 2(10) (d) of the VAT Act specifically refers to only a restaurant or eating house or a hotel but the word hostel is not specifically included therein. Therefore, the inclusion of the petitioner s institution in the category of dealer for the purpose of AP VAT Act, 2005 and assessing the same to tax U/s 21 of AP VAT Act is not correct. The petitioner s case was that the fee charged from the visitors of the hostel is not the actual price of the food consumed by them and the principle of charging the fee is the same as in the case of other hostels where students reside and that a fixed fee is charged for tea, breakfast, lunch and dinner and the same has no relation to the actual consumption and the charges paid by the residents have really a very remote relation to the actual value of the food stuffs consumed by them. Thus, according to petitioner, the transaction of supplying food stuffs to the residents of the hostel cannot be termed as sale nor can the petitioner be said to be carrying on business of buying or selling goods within the meaning of UP Sales Tax Act. The respondent however contended that the petitioner charges price of foodstuffs supplied to the visitors separately in the bills and that the customers of the petitioner include all and sundry. In the instant case also the principal function of petitioner is to impart education with a non-commercial motive and running of the hostel is incidental to the main activity and as such, though subsidized prices are charged from the students for supply of the food items and beverages, the transaction cannot be treated as sale of goods to bring the activity within the mischief of AP VAT Act - In the instant case the 2nd respondent has passed the impugned assessment order though the petitioner under law does not come under the purview of dealer as per the provisions of AP VAT Act, 2005. Therefore, the impugned order can be said to be passed wholly without jurisdiction and hence the writ petition is maintainable. Petition allowed.
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2023 (2) TMI 3
Seeking grant of refund alongwith interest - composite scheme - time limit of assessment - re-assessment expired long time back - HELD THAT:- After filing of the annual return, the time limit for assessment and re-assessment under the VAT Act had expired and no assessment or re-assessment is pending at this stage, we allow this writ petition with the direction to the respondents to grant the refund of Rs.2,78,129/- due as per the self-assessment return under the VAT Act for the year 2007-2008 along with statutory interest payable on such refund within a period of six weeks from the date of receipt of the writ of this order. Petition disposed off.
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2023 (2) TMI 2
Direction to grant outstanding refund for the year 2008-2009 along with proportionate interest - time limit for re-assessment under the VAT Act expired or not - HELD THAT:- After filing of the annual return, the time limit for assessment and re-assessment under the VAT Act had expired and no assessment or re-assessment is pending at this stage, this writ petition is allowed with the direction to the respondents to grant the refund of Rs.13,82,437/- due as per the self-assessment return under the VAT Act for the year 2008-2009 along with statutory interest payable on such refund within a period of six weeks from the date of receipt of the writ of this order. Petition disposed off.
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Indian Laws
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2023 (2) TMI 1
Dishonor of Cheque - particular phrase relating to enquiry being conducted under Section 202 of the Code of Criminal Procedure is missing in the order dated 13.03.2020 or not - Section 202 of the Code of Criminal Procedure - HELD THAT:- In paragraph 12 of the Larger Bench judgement of the Hon ble Supreme Court [ [ 2021 (12) TMI 175 - SUPREME COURT] ], it has been held If the Magistrate holds an inquiry himself, it is not compulsory that he should examine witnesses. In suitable cases, the Magistrate can examine documents for satisfaction as to the sufficiency of grounds for proceeding under Section 202 - In Sunil Todi s case [ [ 2021 (12) TMI 175 - SUPREME COURT] ], the Hon ble Supreme Court in paragraph 47 has approved the manner in which the Magistrate proceeds to issue process after adverting to the complaint, the affidavit filed by the complainant, the evidence as per evidence list and the submissions of the complainant. By way of the present revisional application, the petitioners have not been able to show that the non-application of mind so contended in respect of the order issuing process has resulted in failure of justice because of false implication of any of the petitioners. The contention of the petitioners is definitely correct that the particular phrase relating to enquiry being conducted under Section 202 of the Code of Criminal Procedure is missing in the order dated 13.03.2020, however, the whole of the process is undertaken do satisfy such enquiry which has been undergone by the learned Magistrate, prior to issuance of process - there are no grounds to interfere with the order issuing process which has been challenged by the petitioners so far as the non-compliance of Section 202 of the Code of Criminal Procedure is concerned. Thus, no case for interference has been made out in the present revisional application - revision application dismissed.
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