TMI Tax Updates - e-Newsletter
February 27, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Navigating Input Tax Credit: Ensuring Compliance and Mitigating Risks

   By: Kamal Aggarwal

2. CBDT issues order giving effect to the Budget proposal of remitting petty tax demands

   By: Vivek Jalan

3. Case study suggesting need of streamlining court procedures for expediting justice and to reduce number of cases.

   By: DEVKUMAR KOTHARI and CA UMA KOTHARI

4. Gravity of the offence, object of the Special Act and the period of sentence relevant when granting bail in GST related offences

   By: Bimal jain

5. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

6. COMMENCEMENT OF ARBITRATION

   By: DR.MARIAPPAN GOVINDARAJAN

7. No GST leviable on Manpower Services supplied to Panchayat or Municipality in relation to any function entrusted under Indian Constitution

   By: Bimal jain

News

1. Government of India approves interest free Loan to FCV Tobacco growers in Andhra Pradesh

2. NICDC and IIT Delhi sign MoU to Collaborate on Assessment of Location Optimality for the National Industrial Corridor Development Programme using PM GatiShakti Portal

3. GeM carries out registration drive to increase its MSME seller base in Karnataka

4. G-33 Ministerial Statement on Agriculture Trade Negotiations at the 13th WTO Ministerial Conference G-33 Ministerial Meeting, Abu Dhabi, 25 February 2024

5. Press Brief on the G33 Trade Ministers Meeting in Abu Dhabi preceding the MC 13- 25 Feb 2024

Notifications

Central Sales Tax

1. S.O. 834(E). - dated 23-2-2024 - CST

Designated Indian Carrier - M/s SNV Aviation Private Limited (Akasa Air).

SEZ

2. S.O. 843(E) - dated 22-2-2024 - SEZ

Central Government de-notifies area at Kuvakolli Village, Vardaiah Palem Mandal, Chittoor District, in the State of Andhra Pradesh.

Highlights / Catch Notes

GST

• Court Rules on Expired Cash Credit Account Attachments, Allows Future Challenges to New Orders.

  Case-Laws - HC : Provisional attachment of cash credit accounts of the petitioners - expiry of period of one year from the date it is made - petitioners submits that repeated attachment of cash credit accounts in exercise of power under Section 83 of the CGST Act is in breach of the provisions of Section 83(2) and such exercise could not have been undertaken - The High Court noted that subject matter of these proceedings has ceased to operate - The court disposes of the petition, reserving the petitioner's right to challenge the fresh attachment order dated 13.12.2023 in accordance with the law.
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• Court Extends Limitation Period for CGST Show Cause Notices; Orders Re-Adjudication, Notification No. 9 of 2023 Under Review.

  Case-Laws - HC : Extension of period of limitation for issuance of show cause notice - The Delhi High Court disposed of the petition, setting aside the order under Section 73 of the CGST Act and directing re-adjudication by the proper officer. The validity of Notification No. 9 of 2023 remains open for further review.
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• High Court rules 200% penalty u/s 129 unwarranted for brief e-way bill delay in export to Bangladesh.

  Case-Laws - HC : Levy of penalty of 200% u/s 129 - Bonafide belief - intention to evade tax - expiration of the e-way bill - exported to Bangladesh - On the date and time when the vehicle was intercepted, the vehicle did not have a valid e-way bill - The High Court concluded that the circumstances did not warrant a 200% penalty imposition, considering the short delay and the absence of evidence of intent to contravene the law.
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• High Court Allows Reconsideration of Appeal Filed Late Due to Absence of GST Appellate Tribunal, Citing Similar Case.

  Case-Laws - HC : Condonation of delay beyond condonable period - appeal rejected on the sole ground that the appeal filed by the appellant is beyond the condonable period i.e., 56 days - The High Court held that while the delay was beyond the condonable period, the absence of the GST Appellate Tribunal justified the court's intervention. It referred to a similar case in Narayanapet Municipality Vs Superintendent of Central Tax, where the appeal was remanded back for reconsideration due to delay beyond the condonable period. The court found the principle applicable to the present case as well.
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Income Tax

• Supreme Court allows raising jurisdictional error claims on assessment order's limitation period for 2015-16 tax year.

  Case-Laws - SC : Revision u/s 263 - period of limitation - whether the assessment order for AY 2015-16, issued on 31st March, 2023, was barred by the limitation prescribed in Section 153B? - The Supreme court noted that the impugned order was passed by the High Court without issuing a formal notice to the respondent-Department or calling for a response from them, despite the standing counsel for the Department being present in Court. - Considering this, the court disposed of the special leave petition, reserving liberty for the petitioner to raise contentions regarding jurisdictional error in relation to the limitation period before the appropriate authority.
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• Tribunal Grants Relief from Penalty Due to Technical Issues in Filing Under Vivad Se Vishwas Scheme.

  Case-Laws - AT : Penalty proceedings u/s 271FA - late filing of the SFT statement Online by the appellant - appellant opted for the Vivad Se Vishwas Scheme and paid the due amount - Form No.4 was not submitted electronically - The Tribunal accepted the manual submission of Form No. 4 under the Vivad Se Vishwas Scheme, considering technical difficulties faced by the appellant. - The Tribunal allowed the appeal of the assessee, providing relief from the penalty imposed under section 271FA of the Income Tax Act.
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• Tax Tribunal Rules on Capital Gains and Stock Conversion: Assessee's Valuation Stands Unaltered by Authorities.

  Case-Laws - AT : Computation of capital gain - conversion of Gold in stock in trade and income from other sources - assessee converted the gold into stock in trade on various dates and long term capital gain was paid on it - The ITAT held that, once the assessee has converted the capital asset into stock in trade, the revenue sum moto cannot changed the value adopted by the assessee on the ground that income under one head shown higher and on the other head less.
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• Tribunal Rejects Appeal Due to Negligent Delay in Filing; Emphasizes Strict Adherence to Limitation Laws.

  Case-Laws - AT : Condonation of delay - delay of 280 days - sufficient cause - The Tribunal noted that the delay was due to the callous and lackadaisical approach of the appellant in not preferring the appeal within the stipulated time period. - Referring to legal precedents, the Tribunal emphasized the importance of a bona fide explanation for condonation of delay and strict adherence to the law of limitation. - Despite the liberal construction of the term "sufficient cause," the Tribunal found no plausible explanation from the appellant justifying the substantial delay in filing the appeal.
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• Are Keyman Insurance Maturity Proceeds Taxable? Tribunal Overturns Tax Addition, Grants Exemption Under Income Tax Act.

  Case-Laws - AT : Key man insurance policy - Taxability of the sums received on maturity of life insurance policy - Assessee claimed it as exempt income u/s 10(10D) - It was contended that the proprietorship concern was dissolved and the assessee purchased the Keyman Insurance policy after paying a surrender value - The CIT(A) upheld the addition made by the Assessing Officer under section 28(vi) of the Act - The ITAT held that the authorities were not justified in denying the benefit of exemption to the assessee and directed the AO to delete the addition.
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• Tax Tribunal Increases Disallowance on Bogus Purchases from 0.50% to 6% Following CIT(A) Relief Adjustment.

  Case-Laws - AT : Estimation of income - bogus purchases - The CIT(A) upheld the validity of reopening and granted substantial relief to the assessee by restricting the addition to 0.50% of the impugned purchases. - The Tribunal modified the order of the CIT(A) and directed the Assessing Officer to restrict the disallowance of purchases to 6% of the aggregate purchase amount.
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• Tribunal Overturns Disallowance of Royalty Payment Below Threshold u/s 40A(2)(b) for FY 2005-06.

  Case-Laws - AT : Disallowance of payments to related party u/s 40A(2)(b) - The ITAT observed that, from the working of corporate service charges for the financial year 2005-06, we find that in the present case, the assessee paid a Royalty of Rs. 84 lakh, which is 0.05% of the turnover of Rs. 1449.40 crore and is even less than 0.3% of the turnover considered reasonable by the AO. - The Tribunal deleted the disallowance of Royalty payment made by the AO.
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• Tax Appeal Dismissed: 206-Day Filing Delay Without Explanation Leads to Tribunal Rejection.

  Case-Laws - AT : Condonation of delay - delay of 206 days - assessee had not moved any condonation application explaining the reasons - The Tribunal noted that the expression “sufficient cause” will always have relevancy to reasonableness. - The ITAT dismissed the appeal on the ground of the substantial delay in filing the appeal and observed that the assessee did not provide any explanation or application seeking condonation of the delay.
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• Reassess TDS Non-Deduction on Royalties: Examine MFN Clause in Indo-Belgium DTAA for Article 12 Override.

  Case-Laws - AT : Addition u/s 40(a)(i) - Royalties and fees for technical services - non-deduction of TDS on the commission payment - scope of MFN clause - ITAT directed the Assessing Officer to examine the MFN clause available in the Protocol of Indo-Belgium DTAA as to whether the same shall override the specific provisions laid down under Article 12 and decide the issue afresh in accordance with law.
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Customs

• High Court Overturns Tribunal's Immunity Grant for Confectionary Import Violation; Case Sent Back for Review.

  Case-Laws - HC : Penalty imposed u/s 112(a) - Import confectionary items from Dubai - immunity from prosecution and fine/penalty - Tribunal held that since the appellant was a co-noticee along with the main accused, appellant was also entitled to immunity granted by the Settlement Commission to the main noticee - The High Court held that, the reasoning of the Tribunal extending immunity granted to the other co-noticees to the respondent is not sustainable. - Matter restored back before tribunal for re-judication in view of the earlier decision of the High Court.
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Indian Laws

• Enemy Properties Managed by Custodian Are Not Owned by Union; Local Taxes Can Be Levied and Collected by Appellant.

  Case-Laws - SC : Exemption from payment of property tax under the provisions of the UP Municipal Corporation Adhiniyam, 1959 - The Supreme Court held that, the enemy properties vest in the Custodian as a trustee only for the management and administration of such properties. - Union of India cannot assume ownership of the enemy properties once the said property is vested in the Custodian. This is because, there is no transfer of ownership from the owner of the enemy property to the Custodian and consequently, there is no ownership rights transferred to the Union of India. Therefore, the enemy properties which vest in the Custodian are not Union properties. - The appellant shall be entitled to levy and collect the property tax as well as water tax and sewerage charges and any other local taxes in accordance with law.
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IBC

• Tribunal Upholds Liquidation of Bil Energy Systems, Dismissing Claims of Misleading Asset Valuation and Inadequate Resolution Plans.

  Case-Laws - AT : Liquidation of the Corporate Debtor under Section 33 of the IBC - The appellant contended that the RP misled the CoC regarding the possession and valuation of assets, which led to an unjust liquidation decision. The appellants also claimed that the CoC's decision was made without adequately considering potential resolution plans. - The NCLAt dismissed the appeals, affirming the Adjudicating Authority's order to liquidate Bil Energy Systems Limited. It held that the CoC's decision was made in compliance with the IBC and that there was no evidence of material irregularity or fraud that would warrant overturning the liquidation order.
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Service Tax

• Tribunal Confirms Service Tax Exemption for Public Health Services Provided to Government Entities.

  Case-Laws - AT : Exemption from service tax - question of law or fact - Providing various taxable services like Cleaning Services, Manpower Recruitment, or Supply Agency Services etc., to government hospitals, medical colleges, community health centers, and other government entities. - The tribunal held that, the services provided to government entities related to public health, sanitation, and solid waste management qualified for exemption. The Tribunal clarified that the intention behind the exemption was to encourage services contributing to public health, making a distinction between services "to Government" and not "by Government."
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Central Excise

• Supreme Court dismisses appeal: Electricity usage not valid evidence for clandestine manufacturing claims.

  Case-Laws - HC : Clandestine removal - Whether electricity consumption can be considered as valid evidence of clandestine manufacture of taxable goods? - CESTAT upheld the findings of the Commissioner that there was a huge variation in power consumption per metric ton of ingots produced, and the Revenue did not provide concrete evidence to challenge this. The denial of CENVAT Credit based on consumption rather than the receipt of duty-paid inputs was found to be contrary to the CENVAT Credit Rules. - The Supreme Court dismissed the appeal of the Revenue on the ground that questions raised by the appellant were primarily questions of fact, not of law.
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Case Laws:

• GST

• 2024 (2) TMI 1214
  Maintainability of appeal - appeal filed by the petitioner dismissed on the ground that the same was time barred as it was filed beyond the period of four months - HELD THAT:- The Central Goods and Services Act is a special statute and a self-contained code by itself. Section 107 of the Act has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite law that Section 5 of the Limitation Act, 1963 will apply only if it is extended to the special statute. Section 107 of the Act specifically provides for the limitation and in the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. Accordingly, one cannot apply Section 5 of the Limitation Act, 1963 to the aforesaid provision. In COMMISSIONER OF CUSTOMS CENTRAL EXCISE VERSUS M/S HONGO INDIA (P) LTD. ANR. [ 2009 (3) TMI 31 - SUPREME COURT] , the Supreme Court has reiterated its stand and held In the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. The High Court was, therefore, justified in holding that there was no power to condone the delay after expiry of the prescribed period of 180 days. Thus, no interference is required in this petition and the same is, accordingly, dismissed.

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• 2024 (2) TMI 1213
  Attachment of bank account of the petitioner for realization of due according to the department - order of attachment not served upon - petitioner relies on a downloaded copy of the portal - violation of principles of natural justice - HELD THAT:- The State respondent submits that the aforesaid allegation of the petitioner is not correct and further submits that provisional attachment order in question was uploaded in the official portal of the department and he has produced the downloaded copy of such order. In such facts and circumstances of this case where disputed question of fact based on material evidence are involved, this writ Court cannot act as an enquiry authority and scrutinize the evidence by the parties with regard to the disputed question of fact about uploading of the attachment order - petition dismissed.

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• 2024 (2) TMI 1212
  Provisional attachment of cash credit accounts of the petitioners - expiry of period of one year from the date it is made - petitioners submits that repeated attachment of cash credit accounts in exercise of power under Section 83 of the CGST Act is in breach of the provisions of Section 83(2) and such exercise could not have been undertaken - HELD THAT:- In view of the admitted position that the order, subject matter of these proceedings has ceased to operate, the petition is disposed of reserving the right of the petitioner to impugn the fresh attachment order dated 13.12.2023 in accordance with law. The question of validity of repeated issuance of attachment orders under Section 83 of the CGST Act is left open.

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• 2024 (2) TMI 1211
  Provisional attachment of cash credit accounts of the petitioners - expiry of period of one year from the date it is made - petitioners submits that repeated attachment of cash credit accounts in exercise of power under Section 83 of the CGST Act is in breach of the provisions of Section 83(2) and such exercise could not have been undertaken - HELD THAT:- In view of the admitted position that the order, subject matter of these proceedings has ceased to operate, the petition is disposed of reserving the right of the petitioner to impugn the fresh attachment order dated 13.12.2023 in accordance with law. The question of validity of repeated issuance of attachment orders under Section 83 of the CGST Act is left open.

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• 2024 (2) TMI 1210
  Cancellation of GST registration of the petitioner with retrospective effect - notice does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- The Show Cause Notice did not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration. Show Cause Notice dated 31.08.2021 records that wrongful Input Tax Credit [ITC] was availed from M/S Jagdamba Enterprises, however, as per the petitioner, he did not have any dealing with M/S Jagdamba Enterprises and no ITC has been availed qua the said entity - Further, it may be noticed that the show cause notice directed the petitioner to appear for personal hearing on an appointed date and time whereas no date and time was mentioned in the said show cause notice. The show cause notice and the impugned order are also bereft of any details accordingly the same cannot be sustained. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. Further, there is no reasoning in the said show cause notice and in the impugned order as to why the cancellation has been done retrospectively. The impugned show cause notice dated 31.08.2021, order of cancellation dated 27.12.2021 are accordingly set aside. The GST registration of the petitioner is restored. Petitioner shall comply with Rule 23 of the Central Goods and Service Tax Rules, 2017 - petition allowed.

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• 2024 (2) TMI 1209
  Validity of SCN seeking to create a demand under Section 73 Central Goods and Services Tax Act, 2017 - SCNs are bereft of any details and are not in inconsonance with law - violation of principles of natural justice - HELD THAT:- Reference may be had to the reply filed by the petitioner to the Show Cause Notice which shows that the reply is a detailed comprehensive reply adverting to each of the points raised in the Show Cause Notice. Ex-facie it is apparent that the proper officer has not taken into consideration the reply filed by the petitioner while passing the cryptic order dated 31.12.2023. Consequently, the order dated 31.12.2023 cannot be sustained and is accordingly set aside. The matter is remitted to the proper officer to re-adjudicate the Show Cause Notice dated 29.09.2023 by taking into account the detailed reply filed by the petitioner thereto. In case any further detail or clarification is required from the petitioner, the proper officer shall intimate the petitioner qua the same and petitioner shall thereafter promptly furnish his explanation/reply/document to this query, if any raised. The proper officer shall pass a speaking order after giving an opportunity of a personal hearing to the petitioner within four weeks - The issue of jurisdiction as well as validity of the Show Cause Notice dated 29.09.2023 is left open. Petition disposed off.

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• 2024 (2) TMI 1208
  Extension of period of limitation for issuance of show cause notice - Challenge to N/N. 9 of 2023 dated 31.03.2023 whereby the limitation period for exercise of power under Section 73 of the Central Goods and Services Tax Act, 2017 has been extended - proceedings under Section 73 of the Act have been concluded and a demand has been created against the petitioner - HELD THAT:- The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply - The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that no proper reply/explanation has been received which ex-facie shows that proper officer has not even looked at the reply submitted by the petitioner. The impugned order dated 31.12.2023 is set aside. The matter is remitted to the proper officer for re-adjudication of the show cause notice issued under Section 73 of the Act within four weeks after giving an opportunity of personal hearing to the petitioner - challenge to Notification No. 9 of 2023 is left open - petition disposed off.

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• 2024 (2) TMI 1207
  Extension of period of limitation for issuance of show cause notice - Challenge to N/N. 9 of 2023 dated 31.03.2023 whereby the limitation period for exercise of power under Section 73 of the Central Goods and Services Tax Act, 2017 has been extended - proceedings under Section 73 of the Act have been concluded and a demand has been created against the petitioner - HELD THAT:- The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply - The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that no proper reply/explanation has been received which ex-facie shows that proper officer has not even looked at the reply submitted by the petitioner. The impugned order dated 31.12.2023 is set aside. The matter is remitted to the proper officer for re-adjudication of the show cause notice issued under Section 73 of the Act within four weeks after giving an opportunity of personal hearing to the petitioner - challenge to Notification No. 9 of 2023 is left open - petition disposed off.

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• 2024 (2) TMI 1206
  Levy of penalty of 200% u/s 129 of the WBGST Act - penalty levied on the ground that the e-way bill generated by the appellant for transporting the articles for export to Bangladesh had expired and, therefore, on the date and time when the vehicle was intercepted, the vehicle did not have a valid e-way bill - HELD THAT:- The authorities found that the e-way bill had expired at 12 midnight on 13.06.2022 and fresh e-way bill has not been generated. Consequently, it was held that the goods were transported without a valid e-way bill. Though the appellant had sought to explain the lapse on the ground that the vehicle met to the accident and there was a settlement made between the owner of the motorcycle and the owner of the truck carrying the goods, this also had added to the delay in the process and in any event on 15.06.2022 the second e-way bill was generated and at the time when the vehicle was intercepted, hardly 24 hours had expired from the time at which the first e-way bill had expired. In similar matters court has taken a view that unless and until it is established by the department that the transporter of the goods or the owner of the goods had an intention to contravene the provisions of the Act, the question of imposing penalty under Section 129 of the Act that too 200% would not be justified. Each case has to be decided on the peculiar facts and circumstances and the court can definitely take into consideration the bona fide of the transaction and in the instant case the delay have been less than 24 hours. It is not a case where penalty can be imposed that too 200%. The other factors which are also to be taken note of that the goods have been transported and the goods in question have been exported to Bangladesh. I the instant case no penalty can be imposed on the appellant - Appeal allowed.

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• 2024 (2) TMI 1205
  Condonation of delay beyond condonable period - appeal rejected on the sole ground that the appeal filed by the appellant is beyond the condonable period i.e., 56 days - HELD THAT:- Admittedly the GST appellate tribunal has not been constituted in terms of Sec. 112 of APGST Act 2017 to carry out the matter to the said Tribunal. Therefore, this writ petition can be entertained by this Court. In M/S. NARAYANPET MUNICIPALITY VERSUS THE SUPERINTENDENT OF CENTRAL TAX, THE JOINT COMMISSIONER (APPEALS - I) [ 2023 (4) TMI 306 - TELANGANA HIGH COURT ] when GST Registration was cancelled and the same was challenged, the appeal was dismissed by the appellate authority on the sole ground that the appeal was filed beyond the condonable period. In that context, the Division Bench of High Court of Telangana has observed Though the lower appellate authority may be right in holding that while it may allow filing of an appeal beyond the limitation of three months for a further period of one month, but the delay beyond the extended period of one month cannot be condoned, such a stand taken by respondent No.2 may adversely affect the petitioner - The above decision applies to the case of the petitioner as in the instant case also the sole ground on which the appeal was rejected was because the same was filed beyond the condonable period. In that case the impugned Order challenged in Appeal was the cancellation of Registration. Whereas, in the case on hand, the impugned order under challenge in Appeal is the Assessment Order. However, the principle in the cited decision being the condonation of delay beyond the condonable period, the same can be made applicable to case on hand also. This writ petition is allowed by condoning the entire delay in filing the appeal before the appellate authority on the condition of the petitioner depositing costs of Rs. 20,000/- before the appellate authority within a period of one week from the date of receipt of copy of this Order.

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• Income Tax

• 2024 (2) TMI 1204
  Provision for warranty in excess of 2.14 percent of sales - Tribunal allowing the provision for warranty even thought the assessee had not made the provision on a scientific basis - HC [ 2023 (4) TMI 1053 - KARNATAKA HIGH COURT] answered the question of law in assessee s favour - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petitions are dismissed.

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• 2024 (2) TMI 1203
  TDS u/s 194I OR 194C - External Development Charges ( EDC ) paid to Haryana Urban Development Authority ( HUDA ) - HELD THAT:- Following the order of this Court in Principal Commissioner of Income Tax (Central III) and Anr. vs. BPTP Limited [ 2021 (2) TMI 623 - SC ORDER] and Joint Commissioner of Income Tax vs. M/s Experion Developers Pvt. Ltd. [ 2024 (2) TMI 894 - SC ORDER] , these petitions also stand dismissed stating Petitioners in these petitions were required to deduct TDS from EDC under Section 194-I Pending application(s), if any, shall stand disposed of.

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• 2024 (2) TMI 1202
  Delay in filling appeal before SC - Denial of claim for benefit of Section 10(38) of the Act and denial of an opportunity to cross examine the entry providers by revenue - substantial question of law or facts - as decided by HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO. HELD THAT:- There is gross delay of 272 days in filing the special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any. Pending application(s) stand disposed of.

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• 2024 (2) TMI 1201
  Revision u/s 263 - period of limitation - whether the assessment order for AY 2015-16, issued on 31st March, 2023, was barred by the limitation prescribed in Section 153B? - HC held [ 2023 (11) TMI 48 - DELHI HIGH COURT] since there is no jurisdictional error in the assessment order dated 31st March, 2023 pertaining to AY 2015-16, on the ground of limitation, we are not inclined to entertain the present petition. HELD THAT:- During the course of submissions, as brought to our notice that the impugned HC order dated 19.10.2023 was passed without issuing a formal notice to the respondent-Department or calling for a response from the Department although the standing counsel for the Department was present in Court. We dispose of this special leave petition by reserving liberty to the petitioner herein to raise the contentions regarding the jurisdictional error vis-a-vis the limitation period before the appropriate authority despite the impugned order being passed as against the petitioner herein. The reason for saying so is because the High Court had passed the impugned order without having the benefit of the response of the respondent-Department. Since we are permitting the petitioner to raise the point regarding jurisdictional error in the context of limitation period, the appropriate authority before whom such a point is raised may not be influenced by the observations made by the High Court in the impugned order.

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• 2024 (2) TMI 1200
  Penalty proceedings u/s 271FA - late filing of the SFT statement Online by the appellant - appellant opted for the Vivad Se Vishwas Scheme and paid the due amount - HELD THAT:- As stated by assessee that the assessee had opted for Vivad Se Vishwas Scheme but Form No.4 could not be submitted electronically and same was submitted manually. Therefore, CIT(A) ought to have accepted the submissions of the assessee and granted relief to the assessee. Thus hold accordingly. AO is directed to give benefit of Vivad Se Vishwas Scheme to the assessee upon furnishing of the requisite documents. Grounds raised by the assessee are accordingly, allowed.

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• 2024 (2) TMI 1199
  Validity of assumption of jurisdiction u/s. 153C - additions challenged on the ground that they are not based on any incriminating material - whether addition seized material does disclose any unaccounted/ undisclosed income of the assessee? HELD THAT:- Admittedly, in the assessment order the AO has not made any addition with reference to seized material. In fact, said seized material does not disclose any unaccounted/ undisclosed income of the assessee. Therefore, in our view, assumption of jurisdiction u/s.153C of the Act based on such document is invalid. Even, otherwise now it is fairly well settled that in case of unabated assessment no addition can be made in absence of incriminating material found during the search and seizure operation. As discussed earlier, the only incriminating material referred to in the satisfaction note is the trust deed of PGP charitable trust. Though, in the assessment order the AO has made a number of additions, however, none of them are with reference to the incriminating material referred to in the satisfaction note. Whereas, the additions are based on some other material. Thus, case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] squarely applies to the facts of the present case. Therefore, considering the totality of facts and circumstances of the case, we hold that not only the assumption of jurisdiction u/s.153C is invalid, but, the additions made are unsustainable as they are not with reference to any incriminating material. Accordingly, we delete the additions. Decided in favour of assessee.

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• 2024 (2) TMI 1198
  Computation of capital gain - conversion of Gold in stock in trade and income from other sources - assessee converted the gold into stock in trade on various dates and long term capital gain was paid on it - Difference between the sale value taken by assessee and fair market sale value - contention of the assessee that online platform rate is for buying and sell online without physical delivery whereas the rate of physical delivery always remain higher side and therefore, he has take the higher rate as the capital assets on conversion immediately forms part of stock in trade and that conversion is accepted by the revenue and only disputed the rate - HELD THAT:- Once the assessee has converted the capital asset into stock in trade, the revenue sum moto cannot changed the value adopted by the assessee on the ground that income under one head shown higher and on the other head less. We found merits in the arguments of assessee that the rate of gold is higher for physical delivery and considering the facet of that matter we do not found any merits in the contentions of the revenue in disturbing gold disclosed under IDS, 2016 which was for an amount of Rs. 12,76,81,150/- and after conversion into stock in trade on various dates the total sale proceed was Rs. 15,63,62,967/- is to be considered as correct sale price considering the arguments of the assessee that the rate of gold for physical delivery is higher. Not only that when there is no disputed regarding the overall income of the assessee in the year under consideration, the only difference disputed by the ld. AO and CIT(A) the head under which is to be calculated. Considering the material available on record and based on the arguments advanced before us we are of the considered view that the assessee has correctly computed the capital gain. Based on these observations ground raised by the assessee is allowed. Unexplained money u/s 69A r.w.s.115BBE - cash sales recorded in the books of the assessee considered as unexplained - Sale of gold on the date of demonetization - HELD THAT:- Assessee has recorded the cash in their books of account and the source of the said cash being the sale of goods is duly recorded in the books of account and when there is no contrary material brought on recorded for the sales recorded by the assessee for an amount of Rs. 15,63,62,967/- the action of the lower authority considered the cash sales of Rs. 8,95,25,633/- as not genuine is against the evidence placed on record. Since it was not under dispute that the assessee not sold the goods. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee. Thus, considering all the facets of the case the bench noted that the revenue did not pinpoint any defects in the books of accounts, quantitative records available with the assessee, cash book and invoice presented in the assessment proceedings. Merely the assessee has sold the gold on the date of demonetization it does not make the sale as non-genuine and we find support of this contention from the decision of the jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO [ 2006 (11) TMI 117 - RAJASTHAN HIGH COURT] holding that once the cash receipt is supported by invoice supported by the delivery of goods the source of that cash cannot be in doubt. The cash is generated out of the stock already on record and thus the sales made by the assessee is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. Based on the discussion so recorded herein above we consider the ground of the assessee and hold that the cash receipt from the cash sales cannot be added as income u/s. 69A - Decided in favour of assesee.

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• 2024 (2) TMI 1197
  Addition u/s 68 - unsecured loan - non verification of identity and creditworthiness of lenders and genuineness of transactions from whom the assessee has shown unsecured loans - HELD THAT:- We note that Hon ble Apex Court in the case of CIT vs. Orissa Corporation Pvt. Ltd [ 1986 (3) TMI 3 - SUPREME COURT] held that when assessee furnished their complete address, PAN as well as confirmation and bank details of creditors/lender, the addition should not made in the hands of the assessee. We note that opening balance of the Lenders are not subject to disallowance in the current assessment year under consideration, if the AO wanted to disallow the same, he could disallow in the previous assessment year. During the assessment year under consideration, the assessee took fresh loan and to substantiate the genuineness of fresh loan, the assessee submitted confirmation, bank statement, name, address and PAN number, moreover the transactions were through banking channel. On such fresh loan interest has been paid to the lenders, and TDS on interest has been paid hence genuineness of the fresh loan cannot be doubted. We also note that some of the Lenders have been fully repaid during the year under consideration. Once, the repayment is made and accepted by the department no addition for such loan is to be made in the hands of the assessee. Decided against revenue. Estimation of income - bogus purchases - HELD THAT:- Under the Income tax proceedings, the disallowance of entire purchases is not justified when the assessee has furnished the details of purchases and payments made through banking channel. It is settled law under the income tax proceedings that only profit element embedded in such transaction, may be disallowed and not the substantial part of transaction. Keeping in view the nature of business activities of the assessee and profit margin in trading activities, 6% of impugned disallowance would be reasonable and justified to avoid the possibility of revenue leakage. Thus, the Assessing Officer is directed to restrict the addition to the extent of 6% of Rs. 1.01 crore. Decided partly in favour of assessee.

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• 2024 (2) TMI 1196
  Condonation of delay - delay of 280 days involved in preferring of the captioned appeal - scope of expression sufficient cause - distinction was drawn between normal delay and inordinate delay - contentions of the assessee that the accountant has left many things incomplete, and it appears that he intentionally delays the filing of the appeal although it was ready in all respect HELD THAT:- The delay in filing of the appeals cannot be condoned in a mechanical or a routine manner since that would undoubtedly jeopardize the legislative intent behind Section 5 of the Limitation Act. As the assessee appellant in the present case had come forth with any cogent explanation elaborating the acceptable reasons leading to the delay in filing the present appeal, and had adopted a lackadaisical approach, therefore, there can be no reason to condone the delay of 280 days involved in preferring of the captioned appeal. As observed in the case of Ramlal, Motilal and Chotelal Vs. Rewa Coalfields Ltd. [ 1961 (5) TMI 54 - SUPREME COURT] that seeker of justice must come with clean hands, therefore, now when in the present appeal the assessee appellant had failed to come forth with any substantial clarification to support the application for condonation elaborating in the backdrop of sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeal, therefore, we decline to condone the same and, thus, without adverting to the merits of the case dismiss appeal of the assessee as barred by limitation.

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• 2024 (2) TMI 1195
  Disallowance of interest expenses - as alleged assessee has foregone interest by giving interest free advance to various parties - disallowance confirmed by CIT(A) - HELD THAT:- On perusal of the balance sheet of the assessee for the current year, we find that the assessee had sufficient interest-free surplus funds available with it. Therefore, as per the settled legal principles, it has to be presumed that the interest-free surplus funds have been utilized for interest-free advances. In any case, it is a fact on record that the loans in respect of which interest disallowance has been made were given in earlier assessment years - Thus we direct the assessing officer to delete the disallowance. Ground no. 1 and 2 are allowed. Estimation of income - addition made by applying GP rate of 7.33% on account of alleged difference in stock as per books of account and as per stock statement for hypothecation with the bank - HELD THAT:- Hon ble jurisdictional High Court [ 2017 (11) TMI 396 - DELHI HIGH COURT] AO in his order has only considered the closing stock of sugar as on 31.03.1999, as per the bank statement which is at 3,98,125 Qtls. and after comparing the same with that of the closing stock as on 31st March 1999 in the audited accounts i.e. 3,10,934 Otls. and gone on to add the difference in excess stock of 87,191 Qtls, as assessee s income for the year - when the AO has placed absolute reliance to the closing stock figures as per bank statement for making the above stated addition to income then he should have necessarily taken the figures of opening stock of sugar as well from the same source, namely the statement as on 31.03.1998 as furnished to the bank. This preposition is based on the principle of consistency in approach as it would be improper to place reliance on the book stock for opening balance and in the same breadth the bank statement for closing balance. Decided in favour of assessee.

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• 2024 (2) TMI 1194
  Key man insurance policy - Taxability of the sums received on maturity of life insurance policy - Assessee claimed it as exempt income - AO did not accept the contention of the assessee and treated the sum as taxable u/s 28(vi) of the Act, treating the proceeds under Keyman Insurance policy - Assessee submitted that it was contended before the AO that the maturity proceeds were received in AY 2016-17. The insurance policy was under Keyman Insurance policy taken by M/s. Pratap Parikh Associates, a proprietorship concern in which the assessee was a Keyman. The proprietorship concern was dissolved and the assessee purchased the Keyman Insurance policy from M/s. Pratap Parikh Associates on 22.11.2008 after paying a surrender value. Thus, the assessee rightly claimed the amount as exempt u/s 10(10D) of the Act as a character of policy had changed wayback in the year 2008. HELD THAT:- We find some merit in the contention of the assessee that if the policy is transferred before its maturity then it would lose its character. As decided in Rajan Nanda [ 2011 (12) TMI 392 - DELHI HIGH COURT] as held that we have to bear in mind that law permits such an assignment even LIC accepted the assignment and the same is permissible. There is no prohibition as to the assignment or conversion under the Act. Once there is an assignment, it leads to conversion and the character of policy changes. The insurance company has itself clarified that on assignment, it does not remain a keyman policy and gets converted into an ordinary policy. In these circumstances, it is not open to the Revenue to still allege that the policy in question is keyman policy and when it matures, the advantage drawn therefrom is taxable. One has to keep in mind on maturity, it does not the company but who is an individual getting the matured value of the insurance. No doubt, the parties here, viz., the company as well as the individual taken huge benefit of these provisions, but it cannot be treated as the case of tax evasion. It is a case of arranging the affairs in such a manner as to avail the state exemption as provided in Section 10(10D) of the Act. Law is clear. Benefit inured owing to the combined effect of a prudent investment and statutory exemption provided under Section 10(10D) of the Act, the section does not envisage of any bifurcation in the amount received on maturity on any basis whatsoever. Nothing can be read in Section 10(10D) of the Act, which is not specifically provided because any attempt in that behalf as contended by Revenue would be tantamount to legislation and not interpretation. We are of the considered view that the authorities below were not justified in denying the benefit of exemption to the assessee. We hold accordingly. The AO is directed to delete the addition. Appeal of assessee allowed.

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• 2024 (2) TMI 1193
  Estimation of income - bogus purchases - HELD THAT:- We find that neither any detail on TDS of alleged commission was furnished nor any substantive evidence in the form of confirmation of parties or agreement/agency agreement was placed on record. We find that the CIT(A) recorded that a profit element in similar bogus purchases can only be brought to tax. Despite the fact that the CIT(A) restricted the addition to 0.50% without referring any material evidence available on record. We find that this combination in number of decisions wherein the purchases are shown from Gautam Jain, Bhanwarlal Jain or Rajendra Jain and Company, who were proved entry provider, similar addition was either restricted or enhanced to 6%. We further find a similar order was followed in the case of ITO Vs Rajesh Kumar Pamecha [ 2023 (1) TMI 1321 - ITAT SURAT] , ITO Vs Mukesh Mahavirprasad Sen [ 2023 (1) TMI 1321 - ITAT SURAT] and other cases dated 13/01/2023. Therefore, taking a consistent view, the order of ld. CIT(A) is modified and the disallowance restricted to the extent of 0.50% is increased to 6% of the impugned purchases. We further find that in a similar case in PCIT Vs Surya Impex [ 2023 (1) TMI 835 - GUJARAT HIGH COURT] the Hon ble Jurisdictional High Court affirms the decisions of this Tribunal on similar facts. Therefore, order of CIT(A) is modified and the assessing officer is directed to restrict the disallowance of purchases from there three parties be restricted to 6% of aggregate of purchase of Rs. 2.01 Crore. Grounds of appeal raised by the revenue are partly allowed.

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• 2024 (2) TMI 1192
  Disallowance of payments to related party u/s 40A(2)(b) - AO considered the payment of Royalty @0.5% of turnover as excessive and accordingly restricted the payment of Royalty to 0.3% of the turnover by disallowing 0.2% of Royalty payment - HELD THAT:- Tribunal in assessee s own case in M/s Piramal Enterprises Ltd. [ 2018 (7) TMI 1887 - ITAT MUMBAI ] deleted the disallowance made under section 40A(2)(b) of the Act in respect of payment of Royalty. From the working of corporate service charges for the financial year 2005-06, we find that in the present case, the assessee paid a Royalty of Rs. 84 lakh, which is 0.05% of the turnover of Rs. 1449.40 crore and is even less than 0.3% of the turnover considered reasonable by the AO. Therefore, we find no basis in the disallowance of Royalty payment made by the AO and accordingly, the same is directed to be deleted. Computation of book profit u/s 115 JB - AR submitted that in V.S. Dempo Pvt. Ltd. [ 2010 (10) TMI 711 - BOMBAY HIGH COURT ] held that when the companies are in the same tax bracket and pay the same rate of tax, then there is no question of tax evasion. Accordingly, it was submitted that payment of consultancy and professional charges is neither in any manner device to circumvent the provisions of tax laws nor is a colourable device of diverting taxable income to the sister concern. During the hearing, reliance was also placed upon CBDT Circular No. 6P dated 07/06/1968. We find that the aforesaid aspect has not been examined by the lower authorities. Therefore, we deem it appropriate to restore this issue to the file of the AO limited to examination of the aforesaid submission of the assessee. If upon examination it is found that both the companies are in the same tax bracket, then the addition on account of payment of consultancy and professional charges be deleted in the light of the aforesaid decision. We further agree with the submissions of DR that setting aside the matter to the file of the AO does not come within the purview of powers of the learned CIT(A) u/s 251 of the Act. For examination of the aforesaid aspect, the issue of part disallowance of payment of consultancy and professional charges is restored to the file of the AO. With these directions, the impugned order is set aside, and ground No. 1 raised in assessee s appeal is allowed for statistical purposes. Disallowance of legal and professional charges incurred for system development - HELD THAT:- The assessee has also placed on record the contract notes with Thundercloud Technologies alongwith certain invoices. However, we find that the nature of services rendered under these contract notes has not been examined by the lower authorities. We are of the view that the nature and scope of services rendered in respect of each invoice are required to be examined in order to come to the conclusion that the expenditure is for the maintenance of software. Therefore, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The assessee is directed to furnish all the details in support of its claim, including the information regarding the nature and scope of services availed by it. If upon examination it is found that the expenditure was incurred by the assessee for the maintenance of software then the AO is directed to allow the expenditure to that extent. We further direct that to the extent the expenditure is found to be of enduring nature, the AO is directed to allow depreciation @60% to the assessee on the same. As a result, ground no. 2 raised in assessee s appeal is allowed for statistical purposes. Disallowance of Advertising and Business Promotion expenses - Freebies to doctors - whether the expenditure incurred by the assessee is in violation of the guidelines issued by the MCI and consequently, whether the expenditure is not allowable under section 37(1), in view of the Circular No.5 of 2012? - HELD THAT:- The expenditure incurred by the assessee on providing freebies, i.e. various gifts, travel facilities, etc., to the doctors is allowable under section 37(1) of the Act as the amendment to MCI Regulations is effective from 14/12/2009. Accordingly, the disallowance is directed to be deleted. As a result, ground no. 3 raised in assessee s appeal is allowed. Disallowance of weighted deduction u/s 35(2AB) in respect of the Chennai-Ennore Unit - approval by the prescribed authority in Form No.3CM is not available on the record - HELD THAT:- Since, in the present case, the assessee has also applied for approval before the DSIR, we deem it appropriate to restore this issue to the file of the AO to provide an opportunity to the assessee to furnish the approval of the prescribed authority in the prescribed manner for claiming deduction under section 35(2AB) of the Act. With the above directions, ground no. 4 raised in assessee s appeal is allowed for statistical purposes. Disallowance of depreciation on computer software - AO has restricted the claim of depreciation on software to 25% as against 60% claimed by the assessee - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case for the assessment year 2004-05 [ 2022 (6) TMI 1460 - ITAT MUMBAI] directed the AO to allow the depreciation at 60% and also directed the AO to consider computer and computer software as one block. Since the year under consideration is the third year of the claim of depreciation and the computation of depreciation in the current year is consequential to the preceding year, therefore we restore this issue to the file of the AO to compute the depreciation by considering the closing WDV of the preceding year as the opening WDV of the current year. Further, the AO is directed to allow depreciation on computer software at 60% in line with the directions of the coordinate bench in the preceding year. Grounds in assessee s appeal are allowed for statistical purposes. Addition on account of increase in the value of closing stock in relation to net unutilised MODVAT credit - HELD THAT:- Since in the year under consideration the working of the assessee is required to be verified, therefore, respectfully following the judicial precedents in assessee s own case, we deem it appropriate to restore this issue to the file of the AO to decide in the light of the directions as rendered by the Tribunal in the preceding year. Deduction u/s 80G - assessee made payments to various parties as donations - HELD THAT:- Since the rectification application filed by the assessee is already pending consideration before the AO and the assessee has also furnished the original donation receipts along with the exemption certificates of all the parties, we direct the AO to consider the plea of the assessee regarding the grant of deduction under section 80G of the Act as per law after necessary verification of all the details so furnished by the assessee. Accordingly, additional ground raised by the assessee is allowed for statistical purposes. Depreciation in respect of assets transferred pursuant to the merger - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in Piramal Enterprises Ltd [ 2020 (1) TMI 1200 - ITAT MUMBAI ] decided issue in favour of the assessee as held DRP had directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal regarding slump sale vs. itemized sale. In the backdrop of the aforesaid fact situation, now when the matter as to whether the sale of the aforesaid two divisions by the assessee is to be treated as an itemized sale or a slump sale is pending in the case of the assessee for the preceding years, therefore, we find no infirmity in the order of the DRP who had rightly directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal. Allowance of deduction u/s 80 HHC for the purpose of section 115 JB of the Act - HELD THAT:- As in view of the retrospective amendment in section 115 JB of the Act, vide Finance Act 2011, with retrospective effect from 01/04/2005, this ground of the Revenue be allowed even though during the course of assessment proceedings the assessee made a claim on the basis of the decision of Sincome Formulations (India) Ltd. [ 2007 (3) TMI 288 - ITAT BOMBAY-H ] which was subsequently affirmed by the Hon ble Supreme Court in CIT v/s Bhari Information Technology Systems (P) Ltd. [ 2011 (10) TMI 19 - SUPREME COURT ] Therefore, in view of the aforesaid amendment, whereby clause (iv) to Explanation-1 to section 115 JB of the Act was omitted, ground raised in Revenue s appeal is allowed. Depreciation on technical know-how capitalised in the assessment year 2003-04 - HELD THAT:- Since the rectification application filed by the assessee is already pending consideration before the AO, we direct the AO to consider the plea of the assessee regarding the claim of depreciation on technical know-how capitalised as per law after necessary verification of all the details. Accordingly, additional ground raised by the assessee is allowed for statistical purposes, while groundsmraised in the present appeal is dismissed as infructuous. Disallowance u/s 14A while computing the book profit of the assessee u/s 115 JB - HELD THAT:- We find that in ACIT v/s Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the Income-tax Rules, 1962. Accordingly, we do not find any infirmity in the order passed by the learned CIT(A) on this issue. As a result, ground raised in Revenue s appeal is dismissed.

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• 2024 (2) TMI 1191
  Condonation of delay - delay of 206 days - assessee had not moved any condonation application explaining the reasons - HELD THAT:- Though there is a substantial delay of 206 days involved in filing of the appeal, but the assessee had not moved any condonation application explaining the reasons leading to same. As observed by us hereinabove, as the assessee had not only remained negligent regarding the process of law and had filed the appeal before us after 206 days but had also failed to come forth with any explanation as regards the reasons leading to the said delay, therefore, there appears to be no reason to adopt a liberal view and condone the same. Also, we may observe at this juncture that the law of limitation has to be construed strictly as it has an effect of vesting with one and taking away the right from the other party. The delay in filing of the appeals cannot be condoned in a mechanical or a routine manner since that would undoubtedly jeopardize the legislative intent behind Section 5 of the Limitation Act. The expression sufficient cause will always have relevancy to reasonableness. The action which can be condoned by the court should fall within the realm of normal human conduct or normal conduct of a litigant. However, as observed by us hereinabove, as the assessee appellant in the present case had not filed any condonation application explaining the reasons leading to the delay in filing the present appeal, and had adopted a lackadaisical approach, therefore, there can be no reason to condone the delay of 206 days involved in preferring of the captioned appeal. We observe that though there is an inordinate delay of 206 days involved in filing of the present appeal but the assessee had not filed any application seeking condonation of delay and this kind of conduct should be deprecated. Decided against assessee.

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• 2024 (2) TMI 1190
  Addition u/s 40(a)(i) - Royalties and fees for technical services - non-deduction of TDS on the commission payment - scope of MFN clause available in the protocol of Indo-Belgium DTAA - HELD THAT:- As decided by the Coordinate Bench of the Tribunal for assessment year 2007-08 [ 2018 (10) TMI 2024 - ITAT CHENNAI] CIT(A) held that the payment made to SG Exprover cannot be considered to partake of the nature of fees for technical services and allowed the ground raised by the assessee without obtaining any comments from the AO. Under the above facts and circumstances, we direct the Assessing Officer to examine the MFN clause available in the Protocol of Indo-Belgium DTAA as to whether the same shall override the specific provisions laid down under Article 12 and decide the issue afresh in accordance with law. Thus we direct the Assessing Officer to re-examine and decide the issue afresh in accordance law. Thus, the ground raised by the Revenue is allowed for statistical purposes. Disallowance u/s 14A - investments which yield exempt income during the year under consideration - HELD THAT:- As perused the decision of Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] wherein, it has been held that while computing the disallowance under section 14A of the Act read with Rule 8D(2)(ii)/(iii) of Income Tax Rules, 1962, only the investments which yielded exempt income during the year under consideration are to be included for the purpose of average value of investments. DR could not controvert the above decision of the Delhi Special Bench. Thus, we find no infirmity in the order of the ld. CIT(A) on this issue and dismiss the ground raised by the Revenue. Disallowance u/s 14A added in the book profit u/s 115JB - HELD THAT:- As decided in Beach Minerals Company P. Ltd [ 2015 (8) TMI 1031 - ITAT CHENNAI] and Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] computation under clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the Income Tax Rules. Hence, we are of the opinion that the ld. CIT(A) has rightly directed the Assessing Officer to delete the addition made to book profits with respect to the disallowance made under section 14A r.w.s. Rule 8D. Nature of receipt - investment promotion subsidy - revenue receipt or capital receipt - HELD THAT:- We find that in the case of Shree Balaji Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] by considering its own judgement in the case of CIT v. Ponni Sugars Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT] dismissed the appeal of the Department and upheld the judgement of Hon ble High Court of Jammu Kashmir in the case of Shree Balaji Alloys Others v. CIT, [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] wherein has held Excise refund and interest subsidy received by the assessee in pursuance to the incentives announced and sanctioned are capital receipts. Thus we find that the subsidy received by the assessee has close proximity with the industrial policy of the Government of Tamil Nadu as notified vide GO No. 43 and in addition, GO No. 80 also states that the incentive is given towards Investment Promotion Subsidy. Therefore, the incentive subsidy has to be considered as capital receipt. As in the present case, the assessee has invested more than Rs.. 300 crores in pursuance of GO issued by the Tamil Nadu Government and therefore, the subsidy received by the assessee has close proximity with the State Government policy. Thus the ground raised by the Revenue is dismissed.

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• Customs

• 2024 (2) TMI 1189
  Penalty imposed u/s 112(a) - Import confectionary items from Dubai - immunity from prosecution and fine/penalty - Tribunal held that since the appellant was a co-noticee along with M/s. A.K.S. Apparels and Mr. Nitin Gupta, appellant was also entitled to immunity granted by the Settlement Commission to the main noticee - HELD THAT:- We are informed that a Special Leave Petition impugning the said judgment in M/s. Seville Products [ 2024 (1) TMI 686 - SC ORDER ] has been dismissed by the Hon ble Supreme Court. Thus, the impugned order passed by the Tribunal granting immunity to the respondent is set aside. The appeal of the respondent is restored on the records of the Tribunal. The matter is remitted to the Tribunal to decide the appeal filed by the respondent on merits in accordance with law. The appeal is accordingly disposed of in view of the above.

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• Corporate Laws

• 2024 (2) TMI 1188
  Violation of principles of natural justice - Interim Demand Notice demanding stamp duty issued without adequately scrutinizing the case, and without going into the details along with all the supporting documents in the matter - HELD THAT:- The Petitioner had filed an Appeal challenging the Order dated 14th September 2021 on 2nd November 2021. A hearing was held in the said Appeal on 7th June 2023 and Petitioner filed its written submissions on 7th August 2023. Despite the same, and despite a period of more than 2 years having elapsed, Respondent No. 2 has not passed any order on the said Appeal. It is informed that the Presiding Officer of Respondent No. 2, who heard the said Appeal on 7th June 2023, has changed. In these circumstances, it would be in the interests of justice that Respondent No. 2 is directed to re-hear the Appeal and pass an order in the said Appeal filed by the Petitioner, in accordance with law, within a period of four months from the date of intimation of this Order. Further, since, the said Demand Notice dated 16th March 2022 and the letter dated 23rd January 2024 had been issued by Respondent No. 3, pursuant to the said Order dated 14th September 2021, which is the subject matter of the aforesaid Appeal, it would also be in the interests of justice that, till the said Appeal is re-heard and an order is passed on the said Appeal, the said Demand Notice dated 16th March 2022 and the said letter dated 23rd January 2024 remains stayed. Respondent No. 2 is directed to re-hear Appeal No. 227 of 2021 filed by the Petitioner and pass an Order, in accordance with law, expeditiously and, in any case, within a period of four months from the date of intimation of this Order - Till the said Order is passed by Respondent No. 2 on the said Appeal, the Demand Notice dated 16th March 2022 and the letter dated 23rd January 2024 issued by Respondent No. 3 shall remain stayed and the Petitioner shall be permitted to operate its ICICI Bank Account. Writ petition disposed off.

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• Insolvency & Bankruptcy

• 2024 (2) TMI 1215
  Maintainability of application filed under Section 95 (1) of the IBC, 2016 - initiation of CIRP against the Respondent/Personal Guarantor - invocation of personal guarantee - issuance of demand notice - HELD THAT:- It is noted under section 128 of Indian Contract Act, 1872 that when a default is committed the Principal Borrower and Surety are jointly and severally liable to Creditor and Creditor has the right to recover its dues from either of them or from both of them simultaneously. From the report of IRP, it is clear to us that: i. IRP has recommended to accept the application for the reason as stated in the report dated 11.12.2021. ii. The Respondent has admitted to have executed the Guarantee Agreement. iii. The Applicant has demanded the amount outstanding from the Respondent vide Demand Notice dated 22.09.2021. iv. Resolution Professional report states that no evidence was placed before him by the Respondent having paid the amount demanded by the Applicant and as such in overview entire amount demanded is un-serviced as on the date of order. v. The application is not hit by Limitation. It is directed to initiate Insolvency Resolution Process against the Respondent/Personal Guarantor and moratorium in relation to all the debts is declared, from today i.e. date of admission of the application and shall cease to have effect at the end of the period of 180 days, or this Tribunal passes order on the repayment plan under Section 114 whichever is earlier as provided under Sec 101 of IBC, 2016 - application filed under Section 95 (1) of the IBC, 2016 is admitted and the Insolvency Resolution Process stands initiated against the Respondent/Personal Guarantor. Application allowed.

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• 2024 (2) TMI 1187
  Liquidation of the Corporate Debtor under Section 33 of the IBC - whether the statutory provisions of IBC provides scope for the CoC to consider approval of liquidation of the Corporate Debtor before inviting resolution plans? - HELD THAT:- The statutory provisions of IBC allow the CoC to consider approval of liquidation of the Corporate Debtor before inviting resolution plans. However, it depends on the facts of each case as to whether the decision to liquidate is in conformity with the provisions of the IBC and to that extent open to judicial review by the Adjudicating Authority and this Appellate Tribunal. SBI had failed to gain possession of the Assets of the Corporate Debtor inspite of filing SARFAESI proceedings. It was also pointed out that though the IRP had sent several mails to the suspended management to be present and assist in the handover of the assets of the Corporate Debtor no such assistance was given in handing over the assets of the Corporate Debtor. Therefore, the CoC in the exercise of its powers endowed upon it by Section 33(2) of the IBC was entitled to liquidate the Corporate Debtor. Whether in the present facts of the case there were good reasons for the CoC to initiate liquidation of the Corporate Debtor in the exercise of its commercial wisdom? - whether there existed any cogent ground for the Adjudicating Authority to reject the recommendation made by the CoC to initiate liquidation of the present Corporate Debtor? - HELD THAT:- From the CoC minutes it is also clear that the RP had noticed that Corporate Debtor is not a going concern for 3 years prior to CIRP. This fact has not been contested by the Appellants either. In the present case, when the Corporate Debtor has not been functioning for three years prior to admission into CIRP, the objection raised by the Appellant to the decision of the CoC to liquidate the Corporate Debtor as arbitrary therefore lacks merit. Moreover, the IRP did not have requisite and certain information to draw up proper information memorandum. The CoC had also noted that the IRP had not provided requisite documents like Information Memorandum, Evaluation Matrix, RFRP to the PRAs to facilitate submission of plans. Hence the CoC rightly felt that in the given circumstances it was unlikely that a viable and feasible resolution plan would come around. Continuation of CIRP would only have enhanced the CIRP cost without corresponding advantage. In the present case, the CoC took a decision for liquidation of the Corporate Debtor after holding 5 meetings. This decision was taken by 100% vote share. Thus, this decision of the CoC conforms to the requirements laid down in terms of Section 33(2) of the IBC - The Adjudicating Authority has therefore not committed any error in approving the recommendation of the CoC to liquidate the Corporate Debtor in such circumstances. Furthermore, the decision of the CoC to liquidate could not have been interfered with by the Adjudicating Authority because of the limited powers of judicial review. It is a well settled proposition of law that the Adjudicating Authority has been bestowed with limited jurisdiction as specified in the IBC while dealing with matters relating to liquidation of the Corporate Debtor and cannot enter upon adjudicating into the merits of a business decision taken by the CoC with requisite majority in its commercial wisdom to liquidate a corporate debtor. In the present case too, the Adjudicating Authority has abided by the discipline of the statutory provisions of the IBC. This decision of the CoC to liquidate having been approved by the Adjudicating Authority, the same is not open to judicial review when no grounds have been made out as provided under Section 61(4) of the IBC of material irregularity or fraud committed in relation to such an order. As both these grounds do not arise in the facts in this case, hence the objections of the Appellants to set aside the resolution passed by the CoC to initiate liquidation has no merit. No infirmity is found in the order of the Adjudicating Authority approving the decision of the CoC to liquidate the Corporate Debtor. There are no good ground to interfere with the impugned order passed by the Adjudicating Authority. There is no merit in both the appeals - appeal dismissed.

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• Service Tax

• 2024 (2) TMI 1186
  Exemption from service tax - Cleaning Services - Manpower Recruitment or Supply Agency Services - Housekeeping services - Rent-a-cab service - Solid Waste Management services to various government offices, government hospitals, community health centers, medical colleges, municipal corporation, Government Educational Institutes - failure to show the amount of taxable value and Service tax payable thereon in their ST-3 returns filed with the department - Sr. No. 25(a) of Notification No. 25/2012-ST dated 20.06.2012 - Time Limitation. Service tax demand of service tax dropped by the Ld. Commissioner in impugned order - it has been alleged in the show cause notice dated 20.11.2017 that the respondent has collected the Service tax but not paid to the Government ex-chequer - HELD THAT:- The Ld. Commissioner after verifying the CA Certificate dated 09.07.2019, ledger of Service tax liability, ST-3 returns and other documents etc., found that the difference of Service tax collected and not paid is of Rs. 2,15,195/- only. Ld. Commissioner has therefore held the demand of Rs. 2,15,195/- is sustainable and remaining amount is not sustainable - as regard the said dropped demand revenue in the present appeal nowhere rely upon any details/ documents or any evidence by which it can be concluded that the demand dropped by the Ld. Adjudicating authority is not correct. Services provided by the respondent to the Government Hospitals, Medical Colleges, Primary Health Centres, Community Health centres, etc. - manpower recruitment or supply agency services or not - Sr. No. 25(a) of Notification No. 25/2012-ST dated 20.06.2012 as amended by Notification No. 6/2014-ST dated 11.07.2014 - HELD THAT:- In the impugned matter revenue nowhere dispute the fact that Government Hospital, Health Centres are engaged in providing services related to public health. The para medic personnel, etc. provided by the respondent to said Hospitals / Health Centre have worked under the supervision of authorized Medical Practitioner i.e Medical Superintendent, Medical Officers of the Hospital, health centres etc. Thus the Medical Superintendent, Medical Officers of the Hospital and Health centres have provided service by way of public health to the said government hospital and health centre run by the government in the capacity of government employee. The para-medics, etc., who worked in the same hospitals/ health centres are their subordinates and carried out their instructions in connection with public health and they were all providing the services to government with a common goal of public health. From the above exemption entry it is clear that the intention of the legislature is clear that services contributing in the public health is required to be exempted from payment of Service tax. Further the said entry of above Notification supra is for providing public health services to Government and not by government . There are strength in the finding of Ld. Adjudicating authority that any services provided to government in relation to water supply, public health, sanitation conservancy solid waste management or slum improvement etc, are exempted from payment of service tax in terms of above mentioned Notification - no reason exist for interfering in the conclusion reached by the Ld. Commissioner in the impugned order. The impugned order is correct, legal and does not suffer from any infirmity. The revenue for denying the claim of above exemption also take the ground that the para medics and other staff provided by the respondent do not have any direct contract with the patients and do not raise any invoices on the patients and also do not have any legal responsibility to provide public health services on his own account - There is no requirement that such para-medics and personnel must issue invoices in the name of patients. In such circumstance, it is not permissible to insert such a requirement with a view to deny the exemption. The requirement of the said above exemption entry is only that services must be provided to Government in relation to public health. Once it is the requirements of exemption only, any further condition of contract or invoice between the service provider and patients that is nowhere specified in the above notification cannot be read into it - the services provided by the respondent to Government Hospitals/ Medical offices/ Health Centres etc. for providing public health related services are eligible for exemption under Sr. No. 25(a) of Notification No. 25/2012-ST dated 20.06.2012 as amended vide Notification No. 06/2012-ST dated 11.07.2014. Demand dropped by the Ld. Commissioner on services provided to the Education Institution i.e Government Arts Commerce College, Government Medical College, Government college, Nursing College, Gujarat Secondary and Higher Secondary Education Board, Gujarat Vidhyapith Ashram Road, training Centers, etc. - HELD THAT:- In the impugned matter there is no dispute on the facts that the service recipients are educational institutions. As per the revenue the activity of respondent are not covered under the Sr. No. 9 of Notification No. 25/2012-ST - Serial No. 9 of the Mega Exemption Notification No. 25/2012-S.T., dated 20-06-2012 exempted from service tax the services by way of (a) auxiliary education services to an educational institution . Further, vide Notification No. 06/2014, dated 11-07-2014 , Entry 9 came to be substituted. From the above Notification and Clarification issued by the Board in Circular No. 172/7/2013-S.T., dated 19-9-2013, it is clear that all the Services provided to education institution such a transport services, hostels, housekeeping, security, canteen services and any other type of services provided to education institution are covered under the above entry of exemption notification and exempted from payment of service tax. In the disputed matter it is on record that respondent supply the manpower to educational institutions and said staff supplied by the respondent have supported the educational institutions for performing their works/activities related to education. Therefore, respondent is eligible for exemption from payment of Service Tax for supply of manpower to above mentioned educational institutions under Sr. No. 9 of Notification No. 25/2012-ST dated 20.06.2012. Cleaning and housekeeping services provided by the respondent to Government offices, Courts, government undertakings - HELD THAT:- As per Sr. No. 25(a) of Notification No. 25/2012-ST dated 20.06.2012 as amended vide Notification No. 6/2014-ST dated 11.07.2014, service provided to Government, Local Authority or a Government authority by way of carrying out any activity in relation to public health, sanitation conservancy, solid waste management etc. are exempted from service tax - in the present matter revenue demanded the services tax from the respondent for providing cleaning services to Government Hospitals, courts, local authorities, government undertakings etc. The cleaning and housekeeping services are an essential parts of sanitation conservancy and waste management and respondent are eligible for exemption under Sr. No. 25(a) of the Mega Notification No. 25/2012-ST dated 20.06.2012 for cleaning and Housekeeping service provided to Government Hospitals and other government entities. Accordingly the demand of service tax with respect to cleaning services provided to Government entities cannot be sustained and rightly dropped by the Ld. Adjudicating authority. Time Limitation - HELD THAT:- There are no proof of intent to evade either from the show cause notice or from the grounds of appeals of revenue in the present matter. The department nowhere allege that respondent had deliberately interpreted the Exemption Notification and its clause in a wrongly manner with intent to evade payment of Service tax. In the instant case, there are no wilful or deliberate suppression of the fact with intent to evade payment of service tax. It is opined that whether the respondent is entitled for the benefit of the exemption notification or not depends on the interpretation of the exemption notification and on the contrary, to a very large extent, their interpretation is found correct. Thus, it is evident that there is not even an iota of evidence to even suggest that there was any willful misstatement or suppression of facts on the part of the Respondent. Consequently, extended period is not invokable in this case. The impugned order is upheld. Revenue s appeal is dismissed.

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• Central Excise

• 2024 (2) TMI 1185
  Maintainability of appeal - all the issue related to question of fact - Clandestine removal - Whether CESTAT has erred in not appreciating the suppression of production arisen on calculating annual electricity consumption which shows that there was excess production of excisable goods as compared to the productions reflected in their statutory records? HELD THAT:- All the questions which the appellant has raised in the present appeal, are essentially questions of fact and there is no question of law as such which is required to be adjudicated by this Court. Taking into consideration the concurrent findings of fact, this appeal need not be entertained. The appeal stands dismissed.

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• Indian Laws

• 2024 (2) TMI 1184
  Exemption from payment of property tax under the provisions of the UP Municipal Corporation Adhiniyam, 1959 - Whether statutory vesting of property termed as enemy property under the provisions of the Enemy Property Act, 1968 amounts to expropriation which leads to the change of its status inasmuch as its ownership is transferred to the Union of India? HELD THAT:- Following conclusion have been arrived at: 1) That the Custodian for Enemy Property in India, in whom the enemy properties vest including the subject property, does not acquire ownership of the said properties. The enemy properties vest in the Custodian as a trustee only for the management and administration of such properties. 2) That the Central Government may, on a reference or complaint or on its own motion initiate a process of divestment of enemy property vested in the Custodian to the owner thereof or to such other person vide Rule 15 of the Rules. Hence, the vesting of the enemy property in the Custodian is only as a temporary measure and he acts as a trustee of the said properties. 3) That in view of the above conclusion, Union of India cannot assume ownership of the enemy properties once the said property is vested in the Custodian. This is because, there is no transfer of ownership from the owner of the enemy property to the Custodian and consequently, there is no ownership rights transferred to the Union of India. Therefore, the enemy properties which vest in the Custodian are not Union properties. 4) As the enemy properties are not Union properties, clause (1) of Article 285 does not apply to enemy properties. Clause (2) of Article 285 is an exception to clause (1) and would apply only if the enemy properties are Union properties and not otherwise. 5) In view of the above, the High Court was not right in holding that the respondent as occupier of the subject property, is not liable to pay any property tax or other local taxes to the appellant. In the result, the impugned order of the High Court dated 29.03.2017 passed in Misc. Bench No.2317 of 2012 is liable to be set aside and is accordingly set aside. 6) Consequently, any demand for payment of taxes under the Act of 1959 made and thereby paid by the respondent to the appellant-authority shall not be refunded. However, if no demand notices have been issued till date, the same shall not be issued but from the current fiscal year onwards (2024-2025), the appellant shall be entitled to levy and collect the property tax as well as water tax and sewerage charges and any other local taxes in accordance with law. Appeal allowed.

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