Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 20, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Rejection of refund claim - It is settled principle of law that if an allegation or ground is not made at the time of issuance of show cause notice, the authority cannot go beyond the scope of show cause notice to create new ground at the later stage of adjudication - it is only after the submissions of petitioner’s reply, the Adjudicating Officer decided the refund application on the grounds which were not part of the show cause notice i.e. related to maintaining of two GSTIN number - Matter restored back with direction - HC
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Levy of tax and penalty - Failure to produce E-way Bill for certain items - tax and penalty were imposed only upon the goods which were not accompanied with any document i.e. GRs, Invoices and/or E-way bills. - Learned counsel for the petitioner has not been able to dispute the fact that invoices relating to 9 items were never produced before the Proper Officer and Polyester Fabric was also found in excess by 11,300 meters - Petition dismissed - HC
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Validity of assessment order u/s 74(5) - SCN was not uploaded on the GSTN portal / website - Orders are set aside and the matter is remanded back to the Assessing Officer to pass fresh orders after issuing notice as contemplated under Rule 142(1) of the CGST Act and afford opportunity of hearing to the petitioner(s) in accordance with law. - HC
Income Tax
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It is an imperative duty of the authorities to be updated with the law and to apply it to the case at hand before taking decisions and passing orders. Feigning ignorance of law by authorities only increases the burden of the Courts. - HC
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Reopening of the assessment u/s 147 - Reason to believe - change of opinion - merely because another director of the same company had disclosed the income received differently, cannot be a ground for reopening and the same is evidently a change of opinion not only based on conjectures and surmises but also a case of blindly relying on information and borrowed satisfaction which is not permitted for reopening - HC
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Validity of assessment order - Non responses to notices sent u/s 142(1) and 143(2) - Mistake on the part of Auditor / Tax Practitioner - The petitioner having failed to respond to the several notices sent by the respondent, the petitioner cannot contend that he was not afforded personal hearing. - this Court is inclined to permit the petitioner to file the statutory appeal as against the impugned assessment order within a time frame to be fixed by this Court. - HC
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Reopening of assessment u/s 147 - Reasons to belive - change of opinion - there was no new material which had come to the notice of the Assessing Officer and the entire reference in the reasons recorded is only to the material on record. - issue with regard to depreciation had been gone into by the said AO without making any disallowance as regards the claim of the depreciation - the reassessment proceedings were nothing but a case of ‘change of opinion’, which does not comply with the jurisdictional foundation under section 147 - HC
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Stay of rececovery of demand - Capacity/status of a Assessee as Trust OR status of a Firm - the deposit would itself occasion undue hardship to the petitioner who are Trust created for the purpose of benefiting the employees. - Respondents directed to consider the Petitioner’s application under their status as a Trust and try to dispose of the matter preferably within a period of 4 months - HC
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Disallowance u/s 57 - disallowing of interest paid to bank which has been claimed by assessee against the income from other sources - The claim for netting off of interest in terms of Section 57(iii) of the Act was in order. - Since the Revenue was accepted the principle consistency in earlier assessment years and also in subsequent assessment years there is no justification and deviating from the said principle only for the assessment year under consideration i.e. AY 2015-16. - AT
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Capital Gain - Transfer u/s 2(47)(v) - assessment year - AO himself has given credit for the amount of capital gains declared for the assessment year 2013-14, while computing capital gains in the impugned assessment year. Once the AO came to the conclusion that the assessee has offered capital gains in the earlier assessment year, then there is no reason for the AO to compute capital gains on transfer of very same asset in the impugned assessment year, because transfer will not take place in two assessment years. - AT
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Addition u/s 68 - unsecured loans - the AO did not acknowledge the confirmation along with PAN number, ITR and bank account of the appellant which were very relevant regarding the identity, capacity of the creditors showing their creditworthiness and genuineness of the transaction of unsecured loans the AO simple rejecting the same without any basis and could not satisfied the requirement of valid invocation of provision of section 68 - CIT(A) rightly deleted the additions - AT
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Addition u/s 68 - depositor is one of the directors of the company - To discharge the burden which Section 68 casts upon the assessee, at least some plausible explanation is required to be furnished, which must be backed by some reliable evidence. - the assessee has not discharged the burden which was cast u/s 68 - AT
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Penalty u/s 271 (1)(c) - capital gain assessed as per the provisions of section 50C/2(14) - The direction of CIT(A) is clear that penalty cannot be imposed on the basis of legal fiction of section 50C - He therefore, directed to work out the concealed capital gain in accordance with the sale value of the property - No infirmity into the direction of CIT(A). It would be open before the AO even to decide whether the land in question was a capital asset or not. - AT
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Deduction u/s 80IB(10) - cut of date for claiming deduction u/s 80IB(10) - No provision under the Municipal Corporation Act of Maharashtra Government was shown to us, which empowers the local authorities to issue completion certificate even without completion of construction of the entire building. CIT(A) had grossly fell in error in allowing the deduction in respect of buildings B, C & D overlooking the plain provisions of the Act and without examining case in detail. - AT
Customs
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Levy of Customs duty - importer of vessel "M.V. Vishwa Yash" or not - deemed importer - as the permission was granted in favour of the SCI, the respondent cannot be said to be importer who has purchased the vessel which was delivered in its favour of 5-4-1997. - it cannot be said that the CESTAT and/or the High Court have committed any error in holding that the respondent cannot be said to be the importer and, therefore, not liable to pay the custom duty. - SC
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Jurisdiction - power to issue SCN - CIRP proceedings - Approval of resolution plan - The impugned show-cause notice seeks to do, what is, in fact, an exercise in futility, given the law laid down by the Supreme Court in Ghanashyam Mishra. The Supreme Court has enunciated, in no uncertain terms, the clean slate principle; it cannot be set at naught by entertaining claims that concern the period obtaining before the approval of the Resolution Plan. - HC
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Seeking immediate release of goods without charging demurrage/detention charges or rent - Concor incurs huge expenditure while performing its functions and its main source of revenue is container/ cargo handling and storage services rendered to customers - If the contention raised by the learned counsel for the Petitioner would be accepted then it will cause huge losses to CONCOR which has been formed from public exchequers. - HC
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Absolute Confiscation - gold - packing material - prohibited goods or not - discretion vested with the appropriate authority - While it is true that the Appellate Authorities may or may not agree with the submissions of the petitioner, it is rudimentary that quasi-judicial authorities ought to apply their mind to the issues raised and material on record before arriving at a conclusion - Matter restored back - HC
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Revocation of Customs Broker License - case of facilitating the fraudulent exports carried out - In the present case, the matter was pending under enquiry and liberty was granted to proceed once additional facts emerge. So, it is not a case of double jeopardy. The final order revoking the license was passed only after following due process of law in terms of Regulation 20 of CBLR, 2013. - AT
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Classification of imported goods - Rate of basis customs duty - Electric Vehicle Kits - The Electric Vehicle kits, as described by the applicant in the disassembled state and presented together as a kit merits classification under Heading 8703 - They are presently eligible for 15 per cent rate of BCD applicable thereon. - AAR
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Classification of import goods - Luprosil Salt Calcium - premix for animal feed - the Luprosil salt is classifiable under Heading 2915 and more specifically, under sub-heading 2915 50 00 of the First Schedule to the Customs Tariff Act, 1975. - AAR
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Classification of import goods - omega-6 fatty acid product, namely Lutalin - The Lutalin is classifiable under Heading 2309 and more specifically, under sub-heading 2309 90 90 of the First Schedule to the Customs Tariff Act, 1975.- AAR
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Classification of import goods - The basic raw material for “Scented & Flavoured and/or Sweetened Betel Nut” is raw betel nut, which is classifiable under Chapter 8, more specifically sub-heading 0802 80. Chapter 8 covers only edible nuts; inedible nuts and fruits being excluded by virtue of Chapter Note 1; and that betel nut/supari are masticatory. - the goods covered by the present application are prima facie “Scented & Flavoured and/or Sweetened Betel Nut” and not “preparation of Scented & Flavoured and/or Sweetened Betel Nut” - AAR
IBC
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CIRP - Preferential and fraudulent transaction - The Adjudicating Authority has erroneously dismissed the application filed by the Resolution Professional under Sections 43 and 66 of the IBC - Being satisfied that the Appellant has successfully established that the Respondents had indulged in transactions which squarely attract Sections 43 and 66 of the IBC, the Respondents are directed to pay back the sums received by them from the Corporate Debtor - AT
Service Tax
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Taxability of services provided by the respondent in relation to Hydro Electric Projects - it has to be held that the Commissioner committed no illegality in holding that the works undertaken by the appellant would fall within the exclusion clause of the definition of ‘construction and industrial construction’ service and the taxable ‘works contract’ service. - AT
Central Excise
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Rebate of Excise Duty - inclusion of post removal charges from the factory gate to the Port of Export - the observations made by the Commissioner (Appeals) clarifying that the circular dated 28.02.2015 is not restricted for availment of CENVAT Credit and would also be applicable on rebate of excise duty is the correct interpretation on facts and law. Thus, the order passed by the Revisionary Authority dated 19.12.2019 does not stand to scrutiny and is hereby reversed and set aside - HC
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Disallowance of Cenvat credit as was distributed by the appellant’s Input Service Credit Distributor (ISD) - input services or not - extended period of limitation - The adjudicating authority below has failed to appreciate the catena of decisions not only of this Tribunal but also of their own department with respect to the impugned services and even with the decisions passed by departmental authorities in favour of the present appellant themselves permitting them to avail Cenvat credit distributed by their ISD. The order under challenge is therefore hereby set aside. - AT
Case Laws:
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GST
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2023 (2) TMI 726
Cancellation of registration of petitioner - It is the contention of the petitioner that the respondent no.3 has issued a show cause notice on 11.08.2022 for non-furnishing of the returns for a period of six months - HELD THAT:- This court is of the view that the respondent authority shall give an opportunity to the petitioner to submit his return for the period the show cause notice dated 11.08.2022 was issued. Further, the respondents are directed to release the GST portal which they have blocked relating to the petitioner. The respondents are at liberty to proceed in the matter in accordance with law. The petition is disposed off.
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2023 (2) TMI 725
Seeking defreezing of provisionally attached bank account of petitioner - Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act) - HELD THAT:- It is not disputed that the provisional attachment order dated 06.02.2020 was passed in exercise of powers under Section 83 of the CGST Act. In terms of Sub-section (2) of Section 83 of the CGST Act, the provisional attachment would cease to have any effect after the expiry of the period of one year from the date of the said order. Thus, in terms of Section 83(2) of the CGST Act, the provisional attachment order dated 06.02.2020 ceased to be operative after 06.02.2021. After the provisional order dated 06.02.2020 was passed, a show cause notice dated 30.07.2021 was issued to the petitioner. Admittedly, the said show cause notice has not been adjudicated till date. Since the petitioner s relief is limited to the de-freezing of its Bank Account, we are refraining from examining whether the proceedings in relation to the said show cause notice can now continue. The petition is allowed.
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2023 (2) TMI 724
Condonation of delay of 27 days in filing appeal - petitioner preferred an appeal before the competent authority under the West Bengal Goods and Services Act after a delay of 27 days from the statutory period of 3 / 4 months - HELD THAT:- The learned advocate for the petitioner referring to a decision SURAJ MANGAR VERSUS ASSISTANT COMMISSIONER OF WEST BENGAL STATE TAX, COOCH BEHAR CHARGE, JALPAIGURI, WEST BENGAL ORS. [ 2023 (2) TMI 544 - CALCUTTA HIGH COURT] submits that this Court can allow the petitioner to file an appeal where there is delay of negligible period by extending time as stipulated under Section 107 even after expiry of three plus one month. In view of such submission and under the facts and circumstances of the case, the Appellate Authority is directed to accept the Memorandum of Appeal and decide the appeal on merits within six weeks - It is made clear that this Court has not gone into the merits of the matter and the Appellate Authority is at liberty to decide the factual and legal issues involved in the appeal independently without being influenced in any way by this order. Petition disposed off.
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2023 (2) TMI 723
Rejection of refund - order beyond the scope of show cause notice (SCN) - Maintaining two GST numbers - allegation of mismatch in the outward tax supplies in GSTR-3B returns compared to GSTR-1 - HELD THAT:- After going through the documents available on record it appears that a show cause notice was issued to the petitioner on 17th May, 2021 on the application for refund filed by the petitioner under Section 54 of CGST Act, 2017. It further transpires that the petitioner herein refuted the allegation of the department given in the show cause notice vide his reply by clarifying among other things that returns in FORM GSTR-3B and FORM GSTR-1 have been correctly filed. However, interestingly, the order in original which was passed pursuant to the reply to the show cause notice did not deliberate with the content of reply but the adjudicating officer has proceeded to pass an order rejecting the refund application on the grounds which were never part of the original show cause notice as indicated. It is settled principle of law that if an allegation or ground is not made at the time of issuance of show cause notice, the authority cannot go beyond the scope of show cause notice to create new ground at the later stage of adjudication - In the instant case, had there been any opportunity given to the petitioner, the respondents might have proceeded to issue a subsequent show cause. At the cost of repetition, it is stated that it is only after the submissions of petitioner s reply, the Adjudicating Officer decided the refund application on the grounds which were not part of the show cause notice i.e. related to maintaining of two GSTIN number: one under RCM and other under forward charge mechanism (FCM) with two different rates of GST to be charged upon the services being provided. The impugned show cause notice dated 17th May, 2021 and the consequent order in original dated 14.06.2021 and order in appeal dated 08.12.2021, are quashed and set aside - Application allowed.
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2023 (2) TMI 722
Levy of Interest - non payment of the credit component - petitioner claims that they are not liable to pay any interest as per the impugned demand on the ground that only in respect of the cash component mentioned in the impugned demand, they are liable to pay interest - HELD THAT:- The issue as to whether an assessee is liable to pay any interest for the alleged non payment of the credit component is covered by the decisions of two learned Judges of this Court in the case of M/S. SRI PRIYANGA AGENCIES REP. BY ITS PROPRIETOR V. SRIDEVI VERSUS THE ASSISTANT COMMISSIONER OF CGST CENTRAL EXCISE VILLUPURAM, THE SUPERINTENDENT OF CGST CENTRAL EXCISE VILLUPURAM, THE BRANCH MANAGER LAKSHMI VILAS BANK LTD. [ 2022 (12) TMI 1372 - MADRAS HIGH COURT] in the case of M/s.Refex Industries Limited vs. The Assistant Commissioner of CGST Central Excise and two others [ 2020 (2) TMI 794 - MADRAS HIGH COURT ], wherein they have interpreted and explained Section 50(1) of the GST Act, 2017 - The learned judges have held in clear terms that Section 50 of the GST Act can be applied demanding interest only in cases of belated cash payment towards GST, but not on input tax credit available all the while with the department to the credit of the assessee. Writ petitioner to demonstrate to the satisfaction of Respondents 1 and 2 undisputed payments (if any) within three weeks from today i.e., on or before 28.02.2023 - On demonstration to the satisfaction of respondents 1 and 2 (as above), the impugned notice will stand set aside - Petition disposed off.
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2023 (2) TMI 721
Levy of tax and penalty - Failure to produce E-way Bill for certain items - tax and penalty were imposed only upon the goods which were not accompanied with any document i.e. GRs, Invoices and/or E-way bills. - all the invoices carried by driver were not accepted to be complete and accurate, due to non-production of E-way bills - complete set of invoices were submitted with the Appellate Authority later on - HELD THAT:- Pursuant to 101 of Amendment of the Constitution three enactments were passed by the Parliament i.e. the Integrated Goods and Services Tax Act, 2017, the Central Goods and Services Tax Act, 2017, the Union Territory Goods and Services Tax Act, 2017 - In addition to the aforesaid three enactments, the Legislature of the State of Haryana on 08.06.2017 passed an enactment known as the Haryana Goods and Services Tax Act, 2017 (HGST Act). In matters of inter-State trade and commerce, including import into the territory of India and out of it, the IGST Act, 2017 applies, whereas in matters of intra-State trade and commerce the CGST Act, 2017 and the State Goods Services Tax Act apply. Reference was made to the pronouncement of Hon'ble High Court of Madhya Pradesh in the case of ADVANTAGE INDIA LOGISTICS PVT. LTD. VERSUS UNION OF INDIA OTHERS [ 2018 (9) TMI 1417 - MADHYA PRADESH HIGH COURT ] and Hon'ble Allahabad High Court in the case of SATYENDRA GOODS TRANSPORT CORP. THRU. PROP. BHUWAN KOHLI A VERSUS STATE OF U.P. THRU. PRIN. SECY. TAX REGISTRATION OTHERS [ 2018 (4) TMI 807 - ALLAHABAD HIGH COURT ] - the two judgments are on the proposition that cross empowerment under Section 4 of the IGST Act, 2017 and Section 6 of the CGST Act, 2017 means that State Authorities are empowered under the HGST Act, 2017 can also enforce the provisions of the CGST Act, 2017 or IGST Act, 2017. After going through the departmental record, the Proper Officer had not imposed taxes and penalty upon the goods which were accompanied with aforesaid 11 invoices and GRs inspite of the fact that 3 invoices are without E-way bills and remaining 8 invoices having E-way bills which were also invalid due to non-entering of Part B or entering different conveyance number. Since from the date of inspection i.e. 08.09.2021 and even before the Appellate Authority, invoices of 9 goods and GRs were never produced by the driver when the goods were checked. Moreover, the driver had produced only 11 invoices and 11 GRs and 8 E-way bills and out of these 11 invoices, even 3 invoices were without E-way bills. Even the remaining 8 invoices having E-way bills were also invalid due to non-entering of Part B or entering different conveyance number, still the tax and penalty were not imposed upon the goods which were accompanied with 11 invoices and GRs and tax and penalty were imposed only for non-producing invoices and GRs with respect to 9 items and Polyester Fabric which was found in excess by 11,300 meters to that shown in the invoice No. 140/06.09.2021 of M/s. Jai Enterprises. Learned counsel for the petitioner has not been able to dispute the fact that invoices relating to 9 items were never produced before the Proper Officer and Polyester Fabric was also found in excess by 11,300 meters to that shown in the invoice No. 140/06.09.2021. Appeal dismissed.
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2023 (2) TMI 720
Validity of assessment order u/s 74(5) - SCN was not uploaded on the GSTN portal / website - Whether show cause notice as contemplated under Rule 142(1) of Central Goods and Services Tax Act, 2017 (CGST Act) was mandatory to be followed before passing order under Section 74(5) of the Central GST Act/Punjab GST Act, 2017 - HELD THAT:- Reference was made to Rule 142(1) of the CGST Act and it was observed that the only mode prescribed for communicating to the show cause notice/order is by way of uploading the same on the website of the revenue. The writ petition was allowed with liberty to the revenue to follow the procedure prescribed under Rule 142 (1) of the CGST Act and impugned demand dated 18.09.2020 is struck down. In the facts of the present case, it is nowhere stated in the reply dated 06.08.2021 filed by the respondents that they had uploaded the notice on the website of the revenue as per Rule 142(1) of the CGST Act, 2017 before passing final orders dated 12.03.2021 and 10.03.2021 (Annexures P- 6 and P-7). Hence, the present writ petitions are allowed and orders dated 12.03.2021 (Annexure P-6) and detailed order dated 10.03.2021 (Annexure P-7) are set aside and the matter is remanded back to the Assessing Officer to pass fresh orders after issuing notice as contemplated under Rule 142(1) of the CGST Act and afford opportunity of hearing to the petitioner(s) in accordance with law.
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Income Tax
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2023 (2) TMI 727
Addition u/s 68 - basis for the issue of the share capital by the assess is not explained - HELD THAT:-Undisputedly, there is no unexplained cash credit uncovered by the AO. We are at a loss to understand as to how the aforesaid transaction has been brought under the ambit of Section 68 of the Income Tax Act. Prima facie we are inclined to accept the contention that no person familiar with the Income Tax Act, could possibly accept the said assessment order and the same is without application of mind. As noted above, there is no dispute as to the nature of the transaction. AO seems to harbour a view that the valuation is higher than the one disclosed by the assessee. Respondent prays for some time to seek instructions.
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2023 (2) TMI 719
Reopening of assessment u/s 147 - Change of opinion - case reopened beyond the period of four years - HELD THAT:- While the AO has made a plain statement that there was failure to disclose fully and truly the material facts, yet the AO has neither disclosed nor identified as to what were those material facts which were not disclosed in the earlier assessment proceedings. AO, on the other hand, did record in the reasons that the assessee had fled audited profit and loss account, balance-sheet and other details/schedules, however, short of admitting that the details with regard to reversed sale of TDR had been reflected documents and the return, proceeded to take shelter behind a non-existent excuse that the material facts were embedded in such a manner that the same could not be discovered with due diligence. As difficult to accept this plea inasmuch as all these details were contained in the return of income in the audited accounts and profit and loss statement, also explained in the notes attached to the auditor s report, besides the communication issued by the AO pursuant to which the order of assessment u/s 143(3) came to be passed. There was no failure on the part of the petitioner to disclose fully and truly any material fact to the AO relevant to the assessment year 2015-16. An order of assessment u/s 143(3) having been passed must be deemed to have been passed after considering all material facts in regard to the queries raised which stood duly answered in terms of the judgment of the Full Bench decision of Delhi High Court in Commissioner of Income-tax Vs. Kelvinator of India Ltd [ 2002 (4) TMI 37 - DELHI HIGH COURT] . As stated that there was no new information received by the AO and reference was made to the notes attached to the annual accounts submitted by the assessee-company for the purposes of reopening. It is, thus, clear that no new information was received by the AO between the date of the order of assessment under section 143(3) till the issuance of the notice impugned u/s 148 of the Act. Therefore, the ratio of the judgment in Jindal Photo Films Ltd. [ 1998 (5) TMI 20 - DELHI HIGH COURT] . The Apex Court in Commissioner of Income Tax V/s. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] held that there was a difference between power to review and power to reassess u/s 147 and that the AO had no power to review and that, if the concept of change of opinion was removed, then, in the garb of reopening of the assessment. We have no hesitation in holding that both the jurisdictional conditions had not been satisfied by the AO in the reasons recorded on the touchstone of section 147 of the Act - Decided in favour of assessee.
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2023 (2) TMI 718
Reopening of assessment u/s 147 - Reasons to believe - petitioner had deposited an amount in the financial year 2016-17 which had been brought to light by the Investigation Wing of the department - HELD THAT:- It is no longer res-integra that once during the course of assessment proceedings, a query was raised and replied, it will be presumed that the issue was the subject matter for consideration during the said assessment proceedings notwithstanding the fact that there is no specific mention of that particular issue in specific words in the order of assessment. An order of assessment u/s 143(3) having been passed must be deemed to have been passed after considering all material facts in regard to the queries raised which stood duly answered in terms of the judgment of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] as held that there was a difference between power to review and power to reassess u/s 147 and AO had no power to review and that, if the concept of change of opinion was removed, then, in the garb of reopening of the assessment, a review would take place. In the present case admittedly, between the date of the orders of assessment sought to be reopened and the date of forming of opinion by the Income-tax Officer nothing new has happened. There is no change of law. No new material has come on record. No information has been received. It is merely a fresh application of mind by the same AO to the same set of facts - basis for reopening remains the same which was otherwise the subject matter of scrutiny by the AO during the scrutiny assessment proceedings leading to passing of the order u/s 143(3) thus present case is nothing but a change of opinion which does not satisfy the jurisdictional requirement under section 147 - Decided in favour of assessee.
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2023 (2) TMI 717
Reopening of assessment u/s 147 - Reasons to believe - HELD THAT:- From a reading of the reasons recorded although it has been mentioned that income chargeable to take had escaped assessment on account of failure on the part of the assessee to disclose fully and truly material facts, yet juxtaposed with the later part of the reasons, which states that no scrutiny assessment had been made and that the only requirement was to initiate proceedings under Section 147 on the basis of reason to believe goes to prove that the assessing officer had reopened the assessment only on the basis of reason to believe and not failure to disclose material facts fully and truly, on which too the assessing officer ought to have been satisfied as matter pertained to reopening beyond the period of four years. In our opinion, the manner in which the assessing officer proceeded reflects total non-application of mind, which neither satisfies the jurisdictional condition, which was required to be followed in terms of Section 147 nor does it in the least satisfy the conditions prescribed in the case of Hindustan Lever Ltd. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] as the assessing officer had failed to highlight in the reasons recorded as to which was that material fact, which was not disclosed by the assessee in its return. Thus in our opinion, notice under Section 148 are held to be unsustainable and are accordingly quashed - Decided in favour of assessee.
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2023 (2) TMI 716
Reopening of the assessment u/s 147 - Reason to believe - change of opinion - HELD THAT:- No hesitation to hold that there was no failure on the part of the assessee to disclose fully and truly the material facts, nor there was any tangible material with the A.O. which would have otherwise justified the reopening of the assessment by issuing the notice impugned. In the present case, the AO has not specifically mentioned in the order, what was the tangible material, to conclude that there was an escapement of income. The AO has also failed to aver what material fact the assessee has failed to disclose fully and truly. It is evident that based on the case of Milan Saini who had disclosed his income under the head income from salary that the AO sought to reopen the case of the assessee. Apart from different heads on which the assessees have offered their income to be taxed i.e. there is no other ground based on which the AO is seeking to reopen. It is clearly the very same material on which a different view is being taken. The case of Phool Chand Bajrang Lal [ 1993 (7) TMI 1 - SUPREME COURT] relied upon by Mr. Kumar can be differentiated on the facts, in as much as the managing director of the Calcutta company Mr. Surana had made a confession about his business activity being that of a name lender and had not advanced any loan to the assessee in that case. As in the present case there is a full and true disclosure by the petitioner, which transaction has been accepted under the head claimed by the petitioner. Consequently, merely because another director of the same company had disclosed the income received differently, cannot be a ground for reopening and the same is evidently a change of opinion not only based on conjectures and surmises but also a case of blindly relying on information and borrowed satisfaction which is not permitted for reopening - It is an imperative duty of the authorities to be updated with the law and to apply it to the case at hand before taking decisions and passing orders. Decided in favour of assessee.
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2023 (2) TMI 715
Validity of assessment order - Non responses to notices sent u/s 142(1) and 143(2) - Mistake on the part of Auditor / Tax Practitioner - only contention of the petitioner is that the said notices were received in the Email address of the Chartered Accountant or the Income Tax Practitioner engaged by him for filing the revised return of income, and income Tax Practitioner or the Chartered Accountant did not communicate with the petitioner about the notices received from the respondent - HELD THAT:- The petitioner has engaged the service of the Chartered Accountant, only after reposing faith and trust in him. For the negligence if any of the Chartered Accountant or the Income Tax Practitioner, the respondent cannot be held responsible. Therefore, the contention of the petitioner that he was unable to respond to the notices under section 142(1) and 143(2) of the Income Tax Act has to be necessarily rejected. Having failed to make use of the opportunities granted by the respondent to respond to the notices sent by them, the question of entertaining this writ petition will not arise. However, the petitioner categorically claims that if he had been afforded an opportunity of personal hearing, he would have been able to establish before the authority concerned that he had infact incurred the expenditure which has been disallowed under the impugned assessment order. The petitioner having failed to respond to the several notices sent by the respondent, the petitioner cannot contend that he was not afforded personal hearing. The tax liability involved is also a meagre sum and therefore, the question of entertaining this writ petition, when the petitioner has failed to respond to the several notices issued by the respondent, will not arise. For the foregoing reasons, this Court is inclined to permit the petitioner to file the statutory appeal as against the impugned assessment order within a time frame to be fixed by this Court. This Court is of the considered view that a period of four weeks will suffice for the petitioner to prefer the statutory appeal, if aggrieved by the impugned assessment order.
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2023 (2) TMI 714
Maintainability of revenue appeal before HC on the ground of tax effect - whether the appeal filed by the revenue comes under the exception clause as enumerated in circular no. 3/2018 dated 11.07.2018? - CIT has initiated the proceeding under Section 263 but never referred to the audit objection - HELD THAT:- In the case at hand, the appeal filed by the Revenue in year 2020 against the impugned order dated 20.01.2020, for Assessment Year: 2010-11 appears to be not maintainable and liable to be dismissed in limine, as the amount of disputed issue in the aforesaid Tax Appeal is 2,05,96,503/- and the amount of tax in dispute on the said disputed issue is 68,64,814/- only (33.33% including Surcharge and Education cess) which is much below of Rs. 1,00,00,000/-. Therefore, in view of the aforesaid Circulars (Annexure-A A/1 issued by CBDT) and also in view of the settled proposition of law in this regard, the instant appeal filed by the department is otherwise not maintainable and therefore liable to be dismissed in limine. Thus it is crystal clear that on the one hand the tax effect in the instant case is much below the monetary limit as enumerated in Circular No. 3/2018 read with Circular No. 17 of 2019 and on the other hand none of the exception clause much less the audit objection is involved in this case and as such, we are having no hesitation in dismissing this appeal on the question of maintainability itself. Consequently, the instant appeal is dismissed at the admission stage itself.
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2023 (2) TMI 713
Reopening of assessment u/s 147 - Reasons to belive - change of opinion - Reopening within a period of four years from the end of the relevant assessment year - disallowance as regards the claim of the depreciation - whether there was any tangible material with the AO justifying reopening of the assessment or can it be said to be a case of review and change of opinion by the said Officer? - HELD THAT:- As clear from the record that the AO did enquire into the claim of depreciation and had called for certain details with regard to the assets written of, which were supplied with the Assessing Officer, and only then, the AO passed the order of assessment under section 143(3) of the Act and did not make any disallowance in regard to the claim of depreciation. All the material facts, therefore, were certainly before the AO and notwithstanding the fact that the order of assessment does not specifically discuss the issue, yet must be deemed to have been considered and allowed. As seen from the reasons recorded that there was no new material which had come to the notice of the Assessing Officer and the entire reference in the reasons recorded is only to the material on record. In the absence of any new tangible material available with the AO and in view of the fact that there is a general presumption that an order of assessment u/s 143(3) has been passed after proper application of mind and considering the fact that in the present case, the AO had sought clarification with regard to the assets which had been written off, details whereof were submitted during the course of the proceedings, it certainly goes to show that the issue with regard to depreciation had been gone into by the said AO without making any disallowance as regards the claim of the depreciation. We have no hesitation in holding that the reassessment proceedings were nothing but a case of change of opinion , which does not comply with the jurisdictional foundation under section 147 - Decided in favour of assessee.
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2023 (2) TMI 712
Assessment u/s 144C - TP adjustments were not received in time and the AO has confirmed the draft assessment order and the same is in violation of Section 144C - HELD THAT:- As submission that under Section 144C of the IT Act, the Assessing Officer is bound by the directions issued by the DRP and required to pass the assessment order in conformity with the directions issued within one month from the end of month in which such directions are issued. ITAT has recorded that impugned order is not in conformity with the provisions of Section 144C of the IT Act and barred by time. Shri.Dilip's contention is, the AO has rightly passed the order within time. But it is relevant to note that the said order is not in conformity with Section 144C of the IT Act.
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2023 (2) TMI 711
Stay of rececovery of demand - Capacity/status of a Assessee as Trust OR status of a Firm - Petitioner contended that no addition could be made u/s 69 of the Act and that the assessment had been done on the basis that the Petitioner was a firm instead of an individual - HELD THAT:- We are unable to accept the contentions of the respondents that they have considered all the contentions of the petitioner inasmuch as the revert relied upon at page no.234 and page no.269 clearly evince that the respondents have not considered the various letters addressed by the petitioner from time to time and their request to change their status from a Firm to a Trust. Apropos the judgement in the case of UTI Mutual Fund [ 2012 (3) TMI 333 - BOMBAY HIGH COURT] laying down the parameters for disposing of the application for stay, none of parameters have not been considered by the respondents in true letter and spirit as is evident from the orders passed that are based on the petitioner s status as a Firm instead of as a Trust. Apropos the judgment in the case of UTI MUTUAL FUND [ 2012 (3) TMI 333 - BOMBAY HIGH COURT] held that in considering whether a stay of demand granted, the Court is duty bound to consider not merely the issue of financial hardship if any, but also whether a strong prima facie case is made out and serious triable issues are raised that would warrant a dispensation of deposit. It was further held that calling upon petitioner to deposit, would itself occasion undue hardship where a strong prima facie case has been made out. We are of the opinion that the respondents have failed to consider the ratio of the judgment in its true letter and spirit inasmuch as respondents called upon the petitioner to deposit 10% of the demand when the petitioner had a strong prima facie case. In our view, the deposit would itself occasion undue hardship to the petitioner who are Trust created for the purpose of benefiting the employees. In the case UMUZA CONSULTANTS [ 2022 (12) TMI 804 - BOMBAY HIGH COURT] his Court has held that where a prima facie case in favour of the petitioner was found and it appeared that the assessment was high pitched, a stay was granted with regard to the impugned demand notices. In this case too it appears that the petitioner would have a strong prima facie case and they would not be liable to pay such a high demand if their assessment was considered in their capacity/status of a Trust as against the status of a Firm. We are in agreement with the legal propositions enunciated in the aforesaid three judgments of this Court and are bound by it and do not propose to take a different view. Accordingly, we are of the opinion that both the matters deserve to be remanded back with a direction that the Respondents to consider the Petitioner s application under their status as a Trust and try to dispose of the matter preferably within a period of 4 months from the date of this order.
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2023 (2) TMI 710
Validity of re-opening of the assessment - Unexpalined cash deposited in his bank account - no supporting evidence was furnished regarding creditworthiness of persons - HELD THAT:- As in the absence of any supporting evidence regarding source of such deposit, the AO was justified in re-opening the assessment and making addition out of cash deposits which was not explained and proved with the supporting evidences. - Decided against assessee. Cash deposits - Assessee ought to have been given opportunity for furnishing the confirmation from his wife and other persons who gave advance to the assessee. AO could have secured their attendance for recording their statement and confirming the same to the assessee before making the impugned addition. Therefore, to sub-serve the interest of substantial justice, we hereby set aside the findings of the authorities below on the issue of impugned addition. The issue is restored to the file of AO for decision afresh. Ground raised by the assessee partly allowed for statistical purposes.
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2023 (2) TMI 709
Addition u/s 69A - search and seizure operation conducted u/s 132 - cash was found in the residential premises of the assessee - HELD THAT:- As in course of assessment proceedings, the AO called upon the assessee to explain the source of cash found, however, the assessee did not comply. Even, Commissioner (Appeals) has sustained the addition by stating that the assessee has given a very sketchy and vague response. The assessee has not brought any contrary material/evidence before me to controvert the concurrent factual finding of the departmental authorities. Therefore, in absence of any cogent material brought on record by the assessee to disturb the findings of the departmental authorities, inclined to uphold the addition. This ground is dismissed. Addition u/s 69C - unexplained investment - as in course of search and seizure operation, jewellery was found in the residential premises of the assessee - HELD THAT:- Undisputedly, jewellery was found in course of search and seizure operation conducted in the residential premises of the assessee. As could be seen from the observations of the departmental authorities, the assessee could not furnish any evidence or valid explanation to explain the source of investment in jewellery. Before us, no contrary evidence has been brought on record by the assessee for enabling me to disturb the finding of the departmental authorities - we uphold the addition. Ground raised is dismissed.
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2023 (2) TMI 708
Capital gain computation - Determing sale consideraation - adopting the value of the property as fair market value instead of actual sale consideration - Applicability of provision of 50C - HELD THAT:- DVO has taken into consideration the highest sale instance as mentioned at Sl. No. 1 of the aforesaid chart, which is of dated 26.12.2013 @ 3,47,141/- per Sqm, but deliberately failed to consider the other instances mentioned at Sl. No. 2, 3 4 even dated 07.08.2014. As in the instant case, the property under consideration was sold in the financial year 2015-16, therefore, the instances of financial year 2014-15 would be most relevant for determining the sale consideration. Hence, considering the peculiar facts and circumstances, we deem it appropriate to direct the Assessing Officer to take into consideration, the average of three instances as mentioned at Sl. No. 2 to 4 of the chart referred to above and also add the fair market value of covered car parking as well, while estimating the fair market value of the property, as on the date of transfer and determine/compute the capital gain accordingly. Appeal filed by the Assessee stands allowed.
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2023 (2) TMI 707
Disallowance u/s 57 - disallowing of interest paid to bank which has been claimed by assessee against the income from other sources - principle consistency in earlier assessment years - AO while completing the assessment denied the claim for set off of interest paid by the assessee to banks/financial institutions against the income earned by the assessee from various companies on the ground that the assessee has not expanded the interest expenditure for earning interest income - CIT(A) sustained the stand of the AO observing that on perusal of the loan statements it is noticed that the loans have been granted either for purchase of home or for development of land - HELD THAT:- The principle accepted by the Revenue for the earlier four assessment years and three subsequent assessment years to the assessment year under consideration was that the assessee has been taking loans from the banks and financial institutions and the same were lent to various other companies for earning interest income and the claim for set off of interest paid to banks/financial institutions was allowed against interest earned by the assessee u/s 57 - Since the Revenue was accepted the principle consistency in earlier assessment years and also in subsequent assessment years there is no justification and deviating from the said principle only for the assessment year under consideration i.e. AY 2015-16. The Hon ble Delhi High Court in the case of Vodafone South Ltd. 2015 (10) TMI 22 - DELHI HIGH COURT] held that where assessee having availed of loan from HSBC advanced said amount to its holding company there was a direct nexus between earning of interest on loan advanced by assessee to its holding company and payment of interest to HSBC. The assessee s claim for netting off of interest in terms of Section 57(iii) of the Act was in order. Ratio of the decision applies to the facts of the case. We delete the disallowance made u/s 57 of the Act. Grounds raised by the assessee are allowed.
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2023 (2) TMI 706
Addition of advances - CIT-A deleted the addition - Whether Asessee provided all relevant evidences that the amount in question was not received during the year under consideration? - HELD THAT:- We find that the CIT(Appeals) in deleting the addition has given a finding of fact that the amount was received by the assessee in F.Y. 2008-09. Accordingly, considering the fact that since the advances were not received in the year under consideration, the learned CIT(Appeals) deleted the addition - This finding of fact is not rebutted by the Revenue. Therefore, we do not find any reason to interfere with the finding of the learned CIT(Appeals), same is hereby affirmed. Ground no. 1 is rejected. Disallowance of proportionate interest on loans and advances on which the assessee had not charged any interest - Whether assessee was having sufficient interest free funds available with him - CIT-A deleted addition - HELD THAT:- We find that the learned CIT(Appeals) has given a finding of fact that the advances were given out of interest free funds. CIT(Appeals) in the impugned order has stated t4hat the assessee was having non-interest bearing funds - This fact is not rebutted by the Revenue. We find no infirmity in the action of the learned CIT(Appeals), which is hereby affirmed. Ground of appeal is rejected. Addition on account of personal use of car and 10% disallowance of depreciation on car - HELD THAT:- There is no dispute with regard to the fact that the disallowance was made purely on ad hoc basis without pointing out as to what expenditure was not supported with evidence. Therefore, we do not see any reason to interfere with the finding of the learned CIT(Appeals) on this issue, the same is hereby affirmed. Ground raised by the Revenue is rejected. Addition of unproved alleged unsecured loans - HELD THAT:- CIT(Appeals) has categorically stated that the advances were made out of the maturity of the FDRs of the concerned persons and the evidences are duly enclosed in the paper book filed by the assessee. Therefore, we do not see any infirmity in the order of the learned CIT(Appeals) on the issue in question. Moreover, the AO has not brought any contrary material to rebut the finding of learned CIT(Appeals). Thus, ground of Revenue lacks on merit, same is rejected.
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2023 (2) TMI 705
Addition u/s 69C - Unexplained expenditure - HELD THAT:- As evident from the Clause 3 of the MOU, the buyer of event M/s Cinemine Entertainment Pvt. Ltd. has agreed to pay/reimburse the expenses directly to Hotel Leela Palace, Chanakyapuri. It is the specific case of the assessee is that whole expenses were borne by buyer of the event and no payment was made by the assessee. Since, the amounts have not been debited by the assessee and in fact paid by the buyer M/s Cinemine Entertainment Pvt. Ltd., the addition made by the A.O. u/s 69C which was sustained by the CIT(A) is deserves to be deleted. Addition as unexplained money - A.O. was of the opinion that the assessee had failed to discharge its primary onus to explain the incriminating document seized from its premises and an amount was added to the income of the assessee as unexplained money u/s 69A Section 115 BBE - During the appellate proceedings, the assessee has produced the cancellation letter of MOU by Rajat Pharmachem Ltd. wherein and the same has been refused to be accepted by the Ld.CIT(A) - HELD THAT:- We find that the said cancellation of MOU has been mentioned with the date of coming into effect as 06/06/2014. As per Clause 7 of the Memorandum of Understanding dated 04/04/2014 the MOU came into force once it is executed and valid for a period of one year the said MOU has been cancelled on 06/06/2014 itself and the security deposit was liable to be enchased after expiry of 75 days from the date of execution of the MOU. Since the cancellation has been done within the 60 days from the date of execution of the MOU, the question of encashing by the assessee does not arise. The revenue has not brought anything on record to prove that the amount has been debited from the account of the Rajat Pharmachem Ltd. or credited into the account of the assessee. Hence, in the absence of any evidence to prove either the payment from the bank or in the form of cash by the payer or receipt of the amounts into the bank or otherwise by the assessee, the addition made cannot be sustained. Disallowance of unexplained expenditure u/s 69 - Expenses are not debited in P L Account and not disclosed - HELD THAT:- As in the remand proceedings, the A.O. accepted that the expenses have been accounted by the assessee in its books of accounts and the payment has been made through the banking channels. However, the A.O. took stand that the said expenditure is not incurred wholly and exclusively for the purpose of business. Since, we find that the travelling expense are part of the business expenses and incurred for the business purposes, the addition made by the AO is being deleted. Addition on treating existing liability is cessation of liability u/s 41(1) - addition has been made based on the suspicion that the liabilities are outstanding more than 3 years and no confirmation from the creditors are field during the assessment proceedings - HELD THAT:- We are of the opinion that the Ld. CIT(A) has committed an error in upholding the addition accordingly, the addition made by the assessee which has been upheld by the CIT(A) is hereby deleted by allowing the Ground No.3 of the Assessee.
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2023 (2) TMI 704
Proceddings against company being insolvent - Reopening of assessment u/s 147 - financial creditor had filed an Application u/s 7 of Insolvency and Bankruptcy Code 2016 against the assessee in NCLT and judgment has been passed allowing the application - HELD THAT:- As no proceedings can be initiated against the corporate debtor, i.e., assessee company including the present proceedings before this Tribunal, or the income tax proceedings and recovery of demand or giving effect of any order. It is well settled now that, IBC has overriding affect on all the acts including Income Tax Act which has been specifically provided u/s 178(6) of the I.T. Act as amended w.e.f. 01.11.2016. Thus, in view of moratorium declared by NCLT, all the proceedings in the Court of Law, Tribunal etc. cannot continue in view of Amendment to Section 178(6) of the Act, therefore, no useful purpose is going to be served in continuing the present proceedings. We dismiss both the appeals filed by the assessee and the Revenue as not maintainable. However, liberty is granted to the assessee/Revenue to seek remedial measures in accordance with law as and when the moratorium period is over or order of the NCLT is modified revival of assessee company takes place or where it is necessary to do so in the interest of justice.
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2023 (2) TMI 703
Deduction u/s 54 - Deduction eligible for one residential house - case of the assessee is that 3rd 4th floor were used for own residential purpose and after two years, he gave it on rent - AO restricted the deduction under section 54 of the Act to the investment in 3rd floor keeping in view of the amendment to section 54 of the Act eligible for one residential house - HELD THAT:- Admittedly, the assessee has not been able to establish that 3rd 4th floor are not independent and thus, we find that the Assessing Officer has correctly allowed the claim of deduction under section 54 of the Act for 3rd floor. Restricting the cost of improvement - AO disallowed the payments for painting, grills and Gates and labour masonry tiles for want of supporting document/or bills without date signature - It is common for painting the building after purchase and providing grills gates and doing masonry tiles work. Accordingly, we direct the Assessing Officer to include the payments along with cost of improvement restricted by the Assessing Officer at ₹.2,46,888/- and rework out the indexed cost of improvement [₹.19,221/- + ₹.21,785/- + ₹.4,79,000/- + 2,46,888/-] and allow the same. Appeal filed by the assessee is partly allowed
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2023 (2) TMI 702
Computation of capital gains from transfer of property - Transfer u/s 2(47)(v) - assessment year - assessee along with his two brothers has executed the POA in favour of Shri. A. Sreedharan and relinquished right and interest in the property in favour of the purchaser - HELD THT:- Deemed transfer referred in to section 2(47)(v) took place in the assessment year 2013- 14, and thus, the assessee has rightly computed capital gains and offered to tax in the assessment year 2013-14. As regard the observation of the AO on the basis of subsequent sale deed dated 18.07.2013 and computation of capital gains for the assessment year 2014-15, we find that although, the POA holder executed registered sale deed dated 18.07.2013, but sale deed has been executed in favour of Mrs. Krishna, assessee s wife. What we understood is that POA holder had purchased a property from the assessee in the year 2012-13 by way of registered POA coupled with sale receipt dated 02.01.2013 and has only completed the formality of registration of documents in favour of his wife on 18.07.2013 - AO is completely erred in computing capital gains in the impugned assessment year on the basis of subsequent sale deed dated 18.07.2013, even though the assessee has made it very clear, he has offered capital gains in the assessment year 2013-14. AO himself has given credit for the amount of capital gains declared for the assessment year 2013-14, while computing capital gains in the impugned assessment year. Once the AO came to the conclusion that the assessee has offered capital gains in the earlier assessment year, then there is no reason for the AO to compute capital gains on transfer of very same asset in the impugned assessment year, because transfer will not take place in two assessment years. CIT(A), without considering relevant facts simply sustained additions made by the AO and thus, we set aside the order passed by the CIT(A) and direct the AO to delete the additions made towards capital gains from sale of property for the impugned assessment year. Appeal of assessee allowed.
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2023 (2) TMI 701
Unexplained cash deposits - search in the residential premises of the assessee cash was found and seized - during the course of assessment proceedings, the assessee has took a different stand and argued that his wife derives income from tuition fee and agricultural income and out of said source, she had given a sum gift - HELD THAT:- Assessee claims to have received gift from his wife, but he could not substantiate his claim with necessary evidence, except stating that she had withdrawn some amount from her bank account. CIT(A), after considering withdrawal from bank and subsequent deposits opined that assessee could able to explain source from his wife Smt. Hanspriya to the extent of Rs. 1 lakh only. Therefore, allowed relief to the assessee to that extent. In respect of amount received from his father Shri. Ramalingam, the assessee could not establish source for amount claimed to have been received from his father. Even before us, assessee could not file any evidence to justify source for cash found and seized during the course of search. We are of the considered view that there is no error in the reasons given by the ld. CIT(A) to sustain additions made towards cash found during the search and thus, we are inclined to uphold the findings of the Ld. CIT(A) and dismiss appeal filed by the assessee.
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2023 (2) TMI 700
Revision u/s 263 by CIT - doctrine of merger - appeal of the assessee is pending for adjudication AND Again for the same reasoning, the ld. PCIT has passed revision order under section 263 - addition towards unexplained cash deposits - HELD THAT:- Assessee has filed an appeal before the ld. CIT(A) and the appeal of the assessee is pending for adjudication. Again for the same reasoning, the ld. PCIT has passed revision order under section 263 of the Act, which appears to be incorrect for the reason that the addition made by the Assessing Officer was subject matter of appeal before the ld. CIT(A), which is to be covered by the concept of doctrine of merger in view of the provisions of clause (c) of Explanation (1) to section 263 - See KATHIRAVAN ANANTHALAKSHMI AND KATHIRAVAN SRINIVASAN VERSUS. case [ 2022 (8) TMI 1307 - ITAT CHENNAI] In the present case also, against the addition towards unexplained cash deposits, the assessee has preferred an appeal before the ld. CIT(A) and once this being contested before the ld. CIT(A), thus as per the provisions of clause (c) of Explanation (1) to section 263 of the Act, the doctrine of merger will apply and the ld. PCIT cannot take any cognizance of the matter while passing revision order under section 263 of the Act. Under the above facts and circumstances of the case, the revision order passed under section 263 of the Act is quashed. Appeal filed by the assessee is allowed.
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2023 (2) TMI 699
Appeals to the Appellate Tribunal - Proceedings u/s 119(2)(a) r.w.s. 201(1A) and 220(2A) - applicants for waiver of interest - DR pointed out that the appeal of both the applicants is not maintainable since the orders passed by the CCIT (TDS) are not appealable before ITAT under section 253 - HELD THAT:- We observe that the case of the applicants does not fall under any of the clauses of section 253 of the Act. Accordingly, since the order passed by the CCIT (TDS)-Ahmedabad is not maintainable before us, the appeals of the applicants are being dismissed for want of maintainability.
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2023 (2) TMI 698
Addition u/s 68 - unexplained share application money - establishing a factum of conduit company - HELD THAT:- In present case that the 40 investor companies, who invested the amount in the assessee company as share application money are not part of Keti Construction group of companies and in this situation, the onus lay upon the shoulders of the assessee cannot be held discharged in absence of substantiating the factum of capacity and credit worthiness of the investor companies and genuineness of the transaction. As in the present case, the assessee cannot be held as conduit company because capacity and credit worthiness of 40 companies who invested share application money in the assessee company and genuineness of transaction has not been established. Assessee cannot be held as intermediary company because the assessee has not successfully established that the source companies are also group companies and it is working merely as middleman entity and a conduit company. Therefore, the benefit of the judgements relied on by the assessee in the case of Omni Farms Pvt. Ltd. [ 2015 (1) TMI 1119 - ITAT DELHI] , Vijay Conductors India Pvt. Ltd. [ 2015 (9) TMI 1519 - DELHI HIGH COURT] and AGM Holdings Ltd. [ 2016 (3) TMI 1449 - ITAT DELHI] is not available for the assessee in the present case having distinct and dissimilar facts as the assessee could not substantiate the fact that it is a conduit company of Keti group of companies. Therefore, we are inclined to hold that since the assessee company has not discharged the onus lay on the shoulders of it that it is a conduit company and also has not successfully proved and established the identity, capacity and credit worthiness of 40 investor companies and genuineness of the transaction, therefore, the AO was right in making addition in the hands of the assessee u/s 68 of the Act and the ld.CIT(A) was also correct in confirming the same. Decided against assessee.
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2023 (2) TMI 697
Addition u/s 68 - unsecured loans - assessee has failed to prove the creditworthiness of the loans givers/ providers - admission of additional evidence by assessee - HELD THAT:- No substantial adverse comment by the A.O. on the additional evidence filed by the assessee, in the remand report. We are agreement with the conclusion recorded by the Ld. CIT(A) that the AO was unjustified in making addition by drawing and adverse inference only on the ground that the five parties to whom the notices were issued u/s. 133(6) of the Act did not respond. From the copy of remand report the Ld. CIT(A) observed that the AO did not acknowledge the confirmation along with PAN number, ITR and bank account of the appellant which were very relevant regarding the identity, capacity of the creditors showing their creditworthiness and genuineness of the transaction of unsecured loans the AO simple rejecting the same without any basis and could not satisfied the requirement of valid invocation of provision of section 68 - CIT(A) also noted the loans were taken though banking channels and AO did not bring any adverse or positive material against the assessee to prove the same as otherwise. In view of foregoing the order of Ld. CIT(A) granting relief to the assessee deleting the additions also gets strong support from the judgment of Winstral Petro Chemicals P Ltd [ 2010 (5) TMI 65 - HIGH COURT OF DELHI] We are unable to see any valid reason to interfere with the findings arrived by the Ld. CIT(A) and therefore we uphold the same. Accordingly ground nos. 1 to 3 of revenue are dismissed for A.Y. 2010-11. Assessment order passed u/s. 153A - Necessity of approval u/s. 153D - application of assessee under Rule 27 of the ITAT Rules - Bogus creditors - Whether addition was based on incriminating material in the form of two balance sheets marked as real and final which was found during the course of search action? - HELD THAT:- Approval u/s. 153D of the Act was sought by the DCIT/Assessing Officer on 28.03.2013 from ACIT which was granted on the same date i.e.28.03.2013 by the ACIT to the Assessing Officer and said approval has been held by the Tribunal in the case of Subhash Dabas [ 2022 (3) TMI 643 - ITAT DELHI] and subsequent order [ 2021 (11) TMI 1140 - ITAT DELHI] for A.Y. 2009-10 and 2010-11 2011-12. as has been given without application of mind and thus the same is invalid bad in law and liable to be quashed and Tribunal has quashed the same. Therefore, the application of assesses under Rule 27 of the ITAT Rules is allowed. We, therefore quash the assessment order passed u/s. 153A for A.Y. 2010-11 in the case of present assessee and all additions are deleted. The ground raised by the assessee under Rule 27 of the ITAT Rules is accordingly allowed.
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2023 (2) TMI 696
Addition u/s 68 - cash deposit - depositor is one of the directors of the company - As per AO assessee has to not only establish the identity of the source but also establish at least prima facie the capacity of such source and genuineness of the transaction - HELD THAT:- Merely pointing out to the source and the source admitting that it had made the payments is not sufficient to discharge the burden placed on the assessee by Section 68 - To discharge the burden which Section 68 casts upon the assessee, at least some plausible explanation is required to be furnished, which must be backed by some reliable evidence. CIT(A) after considering the submissions of the assessee, the bank statement which have been reproduced by the CIT(A) in his order has given a finding that for A.Y. 2015-16 assessee had filed return of income of Rs.9,05,220/- which could not explain the source of its deposit of Rs.51,00,000/-. He has further given a finding that for the cash deposit of Rs.27,50,000/- no reasonable explanation was furnished by the assessee and the summons issued to Hitesh Bhatia was not complied with. Before us, no fallacy in the findings of CIT(A) has been pointed out by assessee - if the circumstances required u/s 68 and the findings of CIT(A) are taken into consideration, then in the present case we are of the view that the assessee has not discharged the burden which was cast u/s 68 - In such a situation, we find no reason to interfere with the order of CIT(A) and thus the grounds of assessee are dismissed.
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2023 (2) TMI 695
Addition u/s 68 - difference between deposits in bank account and total turnover as unexplained cash credit - As per CIT no infirmity is found in the documents and, therefore, the addition is required to be deleted - HELD THAT:- We note that a perusal of the aforesaid order of ld. CIT (A) fairly shows that assessee has submitted the necessary details and ld. CIT (A) has passed a well-reasoned order giving factual findings. The Revenue has not been able to rebut any of the findings except submitting that these were not before the AO. For the sake of repetition, this argument is totally unsustainable as ld. CIT (A) has asked for remand report for additional documents but AO chose to ignore. In this regard, we do not find any infirmity in the order of ld. CIT(A) which is a well-reasoned order and uphold the same. Penalty u/s 271(1)(c) - Addition u/s 68 - HELD THAT:- Penalty made on the addition was already deleted by the ld. CIT (A) which we have also confirmed in our order herein above. As regards deletion of penalty on the balance amounts, we are in conformity with the reasoning of ld. CIT (A) that these additions do not warrant levy of penalty u/s 271(1)(c) of the Act on the touchstone of the decision of Hon ble Apex Court in the case of CIT vs. Reliance Petro Products 2010 (3) TMI 80 - SUPREME COURT . Hence, we uphold the order of ld. CIT (A). Revenue appeal dismissed.
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2023 (2) TMI 694
Addition u/s 69B - Tax levied u/s. 115BBE - excess gold and silver jewellery stock found at the business premises - whether Excess stock found in the business premises of the assessee during Survey is Business Income or Income from other sources u/s. 69A r.w.s. 115BBE - HELD THAT:- As decided SHRI SURESH VASUDEV VERNEKAR [ 2023 (2) TMI 598 - ITAT BANGALORE] relying on M/S CHOKSHI HIRALAL MAGANLAL case [ 2011 (8) TMI 1341 - ITAT AHMEDABAD] in the recorded statement, the assessee had declared that the undisclosed stock was generated from the business income. After that the revenue had not made any queries to prove that the said investment is in nature other than business. Only on the basis of the legal view, the identity of the items cannot be changed. In referred case, the ld. DR is trying to prove that the investment in jewellery was out of income from other sources. But the assessee is the trader of jewellery and nature of investment was out of income generated from business. No contrary judgment was placed by the ld. DR against the submission of assessee. We fully rely on the orders of Ragavs Diagnostic Research Centre Pvt. Ltd. [ 2022 (9) TMI 584 - ITAT BANGALORE] . Accordingly, the application of 69B on the assessee is not warranted. So, the tax levied by the revenue on the assessee u/s. 115BBE is liable to be rejected. - Decided in favour of assessee.
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2023 (2) TMI 693
Assessement u/s 144C - notice of demand issued at the stage of draft order - HELD THAT:- Since the A.O in the present case had issued notice of demand at the stage of draft order which actually ought to have been done at the stage of passing a final order, thereby assigning finality to the assessment at the stage of draft order itself. We hold that the resultant final assessment order actually got vitiated in the eyes of law and hence cannot stand. The A.O wanted the assessee to treat the order as the draft assessment order. Then he should not have issued demand notice and penalty notice to the assessee and even when he had issued he should have withdrawn them i.e. the said demand notice and penalty notice which in fact he had not done. Demand notice and the penalty notice are issued only after the final assessment is completed. Therefore, the A.O violated the provisions of section 144C - Accordingly, we set aside the assessment order declaring it null and void. The legal ground raised by the assessee is answered in favour of the assessee and against the revenue.
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2023 (2) TMI 692
Addition u/s 36(1)(iii) - disallowance of interest - loans and advances to sister concern - appellant company advanced certain sums to its concern, Darode Jog and Associates during the earlier previous years - HELD THAT:- Admittedly, no fresh advance was made during the previous year relevant to the assessment year under consideration. The appellant company had borrowed the funds from ASK Investment Managers Pvt. Ltd. i.e. third party in the form of allotment of debentures at 10%. The interest on borrowed funds had been claimed as deduction while computing the income of the assessee company. The assessee company had asserted before the Assessing Officer and the ld. CIT(A) that the advance was made by the assessee company to its sister concern, namely, Darode Jog and Associates for the business purposes i.e. procurement of lands in terms of agreement entered into by it with ASK Investment Managers Pvt. Ltd.. It is also an admitted fact that the said Darode Jog and Associates had not procured any land. Thus, the purpose of advance of loan only for business purpose is established beyond the doubt. In the present case, the assessee company had discharged the onus of proving the expenditure incurred for the purpose of business purpose. It is different matter that the beneficiary of loans i.e. Darode Jog and Associates had not utilized the funds for the business purpose. Therefore, the ratio of the decision of the Hon ble Supreme Court in the case of S.A. Builders Ltd. ( 2006 (12) TMI 82 - SUPREME COURT] is squarely applicable to the facts of the present case. Admittedly during the previous year relevant to the assessment year under consideration, the appellant firm had not advanced any loan to the Darode Jog and Associates and it is also an admitted fact that in the earlier years in which the loans were made, no disallowance of interest was made. Therefore, the ratio of CIT vs. Sridev Enterprises [ 1991 (1) TMI 52 - KARNATAKA HIGH COURT] and CIT vs. Givo Limited [ 2010 (7) TMI 151 - DELHI HIGH COURT] wherein, it was held that for the purpose of disallowance of interest u/s 36(1)(iii) in case where the disallowance was not made in the earlier years, the opening balance of loans and advances to sister concern should not be considered for the purpose of disallowance of interest. Thus, in the light of the above discussion, we are of the considered opinion that no disallowance of interest is warranted in the facts of the present. - Decided in favour of assessee.
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2023 (2) TMI 691
Penalty u/s 271 (1)(c) - capital gain assessed as per the provisions of section 50C/2(14) - Case re-opened on the basis of AIR information regarding sale of property - HELD THAT:- The direction of CIT(A) is clear that penalty cannot be imposed on the basis of legal fiction of section 50C - He therefore, directed to work out the concealed capital gain in accordance with the sale value of the property - No infirmity into the direction of CIT(A). It would be open before the AO even to decide whether the land in question was a capital asset or not. Therefore, grounds raised by the assessee are rejected.
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2023 (2) TMI 690
Disallowance of depreciation claimed on house being used as an office - addition applying the provisions of Section 36(l)(iii) - MAT credit - HELD THAT:- We find that it is a common contention of the ld AR that written submissions, the explanation and the supported documentation submitted by the assessee has either not been considered or properly appreciated by the CIT(A). It is a matter of record that the explanation and documentation so submitted by the assessee is available on record and therefore, in the fitness of things, we deem it appropriate that the matter is set-aside to the file of the ld CIT(A) to consider the same and decide the matter a fresh as per law after providing reasonable opportunity to the assessee. Both the parties have agreed to the same. Therefore, leaving the various contentions open and not deciding on the merits of the case, the matter is set-aside to the file of the ld CIT(A). Appeal of the assessee is allowed for statistical purposes.
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2023 (2) TMI 689
Income from other sources - treating the agricultural income declared by the assessee as income from other sources - HELD THAT:- Since there is no material brought on record by the AO to suggest that the amount deposited into assessee s bank account has been sourced by any inflated income we are not in a position to uphold the findings of lower authorities in treating the agricultural income declared by the assessee as income from other sources as there is no major changes in the agricultural income declared by the assessee in these this assessment year as compared to assessment years 2015-16 and 2016-17 or in subsequent years 2018-19 and 2019-20 as tabulated in earlier part of this order. No justification to sustain the addition and the addition made by the AO and sustained by the learned CIT(A) is deleted. Decided in favour of assessee.
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2023 (2) TMI 688
Deduction u/s 80IB(10) - cut of date for claiming deduction u/s 80IB(10) - deduction derived from the business of execution of housing project under the provisions of section 80IB(10) - HELD THAT:- The object behind enactment of provisions of section 80IB(10) is to provide 100% of deduction of profits derived by undertaking for development of building and housing project. In the present case, assessee sought the approval of building plan, housing project and land admeasuring 25,340 sq.mtrs. to construct 8 buildings and the said approval was granted on 29.03.2007. The housing project was required to be completed on or before 31.03.2012 in order to avail the benefit of deduction u/s 80IB(10) of the Act. However, in the present case, admittedly, the position of the building A was totally incomplete as on 31.03.2012 and the buildings B, C D were completed partly upto floor no.9, 10 11 respectively, which clearly indicates that the housing project of buildings A, B, C and D were not completed upto 31.03.2012. As carefully gone through the order of CIT(A) and find that the CIT(A) had ignored the fact that the buildings B, C D were not completed as on 31.03.2012, which is the cut of date for claiming deduction u/s 80IB(10) - It is beyond anybody imagination as to how the Municipal Authority had issued completion certificate in respect of buildings B, C D even without knowing the fact that the construction was not completed as on 31.03.2012. No provision under the Municipal Corporation Act of Maharashtra Government was shown to us, which empowers the local authorities to issue completion certificate even without completion of construction of the entire building. CIT(A) had grossly fell in error in allowing the deduction in respect of buildings B, C D overlooking the plain provisions of the Act and without examining case in detail. Eligibility of deduction in respect of buildings E, F, G H - We are unable to discern that the ld. CIT(A) had satisfied himself that the respondent-assessee had fulfilled the necessary conditions precedent for availing the deduction u/s 80IB(10) of the Act. Therefore, we are of the considered opinion that the order of the ld. CIT(A) suffers from voice of perversity and it is bereft of factual discussion on facts of the case and also failed to construe the provisions of relevant section in accordance with settled legal principles discussed above. Ordinarily, we would have remanded the matter back to the file of the Assessing Officer to examine the allowability of deduction u/s 80IB(10) in respect of buildings E, F, G H, but even before us the respondent-assessee had not led any material on record before us satisfying the conditions precedent for availing benefit u/s 80IB(10) in respect of buildings B, C D, therefore, keeping in view the well settled principle, that remand cannot be made in order to improve case of either party to the litigation. Accordingly, we decline to do so. Thus, the grounds of appeal filed by the Revenue stand allowed.
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2023 (2) TMI 687
Deduction allowable u/s 43B - Certain deductions to be only on actual payment - assessee company has paid the custom duty and interest as per the order of Director General of Central Excise Intelligence - HELD THAT:- In the case of Shankar Trading Co Pvt Ltd [ 2012 (1) TMI 91 - DELHI HIGH COURT] the assessee company had paid interest on Sale tax. The AO had not allowed the said interest as deduction u/s 43B of the Act. However, the Hon ble Delhi High Court held that it is an allowable deduction u/s 43B of the Act. The facts of the Shankar trading Co P. Ltd (supra) and that of the assessee are identical. In the case of the assessee, the assessee has paid Interest on Customs Duty. In the case of the assessee the Interest on Customs Duty is automatic. Hence, the decision of Hon ble Delhi High Court is applicable in the case of the assessee. As held in the case of CIT Vs. Andhra Sugar Ltd [ 2015 (2) TMI 810 - ANDHRA PRADESH HIGH COURT] that provisions of section 43B are applicable on Interest paid on Purchase duty. Thus we are of the considered opinion that the Interest paid by the assessee on Customs Duty is allowable as deduction u/s 43B - Decided in favour of assessee.
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2023 (2) TMI 686
Disallowance u/s 14A r.w. Rule 8D(2)(iii) - CIT- A restricting disallowance only to the extent of investments yielding actual exempt income - HELD THAT:- As it has come on record that the CIT(A)'s has already taken note of the settled legal proposition on the instant issue. We thus find no merit in the assessee s instant sole substantive grievance. It s instant former substantive ground stands rejected therefore. Sales promotion expenses - dinner for guests at JW Marriot Hotel, Pune - HELD THAT:- We note with the able assistance coming from the Revenue side that the assessee has not been able to prove the impugned dinner expenses to have been incurred wholly and exclusively for the purpose of business by way of filing cogent supportive evidence. We thus affirm the instant latter disallowance of sales promotion expenses as well. - Decided against assessee.
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2023 (2) TMI 685
CIT-Appeals dismissing the appeal for want of prosecution - HELD THAT:- CIT(A) ought to have decided the issue in dispute on merit instead of dismissing the appeal for non-prosecution since he has the power of enhancement. At this stage, we refrain from commenting anything about the issues raised by the assessee before us. Accordingly, we remit the entire issues in dispute to the file of ld. CIT(A)/NFAC to decide the issue afresh after giving one more opportunity of hearing to the assessee in accordance with law. Appeal filed by the assessee is partly allowed for statistical purposes.
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2023 (2) TMI 684
Exemption u/s 11(2) - treatment of unutilized amount of income earned from charitable activities in preceding year which was accumulated and set apart for utilization for charitable purposes - HELD THAT:- The treatment of such unutilized amount of accumulated income is governed by section 11(3) which requires such unutilized amount to be treated as deemed income of the assessee in the year when the period of five years so granted for utilization expires or in the succeeding year. Assessee fairly concedes to the position of law in this regard. His only contention is that since the assessee has already considered this amount by reducing the quantum of application of income for charitable purposes of the assessee during the year, the computation be reworked in accordance with law taking note of this fact. Computation of income for the year reflecting this fact was also produced before us. We direct the AO to recompute the income of the assessee in accordance with law, taking note of and after verifying the fact claimed by the assessee of having considered this unutilized amount of charitable income while computing its income for the year.
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2023 (2) TMI 655
Reopening of assessment u/s 147 - no valid service of notice under section 148 - HELD THAT:- We agree with the view taken by the Delhi High Court in the case of CIT vs Eshaan Holding (P) Ltd. [ 2009 (8) TMI 833 - DELHI HIGH COURT ] upholding the view of the ITAT that if there is no valid service of notice under section 148, the reassessment proceedings are null and void as also the decision of the Punjab and Haryana High Court in the case of CIT vs Avtar Singh [ 2008 (2) TMI 280 - PUNJAB AND HARYANA HIGH COURT ] which held that service of notice under section 148 is a condition precedent for making reassessment or re-computation under section 147 of the Act. In our view, before issuing the notice under section 148A (b) it was imperative for the AO to have checked if there was a change of address. A condition precedent for any proceeding including a proceeding u/s. 148A, is a valid service of notice, lest it would be a jurisdictional error. No averment or proof of the service of notice dated 20th March 2022 on the petitioner in respondent s affidavit in reply dated 14th November 2022. The cascading effect of non-service was the petitioner did not get an opportunity to respond to the notice. Consequently, the notice dated 20th March 2022 and the proceedings thereafter are void. Apropos section 151(ii) of the Act the sanction from the PCCIT ought to have been taken when order was sought to be passed beyond the period of three years i.e. beyond 31st March 2022 on 5th April 2022. Consequently, the notice dated 20th March 2022 and order dated 5th April 2022 deserves to be set aside on account of jurisdictional error i.e. for want of service and consequently, for non-compliance with the provisions of the Act. With regard to the reopening notice u/s. 148 dated 13th April 2022, the contention of the petitioner that they received the hand delivery of the notice on 21st April 2022 pursuant to the message received by the petitioner on the registered mobile number on 18th April 2022 is also not controverted by the respondents in their reply. No approval from PCCIT was taken as contemplated u/s 151(ii) as the reopening was caused beyond three years and is therefore vitiated. We also find no averments responding to the ITRV dated 29 April 2022 filed for A.Y. 2018-19 by the petitioner in response to the notice u/s. 148 dated 13 April 2022 nor with regard to the compliance of the stipulations by the respondents u/s. 148. We are accordingly of the view that the impugned order dated 5 April 2022 and the notice dated 13 April 2022 also deserves to be quashed and set aside.
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Customs
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2023 (2) TMI 683
Levy of Customs duty - importer of vessel M.V. Vishwa Yash or not - deemed importer - whether the respondent can be said to be an importer of the vessel in question which the respondent purchased for the purpose of breaking and, therefore, not liable to pay the custom duty? - HELD THAT:- The decision of this Court in the case of M/s. Jalyan Udyog [ 1993 (9) TMI 108 - SUPREME COURT ] is required be referred to. In the said decision, it is observed and held by this Court that the day on which the permission is granted by the Department for the purpose of breaking, can be said to be the relevant date for the purpose of the levy of duty. Meaning thereby, as observed and held by this Court, the said date can be said to be the deemed import and the person in whose favour the permission is granted can be said to be deemed importer - In the present case, the permission in favour of the SCI was granted on 4-4-1997. In that view of the matter, the respondent cannot be said to be an importer and at the best, SCI can be said to be the importer . The submission on behalf of the Revenue that under MOA dated 22-3-1997, the liability to pay the custom duty was fasten upon the respondent and, therefore, the respondent is liable to pay the custom duty is concerned, has no substance. The MOA is between the two individual parties. What is mentioned in the MOA is between the two individual parties and on the basis of that the respondent cannot be held to be importer and liable to pay the custom duty under the Customs Act. The liability to pay the custom duty would be upon the importer under the provisions of the Customs Act only - If ultimately the SCI is held to be the importer and liable to pay the custom duty as per the terms and conditions of the MOA, the SCI can recover the same from the respondent. However, so far as the liability of the respondent to pay the custom duty under the Customs Act is concerned, the same shall be governed by the provisions of the Customs Act only. It cannot be said that the CESTAT and/or the High Court have committed any error in holding that the respondent cannot be said to be the importer and, therefore, not liable to pay the custom duty - Appeal dismissed.
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2023 (2) TMI 682
Jurisdiction - power to issue SCN - CIRP proceedings - Approval of resolution plan - sustainability of the show-cause notice - DRI s stand is, that prior to the amendment brought about in Regulation 12 of the 2016 Regulations, it was only required to file proof of claim , and the proof of claim not filed - stand taken vis- -vis non-filing of proof of claim is, that SML had acknowledged the debt due, and accordingly sought an extension of time to fulfilits export obligations - waterfall claim for distribution of proceeds from sale of Liquidation of assets - applicability of doctrine of forum non-conveniens. Whether Section 53 of the Code, which provides for a waterfall mechanism for the distribution of proceeds, obtained from the sale of liquidation of assets, would override Section 48 of the GVAT Act? HELD THAT:- In the instant case, the DRI/DGFT neither submitted a proof of claim nor responded to a specific communication via e-mail dated 17.05.2017, addressed to respondent no.3. Section 48 of the GVAT Act is not pari materia with Section 142A of the 1962 Act. Section 142A of the 1962 Act plainly states that any amount payable by way of duty, penalty, interest or any other sum payable by an assessee or any other person under the Act shall have the first charge on the property of the assessee or the person, as the case may be, save as otherwise provided inter alia under the Code. Section 48 of the GVAT Act does not contain any such exception and/or carve out - the fact that extensions were sought to fulfil export obligations would not help the cause of the respondents. As a matter of fact, respondent nos. 2, 3 and 7 have, in their counter-affidavit, admitted that since the amounts due had not been crystallized, they could not respond to the Public Announcement made by the IRP. If the law, as enunciated by the Supreme Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] is applied, then the dues, if any owed to the respondents would have to be declared as having extinguished, and if such is the position, the adjudication of the impugned show-cause notice would be an exercise in futility. The doctrine of forum non-conveniens assumes, that although the Court has jurisdiction, in certain cases, it takes the view, that the action filed before it could be agitated conveniently before another forum. Therefore, in such an eventuality, the writ action is not entertained by the Court for the reasons of convenience, and not on the ground that it does not have the jurisdiction to try and adjudicate the action lodged before it. This writ petition was filed in March 2021, and the objection concerning the Court's power to entertain the writ action was taken much later, it would be unfair to return the writ petition, on the ground that this Court is not a convenient forum for adjudicating the dispute arising between the parties. The impugned show-cause notice seeks to do, what is, in fact, an exercise in futility, given the law laid down by the Supreme Court in Ghanashyam Mishra. The Supreme Court has enunciated, in no uncertain terms, the clean slate principle; it cannot be set at naught by entertaining claims that concern the period obtaining before the approval of the Resolution Plan. The impugned SCN is quashed.
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2023 (2) TMI 681
Seeking immediate release of goods without charging demurrage/detention charges or rent - policy of CONCOR - direction to pay appropriate compensation for their negligence and apathy leading to perishing/deterioration of goods - seeking initiation of appropriate action against respondent no. 2 for suspension/revocation of approval as Customs Cargo Service Provider for the violation of provisions of Handling of Cargo In Customs Area Regulations, 2009 in as much, the demurrage/detention charge has been imposed in respect of goods in respect of which detention certificate has duly been issued by the Customs. If a penalty is imposed by the Settlement Commission and not by any custom authority, then will it entitle the Petitioner for waiver of TSC? HELD THAT:- The Regulation 6(1)(l) of HCCAR, 2009 provides that no rent, demurrage on the goods seized or detained or confiscated shall be charged subject to any other law in force at the time being. Therefore, this regulation is subject to Section 63 of Customs Act which provides for the right of warehouse keeper to levy rent and warehouse charges and Section 63 was in force when CONCOR denied the waiver of TSC to the Petitioner. On perusal of Section 127F of the Customs Act, it is clear that the Settlement Commission is provided the power to impose any penalty or fine under the Customs Act only. Further, Section 127F of the Customs Act explicitly states that in addition to powers conferred on the Settlement Commission under Central Excise Act, 1944, the Settlement Commission also have all the powers which are vested in an officer of the customs under the Customs Act or the rules made thereunder. Therefore, the Settlement Commission is acting as a custom authority only while settling the cases under the Customs Act as it has all the powers that are vested in officer of the customs. This Court does not agree with the contention of the learned counsel for the Petitioner that when the penalty is imposed by the Settlement Commission which is an independent body constituted under the Section 32 of Central Excise Act, 1944, then the policy of CONCOR would not apply to the Petitioner. It is held that even if the penalty is imposed by the Settlement Commission then the same has been imposed by the Settlement Commission by exercising the power vested in it of the officer of the customs and thus, penalty imposed by the Settlement Commission would be treated as a penalty imposed by a custom authority. Further, it is to be noted that CONCOR was established in 1988 under the Ministry of Railways to profitably satisfy customer s needs for high-quality, cost-effective logistics services. CONCOR spent huge expenditure in developing of ICD infrastructure to provide container/ cargo handling and storage services to the importers and exporters. CONCOR also ensures safety and security of the cargo while it is lying at ICDs. Concor incurs huge expenditure while performing its functions and its main source of revenue is container/ cargo handling and storage services rendered to customers - If the contention raised by the learned counsel for the Petitioner would be accepted then it will cause huge losses to CONCOR which has been formed from public exchequers. The contention of the learned counsel for the Petitioner that if the penalty has been imposed by the Settlement Commission then the policy of CONCOR for not entertaining the request of waiver of demurrage/ detention charges would not be applicable, is not acceptable. Petition dismissed.
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2023 (2) TMI 680
Non-issuance of Advance Authorization - import of Gold bars and export of manufactured Gold Jewellery and Gold Medallions by the Petitioner - party to the writ petition or not - rejection to issue Advance Authorization License on the ground that Advance Authorization would not be issued where the items for export were Gold Medallions and Coins or Any other jewellery/articles manufactured by a fully mechanized process. Rejection on the ground that the Petitioner was not a party to the writ petition which led to the decision of the Ld. Division Bench in M.D. OVERSEAS LIMITED VERSUS UNION OF INDIA AND ORS. [ 2020 (6) TMI 140 - DELHI HIGH COURT] - HELD THAT:- This ground would be completely untenable inasmuch as the public notice which was under challenge was the identical public notice which was the basis of the Petitioner s rejection. The said public notice upon being quashed, any action taken consequential to the said public notice, would also not stand in the eyes of law. The ld. Division Bench s judgment would squarely apply to the facts of the Petitioner s case as well. A quashed public notice cannot be relied upon by the department to refuse the Advance Authorization. Retrospective application of the notification dated 10th August, 2020 - HELD THAT:- The Advance Authorization of the Petitioner was applied for on 26th June, 2019 and the same would have to therefore, be considered in terms of the legal position prevalent on the said date. The subsequent notification cannot be applied retrospectively to reject the said Advance Authorisation. The rejection of the Advance Authorization accordingly stands quashed and set aside - petition allowed.
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2023 (2) TMI 679
Violation of principles of natural justice - relied upon documents had not been provided to respondent - non-grant of opportunity to cross-examine the persons whose statements were relied upon - whether in fact the respondent had used the portal itself as has been stated by the respondent in its letter dated 09.11.2018 sent in response to the Show Cause Notice dated 30.08.2018? - HELD THAT:- After some arguments, learned counsel for the parties state that there are several aspects of the matter which have not been considered by the learned CESTAT as the same had possibly not been advanced before the learned Tribunal. The impugned order is set aside and the respondent s appeal is restored with the learned CESTAT to decide afresh.
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2023 (2) TMI 678
Absolute Confiscation - gold - packing material - prohibited goods or not - discretion vested with the appropriate authority to grant/extend the option of payment of fine in lieu of confiscation under Section 125 of Customs Act, in case of prohibited goods - HELD THAT:- This Court finds that the language of Section 125 of the Act confers discretion on the adjudicating authority. The adjudicating authority is obliged to address the question as to whether the discretion should be exercised in favour of the assessee having regard to the facts and circumstances of the case. In HARGOVIND DAS K. JOSHI VERSUS COLLECTOR OF CUSTOMS [ 1987 (1) TMI 107 - SUPREME COURT] the Supreme Court held that the adjudicating authority, before ordering confiscation, must first address itself on the question of exercising its discretion to give an option of redemption to the assessee. The twin tests for exercise of discretion under Section 125 are relevance and reason - The discretion has to be exercised in conformity with the purpose for which it has been conferred and the object which it seeks to achieve. Reasons must be recorded in support of it. In the exercise of discretion, non-consideration or non-application of the mind to the relevant factors would not only render the exercise manifestly erroneous, but would also warrant judicial interference. The power to give an option to the importer to redeem the prohibited goods upon payment of fine is a power coupled with the duty and in any event it should be exercised fairly and reasonably and not arbitrarily and capriciously, there must be at least an application of mind to the discretion in terms of Section 125 of the Act. There is no reference whatsoever to any of orders which according to the petitioner was passed by the Respondents herein under similar circumstances wherein the benefit of the option under Section 125 of the Act was extended to similarly placed importers. While it is true that the Appellate Authorities may or may not agree with the submissions of the petitioner, it is rudimentary that quasi-judicial authorities ought to apply their mind to the issues raised and material on record before arriving at a conclusion - The 1st and the 2nd Respondents by not dealing with the submission as to the nature of gold imported viz., non-compliance would result in the same being treated as prohibited and not restricted goods, for it has a direct impact on the nature of right available under Section 125 of the Act. The 1st and 2nd Respondents have not dealt with the orders passed under similar circumstances nor the case laws relied upon, thereby vitiating the order. The impugned order is set aside and the matter is remanded back to the 1st Respondent to re-adjudicate the revision application filed by the petitioner as expeditiously as possible, after affording an opportunity of hearing to the petitioner - Petition allowed by way of remand.
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2023 (2) TMI 677
Revocation of Customs Broker License - Non-grant of opportunity of cross examination - retraction of statements - SCN is beyond the period of limitation under CBLR, 2013 or not? - applicability of principle of double jeopardy on issuance of second suspension order - violation of provisions of Regulation 11 (a), (d), (m), (n) (o) and 17 (9) of CBLR, 2013. Whether show cause notice is beyond the period of limitation under CBLR, 2013? - HELD THAT:- In the present case, it is evident that after further investigation in accordance with the provisions of Regulation 20 of CBLR 2013, the Commissioner of Customs, Noida, vide letter dated 25.01.18 sent the Offence Report dated 19.01 .2018 which was received by the Commissioner of Customs, New Delhi on 09.02.2018. The subject of the said report, specifically stated, Role of Customs Broker, Swastik Cargo Agency in fraudulent exports and investigations against M/s Shagun overseas, M/s Fine Art Traders and M/s S. K. Exports. After the receipt of the Offence Report on 09.02.2018, the show cause notice issued on 07.05.2018, was issued within the time limit of 90 days as prescribed under Regulation 20(1) and hence there is no delay and the show cause notice is not barred by limitation. Whether the present case is hit by the principle of double jeopardy on issuance of second suspension order? - HELD THAT:- The plea of issuing two SCNs or that the license cannot be suspended or revoked twice on same issues does not survive as the action under Regulation 19 has to be taken immediately to restrain the CB from functioning. On receipt of the information on 27.09.2017, the order of suspension was passed immediately on 05.10.2017. Following the provisions of Regulation 19(2), CBLR, 2013 after granting an opportunity of hearing to the CB, further order with regard to revocation of suspension was passed, however specific liberty was granted to initiate action under CBLR, 2013 if new facts are established. On receipt of the offence report on 09.02.2018, immediate action was required to restrain the CB from indulging in any further activity which could be detrimental to the interest of the Revenue and therefore an order of suspension of license was passed on 15.02.2018 which was then confirmed on 12.03.2018 under Regulation 19(2) CBLR, 2013. The order of suspension under Regulation 19 of CBLR, 2013 is required to be issued immediately to restrain him from functioning on the basis of that license and is in the nature of an interim measure. The dictionary meaning of the word suspension‟ as per the Cambridge Dictionary is the act of stopping something happening, operating etc. for a period of time, meaning thereby that it is a temporary stoppage. In the present case, the matter was pending under enquiry and liberty was granted to proceed once additional facts emerge. So, it is not a case of double jeopardy. The final order revoking the license was passed only after following due process of law in terms of Regulation 20 of CBLR, 2013. Whether the Custom Broker has violated the provisions of Regulation 11 (a), (d), (m), (n) (o) and 17 (9) of CBLR, 2013? - HELD THAT:- It stands proved that the CB has not discharged the obligations cast on him under the Regulation as the CB fully connived with the freight forwarder and therefore never verified the existence of the exporters or the documents submitted in this regard. The facts of the present case reflects that it is virtually a case of subletting the license as practically the entire transaction of export was controlled managed by the Proprietor of the freight forwarder. Thus, any contravention of the obligations on the CB under the Regulations even without any intent would be sufficient to proceed for imposition of punishment as provided in the Regulations. This being a case of facilitating the fraudulent exports carried out and it being duly proved during the inquiry proceedings that the exporters were non-existent, CB has failed to verify the correctness of the documents, violated the obligation as a custom broker under CBLR, 2013. Therefore, the Adjudicating Authority had rightly directed for forfeiture of the security deposit of Rs. 5 lakhs submitted by CB. The facts of the present case clearly show the fraudulent manner in which the exports have been made where 90% of the goods were short and nearly 70 lakhs of rupees were taken as duty drawback thereby defrauding the revenue. The entire transaction was fraudulently conducted. The exporters were found to be fictitious, non-existent who were actually farmers and had no knowledge about their being exporters and therefore the CB could not bring them before the Customs Authorities. Neither the partners nor the G-Card holder of CB met the exporters. It has to be concluded that CB had put himself into the shoes of fraudsters who were using forged documents of fictitious persons who were actually not involved with the said fraudulent exports to claim duty drawbacks - Thus, the CB has violated the obligations cast on him under the Regulations as discussed above and hence the revocation of the license and the forfeiture of security deposit is justified. Appeal dismissed.
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2023 (2) TMI 676
Classification of imported goods - Electric Vehicle Kits - classifiable under Tariff Entry No. 8703 of the First Schedule to Customs Tariff Act, 1975 or not - eligibility of the import for S. No. 526A(1)(a) of the mega exemption notification, qualifying for 15% BCD rate for the kits or not. Classification of the Electric Vehicle Kits of Volvo brand passenger vehicles - HELD THAT:- For determining the appropriate classification of goods being imported as kit comprising the items mentioned in the packing list referred to above, reliance needs to be placed on Rule 2(a) of the General Rules for Interpretation of Import Tariff (GIR in short), which provides that, any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. In the instant case, the applicant has stated that they will be importing kits of passenger cars and it is also settled, if all the parts are presented in knocked down condition and they have the essential character of a complete article, they have to be assessed as complete article, in terms of said Rule 2(a) of GIR. In the present case, the motor vehicles are initially assembled at site to a substantive extent for thorough verification and testing, then disassembled and imported in form of a kit. Therefore, notwithstanding the fact that at the initial assembling stage, they have not acquired the completeness of a car to be roadworthy, these kits have acquired the essential characteristics of motor vehicle to merit classification under Heading 8703, noting that they are principally designed for the transport of persons, numbering less than ten persons. Reliance placed in the case of M/S VOLVO AUTO INDIA PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS, BANGALURU AND COMMISSIONER OF CUSTOMS, CHENNAI [ 2022 (3) TMI 560 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS- NEW DELHI ]. In this regard, it is also noted that the question relating to classification of the EV vehicle kits posed for advance ruling is sufficiently answered holding that they are classifiable under Heading 8703 at four-digit level. The additional submission made by the applicant is referred wherein it has been mentioned that in exceptional cases, due to logistics and business considerations, one or more parts of the kit may have to be imported in a separate consignment through the same port, while majority of the parts of the said electric vehicle kit would still be imported in one consignment, and even in such case, all imports pertaining to one vehicle would be made in close proximity to each other and the relevant electric vehicle kit, to which it pertains would be clearly identified - the submission of the applicant that even in such exceptional cases, the classification of the electric vehicle kit would not be impacted and would Heading 8703, agreed upon. Effective rate of duty applicable on the EV vehicle kits under Notification No. 12/2012-Customs, dated 17-3-2012, which has since been replaced by the Notification No. 50/2017-Customs, dated 30-6-2017, as amended - HELD THAT:- The applicant has clearly stated that the Electric Vehicle CKD kits to be imported by the applicant consist of approximately 105 parts/sub-assemblies, which are standalone and not attached to each other or any other parts, components or assembly. They have also added that going forward, the number of parts in which the vehicle is broken down could increase. Further, these components and parts are not mounted on a chassis or a body assembly - these CKD kits, as described in the application submitted before this Authority will fall under sub-category 1(a) and attract effective rate of BCD of 15%.
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2023 (2) TMI 675
Classification of import goods - Luprosil Salt Calcium - intent to import the said goods through the entry points of seaports/airports at Nhava-Sheva, Mumbai (Air Cargo Complex), Chennai (preventive Commissionerate) and Kolkata - to be classified under Heading 23.09 of the Customs Tariff as premix for animal feed or not - Heading 2915, which is adopted by the global desk of the applicant, is the competing classification entry. HELD THAT:- In the present case, the starting material, in the product brochure, is propionic acid. Luprosil salt based on propionic acid does not appear to have any impurity. The 2% unexplained component in Luprosil salt could have resulted from the manufacturing process, having no stated specific utility. Therefore, the product can be classifiable under Chapter 29 and specifically under Heading 2915 - Heading 2309 is in the nature of a residuary heading as Note I to Chapter 23 says that the Heading 2309 includes products of a kind not elsewhere specified or included, whereas sub-heading 2915 50 00 is a specific heading for propionic acid, its salts and esters. As per the Rule 3(a) of General Interpretation Rules, a specific heading shall prevail over the general heading. The Hon ble High Court of Allahabad in the case of COMMISSIONER OF CUSTOMS CGO. VERSUS SONAM INTERNATIONAL SHOP NO. 9 [ 2010 (10) TMI 120 - ALLAHABAD HIGH COURT ] , held that vitamins of high concentration used for manufacture of animal feed will be classified under 2936. Admittedly, the product in this case has a very high concentration to the tune of 98%. Even though, the applicant in their application has stated that the product which they propose to import is going to be used in the manufacture of animal feed, as discussed in the preceding paragraphs, propionic acid and its salts are not excluded from the ambit of the Chapter 29 - On the contrary, there is a very specific tariff entry for this very product. Therefore, when confronted with a specific classification entry vis- -vis a residuary classification entry, one must favour the specific entry. In fact, as per the mandate of Rule 3A of the General Rules of Interpretation of Customs Tariff, the specific heading prevails over the general heading. Thus, the Luprosil salt is classifiable under Heading 2915 and more specifically, under sub-heading 2915 50 00 of the First Schedule to the Customs Tariff Act, 1975.
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2023 (2) TMI 674
Classification of import goods - omega-6 fatty acid product, namely Lutalin - to be classified under heading 2302 of CETA, 1985 or heading 2309 of the Customs Tariff Act, 1975? - HELD THAT:- The product is sold as animal feed for the nutritional needs of the pigs and cows. A certificate issued by the German Government s certifying agency certifies that these products are feed supplements and are of animal grade. Further, the Indian Council of Agricultural Research (ICAR), as per the letter issued by the Department of Animal Husbandry, Dairying and Fisheries, dated 18-6-2012, CLA 10% coated with bypass fat can be used as a feed additive for animal feeding. Therefore, on the basis of trade parlance and the opinion of experts, it appears that the said products are used for animal feed. These products are not covered under the exclusion list provided in the HSN Explanatory Notes. The Lutalin is classifiable under Heading 2309 and more specifically, under sub-heading 2309 90 90 of the First Schedule to the Customs Tariff Act, 1975.
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2023 (2) TMI 673
Classification of import goods - preparation of Scented Flavoured and/or Sweetened Betel Nut imported from Vietnam, Thailand or any other country having the description as given in the body of application - whether the addition of flavor or menthol and/or sweetening agent will turn the betel nut into a preparation of betel nut? - to be classified under 0802 80 of the First Schedule to the Customs Tariff Act or not? HELD THAT:- In the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE, GOA VERSUS PHIL CORPORATION LTD. [ 2008 (2) TMI 3 - SUPREME COURT ] , the issue was whether roasted/salted ground nut and other nuts are classifiable under Tariff Heading 08 or under Heading 20. After discussing the issue in great detail, the Hon ble Apex Court held that the courts have to make serious endeavour to ascertain spirits and intention of the Parliament in enacting these provisions and once the legislative intention is properly gathered, then the bounden duty and obligation of the courts is to decide the cases in consonance with the legislative intention of the Parliament. In the instant case, the intention of the Parliament is obvious when they inserted Supplementary Note 2 in the Customs Tariff in the year 2008. The Authority has to ascertain whether the product intended to be imported is covered by the said Supplementary Note of Chapter 21. The basic raw material for Scented Flavoured and/or Sweetened Betel Nut is raw betel nut, which is classifiable under Chapter 8, more specifically sub-heading 0802 80. Chapter 8 covers only edible nuts; inedible nuts and fruits being excluded by virtue of Chapter Note 1; and that betel nut/supari are masticatory. However, this item has been subjected to certain processes and added with certain materials, resulting in the question being posed whether the said processes and mixing/addition of certain materials are substantive enough to lead to the said goods being considered as preparation of betel nut , that would make them classifiable under Chapter 21 by virtue of Supplementary Note 2 of Chapter 21. At this juncture, it is important to mention that the goods covered by the present application are prima facie Scented Flavoured and/or Sweetened Betel Nut and not preparation of Scented Flavoured and/or Sweetened Betel Nut , as submitted by the applicant; and the question posed for ruling is whether the said Scented Flavoured and/or Sweetened Betel Nut are covered by the scope of expression preparation containing betel nuts .. in Supplementary Note 2 to Chapter 21. The decisions in the case of Scented Flavoured and/or Sweetened supari, M/s. Crane Betel Nut Powder Works [ 2007 (3) TMI 6 - SUPREME COURT] and M/s. Azam Laminators Pvt. Ltd. [ 2019 (3) TMI 782 - CESTAT CHENNAI ] clearly imply that addition of flavouring agents do not change the character of the goods, meaning in the present case betel nut would continue to remain betel nut and not become preparation of betel nut. Thus, Scented Flavoured and/or Sweetened Betel Nut merit classification under Chapter 8, more specifically 0802 80 of the First Schedule to the Customs Tariff Act.
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Corporate Laws
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2023 (2) TMI 672
Seeking restoration of the name of the Appellant Company in the register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - HELD THAT:- In view of the fact that the Appellant Company was in some disputes and death of the Managing Director, the company could not file its Annual Returns. Further, the Appellant Company has regularly paid payment of Taxes and having valid Sale Deeds dated 20.09.1972, 20.12.1972 21.03.1975 and the Municipal Corporation of Faridabad has issued an Encumbrance Certificate dated 04.09.2019, it shows that the land in which the factory of the Company is located, is currently the name of the Company and also having huge assets of the Company. The order passed by the National Company Law Tribunal (New Delhi Bench, Court-II) as well as Registrar of Companies, NCT of Delhi Haryana is not sustainable in law - the name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed - application allowed.
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Insolvency & Bankruptcy
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2023 (2) TMI 671
Maintainability of petition - Petitioner is neither a Member of the first Respondent Company nor did the 24 persons who had given consent to file the Company Petition are Members of the CSITA - whether the Appellant is a Member of the Section 8 Company and has the locus standi to file this Appeal and also whether the Petitioner could have file the Petition under Sections 241 242 of the Companies Act, 2013? HELD THAT:- As per the definition, a person cannot be treated as Member of the Company unless his name is entered in the Register of Members of the Company - The term Member is different from that of Shareholder. A Shareholder can be Shareholder by acquiring shares but will not be Member till his name is entered in the Register of Members of the Company. This definition is relaxed in case of Section 244 of the Companies Act, 2013, where even a Shareholder is treated as a Member. In the instant case, apart from not being a party to the main Petition, the Appellant herein is, admittedly, only a Member of the Church and he has not filed any documentary evidence to substantiate that any of the requirements under Section 2(55) of the Companies Act, 2013, is met. Admittedly, there is a four layered Election Process to become a Member of the Company. The persons acting as Member of CSITA are in fact first elected by various Parishes falling under more than 20 Dioceses and these Parishes Member elect people to the Diocesan Council and also to the Synod Council who in turn elect the process of the Company - This Tribunal is of the earnest view that merely because a person is a Member of Church, he does not have the locus standi to file a Petition under Sections 241 242 of the Companies Act, 2013, against a Section 8 Company of which, he is admittedly, not a Member. As the Petitioner in application, does not satisfy any of the requirements stipulated under Section 2(55) of the Companies Act, 2013, he cannot seek any exemption under Section 244 of the Companies Act, 2013 - A brief perusal of the paragraphs in the Impugned Order, shows that the said paragraphs are by and large the submissions of the parties and there were no strictures or conclusion, arrived at by the Tribunal (NCLT), which require Expunging. Appeal dismissed.
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2023 (2) TMI 670
Preferential and fraudulent transaction - Seeking avoidance of certain preferential and fraudulent transactions carried out by the suspended directors of the Corporate Debtor - Sections 43 and 66 of the IBC - Whether the application filed by the Resolution Professional with regard to transactions under Sections 43 and 66 is rendered non-maintainable on grounds of non-compliance to Regulation 35-A if it is not filed on or before 135th day of ICD and if formation of opinion and making a determination on such transactions does not take place on or before the 75th day and 115th day of ICD respectively and whether these periods stipulated by the said Regulation is mandatory or directory? - HELD THAT:- It is commonsensical axiom that the time taken by a Resolution Professional to determine an avoidance transaction is dependent on a multitude of factors, including availability of information, co-operation from the erstwhile directors of the Corporate Debtor, cooperation from parties to the avoidance transactions, analysis by the transaction auditor, etc. Such factors often being outside the control of the Resolution Professional, there is therefore a distinct possibility of delay in making a determination, beyond the timelines specified in the CIRP Regulations. While admitting some delay in determination of opinion by the Resolution Professional in the present case, it was submitted that this was on account of delay in submission of report by the TA and for this delay the fault was attributable to the suspended management as documents were not provided by them to the TA despite repeated reminders - there are no hesitation in pointing out that the suspended management of the Corporate Debtor by not parting with information on time and refusing to comment on the final TAR has also been a critical and contributory factor in causing delay in the determination of the opinion and to that extent cannot be absolved of blameworthy conduct. CIRP Regulations 35-A is not mandatory and the requirement for approaching the Adjudicating Authority for appropriate relief on or before 135th day of the ICD is only directory. Moreover, since Regulation 35-A must be read along with the statutory construct of IBC which by itself does not prescribe any time period for determination of opinion. Hence merely on account of delay in determination of opinion cannot by itself become a ground for non-maintainability of the petition - Keeping in view the facts of this case, it is held that there were sufficient and genuine reasons for the delay justifying consideration of the application under Sections 43 and 66 by the Adjudicating Authority even though it was filed beyond 135th day of ICD. Whether the transactions conducted by the Respondents which find mention in the application of the Resolution Professional were not in the ordinary course of business and thus fell in the category of preferential transactions and fraudulent trading in terms of Sections 43 and 66 of the IBC - HELD THAT:- The Adjudicating Authority without much analysis has simply noted that the Respondent has opined that the Resolution Professional has misrepresented the stock statement and that even the creditor Bank has relied on the genuineness of these transactions based on CA certificate which had verified the stock and book debts. However, it is held that the Adjudicating Authority has not taken the full picture into account since the Bank inspection note of 18.09.2017 placed at page 230 of APB clearly records that the Respondent No.1 had admitted that negligible sales was being reflected in the Corporate Debtors account since the sales proceeds were being parked in the account of a separate firm. Prima-facie, we are of the view that there is sufficient and adequate reason to subscribe to the contention of the Appellant that the Respondents had wrongfully diverted funds of the Corporate Debtor which in turn had aggravated the financial health of the Corporate Debtor and tantamount to fraudulent trade practice. The Resolution Professional after having appraised the TAR, did effectively make out a detailed and specific case substantiating how the Respondents carried out certain transactions which squarely answer the description of preferential and fraudulent transaction under Sections 43 and 66 of IBC. However, the Adjudicating Authority has erroneously disregarded the same without placing on record cogent and sufficient reasons. The Adjudicating Authority has erroneously dismissed the application filed by the Resolution Professional under Sections 43 and 66 of the IBC - Being satisfied that the Appellant has successfully established that the Respondents had indulged in transactions which squarely attract Sections 43 and 66 of the IBC, the Respondents are directed to pay back the sums received by them from the Corporate Debtor - appeal allowed.
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Service Tax
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2023 (2) TMI 669
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - denial of benefit of the amount of pre-deposit made by the Petitioner during the inquiry - petitioner made to pay an excessive amount for issuance of the discharge certificate - HELD THAT:- After the Petitioner had received SVLDRS- 2, the Petitioner addressed two communications to the Designated Committee calling upon the Committee for adjustment of the service tax of Rs.55,06,021/- already paid in reference to the challans. Apart from these two communications made to the Designated Committee, the Petitioner has placed the material in respect of the deposit of Rs.55,06,021/-. Since the Scheme itself makes a provision for adjustment of any amount paid as pre-deposit and since it was the case of the Petitioner that the Petitioner demonstrated through evidence that an amount of Rs.55,06,021/- was already paid by the Petitioner and should have been considered as pre-deposit or deposit during the enquiry, the Designated Authority ought to have examined this aspect carefully. In a given case, if a declarant is able to show that deposit or pre-deposit, as the case may be, has been made, then such a declarant is entitled to an adjustment or reduction of the amount to be paid under the Scheme and for receipt of the discharge certificate in respect of the said amount. The failure of the Committee even to examine these documents has resulted in prejudice to the Petitioner. The documents will have to be examined by the Respondents to ascertain whether the Petitioner was entitled to relief under section 124(2) of the Act. In the case at hand, the Designated committee, without examining the documents on record, has concluded that the petitioner has failed to produce evidence regarding the pre-deposit. As far as the finding of the Designated Committee that the Commissioner (Appeals) has not appropriated the amount and the Petitioner is not entitled to the benefit of section 124(2) is concerned, the material on record will have to be examined. The Respondents are directed to examine the material placed on record by the Petitioner indicated above in this decision and referred to in the petition and to decide as regards the aspect of section 124(2) in respect of the amount of Rs.55,06,021/-. Upon examination of the issue, if the decision is reached that the Petitioner is entitled to the benefit under section 124(2) to the extent of Rs.55,06,021/-, then the Respondents will take consequential remedial steps within eight weeks - petition disposed off.
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2023 (2) TMI 668
SVLDRS - benefits under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 denied as the petitioner was not eligible to apply as the matter was under investigation - Petitioner contends that there is no falsity in any of the declarations of the petitioner as admittedly, on 30 June 2019, there were no investigation proceedings pending against the Petitioner. HELD THAT:- Section 125 of the Act states that all persons shall be eligible to make a declaration under this Scheme except ones specified in the said section. The Petitioner had applied under the Voluntary Disclosure category. Section 125(1)(f) refers to a person making a voluntary disclosure after being subjected to any enquiry, investigation or audit, as not eligible. Even though Section 125(1)(f) does not make a specific reference to any date, the Division Benches of this Court in New India Civil Erectors Private Limited and in UCC Infrastructure Pvt. Ltd. [ 2022 (2) TMI 94 - BOMBAY HIGH COURT ] have interpreted Section 125 to mean that the investigation must be pending as of 30 June 2019 to disentitle the declarant under voluntary disclosure category. We have not been shown any contrary decision nor been informed that these decisions have been challenged by the Revenue. From the affidavit in reply filed by the Respondents, it is clear that even the basic process of issuing notice had commenced after 30 June 2019. Absolutely nothing is placed on record as regards the cut-off date of 30 June 2019 qua the Petitioner. In light of the position that emerges on record, the Petitioner is entitled to the benefit of the legal position laid down by this Court in New India Civil Erectors Private Limited and UCC Infrastructure Pvt.Ltd. since the date 30 June 2019 is relevant even for the voluntary disclosure category. On that date the Petitioner was not subjected to any inquiry/ investigation prior to 30 June 2019. Thus, it cannot be held that the Petitioner was not eligible to apply under the Scheme. Petition allowed.
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2023 (2) TMI 667
Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the matter involves redemption of fine and this fine was in lieu of confiscation of goods which had not been proposed for relief in the said scheme as the said scheme only relates to the matters involving demand of duty, interest and penalty - time limitation. HELD THAT:- Reference can be made to an order passed by the Hon'ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] had extended the period of limitation which was to expire during the period between 15.03.2020 till 28.02.2022 and all persons will have a limitation period of 90 days from 01.03.2022 - During the period of COVID-19, Reserve Bank of India had also issued notification dated 27.03.2020 (Annexure P-9) whereby Reserve Bank of India had granted moratorium of three months on all payments due from March 1, 2020 to May 31, 2020. In the same background, the Government of India had announced relief for the MSME under COVID times which has been placed on record by the petitioner as Annexure P-1 Learned counsel for the petitioner has further submitted that keeping in view the ordinance dated 31.03.2020 issued by the Ministry of Law and Justice to provide relaxation in the provisions of certain Acts in view of the spread of pandemic COVID-19, the Ministry of Finance had also made rules to amend the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 by which payment was to be made on or before 30.06.2020 (Annexure P-8). The petitioner is ready to abide by the orders of the designated committee and would pay the redemption fine as well if his case is considered again. Time Limitation - HELD THAT:- Since, the object of the SVLDR Scheme was to reduce litigation and the said Scheme is for the benefit of small tax payers, hence, for all intents and purposes, delay can be condoned by the Court as observed by the Supreme Court in the case of CENTAUR PHARMACEUTICALS PVT. LTD. ANR. VERSUS STANFORD LABORATORIES PVT. LTD. [ 2022 (1) TMI 1269 - SUPREME COURT] that suo motu order extending limitation period on account of COVID-19 would also include the period which can be condoned in exercise of the statutory discretion. It is further observed that since the designated committee had wrongly rejected the case of the petitioner, there was no occasion for the petitioner to file a fresh application within the stipulated time and, hence, his case cannot be rejected on the ground of limitation. The matter is remanded back to designated committee to consider the case of the petitioner(s) as per the SVLDR Scheme and redetermine payable including redemption fee/fine under the SVLDR Scheme by passing fresh order - Petition allowed by way of remand.
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2023 (2) TMI 666
Refund of Service Tax on the specified service used for export of the goods - nexus of input service with the exports - HELD THAT:- In para 6.2 of C.B.E. C. in Para 3.2.1 of Circular No. 120/01/2010-S.T., dated 19-1-2010, C.B.E. C. has clarified that only a broad co-relation of input services and Service Tax paid is required to be made with respect to exports. Though the clarification was with respect to Notification No. 5/2006-C.E. (N.T.) but it clearly conveys that in budget 2009 the scheme under Notification No. 41/2007-S.T. was simplified in Notification No. 17/2009-S.T. by providing self certification or Chartered Accountant s certification about co-relation and nexus between input Services the exports. That above logic can be followed for Notification No. 5/2006-C.E. (N.T.) where such simplification of Notification No. 17/2009-S.T. may not be available. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.
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2023 (2) TMI 665
Taxability of services provided by the respondent in relation to Hydro Electric Projects - services were provided to dams, which are exempted - non-inclusion of the material received free of cost in the assessable value and simultaneous availment of abatement - liability to discharge the service tax liability as a sub-contractor where the service tax has already been paid by the main contractor - period involved is April, 2005 to September, 2011. HELD THAT:- The works executed for a hydro electric project would be excluded from the taxable service of works contract or commercial or industrial construction if the services are provided in respect of tunnels and dams. The Commissioner has held that the exclusion of the dams and tunnels would cover all the works of hydro mechanical nature, including civil construction of dams and tunnels for the reason that a dam or a tunnel would not be complete without hydro mechanical works. The Commissioner, therefore, concluded that the civil works forming part of dams and tunnels would not be exigible to service tax under the Finance Act as they would fall within the exclusion clause - there is no error in the finding recorded by the Commissioner and indeed it finds support from various decisions of the Tribunal. In PES ENGINEERS PVT. LTD VERSUS CCE ST, HYDERABAD-I AND (VICE-VERSA) [ 2017 (7) TMI 687 - CESTAT HYDERABAD ], a Division Bench of the Tribunal while examining a matter where the assessee was engaged in large construction of projects relating to hydro electric projects observed that the activity undertaken for installation and commissioning of pressure shaft liners also called steel liners/penstocks would fall within the exclusion clause of the taxable service of works contract - In M/S. MCM SERVICES PVT. LTD. VERSUS CST, DELHI [ 2017 (2) TMI 624 - CESTAT NEW DELHI ], a Division Bench of the Tribunal examined whether the nature of work executed by the appellant therein relating to construction of dam, which would be a part of the hydro electric project, would fall within the exclusion clause of the taxable service of works contract . Thus, it has to be held that the Commissioner committed no illegality in holding that the works undertaken by the appellant would fall within the exclusion clause of the definition of construction and industrial construction service and the taxable works contract service. Material supplied free of cost - HELD THAT:- The issue as to whether service tax can be levied on the cost of materials supplied free of cost has now been settled by the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT ] It has been held that service tax cannot be levied on the amount of material supplied free of cost. Thus, as the Supreme Court has held that the value of goods which are provided by the service recipient free of charge cannot be included in the gross amount charged by the service provider, the finding recorded by the Commissioner does not suffer from any error. Whether a sub-contractor is required to discharge the service tax liability, even if the service tax liability has been discharged by the main contractor? - HELD THAT:- The service tax liability would not leviable on the works involved in this appeal, it would not be necessary to decide this issue, though a Larger Bench of the Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI ] has held that a sub-contractor would have to discharge the service tax liability even if the main contractor has discharged service tax liability on the activity undertaken by the sub-contractor in pursuance to the contract. There is no merit in this appeal - Appeal dismissed.
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Central Excise
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2023 (2) TMI 664
Maintainability of petition - Enhancement of the interest awarded on the amount of refund - monetary limit involved in the appeal - HELD THAT:- It is noted that an appeal involving a similar issue in COMMISSIONER OF CENTRAL TAX, CGST, DELHI EAST VERSUS BATRA HENLAY CABLES [ 2022 (11) TMI 796 - DELHI HIGH COURT ] where it was held that The Board, in its communication dated 19.10.2022 has indicated, that an SLP should not be filed, having regard to the monetary limit, keeping the question of law open in terms of Section 35R of the Central Excise Act, 1944. It is considered apposite to close this appeal as well on the ground that the tax effect is below the monetary limit as prescribed. Appeal disposed off.
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2023 (2) TMI 663
Rebate of Excise Duty - rebate sought included post removal charges from the factory gate to the Port of Export - point of sale/place of removal should be considered as the factory gate or the Port of Export? - HELD THAT:- The provisions of Sale of Goods Act, 1930 would govern the issue. The determinative factor as to when ownership of the goods is transferred from seller to buyer has to be considered in light of the provisions of the Act of 1930 as held by Hon ble Supreme Court in the case of Commissioner, Customs and Central Excise, Aurangabad vs. Roofit Industries Limited [ 2015 (4) TMI 857 - SUPREME COURT] - As per the facts prevailing in the case at hand, the goods in question were exported from a port. Thus, unquestionably, ownership of the goods would be transferred to the buyer, moment the shipping bill is filed and the goods are handed over to the shipping line. At any point of time before this transaction, the manufacturer would have the option to retain/ call back or to deal with the goods in any other manner desired. Thus, the export order/ sale would fructify/be fulfilled only when the goods are handed over to the shipping line whereafter, the exporter would have no control thereupon. The issue has been duly clarified by the Central Board of Excise Customs at para No.6 of the circular dated 28.02.2015 - The contention of Shri Saraswat (respondent) that this circular only deals with the CENVAT Credit and thus, the same has no application in cases of excise claim, has no merit whatsoever because in either of situations, the crucial factor for determining entitlement of the manufacturer exporter be it of CENVAT Credit or Excise Duty Rebate would be the point of sale. The controversy at hand is squarely covered by following observations made by Hon ble the Supreme Court in the case of Commissioner, Customs and Central Excise, Aurangabad vs. Roofit Industries Limited [ 2015 (4) TMI 857 - SUPREME COURT] . It is precisely in light of the aforesaid judgment that the Board issued the circular dated 08.06.2018. The contention of Shri Saraswat (respondent) that the petitioner is not entitled to the relief claimed for in view of the circular dated 08.06.2018 is sans merit because in the said circular, the general principles for determination of place of removal have been highlighted with the exceptions being marked at para No.4 which deals with the case of export. The present one is also a case of export of goods. There cannot be two views on the aspect that in case of export, sale would be completed once the goods are handed over to the shipping line because the transaction would not be completed till that point of time. Thus, the observations made by the Commissioner (Appeals) clarifying that the circular dated 28.02.2015 is not restricted for availment of CENVAT Credit and would also be applicable on rebate of excise duty is the correct interpretation on facts and law. Thus, the order passed by the Revisionary Authority dated 19.12.2019 does not stand to scrutiny and is hereby reversed and set aside - petition allowed.
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2023 (2) TMI 662
Rebate claim - time limitation - claims filed by the petitioner were rejected as being time barred as the same were preferred beyond the period of limitation of one year as stipulated under Section 11(B) of the Central Excise Act - HELD THAT:- The plea raised by the petitioner offering justification to the delay in filing of the claim applications is absolutely far-fetched and unsubstantiated. It may be noted that the Central Excise Act and the rules framed thereunder, do not contemplate extension of time beyond the period of limitation for entertaining applications for refund of duty and interest rebate claims, which have to be submitted within a period of one year as stipulated under Section 11-B of the Central Excise Act. Furthermore, there is no satisfactory evidence on record to show that as a matter of fact, these documents were provided to the petitioner on 29.09.2014 as claimed in the writ petitions. This argument involves purely disputed question of facts and hence, cannot be entertained in the extraordinary writ jurisdiction conferred upon by this Court. There are no two views on the aspect that a time barred claim filed beyond one year for claiming rebate of duty or interest under Section 11-B of the Act read with Rule 18 of the Central Excise Rules cannot be entertained as has been affirmatively held by Hon ble the Supreme Court in the case of SANSERA ENGINEERING LIMITED VERSUS DEPUTY COMMISSIONER, LARGE TAX PAYER UNIT, BENGALURU [ 2022 (12) TMI 49 - SUPREME COURT] . The impugned orders dated 01.03.2021 and 10.10.2017 do not suffer from any infirmity whatsoever warranting interference - Petition dismissed.
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2023 (2) TMI 661
Recovery of wrongly availed and utilized CENVAT credit alongwith interest and penalty - Supply of HR Coils and other inputs - process amounting to manufacture or not - denial of CENVAT Credit on the ground that Rule 3 of the Cenvat Credit Rules [CCR], 2004 provides for credit of duty of excise, but not the credit of an amount deposited under section 11D. HELD THAT:- The appellant is a buyer of the materials and had paid the amount as duty of excise and not as an amount under section 11D. The goods have been correctly received and accounted for. If the Revenue was of the opinion that M/s Bhushan Steels had wrongly assessed its duty liability and paid certain amount as duty of excise when in fact the activities did not amount to manufacture at all, the officers who had jurisdiction over M/s Bhushan Steels should have examined this matter while assessing the returns filed by M/s Bhushan Steels and taken appropriate action. The officer who issued the SCN had jurisdiction over the appellant and not over M/s Bhushan Steels - the SCN itself was issued without any authority of law. No doubt, the SCN intends to recover the Cenvat credit availed by the appellant but the basis for such of recovery is the assertion that the activities of M/s Bhushan Steels, Ghaziabad, who had supplied the goods did not amount to manufacture. Deciding the amount of excise duty leviable and deciding whether the activities of an assessee amount to manufacture or otherwise and other related issues are matters of assessment. Such assessment can be done by the assessee itself (self-assessment under Rule 6 of Central Excise Rules, 2002) or by the Scrutinizing Officer who has jurisdiction for the assessee under Rule 12 (3) of the Central Excise Rules. Neither the appellant in this case who is the only the buyer of the goods nor the Assistant Commissioner who has jurisdiction over the appellant had any jurisdiction or right to change the assessment made by M/s Bhushan Steels - the entire SCN and the consequent orders need to be set aside. Nothing in the CCR, or the Central Excise Rules or the Act which places such an obligation on any assessee who is the buyer of the goods. The SCN and the consequent orders need to be set aside on this ground as well. Appeal allowed.
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2023 (2) TMI 660
Disallowance of Cenvat credit as was distributed by the appellant s Input Service Credit Distributor (ISD) - input services or not - extended period of limitation - HELD THAT:- There is no denial to the fact that M/s. IAIL, Bhiwadi was engaged in manufacture of aluminium doors and windows and their APP Division, Delhi was engaged in fixing, installation etc. of manufactured aluminium doors and windows at the premises of their customers. There is also no denial to the fact that for these purposes the appellants were admittedly procuring composite order from their customers i.e. the cost of goods and post delivery services in respect of the manufactured goods. Admittedly, both the premises were registered with Central Excise for their individual activities i.e. for manufacturing activity by Bhiwadi unit and for Commercial Industrial Construction Services activity by APP Division - there is no categorical denial to the fact that APP Divison was ISD which used to issue invoices for distribution of Cenvat credit by adopting the turnover ratio instead of actual basis of availment of service. The adjudicating authority below has not observed the judicial protocol while denying credit on the ground that the services are not eligible Input Services. Once the services in question have already been settled to be the eligible input services, the Cenvat credit thereof cannot be denied to the assessee. There remains no necessity to invoke Rule 9(6) of Cenvat Credit Rules, 2004. Hence, the adjudicating authority has wrongly held the impugned services to be ineligible input services while disallowing the Cenvat credit of the service tax paid on the said services. Distribution of proportionate Cenvat credit - HELD THAT:- There appears no restriction in Rule 7 of Cenvat Credit Rules, 2004 for distributing even the whole credit by ISD to any one of the units. However, in the present case the entire credit has been distributed based on the turnover ratio formula. It is observed that post order of remand by this Tribunal, the appellant provided additional documents in the form of balance sheets and invoices. The balance sheets contain the details of total turnover of the company, turnover from service providing unit and hence, the ratio of turnovers intimated were quite verifiable but the order under challenge is absolutely silent about verifying those details from the documents provided. The adjudicating authority despite admitting that the service providing unit only fixes the anodized aluminium doors and windows with extruded build up aluminium section which are being manufactured by the appellant s Bhiwadi unit, has still failed to appreciate that the services in question could not be exclusively used by the service providing unit only. No specific document has been discussed by the adjudicating authority which shows that the appellant has taken credit of any service received in service providing unit or of any service exclusively used in service providing unit. Disallowing the Cenvat credit is therefore held to be without any logical and legal basis. Extended period of limitation - HELD THAT:- The extended period is invocable only when suppression, fraud, etc. with an intent to evade payment of duty is established. The initial burden to prove that both these ingredients exist lies upon the department. Except the act of reversal of excess credit subsequent to audit of the appellant, there is no other evidence produced by the department to prove a positive act on the part of the appellant to have an intention to evade the duty. Nothing has been brought on record to falsify the plea of bona fide belief with the appellant about their entitlement to take the entire credit whatever being transferred by their ISD - all requisite documents despite having been filed, there cannot be an intent to evade payment of duty and thus the extended period is therefore held not in-vocable. The penal provisions also do not sustain. The adjudicating authority below has failed to appreciate the catena of decisions not only of this Tribunal but also of their own department with respect to the impugned services and even with the decisions passed by departmental authorities in favour of the present appellant themselves permitting them to avail Cenvat credit distributed by their ISD. The order under challenge is therefore hereby set aside. Appeal allowed.
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2023 (2) TMI 659
Recovery of credit distributed by the registered input service distributor - Area Based Exemption - Disallowance of CENVAT Credit - disallowance of credit attributable to the other two factories in proportion to production that should, according to central excise authorities, have been excluded from the pool available for distribution - HELD THAT:- On perusal of the decision of the Hon ble High Court of Bombay in re Mahindra Mahindra Ltd [ 2019 (12) TMI 230 - BOMBAY HIGH COURT ], it is found that there is an elaborate discussion on the logic in the decision of the Tribunal to narrow the intent of rule 6 of CENVAT Credit Rules, 2004 to basic excise duties only. Taking note that the submission of Revenue mirrored the decision of the Hon ble High Court of Uttarakhand in Hero Motocorp Ltd v. Commissioner of Central Excise, Dehradun [ 2018 (1) TMI 770 - UTTARAKHAND HIGH COURT ], the Hon ble High Court of Bombay held that the distinction in the phrases in section 2A of Central Excise Act, 1944 was not intended as mutually exclusive enumeration. The decision of the Tribunal in re Fosroc Chemicals India Pvt Ltd [ 2016 (1) TMI 21 - CESTAT BANGALORE ] was also about a dispute in which the other cess on the output of the units, entitled to the same area based exemption , was to be computed on the basic excise duty which was exempted. The distinction of automobile cess , in so far as not being a levy under Central Excise Act, 1944 and not levied on basic excise duty, with other cess , that are exempted owing to exemption of basic excise duty makes the position abundantly clear. Nothing further survives in the finding of the adjudicating authority in the impugned order as the discharge of automobile cess effaces coverage of rule 6 of CENVAT Credit Rules, 2004 to the output of the Rudrapur and Haridwar factories. Appeal allowed.
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2023 (2) TMI 658
Evasion of Central Excise Duty - rejection of the invoice value as the transaction value - liquidated damages - allegation of affording a method by which pre-planned amount could be transferred back to the seller and, thus, constituting additional consideration under a different guise - HELD THAT:- The finding of the original authority is, without saying in so many words, based on transaction value in section 4(1) of Central Excise Act, 1944 not being truly reflected in the invoices and, therefore, to be enhanced to the extent of liquidated damages representing additional consideration. It is clear from section 4 of Central Excise Act, 1944 that several elements enumerated therein combine to designate such price as transaction value on which appropriate rate of duty would, in accordance with section 3 of Central Excise Act, 1944, apply. These are the price to be the sole consideration for sale of goods sold by the manufacturer for delivery at the time and place of removal and to the extent that the assessee and the buyer are not related each other. There is no finding in the impugned order, or unearthing by investigation, that the details of the contract so designated as liquidated damages , contingent upon inability of the dealers of the buyers to book the prescribed number of vehicles, for remitting additional consideration. It is clear from section 4 of Central Excise Act, 1944 that any deviation from any of the elements enumerated therein would require treatment prescribed in Central Excise (Determination of Price of Excisable Goods) Rules, 2000. These several rules commence with the declaration that there is no option for determination of value other than by recourse to in Central Excise (Determination of Price of Excisable Goods) Rules, 2000 - in the event of rejection of the invoice value as the transaction value, it was not open to the adjudicating authority to re-determine value without recourse to Central Excise (Determination of Price of Excisable Goods) Rules, 2000. As the order is deficient in such finding, and more particularly as the show cause notice leading to the impugned order is also equally silent, the adjudicated demand and the fine and penalties flowing therefrom would not survive. Appeal allowed.
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CST, VAT & Sales Tax
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2023 (2) TMI 657
Classification of goods - Aluminium Composite Panels (ACP) - It is the contention of the Appellants that ACP is classifiable under Entry C-6 of Schedule to the MVAT Act, 2002 read with Sr. No.6 of Notification No. VAT- 1505/CR-113/Taxation-1 dated 1st June, 2005 and the sale was chargeable to 5% VAT and not 12.5 % as claimed by the State Authorities - interpretation of Heading 7606 and Heading 7610. HELD THAT:- The learned Tribunal has failed to give any finding with respect to subject ACP in the context of the product description, its manufacture, its end use, the various principles including essential characteristics as well as the predominant use. There is no finding as to whether the subject aluminium panel is not a aluminum plate or sheet or a strip of thickness exceeding 0.2 mm nor a finding that the same is part of a structure or prepared for use in structures to come to a conclusion that it falls under Heading 7610. Nowhere the Tribunal has distinguished the opinions published by the Worlds Customs Organization. It was necessary for the Tribunal to consider the submissions made on behalf of the Appellants as well as the Respondent Revenue and give factual findings with detailed reasoning before confirming the orders of the Commissioner and dismissing the Appeals. The Tribunal is the last fact finding authority and is expected to come to a conclusion of a product under a Heading after a detailed factual analysis of the product in question and not merely on the basis of judgments cited before it - the Tribunal ought to have independently come to a conclusion after considering and exhaustively dealing with the material furnished by the Appellants. The matters are remanded back to the Tribunal - appeal disposed off.
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2023 (2) TMI 656
Scope of assessment - Reassessment of entire turnover or fresh assessment of escaped turnover - power of review - Exemption from sales tax - export sales - purchase of raw skins for export - revised assessment under Section 16 of the TNGST Act, 1959 for the turnover of the year 1988-1989 or not - HELD THAT:- The Division Bench in Ekambareeswarar Coffee and Tea Works case [ 1991 (2) TMI 359 - MADRAS HIGH COURT] has held that it would be a travesty of law to hold that the orders made under section 16(1)(a) of the Act had set aside the original orders of assessment, which were not even under consideration referred to or included in the order under section 16(1)(a) of the Act. The order of refund of tax, already paid on the basis of the original order of assessment is, therefore, erroneous and cannot be sustained. The said observation has been made after considering the tenor of the re-assessment order passed under Section 16 of the Act. In the said case, the Division Bench has taken note of the language used in Section 16(1)(a) and 16(1)(b) as well as the various interpretations of the Courts, making it clear that Section 16(1) (a) deals with assessment of escaped turnover, whereas Section 16(1)(b) deals with re-assessment of the turnover not only escaped assessment, but also improperly assessed. In case of assessment on escaped turnover in exercise of power under Section 16(1)(a), reflection of the original order of assessment is not required even if the authority chooses to pass a composite order by including the assessment year relating to escaped turnover. If the tax liability already determined in the original assessment proceedings, it can be bodily lifted and added to the order under Section 16(1)(a) of the Act. Admittedly, the right to challenge the disallowance of exemption has not been availed. When the appeal preferred and remedy exhausted against the original order, it will be preposterous to confer the said right in the subsequent assessment on the escaped turnover alone, only because the subsequent order passed under Section 16(1)(a) of the said Act has also incorporated the earlier assessment order, merely for the sake of completeness. Unless the entire turnover is re-assessed in exercise of power under Section 16 (1) (b) of the said Act, the subsequent Appellate Authority cannot substitute his view contrary to the assessment regarding the turnover which has reached finality. Such substitution will amount to review of the earlier order. The power which the assessing authority thus exercises under Section 16(1)(a) of the Act is neither the power of revision nor the power of review. From the assessment order, dated 31.03.1995, it is found that it is not reassessment of entire turnover. It is assessment made in exercise of power under Section 16(1)(b) of the said Act, but only a fresh assessment regarding the escaped turnover in exercise of power under Section 16(1)(a) of the TNGST Act, 1959. Appeal dismissed.
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Indian Laws
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2023 (2) TMI 654
Adulteration of food products - Cognizance of offence punishable under Section 272/273 of the Indian Penal Code - Issuance of warrant of Proclamation and Attachment against Sri. C.M. Donati, Managing Director, Nestle India Limited - HELD THAT:- It has become settled principle of law that Article 254 of the Constitution mandates if there is any inconsistency between the provision of a Central Act and a State legislature, the Central Act will prevail. From the attending facts of the case it is found that the alleged offence known to be committed on 18th August, 1998 when Public Analyst report confirmed that the content was adulterated food while cognizance was taken by the Trial Court on 29th June, 2000 after the prescribed period of the limitation which ex-facie is not permissible under the law and on this score alone the prosecution should be quashed. It has become settled principle of law that special law will prevail over and above the general legislation. The P.F.A. Act has extended certain rights to the accused person under Sections 11 and 13 of the P.F.A. Act. Launching of a prosecution under Sections 272 and 273 of the I.P.C., without following the procedure prescribed under this Special Act would amount to depriving an accused of his statutory right. On that score also the proceeding cannot be allowed to remain in force. Sections 272 and 273 of the I.P.C. are offences non-cognizable in nature. Therefore, police is not empowered to hold investigation without obtaining permission from the jurisdictional Magistrate. In this case provision of Section 155 (2) Cr.P.C. since has not been complied with it gives a fatal blow to the prosecution case and it is yet another point to justify an order of quashment. The criminal proceeding being G.R. Case No. 3181 of 1998 arising out of Bizpore Police Station Case No. 130 dated 18th September, 1998 under Sections 272/273 of the I.P.C. before learned S.D.J.M., Barrackpore (now A.C.J.M., Barrackpore) should not be allowed to remain in force to avert the abuse of process of law - Section 482 of the Cr.P.C. is invoked - the proceeding pending before the learned S.D.J.M. Barrackpore (as then was), presently learned Additional Chief Judicial Magistrate, Barrackpore is quashed. Application disposed off.
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