TMI Tax Updates - e-Newsletter
March 13, 2023

Case Laws in this Newsletter:

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

Articles

1. WITHHOLDING OF REFUND CLAIM

   By: DR.MARIAPPAN GOVINDARAJAN

2. Assessee entitled to refund of unutilized Cenvat credit of Education and S&H Education Cess

   By: Bimal jain

3. UNDERSTANDING RETROSPECTIVE OR PROSPECTIVE APPLICATION OF PROVISIONS 

   By: Dr. Sanjiv Agarwal

4. CGST and SGST Authority cannot simultaneously prosecute the assessee on the same subject matter

   By: Bimal jain

News

1. Direct Tax Collections for F.Y. 2022-23 up to 10th March 2023

2. The FinTech Revolution in India- Innovation, Inclusion and Regulation (Speech delivered by Shri M K Jain, Deputy Governor, Reserve Bank of India - March 10, 2023 - at the International Research Conference on FinTech: Innovation, Inclusion, and Regulation jointly organized by the Indian Institute of Management (IIM), Ahmedabad and the Centre for Advanced Financial Research and Learning (CAFRAL) in Ahmedabad)

3. Joint Statement of India-US Commercial Dialogue held on 10.03.2023 in New Delhi

4. Union Minister Shri Piyush Goyal to chair the 6th meeting of National Startup Advisory Council

5. Union Government releases 14th instalment of tax devolution to State Governments amounting to ₹1,40,318 crore to strengthen hands of States to accelerate their capital and developmental expenditure

6. India – USA 5th Commercial Dialogue 2023 held

Circulars / Instructions / Orders

Income Tax

1. F. No. 246/06/2023-A&PAC-I-79 - dated 16-2-2023

Procedure for remedial action in cases where Revenue Audit Objection is accepted

Customs

2. Instruction No. 10/2023 - dated 10-3-2023

Implementation of origin procedures under India-Australia ECTA

Highlights / Catch Notes

GST

• Show cause notice issued without evidence of fraud or tax evasion; lacked independent assessment or justification.

  Case-Laws - HC : Blocking of ITC - In the present case, the respondents had no material to form any opinion that the ITC had been availed wrongly on account of any fraud or any wilful-misstatement or suppression of facts to evade tax. Concededly, the respondents had no material to form any independent opinion whatsoever. It is apparent that the impugned show cause notice was issued in a mechanical manner to comply with the impugned instructions. - HC
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• Purchasers lose Input Tax Credit if any seller in the supply chain fails to meet tax obligations under the Act.

  Case-Laws - AAR : Input Tax Credit - purchases made from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act - If the seller or preceding sellers have not deposited the tax either in cash or through utilization of input tax credit admissible in respect of the said supply, purchaser is not eligible to claim ITC on such supply. - AAR
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Income Tax

• Reopening of Income Tax Assessment u/s 147 Due to Suspicious Cash Transactions in Retail Appliance Business.

  Case-Laws - HC : Reopening of assessment u/s 147 - reason to believe - large sums of cash debit/credits - The Petitioner is carrying on a retail business of electronic appliances. Usually, appliances would be supplied to clients wherever required and payment would be received in cash upon delivery. Therefore, the cash deposits from various places cannot be doubted be considered suspicious transactions. - HC
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• Court Rules Reopening of Assessment u/s 148 Invalid Due to Lack of New Evidence, Just a Change of Opinion.

  Case-Laws - HC : Reopening of assessment u/s 148 - ‘review’ and ‘change of opinion’ - The respondent has failed to show why the presumption should not be applied in the present case. It can also be seen from the reasons recorded that there was no new material which had come to the notice of the AO and the entire reference in the reasons recorded is only to the material on record. - HC
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• Property Sale Consideration Enhanced u/s 50C; Lacks Evidence, Deemed Unsustainable for Capital Gains Tax.

  Case-Laws - AT : Capital Gain - Addition made by enhancing the sale consideration of the property sold - value u/s 50C - neither the AO nor the Ld. CIT(A) have brought on record any direct evidence to prove that extra consideration has been received by the appellant over and above the consideration as per sale agreement. Further, the Ld. CIT(A) failed to rebut the contention of the Ld. AR on the issue of determination of value of sale consideration for the purpose of capital gains u/s 50C of the Act. Therefore, the addition made on the basis of presumption, assumption and conjecture would not be sustained under the law. - AT
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• Assessee qualifies for tax exemption u/s 54B; agricultural land sold and purchased within required timeframe.

  Case-Laws - AT : Exemption u/s 54B - Since the land sold has been proven to be used for agriculture purpose in the preceding two years and the land purchased by the assessee has been proved to be agriculture land and the purchase has taken place within the stipulated period allowed by the Income Tax Act, 1961, we hold that the assessee is eligible for claim of exemption u/s 54B - AT
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• PCIT's attempt to revisit AO's reviewed facts u/ss 143 and 147 ruled unjustified legally and factually.

  Case-Laws - AT : Revision u/s 263 - the PCIT-1 has attempted to made a case for reexamination of facts and evidences already examined by the AO while passing the order u/s 143/147 of the act. Such an action of PCIT is not justified in law and on the facts of the case. - AT
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• Registration Denial u/s 12A: Key Issues Include Trust Genuineness and Alignment of Activities with Objectives.

  Case-Laws - AT : Exemption u/s 11 - application for registration u/s. 12A rejected - The two issues must be settled during registration U/s 12AA which are genuinity of trust & activities are related to main object of trust. The two limbs must be considered during registration. Only mere receiving of the corpus fund and rejection of application of FCRA should not be the ground for rejecting the registration u/s 12AA - AT
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• TPO Cannot Set Arm's Length Price to Nil Without Following Prescribed Methods in International Transactions.

  Case-Laws - AT : TP adjustment - there is no provision made in the statute empowering the Id. TPO for determining the ALP of a particular international transaction at Nil without resorting to any methods prescribed. - AT
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• Transfer Pricing Dispute: Associated Enterprises and Arm's Length Price u/s 92A(2) of Income Tax Act.

  Case-Laws - AT : TP Adjustment - related parties / associated enterprise or not - Re-computation of arm's length price of shares sold by the assessee - Admittedly, in the instant case Relay BV holds controlling stake in USL of more than 26% i.e. 26, 37% on 28.11.2013 i.e. during the relevant previous year. Therefore in light of the clear provisions of Section 92A(2) of the Act, which uses the expression "if at any time during the previous year" we find no merit in the contention of the learned Sr. Counsel. - AT
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• CIT Revises Tax Assessment u/s 263 Due to Excessive Depreciation Claim Affecting Section 115JB Tax Computation.

  Case-Laws - AT : Revision u/s 263 by CIT - Computation of taxability under section 115JB is affected by excess depreciation claim. Therefore, to the extent of Computation of Taxability under section 115JB and excess depreciation, there is no doubt that the assessment order is erroneous and prejudicial to the interest of the Revenue. - AT
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• Sections 4 & 5 of Income Tax Act subject to Section 90; DTAA impacts capital gains tax exemptions in India.

  Case-Laws - AT : Benefit of DTAA while claiming exemption from taxation of capital gain - Provisions of sections 4 and 5 are expressly made subject to the provisions of the Act which means that they are subject to the provisions of section 90 of the Act. By necessary implication they are subject to the terms of the Double Taxation Avoidance Agreement, if any, entered into by the Government of India. - AT
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Customs

• EOU's DTA Job Work Permission Withdrawn on Suspicion: Violation of Natural Justice and Arbitrariness Cited.

  Case-Laws - AT : 100% EOU - withdrawal of permission granted for allowing job work in DTA - at the time the show cause notice was issued, the allegation was merely based on suspicion. Clearly, therefore, there is violation of natural justice and manifestation of arbitrariness. Matter related to seizure at job worker premises is part of separate proceedings. - AT
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Indian Laws

• Authorized Cheque Signatory Not "Drawer" u/s 143A NI Act; No 20% Deposit Required in Section 148 Appeals.

  Case-Laws - HC : Dishonour of Cheque - “drawer" of the cheque - signatory of the cheque, authorized by the "Company" Thus, the signatory of the cheque, authorized by the "Company", is not the drawer in terms of section 143A of the NI Act and cannot be directed to pay interim compensation under section 143A - In an appeal under section 148 of NI Act filed by persons other than "drawer" against the conviction under section 138 of the NI Act, a deposit of a minimum sum of 20% of the fine or compensation is not necessary. - HC
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IBC

• Court Upholds Constitutionality of Section 7 in Insolvency and Bankruptcy Code; Dismisses Claims of Discrimination Against Debtors.

  Case-Laws - HC : Constitutional validity of section 7 of IBC - the contention that Section 7 is a draconian provision loaded against the corporate debtor, cannot be countenanced. Therefore, the challenge against constitutional validity of section 7 of IBC on the ground that the provision is arbitrary and discriminatory, is liable to be rejected. - HC
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• 205 Flats Excluded from Debtor's Assets; Corporate Veil Lifted; CoC-Approved Resolution Plan Bars Amendments by Creditors.

  Case-Laws - AT : Direction to Resolution Professional (RP) to exclude 205 Flats from the pool of the Assets of the Corporate Debtor - lifting of Corporate Veil - Once the Resolution Plan is approved by the CoC, the ‘Financial Creditors’ are estopped from seeking any Amendments/Modifications in the Information Memorandum. - AT
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Service Tax

• Exporter Challenges Unjust Rejection of CENVAT Credit Refund; ST-3 Return Not a Relevant Document for Credit Admissibility.

  Case-Laws - AT : Refund of unutilised CENVAT Credit - exporter of services - It is evident that ST-3 return has not been mentioned as the document relevant for the purpose of considering the admissibility of the credit and the refund. Accordingly rejection of refund claim by referring to the ST-3 return, cannot be justified, - AT
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• Penalties under Finance Act Sections 77 & 78 inapplicable without evidence of intent to evade tax. Accusations lack substantiation.

  Case-Laws - AT : Levy of penalties u/s 77 and 78 of the Finance Act, 1994 - An assessee who has suppressed figures in their account or issued parallel invoices so as to evade the payment of tax will not be covered under sub-section (3) of Section 73 of the Finance Act, 1994. Here, apart from a vague allegation, there is no evidence that the appellant has suppressed facts with the intent to evade payment of tax. - The penalties imposed are unwarranted and require to be set aside - AT
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• Appeal Challenged for Non-Compliance with Pre-Deposit Requirement u/s 35F of the Central Excise Act.

  Case-Laws - AT : Maintainability of appeal - non-compliance with the requirement of pre-deposit under service tax - Applicability of section 35F of the Central Excise Act - The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. - AT
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Central Excise

• Clandestine Removal Claims Under Central Excise Act Require Independent Evidence Beyond Income Tax Probes.

  Case-Laws - AT : Clandestine removal - Corroborative evidences - stock recorded as per Income Tax Investigation - merely on the basis of income tax investigation the case of clandestine removal under the Central Excise Act cannot be confirmed without bringing independent tangible evidence on record - AT
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• Department's Case on Consumable Charges Collection Fails Due to Lack of Evidence in Show Cause Notice.

  Case-Laws - AT : Valuation - collection of charges from customers in the name of consumable charges through debit notes - in the show cause notice the department failed to even corelate the consumable charges raised through debit note with a particular DG set manufactured and sold by them. Therefore, the case of the department cannot be sustained. - AT
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Case Laws:

• GST

• 2023 (3) TMI 489
  Blocking of ITC and the subsequent appropriation of the said amount to satisfy the demand as raised by the impugned order - Proper/competent Officer to block the credit - HELD THAT:- The ITC can be blocked by a Commissioner or an officer authorised by him in his behalf, not below the rank of an Assistant Commissioner, provided that he has reasons to believe that the ITC available in the ECL has been fraudulently availed or is ineligible on account of the reasons as set out in Clauses (a) to (d) of Sub-rule (1) of Rule 86A of the Rules - In SUNNY JAIN VERSUS THE UNION OF INDIA ANR ORS. [ 2022 (12) TMI 653 - DELHI HIGH COURT] this Court had examined the language of Rule 86A(1) of the Rules and had held that the reasons set out in Clauses (a) to (d) of Rule 86A(1) of the Rules exhaustively set out the conditions of ineligibility. Thus, unless the competent officer has reasons to believe that the conditions in the said clauses are satisfied or the ITC was fraudulently availed, the ITC in the ECL cannot be blocked. Blocking of the ITC effectively deprives the taxpayer of a valuable resource to discharge its liability and realise the value in monetary terms. Thus, undisputedly, the said action is a drastic step and it is necessary that all legislative checks and balances, enacted in respect of exercise of power to take such measures, are duly satisfied. In the present case, the respondents had no material to form any opinion that the ITC had been availed wrongly on account of any fraud or any wilful-misstatement or suppression of facts to evade tax. Concededly, the respondents had no material to form any independent opinion whatsoever. It is apparent that the impugned show cause notice was issued in a mechanical manner to comply with the impugned instructions. There are no hesitation in holding that the impugned show cause notice is not in conformity with the provisions of Section 74 of the CGST Act and is, thus, without authority of law - It is also clear from a plain reading of the impugned instructions that it suggests that the exercise of issuing a show cause notice and creating a demand should be completed before unblocking the ITC notwithstanding that the period of one year has elapsed after the blocking of the ITC. This is contrary to the express provisions of Rule 86A(3) of the Rules. It is apparent that the impugned instructions, to the aforesaid extent, has been issued only to overcome the provisions of Rule 86A(3) of the Rules and the impugned instructions, to this extent, cannot be sustained. The impugned show cause notice and the impugned order are set aside - petition allowed.

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• 2023 (3) TMI 488
  Constitutional Validity of section 132(1)(b) and (c) of the CGST Act - violation of Articles 14 and 21 of the Constitution of India, 1950 or not - seeking to issue a writ declaring that the power under section 69 of the Central Goods and Services Tax Act, 2017 can be only exercised upon determination of liability and a failure on part of the assessee to pay make payments towards such liability. HELD THAT:- In the case of NAGPUR CABLE OPERATORS ASSOCIATION VERSUS COMMISSIONER OF POLICE, NAGPUR AND ORS. [ 1995 (8) TMI 342 - BOMBAY HIGH COURT] , the Division Bench of this court (Nagpur Bench) has expounded procedure with reference to the Rules and the law as to in which circumstances criminal writ petition and which circumstances civil writ petition is to be filed and placed before the court as per the allocation of work. On a query was put to learned counsel for the Petitioners as to whether the Petitioners intends to prosecute the challenge to the provisions of the CGST Act, the learned counsel for the Petitioners states that instructions have been taken that the Petitioners would not press these challenges, and the interim order be continued for some time. The learned counsel for the Petitioners states that this is so because complaint has now been filed and as regards the remedy concerning liberty of the Petitioners, the Petitioners, would take necessary action by approaching the criminal court and for that purpose seek extension of the interim order passed in these petitions. Be that as it may, since the Petitioners are not pressing the petitions and seeking only the extension of the protective measures, this request is to be considered. The Petitioners have been at liberty for almost two years under the interim order which the Respondents have not challenged. Therefore, in these circumstances, the interim order in these petitions are continued for a period of six weeks, for the Petitioners to take steps for the purpose mentioned above. Writ petition disposed off.

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• 2023 (3) TMI 487
  Input Tax Credit - purchases made from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act - eligibility for ITC when no infrastructure has been provided by the Govt, in order to ensure discharging of tax liability by the sellers falling in the queue of a transaction - non-payment of tax by the seller even though the purchaser is in possession of the invoice, other relevant documents and the payments have been made through banking channels and there is no connivance or collusion between the purchaser and seller. HELD THAT:- Section 16 of the CGST Act, 2017, inter alia, prescribes conditions and restrictions for a registered person for availing ITC of input tax charged on supply of any goods or services or both to him which are used or intended to be used in the course of furtherance of his business. In terms of Clause (b) of Sub Section (2) of Section 16 ibid inter alia states that notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless he has received the goods or services or both. From the perusal of provisions of the section 16(2)(c) CGST Act and PGST Act, it is very much clear that no registered person shall be entitled to take the credit of any input tax in respect of any supply of goods or services or both unless the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply. If the seller or preceding sellers have not deposited the tax either in cash or through utilization of input tax credit admissible in respect of the said supply, purchaser is not eligible to claim ITC on such supply. Thus, keeping in view the relevant provisions of Section 16(2)(c) of CGST Act read with PGST Act, there are no doubt in holding that the purchaser is not entitled to claim Input Tax Credit on the purchases made by it from the seller who had discharged its tax liability but the preceding seller has not discharged its liability under the Act - application disposed off.

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• Income Tax

• 2023 (3) TMI 486
  Reopening of assessment u/s 147 - reason to believe - large sums of cash debit/credits - information on the INSIGHT PORTAL from the Financial Intelligence Unit - HELD THAT:- No new tangible material as contended by the respondents. Debits and Credits can in no way disclose the nature of transactions or lead to an inference of income escaped assessment. The respondents have not taken any ground of extrapolation. The debits and credits cannot be a ground for further enquiry and verification and the same is impermissible. We find no live link or nexus between the information received and the income escaping assessment. The Petitioner is carrying on a retail business of electronic appliances. Usually, appliances would be supplied to clients wherever required and payment would be received in cash upon delivery. Therefore, the cash deposits from various places cannot be doubted be considered suspicious transactions. In our view, there is no prima facie case made out that income has escaped assessment. The Petitioner has fully and truly disclosed all the material facts and there is no specific averment to show what material fact was required to be disclosed by the Petitioner that is not disclosed. The ratio of the Judgment in the case of Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] that the reasons for formation of the belief must have rational connection with or relevant barring on formation of belief is squarely applicable to the present case. The decision of the Apex Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers(P) Ltd. ( 2007 (5) TMI 197 - SUPREME COURT ) is vaguely relied upon. There is no reason provided as to why the debit and credit transaction had no mention in the recorded reasons nor was there meaningful averment with regard to the nature of transaction. It is pertinent to note that whilst the order has been passed by NFAC the reasons are recorded by respondent No. 1 to which there is no explanation in the affidavit in reply. In our view the response in the impugned order as to the nature of transaction, and as to how it makes it suspicious are missing. Decided in favour of assessee.

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• 2023 (3) TMI 485
  Reopening of assessment u/s 147 - capital reduction and financial statements highlighting the capital reduction in the balance sheet - capital gain transactions filed under Schedule C.G. - Capital Gains - purchase and sale of shares and the conversion of amounts in foreign currency - petitioner categorically mentioned that it had not carried on any business activity since the liquidation/bankruptcy application and also mentioned about the capital reduction - petitioner had incorrectly characterized the transaction and consequently contended that it was not covered under Section 112(1)(c)(iii) and claimed the benefit of computation under Section 48 - HELD THAT:- As at the time of filing the return of income for the A.Y. 2015-16, the petitioner was not covered by Section 112(1)(c)(iii) as it had transferred the shares of the private limited company. Accordingly, in the instant case, the assessment is being sought to be reopened in contravention of the law as it stood during the previous year 2014-15 and A.Y. 2015-16 in which the petitioner filed its tax return. In this regard, the learned counsel for the petitioner placed reliance on the decision in case of Godrej Industries Ltd. v/s. B. S. Singh, Deputy Commissioner of Income-tax, Range 10(2) [ 2015 (8) TMI 668 - BOMBAY HIGH COURT] which confirms that a retrospective amendment cannot be the basis for reopening of assessment. In any case, it may be noted that for the A.Y. 2015-16, the four years period has expired on 31st March 2020, and absence any failure to disclose facts by the assessee or any tangible new material, the reopening of assessment proceedings by the respondent is bad in law. It is a clear cut case of change of opinion inasmuch as there is no new material which is discovered by the concerned officer. The application of another section of the IT Act on the facts and circumstances of a case would only constitute a change of opinion and can by no stretch of imagination be construed as new material by the Revenue. The entire emphasis on the petitioner not truly and fully disclosing facts is baseless inasmuch as in the present case, there is only one transaction which was under consideration for the respondents. The entire transaction has been considered by the Assessing Officer and has culminated into the order under Section 143(3) of the Income Tax Act dated 24th December 2018. As apparent from the reasons there were no new tangible material in the hands of the Assessing Officer. Once the assessment is concluded, it is deemed to have been concluded with application of mind by the Assessing Officer from all perspectives legal and factual. See KELVINATOR OF INDIA LIMITED. [ 2002 (4) TMI 37 - DELHI HIGH COURT] The reopening of the assessment based on a different method of computation or application of the section is nothing else but a change of opinion, which is impermissible in law - See JINDAL PHOTO FILMS LTD. [ 1998 (5) TMI 20 - DELHI HIGH COURT] . The defense is misdirected and misconstrued and unsubstantiated. In our view, appropriate application of the law and correct advise to the concerned officer can save a lot of litigation and burden on the court as well as agony to the citizens. The case law referred by the respondents also is totally meaningless and out of context and by no stretch of imagination applicable to the facts of this case and therefore, we do not propose to deal with each one of them. Decided in favour of assessee.

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• 2023 (3) TMI 484
  Reopening of assessment u/s 148 - review and change of opinion - disallowance with respect to interest expense on the ground that the petitioner had given interest free loan and advances to subsidiaries and other companies - HELD THAT:- The pre-requisite conditions of assuming jurisdiction u/s 148 are not satisfied in as much as the AO has failed to specify the material facts that were not truly and fully disclosed by the petitioner that was necessary for the assessment. Upon perusal of all the documents attached with the petition, it is clear that all documentary evidence including books of account as well as statements were submitted by the petitioner and therefore it is nothing but change of opinion which is not permissible under the Act. In regard to what is true and full disclosure by the assessee the following passage from the decision in the case of Income-tax Officer vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] - there was no failure to disclose any material fact necessary for the assessment by the petitioners. Based upon the reasons recorded, one needs to scrutinize 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. On the perusal of the papers and the reasons mentioned in the notice for reopening we find that AO has not mentioned what was the new tangible material to justify the reopening and what was the material fact which was not truly and fully disclosed. The respondent has failed to show why the presumption should not be applied in the present case. It can also be seen from the reasons recorded that there was no new material which had come to the notice of the AO and the entire reference in the reasons recorded is only to the material on record. The respondent no.1 wrongly rejected the aforestated objection of the petitioner by the impugned order dated 25th January 2022. The statement of an employee, during the course of survey of Jet Airways cannot in our view form the basis of assessment. It would clearly amount to a change of opinion. There is no failure on the part of the petitioner to disclose any material facts and consequently the reopening is invalid in view of the proviso of Section 147 of the IT Act. The petitioner was right in charging lower commission rates to its sister concern / related party jet airways India Limited on account of it being a sole selling agent as well as client giving more than 98% of its total turnover. It is business call / decision for a party and is certainly not colourable device / mechanism as contended by the respondents. In fact, if the sister concern / related party namely Jet Airways India Limited which is loss making company were to pay the same rates as paid by other clients of the assessee then such transaction in normal business parlance would have been colourable device or mechanism to increase the expenses of the sister concern, the fact that Jet India Private Limited is a loss making company is not a valid criteria to determine escapement of income. Since this transaction is neither an international transaction nor a specified domestic transaction, the transfer provisions do not apply. 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 u/s. 147 of the Act.

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• 2023 (3) TMI 483
  Condonation of delay of 180 days in re-filing the appeal - HELD THAT:- The reason given is that certain information was required from the Income Tax Department to remove the defects. Although the reason is not satisfactory, given the fact that the impugned order was passed around the time when Corona Virus was raging in the city we are inclined to take a benevolent view. According the delay is condoned. Disallowance u/s 14A read with Rule 8D - appellant made investment in subsidiary/associated companies for strategic purposes - HELD THAT:- As a matter of fact, in the decision rendered in M/S MMTC LTD [ 2022 (12) TMI 651 - DELHI HIGH COURT] the Court even dealt with the amendment brought about u/s 14A of the Finance Act, 2022 - Given these circumstances, we are of the view that, insofar as this case is concerned, no substantial question of law arises for consideration. We are informed that appellant/revenue has filed a Special Leave Petition vis-a-vis the judgment in PCIT v. IL FS Energy Development Company Ltd [ 2018 (5) TMI 2126 - SC ORDER] In case, appellant/revenue were to succeed, it would then have liberty to approach the court to re-open the appeal.

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• 2023 (3) TMI 482
  Validity of order passed u/s 148A(d) and the consequential notice u/s 148 - deduction u/s 54F - audit objection relied upon - HELD THAT:- Briefly, in the order passed in the said writ petition, we have taken note of the fact that the expression any audit objection was introduced only via Finance Act, 2022 albeit w.e.f. 01.04.2022. Prior to the said amendment, the expression which obtained in Explanation 1(ii) appended to Section 148 of the Act adverted to the Comptroller and Auditor General of India . We are, prima facie, also of the view that if the AO, according to the respondents/revenue, had committed an error in law, perhaps, they could have taken recourse, at the appropriate time, to the provision of Section 263. We are of the view that the matter requires examination. Issue notice.Mr Agarwal accepts notice on behalf of the respondents/revenue.

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• 2023 (3) TMI 481
  Penalty u/s 271B - Non filing of audit report under section 44AB on time - HELD THAT:- As there is no dispute that audit report was filed along with return of income under section 139(1) of the Act on 29.02.2016 and date of filing return under section 139(1) was 30.09.2015, the audit report was filed along with returned income. It is a matter of fact that Assessing Officer passed assessment order u/s 143(3) on 03.11.2017 in accepting the returned income of assessee. Hon ble Madras High Court in the case of CIT vs. Apex Laboratories (P.) Ltd. . [ 2006 (1) TMI 90 - MADRAS HIGH COURT] held when accounts were audited and the assessee got audit report but the same was filed along with returned income which was filed belatedly, penalty could not be imposed under section 271B of the Act. Therefore, direct the Assessing Officer to delete the penalty under section 271B. Also in CIT VS Jagat Rice Mills [ 2005 (3) TMI 824 - ALLAHABAD HIGH COURT] by following its earlier decision in CIT Vs Jai Durga Construction [ 1999 (11) TMI 27 - ALLAHABAD HIGH COURT] also held that penalty under section 271B was not leviable for delay in filing audit report as the assessee had got its accounts audited and obtained the audit report within the time allowed under section 139(1). Thus find that the ratios of the above decisions are squarely applicable on the facts of the present case. Appeal raised by assessee is allowed.

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• 2023 (3) TMI 480
  Validity of assessment proceedings u/s.143(1) once order passed u/s.143(3) - Deduction u/s.80P denied - Validity of additions made u/s.143(1) - case has been selected for limited scrutiny to verify deductions from total income under Chapter-VIA of the Act, and the AO has completed assessment u/s.143(3) of the Act, on 29.03.2021, and allowed deduction claimed u/s.80P - HELD THAT:- Once proceedings have been initiated u/s.143(3) of the Act, and assessment has been completed thereunder, then earlier assessment order passed u/s.143(1)(a) of the Act, is no long operative for that assessment year, because, the first assessment order passed u/s.143(1) of the Act, is merged with the proceedings initiated u/s.143(3) of the Act. Therefore, we are of the considered view that when the AO has allowed the claim of deduction u/s.80P of the Act, in assessment proceedings u/s.143(3) of the Act, then order passed u/s.143(1) of the Act, by rejecting deduction claimed u/s.80P of the Act, in assessment proceedings u/s.143(1) of the Act, cannot survive. Because, the moment proceedings u/s.143(3) of the Act, is initiated, the proceedings u/s.143(1) of the Act, merged with proceedings u/s.143(3) of the Act. Since, the AO has allowed the claim of the assessee u/s.80P of the Act, in proceedings u/s.143(3) of the Act, the additions made by the AO in assessment proceedings u/s.143(1) of the Act, by rejecting deduction u/s.80P of the Act, is no longer survives and thus, we direct the AO to delete addition made towards deduction claimed u/s.80P of the Act, and consequent demand raised in the intimation issued u/s.143(1)(a) of the Act. Appeal filed by the assessee is allowed.

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• 2023 (3) TMI 479
  Addition u/s.68 - Unexplained cash deposits - HELD THAT:- The assessee had also received a sum from three parties through proper banking channels. If you consider reconciliation filed by the assessee, we find that there is no difference between closing balance of trade receivables shown in the balance sheet as on 31.03.2013. From the above, it is very clear that claim of cash receipt from trade receivables is backed with various evidences, including confirmations from the parties. Therefore, we are of the considered view that the AO is completely erred in rejecting arguments of the assessee in so far as cash receipt from trade receivables. As regards advance received from M/s.Sri Baba Trading Co., AO is not in dispute with regard to the fact that the assessee has filed confirmation from the parties to substantiate its claim. AO failed to understand the issue because, it is not necessary to match dates of cash receipts from party to date of cash deposit into bank account when the assessee has furnished cash books to explain the receipt of the cash from various parties and deposit of cash to bank account. AO misunderstood the issue without considering cash book maintained by the assessee and come to the conclusion that cash received from M/s.Sri Baba Trading Co., cannot be source for cash deposits found in bank account maintained with M/s.KVB. Therefore, we are of the considered view that the AO is completely erred in rejecting source for cash deposits from M/s.Sri Baba Trading Co - we are of the considered view that the assessee is able to explain source for cash deposits found in bank account maintained with M/s.KVB. CIT(A) after considering relevant facts has rightly deleted the additions made by the AO towards cash deposits u/s.68 and thus, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeal filed by the Revenue.

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• 2023 (3) TMI 478
  TDS u/s 195 - reimbursement for software licenses liable to tax deduction as Royalty payments - Addition towards the 20% of TDS on the software license payment in the nature of royalty and also charged interest u/s 201(1A) - HELD THAT:- When AO herself recorded that the parent entity has no role to play in the transaction of assessee s access to the software, the agreement between the parent entity and Microsoft and Dell does not appear to be much relevant. Suffice to say that through the invoices produced by the assessee and as found by the learned Assessing Officer, there is no component of income involved in this license transaction accruing to the parent entity. In view of the fact that the payments made by the assessee were essentially for making use of the shrink wrap computer software wherein the assessee has non-exclusive and non-transferrable license enabling use of the programme in the copyrighted product, there is no transfer of any copyright in the product nor the assessee was granted any commercial right to exploit it other than for permissible usage. The matter is covered by the decision of the Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] respectfully following the same, we hold that the impugned payments made by the assessee do not fall in the definition of royalty and consequently, do not attract any addition on that score. Appeal of the assessee is allowed.

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• 2023 (3) TMI 477
  Unexplained cash found during the course of search and seizure action - AO has recorded in the assessment order that during the course of search and seizure proceedings cash was found from the possession of the assessee but was not seized as per annexure 5 of the panchnama stated to be belonging to the assessee - HELD THAT:- The finding of the CIT(A) is based on the facts that the closing cash balance for the assessment year 2009-10 was held as nil and therefore, there is no opening balance as on 1.4.2009. When the assessee has not challenged the order of the CIT(A) for the assessment year 2009-10 then the said finding of the CIT(A) remained unrebutted and consequently the opening balance claimed by the assessee as on 1.4.2009 cannot be accepted. We do not find any error or illegality in the order of the CIT(A) qua this issue. Enhancement of assessment on account of cash deposited by the assessee in the saving bank account with Allahabad Bank - HELD THAT:- From the bank statement of the assessee, it transpires that there is no cash withdrawal by the assessee during the financial year under consideration. Therefore, the assessee has not produced any record showing the withdrawal of cash from the bank either during the year under consideration or in the preceding year which could be available with the assessee for making the deposit in the bank account. Accordingly, we do not find any error or illegality in the impugned order of the CIT(A) qua this issue. Appeal of the assessee is dismissed.

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• 2023 (3) TMI 476
  Addition made by enhancing the sale consideration of the property sold - determination of value of sale consideration for the purpose of capital gains u/s 50C - CIT(A) confirming 10% of the total addition made by the Ld. AO in respect of sale of flats and the addition in respect of Commercial space has also been confirmed to 10% instead of 20% - HELD THAT:- As in the present case, since, the assessee has taken the sale consideration at a higher value than the price fixed as per the Stamp Duty Act and hence, the AO arbitrarily enhancement of the sale consideration without any basis is unwarranted and against the mandate. CIT(A) has misinterpreted the provision of section 50C, that there is no restriction on adopting a higher value than the stamp duty valuation, even there was no direct evidence or proof of the same on record, taking shelter of the circumstantial evidence in the shape of higher price for similar size flat at same floor and same locations/situations and that such things (i.e. the cash payment) were involved in this case merely on presumption and conjectures without bringing corroborative material documantary evidence on record to rebuttal of the submissions of the assessee appellant. Merely, estimating the income even without quoting a specific instance of circumstantial evidence, partly confirming the addition to meet the ends of justice in this case by restricting addition to 10% as against 20% of the total addition made by the AO in respect of sale of flats in respect of commercial space is held to be perverse to the fact on record. Neither the AO nor the Ld. CIT(A) have brought on record any direct evidence to prove that extra consideration has been received by the appellant over and above the consideration as per sale agreement. CIT(A) failed to rebut the contention of the Ld. AR on the issue of determination of value of sale consideration for the purpose of capital gains u/s 50C of the Act. Therefore, the addition made on the basis of presumption, assumption and conjecture would not be sustained under the law. We hold that the decision of the Ld. CIT(A) that the ends of justice would be made, if the addition in this case is restricted to 10% of the total addition made by the AO in respect of sale of flats and the addition in respect of commercial space is also restricted to 10% instead of 20% made by the AO is infirm and perverse to the facts on record and against the law. Accordingly, the estimated addition of Rs. 18,17,621/- in respect of flats, and Rs. 5,32,690/- respect of commercial space of Palm Island, (18,17,621/- + 5,32,690/- = 23,50,311/-) is deleted.

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• 2023 (3) TMI 475
  Exemption u/s 54B - mode of transfer of property - income from agriculture - Proof of purchase of land - HELD THAT:- As gone through the Khara Girdawari which was submitted before the ld CIT(A) reflecting the crops grown in Kharif and Rabi. Since the land sold has been proven to be used for agriculture purpose in the preceding two years and the land purchased by the assessee has been proved to be agriculture land and the purchase has taken place within the stipulated period allowed by the Income Tax Act, 1961, we hold that the assessee is eligible for claim of exemption u/s 54B of the Act and also the receipt of Rs. 2 lacs be treated as income from agriculture. Appeal of the assessee is allowed.

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• 2023 (3) TMI 474
  Assessment u/s 153A - Unexplained cash credit u/s 68 - incriminating material found in search or not? - HELD THAT:- No infirmity in the finding of CIT(A) who has rightly deleted the alleged addition observing that no incriminating material or document related to the addition of share capital and share premium as made by AO were found during the course of search and the assessment year in question is a completed and unabated year. Thus, all the grounds raised by the Revenue for AY 2011-12 are dismissed.

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• 2023 (3) TMI 473
  Protective addition u/s 80IA(4)(iii) - double addition - HELD THAT:- AO had accepted the contentions of the respondent-assessee that the sale proceeds shown during the year under consideration represents the sales reversed in the financial year relevant to the assessment years 2009-10 and 2010-11, which is nothing but double addition. However, the Assessing Officer had chosen to make a protective addition, as the appeals filed by the assessee before the Tribunal were pending disposal, but however, the appeals for the assessment years 2009-10 and 2010-11 came to be dismissed by this Tribunal vide order [ 2017 (7) TMI 1444 - ITAT PUNE] and the relevant grounds of appeal challenging the action of the Assessing Officer not accepting the revised returns of income came to be withdrawn by the assessee as evident from para 5 of the order of this Tribunal, which is enclosed. The submission of the ld. CIT-DR that the matter be remanded to the file of the ld. CIT(A) for fresh examination or verify whether the addition amounts to double addition or not, cannot be accepted for the reason that the Assessing Officer himself had accepted that it amounts to double addition as evident from para 3.14 of the assessment order. He only chosen to make protective addition for the reason that at relevant point of time, the appeals filed by the assessee before the Tribunal were pending disposal. AO never disputed the fact that the sum shown for the year under consideration is nothing but sales reversed during the financial year relevant to the assessment years 2009-10 and 2010- 11. The submission of the ld. CIT-DR cannot be accepted for another reason that it is settled position of law that the Department Representatives cannot argue the matter beyond the scope of the assessment order. We do not find any merits in the ground of appeal no.2 filed by the Revenue, hence the same is dismissed. Disallowance offered by the respondent-assessee u/s 14A r.w.r 8D - HELD THAT:- As regards to the disallowance of indirect expenditure under Rule 8D(2)(iii), CIT(A) merely remanded the matter to the Assessing Officer to compute the disallowance in terms of the order passed by this Tribunal in assessee s own case for the assessment years 2009-10 and 2010-11. The finding of the ld. CIT(A) is under challenge before us in the present appeal. It is undisputed fact that during the previous year relevant to the assessment year under consideration, the appellant had not made any fresh investment which yielded the exempt income. In the earlier assessment years, in which the investments were made, no disallowance u/s 14A was sustained in view of orders of this Tribunal - Similarly, for the subsequent assessment year i.e. 2013-14 also, the Tribunal had deleted the disallowance of interest u/s 14A r.w. Rule 8D(2)(ii) after rendering categorically finding that the interest free funds far exceeds the investments made. Therefore, the findings of the ld. CIT(A) that no disallowance u/s 14A r.w. Rule 8D(2)(ii) is warranted, as it is based on the proper appreciation of facts as well as in consonance with the well settled position of law. Disallowance of indirect expenses of Rule 8D(2)(iii), CIT(A) only set-aside the computation of the disallowance in terms of the order passed by this Tribunal in assessee s own case for the earlier assessment years (supra). Therefore, we do not see any grievance for the Department. Thus, ground of appeal nos.3 and 4 stands dismissed.

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• 2023 (3) TMI 472
  Revision u/s 263 - assessment order had been framed u/s 143(3) r.w.s. 147 - cash deposits has remained unverified /unexplained - refund of advance of property u/s 69A of the act, which was also settled under VSVS scheme - HELD THAT:- PCIT ought to have rebutted the documentary evidences filed by the assessee and the view of the AO in accepting the source of cash deposits as explained by way of pointing out deficiencies and directing specific enquiries in respect of source of particular amount of cash deposit or the source of cash deposit remained unverified or unexplained. Meaning thereby, the PCIT s general and vague observation that the source of cash deposit remained unverified or unexplained and same need verification at assessment stage without appreciating the facts on record and holding the order passed by the AO to be erroneous and prejudicial to the interest of Revenue is against the intention of the legislation and bad in law. It is pertinent to mention that by way of the impugned order passed u/s 263, it can be said the PCIT-1 has attempted to made a case for reexamination of facts and evidences already examined by the AO while passing the order u/s 143/147 of the act. Such an action of PCIT is not justified in law and on the facts of the case. We have to understand that lack of enquiry/no enquiry is different from inadequate enquiry and it is only in case of no enquiry by the AO, Pr. CIT/C1T can exercise jurisdiction u/s 263 of the Act and not in case where the AO has made enquiries as seems appropriate in the facts and circumstances of the case. In the instance case inquiry on relevant issue has been made by AO, hence no action invited u/s 263. We hold that the impugned order passed by the PCIT is perverse to facts on record in holding assessment order erroneous and prejudice to the interest of revenue on account of lack of enquiry. Accordingly, the order passed by the PCIT -1, Jalandhar u/s 263 is cancelled being bad in law. Appeal of the assessee is allowed.

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• 2023 (3) TMI 471
  Exemption u/s 11 - application for registration u/s. 12A rejected - CIT(E) rejected the application on the ground that for corpus funds received before the exemption and there is absence of FCRA Certificate which is clear violation of FCRA norms related to foreign donation - HELD THAT:- The assessee is a charitable trust and applied for registration u/s 12AA. The ld. CIT(E) had not pointed out any lacuna related to the main object of the trust and activity related main object. The genuineness of the assessee also is not in question. The two issues must be settled during registration U/s 12AA which are genuinity of trust activities are related to main object of trust. The two limbs must be considered during registration. Only mere receiving of the corpus fund and rejection of application of FCRA should not be the ground for rejecting the registration u/s 12AA. We respectfully relied on the order of jurisdictional High Court in case of Shanti Devi Educational Trust [ 2017 (4) TMI 1065 - PUNJAB HARYANA HIGH COURT ] T.R. Gupta Public Charitable Trust [ 2022 (9) TMI 1086 - ITAT AMRITSAR ] We set aside the order of the ld. CIT(E) and directed the authority to allow the registration of the assessee as per Act. - Appeal of assessee allowed.

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• 2023 (3) TMI 470
  Addition u/s 56(2)(vii)(b) - assessee has purchased two parcels of land for a sale consideration - Special Deputy Collector (Stamps) had valued the property price more than sale consideration - assessee has not asked the Assessing Officer to refer the matter to the DVO to ascertain the fair market value and dismissed the appeal of the assessee - HELD THAT:- Admittedly, there is a difference between the sale consideration and the value adopted by the Special Deputy Collector (Stamps). It is a fact that the assessee has not requested the AO to refer the matter to the DVO to ascertain the FMV. In our opinion, the assessee should have asked the AO to refer the matter to the DVO to ascertain FMV. Assessee has raised the issue before the ld. CIT(A) and CIT(A) did not consider this for the reason that the assessee has not asked for reference to DVO before the AO. Under these facts and circumstances, we are of the opinion that one more opportunity to the assessee to substantiate his claim and to make a request to the AO to refer the matter to the DVO to ascertain FMV. We set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer and by considering the request of the assessee, the AO shall refer the matter to the DVO to ascertain the FMV and decide the issue afresh in accordance with law by allowing an opportunity of being heard to the assessee - Appeal filed by the assessee is allowed for statistical purposes.

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• 2023 (3) TMI 469
  Deduction u/s 57(iii) - interest expenses on the borrowed funds which was diverting the interest bearing funds - assessee borrowed funds which have been invested in the firm M/s. Sweeto Apparels - HELD THAT:- It is pertinent to note that the mention of the assessee that the loan was taken for expansion of business from A.Y. 2007-08 onwards the fact remains that the position in A.Y. 2013-14 has remained similar in present AY 2015-16 as relates to capital investment in purchase of new shops. Tribunal in SHRI RASHMIN RAMNIKLAL VORA [ 2019 (6) TMI 1695 - ITAT AHMEDABAD] categorically mentioned that there was debit balance of assessee s capital account in the partnership firm as the opening debit balance and closing debit balance was having a major difference as closing debit balance was much more higher. The assessee has paid net interest to the partnership firm but at the same time assessee has withdrawn more money from the partnership firm that actually invested in the partnership firm. Tribunal has also distinguished the factual aspect in assessee s case and in case in CIT v/s. Rajendra Prasad Moody [ 1978 (10) TMI 133 - SUPREME COURT ] The facts are exactly identical to A.Y. 2013-14 and therefore, it is noticed that as per specific provision of Section 28(v) any interest, salary etc. earned by a partner from a partnership firm is taxable under the head profit and gains of business or profession and there is no question of categorizing it under the head income from other sources. Thus, the claim of the assessee for deduction u/s 57(iii) is not justifiable and has rightly been disallowed by the AO and the CIT(A). Thus, the appeal of the assessee is dismissed.

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• 2023 (3) TMI 468
  TP Adjustment - related parties / associated enterprise or not - Re-computation of arm s length price of shares sold by the assessee - transaction at the time of entering into SPA were between two unrelated parties and thus transfer pricing provisions are inapplicable - HELD THAT:- Section 92A(2) of the Act states that two enterprises shall deemed to be an associated enterprises if, at any time during the previous year one enterprise holds, directly or indirectly, shares carrying not less than 26% of the voting power in the other enterprise. Admittedly, in the instant case Relay BV holds controlling stake in USL of more than 26% i.e. 26, 37% on 28.11.2013 i.e. during the relevant previous year. Therefore in light of the clear provisions of Section 92A(2) of the Act, which uses the expression if at any time during the previous year we find no merit in the contention of the learned Sr. Counsel. The literal reading of Section does not give rise to any absurdity or unjust result. Hence the contention that the literal interpretation should not adopted is rejected and we hold that the impugned transaction has been rightly put through the test of benchmarking. Therefore the contentions raised in ground Nos. 3 4 are rejected. Benchmarking of share transfer in the impugned transaction - There has to be a same or similar uncontrolled transaction with or between non associated enterprises under similar circumstances considering all the relevant facts. In the present case, the share purchase agreement was entered into for transfer of 25.1% of shares of USL. If non associated enterprises had entered into similar agreement, they would not have agreed for the transfer of shares at the stock exchange price as it involves transfer of control. Transfer of shares in stock exchange cannot be equated with transfer of shares involving transfer of control. Therefore, the price determined by the TPO is upheld for the above reasons and the grounds No. 5 to 10 raised by the Assessee are accordingly dismissed. Method and computation mechanism adopted by the learned TPO - DCF method is statutorily as well as internationally accepted method for valuation of shares. We therefore are of the opinion that the TPO has not erred in adopting such method. The data considered for computing the value using such method is also questioned particularly on the aspect of substantial variations in projected cash flows vis-a-vis the actual cash flows. In the context of section 56(2)(viib) read with rule 11UA, this Tribunal in Flutura Business Solutions (P) Ltd. [ 2020 (7) TMI 71 - ITAT BANGALORE] and other similar cases, has held that the valuation under DCF method can be based only on estimated future projections and actual figures available subsequently cannot be replaced. Applying the same, the estimated cash flows considered by the TPO using date available in Bloomberg database for the relevant period, is justified. Accordingly, these grounds raised by the Assessee are dismissed. Differential tax on account of rate of tax on capital gains - rate of tax applied by the AO in computing tax on long term capital gains offered - HELD THAT:- We direct the AO to apply the rate of 10% as provided under the proviso to section 112(1) of the Act and compute the tax on long term capital gains on sale of listed shares accordingly. Therefore, the grounds raised by the Assessee are allowed.

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• 2023 (3) TMI 467
  Unexplained cash deposits in bank account - source of amount of credit in the assessee s bank account stands unexplained - NP estimation - HELD THAT:- Admittedly, the assessee was carrying on the business of sale of milk. He had not been filing his returns of income since his income was below the taxable limit; and that this fact stands verified by the department during the course of his proceedings for AY2010-11. In that year, its case was also reopened u/s 148 of the Act for verification of cash deposits Rs. 20,96,973/- in its bank from his business of supplying of Milk where the addition made for Asstt. Year 2010-2011, by the AO, has been deleted by the Worthy CIT(A), on the basis of report of the Inspector that the assessee had been carrying on the business of sale of Milk by restricting to only 6% profit on the total bank deposits of Rs. 20,96,973/- being treated as Milk Business Turn Over under the provisions of Section 44AD. In the case of Commissioner of Income Tax vs. Leader Valves Ltd. [ 2007 (1) TMI 70 - HIGH COURT, PUNJAB AND HARYANA] observed that in view the principle of consistency, the Revenue could not be permitted to raise an issue in isolation only for one year in the case of one assessee, while accepting the findings on the same issue in the case of other assesses and for other years in the case of assessee. The department cannot be permitted to raise an issue in isolation only for immediately succeeding on identical facts in the case of the same assessee. Thus, the source of amount of credit in the assessee s bank account stands explained as milk sale Turn Over for the Assessment Year under consideration. As per provisions of section 44AD of the Act, the AO is directed to apply 8% Net profit on the total milk sale of worth. Appeal of the assessee is allowed

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• 2023 (3) TMI 466
  Reopening of assessment u/s 147 - revise the rate of depreciation allowable on the software capitalized by the AO - CIT(A) dismissing the appeal of the Assessee under impression that the Assessee has settled the dispute under Vivad se Vishwas scheme - AO had allowed depreciation @ 60% in the original assessment proceedings and the reopening of assessment was done only to restrict the rate of depreciation to 25% - whether the decision of AO to revise the depreciation can be said to be mere change of opinion? - HELD THAT:- As relying on INDIAN ENERGY EXCHANGE LIMITED case [ 2022 (4) TMI 636 - BOMBAY HIGH COURT] we hold that the assessing officer has reopened the assessment of the year under consideration on mere change of opinion only and the same is not permitted under the law. Accordingly, we hold that the reopening of assessment is bad in law and accordingly the impugned assessment order is liable to be quashed. Accordingly, we quash the orders passed by the tax authorities - Appeal of the assessee is allowed.

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• 2023 (3) TMI 465
  Revision u/s 263 by CIT - AO has not discussed anything in the order except Gross Profit of the assessee - PCIT held that the AO failed to make enquiries regarding excess depreciation claimed by the assessee and also as a result of wrong claim of depreciation, there is incorrect computation of profit under section 115JB - PCIT also held that the AO failed to make enquiries regarding the investment in equity shares of Prestige Estate Project Limited, loss on sale of fixed assets, reduction in share application money - HELD THAT:- AO has not carried out any enquiry regarding the impugned issues mentioned in the order under section 263 of the Act. The ld.AR has not brought to our notice any document to demonstrate that the AO had carried out enquiries regarding impugned issues. Assessee has not answered or provided any information regarding the impugned issues. It is also an admitted fact by the assessee that inadvertently excess depreciation has been claimed, which is one of the impugned issues. Computation of taxability under section 115JB is affected by excess depreciation claim. Therefore, to the extent of Computation of Taxability under section 115JB and excess depreciation, there is no doubt that the assessment order is erroneous and prejudicial to the interest of the Revenue. As far as other issues are concerned, we have already mentioned that AO had not carried out any enquiry and assessee has also not made any submissions regarding the remaining issues mentioned in the order under section 263 of the Act. Therefore, we agree with the ld.Pr.CIT that order is erroneous and prejudicial to the interest of the Revenue with reference to the impugned issues mentioned in the order under section 263 of the Act by ld.Pr.CIT, except the issue of 14A disallowance. Accordingly, we uphold the order under section 263, except for the issue of disallowance under section 14A. Disallowance u/s 14A - Pr.CIT has erred in stating that 14A requires proper investigation, because as far as facts of this case are concerned, there is no exempt income and hence no disallowance under section 14A can be made. Therefore, to the extent of 14A issue, we are of the opinion that the order of ld.Pr.CIT under section 263 of the Act, is not sustainable. However, we have already clarified that the order under section 263 is sustained by us on all other issues mentioned in the order under section 263 of the Act. Appeal of assessee partly allowed.

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• 2023 (3) TMI 464
  Addition u/s 68 - share capital introduced during the previous year unexplained - identity, creditworthiness and genuineness not proved - assessee has failed to substantiate the genuineness of transaction and creditworthiness of the share holding company - HELD THAT:- AO has not properly applied his mind to the facts, details and evidence filed on record, rather, the assessment was framed in a hurried manner as the time limit for framing of the assessment was expiring. However, the ld. CIT(A) has duly taken note of the facts, details and evidence on the file and noted that the share application money was received from one party which was a group company of the assessee company who was substantially interested in the business and development of the assessee company and further the assessee had duly proved the identity, creditworthiness and genuineness of the transactions. The ld. D/R has failed to controvert the factual findings of the ld. CIT(A). Appeal of the revenue stands dismissed.

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• 2023 (3) TMI 463
  Addition u/s 69A - unexplained cash deposits in the bank account of the appellant - contention of the assessee is that he has received the amount from his parents and wife, who are also assessed to income tax and they have given confirmation letters - contention of the revenue on this aspect is that there is time gap between the sale deed and deposit of cash in the bank account of the assessee - HELD THAT:- It is not a valid reason to make addition u/s 69A simply for the reason that there is time gap. The persons, who gave money are none other than the assessee s parents and wife. The assessee has filed paper book, which established the sale transaction of the family members, considering the above evidence. Therefore, that the assessee has explained his source properly. Therefore, direct the AO to delete the addition made u/s 69A - Appeal of the assessee is allowed.

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• 2023 (3) TMI 462
  Reopening of assessment u/s 147 - Reason to believe - assessee has made high value transactions of cash deposits and issued DD/Cheque in lieu of cash through his bank accounts owned by him - assessee is an individual, engaged in Shroff business of discounting/issuing of negotiable instruments like drafts, cheques etc.- HELD THAT:- As seen from the detailed appellate order passed by the CIT(A), the mandate of Section 147 namely reason to believe that income has escaped assessment is absent in the reasons recorded by the AO namely high value cash deposited and issued cash/cheque in lieu of cash in his bank account . Therefore the proceedings initiated by the AO by issuing 148 notice is unsustainable in law. We have no hesitation in confirming the detailed order passed by the ld. CIT(A) which is already reproduced at Para 3 of this order. Therefore we concur with CIT(A) that the notice issued u/s. 148 is invalid and bad in law. Unexplained cash deposited - Revenue could not able to establish it is an unexplained cash deposited by the assessee, inspite of enquiries made by Investigation Wing for more than 5 years. Similarly the AO failed to establish that the issuing of cheques to customers was fake or bogus and the assessee was receiving back the amount in cash. Thus the Assessing Officer failed to prove that the assessee is not in the business of Sahukar/Shroff as well as the cash deposited in the bank account neither remains with the assessee nor is it ploughed back in his business or in any kind of assets. Appeal filed by the Revenue is hereby dismissed.

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• 2023 (3) TMI 461
  Delayed payment of employee s contribution to PF/ESI - Assessment u/s 143(1) - HELD THAT:- Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] decided the issue on allowability/ treatment of delayed payment of employee s contribution to PF/ESI in hands of the assessee under the provisions of the Income Act and held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e. employees contribution is linked to payment before the due dates specified in the respective Acts and employer s contribution is linked to the payment before the prescribed due date for filing of return of income under Section 139(1) of the Act. The result of any failure to pay within the prescribed dates also leads to different results. In case of employees contribution, any failure to pay within the prescribed dates under the respective PF Act of Scheme, will result in negating the employer s claim for deduction permanently forever under Section 36(1)(va) of the Act. On the other hand, delay in payment of employer s contribution is visited with deferment of deduction on payment basis u/s 43B of the Act and is therefore not lost totally. Therefore, as per the above decision, the additions made by Revenue authorities were fully justified. We are of the view that the decisions cited by the learned Counsel for the assessee proceed on the assumption that the disallowance of employees share of PF and ESI paid beyond the due dates under relevant law has been made only under section 143(1)(a)(iv) of the Act, while in the intimation under section 143(1)(a) of the Act, no such basis has been given and therefore the disallowance can be justified even in terms of section 143(1)(a)(ii) of the Act. - Decided against assessee.

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• 2023 (3) TMI 460
  Addition u/s 68 - accommodation entries of unsecured loans were provided to assessee - discharge of onus - HELD THAT:- There is no dispute that the assessee has discharged its burden placed upon it u/s 68 of the Act by furnishing all relevant documents. As pointed out by Ld CIT(A), the AO has not found fault with those documents. We also noticed that two creditors have responded to the notices issued by the AO u/s 133(6) but the AO has refused to consider them at all. Hence, it appears to us that the AO was swayed by the generalised findings given by the investigation wing and hence did not proceed the matter on the merits of each case. Hence,we have to hold that the AO has made the impugned addition on suspicions, surmises and conjectures only. We have also gone through the decision rendered in the case of M/s Pravir Polymers p Ltd [ 2022 (4) TMI 1501 - ITAT MUMBAI] and notice that the decision has been rendered in that case on the basis of peculiar facts available therein. In the absence of parity facts, we are of the view that the said decision will not have application to the present case. CIT(A) was justified in deleting the addition - Accordingly, we confirm the order passed by him on this issue. Decided in favour of assessee.

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• 2023 (3) TMI 459
  TP Adjustment - Comparable selection - DR submitted that the multiple of 10 times of the turnover should be adopted while adopting the turnover filter - HELD THAT:- We hold that the DRP was justified in its directions to include only those companies having turnover of Rs.200 crore to Rs.2000 crore as a comparable for making the TP study in the assessee s case. It is ordered accordingly. Our order will have impact only on non-US AE s transactions, since the international transaction of the assessee with its US based AE had already been settled under the MAP Resolution. It is ordered accordingly.

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• 2023 (3) TMI 458
  TP Adjustment of AE Receivable - Assessee had outstanding receivable from its Associated Enterprises (AE) - TPO held that excessive outstanding receivables have to comply with TP provisions - only relief granted was on account of applicable rate and TPO was directed to benchmark the same on the basis of interest rates on short term fixed deposits prevailing at relevant point of time - HELD THAT:- It emerges that the assessee has not charged any interest on outstanding receivables from AEs and non-AEs. The loans advanced to AEs have been benchmarked separately. It also emerges that the assessee is a zero-debt entity and do not incur significant interest expenditure. Therefore, to allege that the assessee accommodated its AEs in the guise of receivables would not be a correct proposition. Therefore, this addition is not sustainable. We order so. The corresponding grounds raised by the assessee stand allowed. Disallowance u/s 40(a)(i) - payment made to foreign entities - HELD THAT:- It emerges that the assessee could not file any documentary evidences in support of the payment so made to foreign entities. The claim of the assessee has to cross the hurdles of Sec.37(1) as well as the provisions of Sec.40(a)(i). We find that similar payments were made by the assessee in AY 2011-12 and adjudication of this issue was done by Tribunal [ 2019 (12) TMI 441 - ITAT CHENNAI] , it was held that the services were not technical in nature - this issue stand restored back to the file of Ld. AO for fresh consideration with a direction to the assessee to file requisite evidences in support of the claim. The decision of this Tribunal as rendered for 2011-12 shall be duly considered by Ld. AO. The corresponding grounds stands allowed for statistical purposes. Foreign Exchange Loss on forward contracts - HELD THAT:- AR explained that the assessee was exposed to foreign exchange risk which was sought to be covered by forex derivatives. Accordingly, these transactions could not be termed as speculative or notional loss in nature. AR submitted that the quantum of transactions is commensurate with the forex exposure of the assessee and represented by underlying assets. Considering the same, we restore this issue back to the file of Ld. AO for fresh consideration with a direction to the assessee to substantiate its claim. MAT computation on Disallowance u/s 14A - only plea of Ld. AR is that this disallowance is not to be added while computing Book Profits u/s 115JB - HELD THAT:- We direct AO to exclude the same while computing Book Profits u/s 115JB.

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• 2023 (3) TMI 457
  Benefit of DTAA while claiming exemption from taxation of capital gain - Allowability of carry forward of earlier years losses without setting off with current year s capital gains (claimed to be not subject to tax in India under the India- Mauritius DTAA) - capital gains earned during the year under consideration which are not taxable in India by virtue of Article 13(4) of India Mauritius DTAA - brought forward short-term capital loss and long-term capital loss was carried forward as is basis to subsequent year(s) - Whether in the earlier years when assessee suffered loss it chose not to claim benefit under DTAA and computed the loss as per domestic law, i.e., under the Income Tax Act - HELD THAT:- In the case of a situation of tax relief, the country where a particular income arises (source country), consciously gives up its taxing rights in respect of a particular income arising from source(s) in that country in favour of the other treaty partner country (residence country). The residence country may or may not levy tax on the said income, for e.g. some countries like Singapore, Hong Kong etc. do not levy tax on the income unless it arises in their own territory, as they follow a territorial model of taxation. In case of income, where a country consciously gives up its rights to tax income (i.e. positive income) of resident of the treaty partner arising on its own shores, it automatically does not mean that losses which had arisen in earlier year in the subject country are not allowed to be carried forward. The said principle of allocation of taxing rights has also been considered and propagated in various judicial precedents and commentary. The application of a treaty can result in the entire (gross) income being not subject to tax in India in a year where a taxpayer claims treaty benefits. Therefore, in a year in which a taxpayer claims benefit of Article 13(4) of the India- Mauritius tax treaty, the entire gains he earns will not be taxable at all as India has given up its taxing rights in respect thereof. Thus, the entire amount of gains for the year (before set off of brought forward losses) will go out of the taxing provisions if Assessee has chosen to be assessed as per Treaty. Provisions of sections 4 and 5 are expressly made subject to the provisions of the Act which means that they are subject to the provisions of section 90 of the Act. By necessary implication they are subject to the terms of the Double Taxation Avoidance Agreement, if any, entered into by the Government of India. If it was not the intention of the legislature to make a departure from the general principle of chargeability to tax under section 4 and the general principle of ascertainment of total income under section 5 of the Act, then there was no purpose in making those sections subject to the provisions of the Act. Thus, as a corollary, where treaty provisions are beneficial as compared to the provisions of the Act; the taxpayer has right to rely on the treaty provisions. The provisions of Section 90(2) of the Act can be resorted to only when these are more beneficial (compared to Treaty).. There could however be years where a taxpayer chooses not to claim treaty benefit as we have already noted above that he can do so under the provisions of Section 90(2) of the Act. When he does so, his income will have to be computed under the provisions of the Act for that year. This will include the provisions for carry forward of loss - under DTAA between India Mauritius, the taxing rights on capital gains falling under Article 13(4) is kept with country of residence, i.e., Mauritius and hence the same is not taxable in country of source, i.e., in India. The capital gain as per the Indian Mauritius DTAA is taxable in the resident country and the source country has given up its rights to tax the income. We hold that the losses which have been brought forward from earlier years will be carried forward to the subsequent years without setting off the same against the gains of the previous year relevant to the assessment year in question for the reason that once the assessee has chosen the benefit of DTAA, then the capital gain is not at all taxable in India and therefore, there is no question of setting off of loss from the earlier years. Accordingly, the Cross Objection raised by the assessee is allowed. Whether the AO could have passed the draft assessment order or not u/s 144C? - In any case once we have held that long term capital gain during the year is not taxable as in accordance with Article 13(4) of Indo Mauritius DTAA and carry forward losses on account of long term capital loss and short term capital loss has been held to be carry forward in the subsequent year, therefore the grounds raised by the revenue are purely academic, hence we are not entering into semantics of whether the AO could have passed the draft assessment order or not u/s 144C. Assessee appeal allowed.

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• 2023 (3) TMI 456
  TP Adjustment u/s. 92CA(3) - exclusion/inclusion of comparables for determination of arms length price of the international transactions - CIT(A) upholding the order of the AO/TPO in rejecting functionally comparable companies selected by the Appellant in its transfer pricing report - HELD THAT:- We find that assessee is engaged in recruiting personals in India on the basis of their academic qualifications and skill sets for the work of audit in various fields of finance, management, information technology etc. for Associated Enterprises. The auditors selected by the assessee are being further screened and trained by respective entity who is using the services. These auditors perform services of reviewing the existing operations of the contracting entities and assist them in writing audit report. These auditors would do on-site auditing (at the place of the contracting entity) and one week of report writing (off-site work) at the office of the assessee. Vishal Information Technologies Ltd - Percentage of outsourced business of the comparable company has been reported as 44.81% whereas before us the assessee has pointed out the ratio of outsourcing expenses to the total expenses as 65.98%. Therefore, it is essential to verify the exact quantum of outsourcing expenses in the case of the comparable company. Accordingly, we set aside the matter of exclusion of the company to the file of the Ld. TPO with the direction to ascertain quantum of outsourcing expenses and the business model of the company by way of issue of notice under section 133(6) of the Act and then if the business model of the company is found to be based on outsourcing, then same shall be excluded from the set of the comparables in accordance with law. Asit C Mehta financial services ([Nucleus netsoft and GIS (India) Limited ] - Concern with extraordinary events of merger/demerger cannot be comparable in the years of such merger/demerger we direct the Ld. AO/TPO to exclude this company from the set of the comparables for computing arithmetic mean of PLI of comparables. Transworks information services Ltd - We find that the Ld. TPO has gathered financial and functional details of the company by way of using his authority u/s 133(6) of the Act. Since the said information has not been provided to the assessee, we feel it appropriate to restore this issue back to the file of the Ld. AO/TPO with the direction to provide all the information gathered under section 133(6) about the company to the assessee and decide the issue of exclusion/inclusion of the company after providing adequate opportunity of being heard to the assessee. Datamatics financial services Ltd (segmental) - We find that information gathered under section 133(6) of the Act has not been provided to the assessee to ascertain the fact of RPT being more than 25% i.e. a filter applied by the Ld. TPO, therefore we set aside the finding of the Ld. CIT(A) and restore the issue of exclusion/inclusion of the company from the final set of the comparables to the file of the Ld. AO/TPO for deciding a fresh after providing information gathered under section 133(6) of the Act to the assessee. Goldstone Infratech Limited (Segmental) - The first division is telecom and insulated divisions, wherein the turnover has been bifurcated in domestic turnover at Rs.25,84,43,794/- and export turnover of Rs.2,29,721/-. The other division is BPO division wherein the turnover has been mentioned at Rs.5,02,71,015/-. In the BPO division no such bifurcations of domestic and export turnover has been reported. Since the TPO has considered only BPO division for comparison with the assessee, the contention of the Ld. counsel of the assessee of complying up export filter is not relevant. The said objection of the Ld. counsel of the assessee is accordingly rejected. As the assessee in its transfer pricing study has considered ITes/BPO activity as functionally similar to the assessee, the comparable company is held to be functionally similar and therefore contentions of the Ld. counsel to exclude this company are accordingly rejected. Spanco Telesystems and Sloutions Limited (segmental) - Before us the assessee has not filed annual report of the company in support of its claim of merger of another company with the assessee and also for verification of application of export filter.Therefore in the interest of justice, we feel it appropriate to restore the issue of exclusion/inclusion of this company into set of the comparables to the file of the Ld. AO/TPO for deciding afresh. Maple e-solutions Ltd - As relying on Commins turbo technologies Ltd [ 2018 (3) TMI 1588 - BOMBAY HIGH COURT] we direct the Ld. AO/TPO to exclude the company out of the set of the comparables on the ground of unreliability of financial data because of fraud committed by the owners/directors. C S software Enterprises Ltd - From the reporting in Annual Report, it is evident that company is having only one segment of Information Technology enabled services. Further on perusal of the other pages of the Annual Report also it is evident that company is primarily in the field of IT-BPO and no where it is reported that company is in software development. The observation of the CIT(A) that company is engaged in software development and there is no separate segment of ITes, is without any basis. Accordingly, The Ld. AO/TPO is directed to include the company into the set of the comparables.

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• 2023 (3) TMI 455
  TP adjustment in respect of Technical know-how fees paid by Appellant to its Associated Enterprise ( AE ) - HELD THAT:- We find that the Coordinate Bench of Mumbai Tribunal in assessee s own case for the A.Y. 2013-14 [ 2019 (9) TMI 1342 - ITAT, MUMBAI] TPO having not determined the ALP in conformity with the statutory provision and in the process having failed to demonstrate that ALP shown by the assessee is incorrect, the contentions of the Id. DR to restore the issue to the file of the Id. TPO for fresh determination of the ALP, is unacceptable. Respectfully following the aforesaid decision, we hold that there is no provision made in the statute empowering the Id. TPO for determining the ALP of a particular international transaction at Nil without resorting to any methods prescribed. Grounds of appeal no.1 of the assessee is allowed. Incorrect computation of mark-up on recovery of expenses by the appellant from it s AE - HELD THAT:- As in assessee s own case for the A.Y. 2013-14 [ 2019 (9) TMI 1342 - ITAT, MUMBAI] direct the Ld. A.O./TPO to delete the ALP adjustment made on recovery of expenses.

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• 2023 (3) TMI 430
  Estimation of income - Rejection of books of accounts - Determination of income - difference in turnover as per Form 26AS and turnover reported in books of accounts - CIT(A) directed the AO to estimate 5% profit on total receipts as per Form 26AS - CIT(A) further directed the AO to determine the income of the assessee on the basis of 5% net profit estimated on total turnover and difference between income offered in the return of income and 5% estimated profit as per directions, should be treated as quantum addition which is liable to be sustained - HELD THAT:- CIT(A) while adopting 5% net profit has analyzed previous financial results of the assessee right from AYs 2008-09 to 2013-14 and observed that the average net profit declared by the assessee for all those years works out to 3.25%. If you consider average net profit declared by the assessee for earlier assessment years with income determined by the AO by adding difference in turnover as per Form 26AS, the net profit percentage determined by the AO for the impugned assessment year is exorbitant, which gives distorted figures. Therefore, she has made a fair estimation of 5% net profit by taking into account net profit estimated by the AO for earlier assessment years and also the directions of the JCIT s order u/s.144A of the Act, for the AY 2016-17. The method followed by the Ld.CIT(A) to determine income of the assessee is appears to be reasonable and thus, we are of the considered view that there is no reason to interfere with findings given by the Ld.CIT(A) to estimate 5% net profit on grossreceipts as per Form 26AS. Thus, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the Revenue for the AY 2015- 16. Estimation of profit on cash deposits found in the bank account of the assessee - AO was of the opinion that the assessee could not explain source for cash deposits and thus, treated cash deposits as unexplained income of the assessee - HELD THAT:- AO has made addition towards difference in gross turnover as no business income of the assessee. Ideally, when the AO has treated gross-receipts as per Form 26AS as business turnover of the assessee, then addition made towards differential turnover as business income of the assessee, will take care of cash deposits found in the bank account of the assessee. If you telescopic, addition made towards business income to cash deposits, in our considered view, further addition towards cash deposits u/s.69A of the Act, appears to be double addition on very same income. CIT(A) has taken a reasonable view taking into account overall facts and circumstances of the case and has estimated net profit of 5% which is further strengthened by the fact that in earlier assessment years, the AO himself has estimated 5% net profit on total turnover on the basis of directions of the JCIT s order passed u/s.144A of the Act for the AY 2016-17. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to estimate net profit at 5% on total turnover, including cash deposits found in the bank account of the assessee and thus, we reject the ground taken by the Revenue.

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• 2023 (3) TMI 429
  Exemption u/s 11 - application for registration u/s 12AA denied - purpose of creation of Trust - Charitable activity u/s 2(15) - CIT(E) has alleged that applicant trust has created an arrangement whereby it is not only laundering its income but also diverting the same in the hands of the trustee/members - CIT(E) objection was that an arrangement was made by a group of persons who owns the land and had given this land on lease to their partnership firm which subsequently given to their trust at an exorbitant rent. As the trust has paid a huge rent, it becomes clear that these persons are diverting funds of the trust to a partnership firm which is nothing but an entity controlled by trustee/members of the appellant trust - HELD THAT:- Merely questioning the purpose of creation of Trust without disputing the charitable nature of objects, genuineness of activities and the manner of carrying out the activities of the trust in consonance to its objectives renders the impugned order of the Ld. CIT(Exemption) perverse to the facts on record. Further, the only requirement for granting the registration is that the object of the society should be charitable in nature and its activities were genuine. On this issue, case of M/s Ananda Society and Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT] has laid down the basic principles for allowing registration by observing that Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. If it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. Thus we hold that the appellant assessee s grievance is genuine and accordingly, we direct the CIT exemption to grant registration to the assessee trust from the date of application - Appeal of assessee allowed.

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• 2023 (3) TMI 428
  Validity of order passed u/s 148A(d) and the consequential notice u/s 148 - main allegation against the petitioner is that it has wrongly claimed long term capital gain concerning sale of shares of an entity - reassessment proceedings were triggered on account of an audit objection - HELD THAT:- Briefly, in the order passed in the said writ petition, we have taken note of the fact that the expression any audit objection was introduced only via Finance Act, 2022 albeit w.e.f. 01.04.2022. Prior to the said amendment, the expression which obtained in Explanation 1(ii) appended to Section 148 of the Act adverted to the Comptroller and Auditor General of India . We are, prima facie, also of the view that if the AO, according to the respondents/revenue, had committed an error in law, perhaps, they could have taken recourse, at the appropriate time, to the provision of Section 263. We are of the view that the matter requires examination. Issue notice.Mr Agarwal accepts notice on behalf of the respondents/revenue. Counter-affidavit will be filed within four weeks. Rejoinder thereto, if any, will be filed before the next date of hearing. List the matter on 12.09.2023.

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• 2023 (3) TMI 427
  Assessment proceedings completed u/s 153A - unexplained investment of the assessee u/s 69 - HELD THAT:- Assessee has produced sufficient documents to substantiate that the loan/booking advance of Siddha Group were made by independent entities from their own funds reflected in the audited balance sheet and there is no evidence that such loan/booking advance are funded by the assessee or any other entity acting on behalf of the assessee. There is a complete lack of evidence in the hands of ld. AO which could indicate that the investment made in the Siddha Group in the form of loan and booking money is made by the assessee and the alleged addition seems to be made purely on suspicion, surmises and conjectures. The only evidence which ld. AO had was the statement given by the assessee during the course of search which has been retracted within three days himself and therefore, there remains no sanctity to refer/rely on such a statement which has been retracted within three days of the date of search. Even otherwise on legal grounds also since no incriminating material has been referred to by ld. AO which has a direct nexus with the assessee nor is there any material which could throw any light that the assessee has parked its unaccounted funds with the Siddha Group as loans and advances/booking money of the Siddha Projects the proceedings carried out u/s 153A of the Act deserves to be quashed since for AY 2014-15 AY 2015-16 the original returns were duly submitted on 11.06.2014 21.08.2015 and the time limit for issuance of notice u/s 143(2) of the Act stood expired and no proceedings u/s 143(3)/147 of the Act were pending on the date of search, therefore, both the assessment years were completed assessment years which cannot be abated and for such completed assessment year, no additions can be made unless until supported by incriminating material found during the course of search belonging/pertaining to the assessee - Decided against revenue.

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• Customs

• 2023 (3) TMI 454
  Smuggling - Gold - petitioners submitted that petitioners have been falsely implicated in the present case as the DRI has not brought any evidence on record that particular alleged gold was the smuggled gold, on which import duties were evaded - HELD THAT:- Perusing the impugned panchnama and also considering that as per impugned panchnama, cognizable offence is made out against the petitioners, we are of the opinion that no interference is called for by this Court in its extraordinary power under Article 226 of the Constitution of India for quashing of the panchnama or for grant of any interim relief to the petitioners. Petition dismissed.

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• 2023 (3) TMI 453
  Refund of SAD - rejection on the ground that the sales invoices were not endorsed with the mandatory declaration that no cenvat credit can be availed on the invoices . Whether refund can be granted as per the benefit of Notification No.102/2007-Cus. Dated 14.09.2007, if condition 2(b) of the notification has not been complied by a trader who cleared the goods on the strength of commercial invoices? HELD THAT:- The said issue has been decided by the Larger Bench in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] wherein it was held that A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification No.102/2007-Cus., notwithstanding the fact that he made no endorsement that credit of duty is not admissible on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein. The Tribunal in a similar matter in the case of IM/S. INFINITY INDUSTRIES PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , CHENNAI-IV [ 2019 (12) TMI 655 - CESTAT CHENNAI] wherein the authorities below had rejected the refund claim on the ground that the commercial invoices did not contain the declaration that no credit is admissible on the duty paid and also refused to accept the C.A certificate, considered the issue and observed that On perusal of description of the goods mentioned above, it is found that character of the goods (paper) has been shown in the sales invoices. So also, the goods sold are paper of different grades. The appellant has pointed out that he has used description of the goods as known in the trade in India. Department does not have a case that the description shown in the invoices are not the goods known in the local market in India. Thus, there are no major discrepancy in the description of the goods in the Bill of Entry and the sale invoices. The rejection of refund is without legal basis. The impugned order rejecting the refund is set aside - Appeal allowed.

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• 2023 (3) TMI 452
  Conditions / Security for Provisional release of the goods - mis-classification of goods - Toughened Glass Top (Part of Gas Stove) - whether the conditions imposed for the provisional release order by the adjudicating authority and upheld by the Ld. Commissioner(appeals), particularly the quantum of bank guarantee/ cash deposit and other conditions imposed to safeguard the interest of Revenue pending adjudication on the face of the allegation of mis-classification of Toughened Glass Top Part of Gas Stove is too harsh and warrants modification? HELD THAT:- At this stage, learned advocate for the appellant, on instruction, submitted that the Appellant since incurring heavy warehousing charges for the last one year, are willing to deposit the differential duty and execute bank guarantee / security deposit of Rs.3,00,000/-; also they have no objection to execute B-1 Bond for the estimated value of Rs.39,64,262/- as conditions for provisional release of the goods. In our considered opinion, keeping in view the principles of law settled in this regard, furnishing B-1 Bond for the estimated value of Rs.39,64,262/-, bank guarantee/cash deposit of Rs.3.00 lakhs, and deposit of the differential duty at the time of provisional release of goods would sufficiently safeguard the interest of revenue and meet the ends of justice. Accordingly, the impugned order is modified to the extent that on execution of B-1 Bond for the estimated value of Rs. Rs.39,64,262/-, furnishing of bank guarantee/cash deposit for Rs.3.00 lakhs and on deposit of differential duty by the Appellant, the adjudicating authority shall release the goods provisionally forthwith pending adjudication of the case. Appeal disposed off.

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• 2023 (3) TMI 451
  100% EOU - withdrawal of permission granted for allowing job work in DTA - violation of principles of natural justice - HELD THAT:- The present proceedings before this Court emanate from a letter dated 6.1.2020 which cannot be treated as a proper show cause notice. No reason or evidence to support the allegation has been brought on record by the respondent Department, in the letter. While the same has been collated, as per the contention of the learned authorized representative subsequently after search, as allegedly certain discrepancies were found which indicated violations. It, therefore, appeared to the Department that the imputations in the letter dated 6.1.2020 were later on found to be true. Same, however is a subsequent development, but at the time the show cause notice was issued, the allegation was merely based on suspicion. Clearly, therefore, there is violation of natural justice and manifestation of arbitrariness. Matter related to seizure at job worker premises is part of separate proceedings. For the purposes of the present proceedings before this Court, it is found that the show cause notice is improper and unsustainable and the proceedings based thereupon are liable to be set aside - Appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (3) TMI 450
  Constitutional validity of section 7 of IBC - Adjudication on an application under Section 7 filed by a financial creditor - challenge is on the premise that no power is conferred on the adjudicating authority to adjudicate on any issues on the filing of an application Under section 7 by a financial creditor, and the adjudicating authority is under statutory compulsion to appoint a Resolution Professional. HELD THAT:- It is pertinent to note that, over a period of time, the Supreme Court has analysed and interpreted Section 7 and held that Section 7(5)(a) confers the adjudicating authority with the discretion to decide whether to admit the application or not, after considering all relevant aspects. The scope and ambit of Section 7 had come up for consideration in Innoventive Industries Ltd [ 2017 (9) TMI 58 - SUPREME COURT ] where the Apex Court had taken note of the difference in procedure with respect to the claims raised by financial creditors and operational creditors. The Court also opined about the limited scope of adjudication on an application under Section 7 filed by a financial creditor. The legal position emanating from the above decision leaves no room for doubt that the adjudicating authority is vested with the discretion and is legally bound to consider all relevant aspects, including the financial health and viability of the corporate debtor, while taking a decision on the application filed by the financial creditor. As such, the contention that Section 7 is a draconian provision loaded against the corporate debtor, cannot be countenanced. Therefore, the challenge against constitutional validity of section 7 of IBC on the ground that the provision is arbitrary and discriminatory, is liable to be rejected. It is hence clear that the petitioner has the right to file objections against Ext.P7 application and in such event, the adjudicating authority is bound to consider the objection on merits and take a decision on the admissibility or otherwise of Ext.P7 application after considering all relevant aspects, including those urged in this writ petition. The writ petition is accordingly dismissed.

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• 2023 (3) TMI 449
  Condonation of delay of 5 days in physical filing of Hard Copies of the Appeal Type Set of papers - wilful or wanton delay or not - plea of the Petitioner / Appellant is that, there is no proof that the Order, was pronounced / dictated Online on 11.10.2022, when the Appellant, was present and when the Order, is not Pronounced, then the date of receipt of Order alone, can be used to calculate, the Limitation. HELD THAT:- Undoubtedly, a Remedy, under the Limitation Rules, can be exercised only upto a particular point of time and not later, as the case may be. Indeed, the Stakeholders / Litigants / Entities, are to be quite diligent and they cannot remain negligent, and resort to a callous attitude, especially, in the spirit of the I B Code, 2016, that Speed is its Gist. In so far as the Plea of the Petitioner / Appellant, is that the Impugned Order, was not Pronounced by the Adjudicating Authority (Tribunal) on 11.10.2022, and the same was not available for a long period and further that it was uploaded by the NCLT (Tribunal) on 21.11.2022, this Tribunal, pertinently points out the Judgment of the Hon ble Supreme Court in Central Bank of India v. Vrajlal Kapurchand Gandhi Anr. [ 2003 (7) TMI 708 - SUPREME COURT ], wherein, it is observed that This Court cannot launch into an enquiry as to what transpired in the High Court. It is simply not done. Public policy and judicial decorum do not permit it. Matters of judicial record in that sense are unquestionable However, the Court can pass appropriate orders if a party moves it contending that the order has not correctly reflected happenings in Court. It cannot be gainsaid that in view of Article 141 of the Constitution of India, the Law, declared by the Hon ble Supreme Court is binding on all Subordinate Courts, Tribunals, Appellate Tribunal, etc., as opined by this Tribunal. In the instant case, the Order, dismissing Ivn.P/7(CHE)/2022 in IA/248(CHE)/2022 in IBA/471/2020, was Pronounced by the Adjudicating Authority (Tribunal) on 11.10.2022 in Open Court itself, at once, and hence, the Petitioner / Appellant, cannot have any grievance, because in the presence of its Authorised Representative, the impugned order, was passed and as such, there is sufficient compliance of Rule 150 (1) of the NCLT Rules, 2016, in the considered opinion of this Tribunal, Moreover, the Petitioner / Appellant s Authorised Representative and the Learned Counsel for the Appellant, had knowledge of the Order on 11.10.2022 itself, and hence, the time for computing the Limitation, had commenced from 11.10.2022, and there is no acceptable / sufficient justiciable reason on behalf of the Petitioner / Appellant, in remaining inactive from 11.10.2022 to 24.11.2022. In the instant case, the Petitioner / Appellant, from the date of Pronouncement of Order of Dismissing the Ivn.P/7(CHE)/2022 in IA/248(CHE)/2022 in IBA/471/2020, on 11.10.2022 (in Open Court), by the Adjudicating Authority (NCLT), the instant Comp. App (AT) (CH) (INS.) No. 41 of 2023, ought to have been filed within 30 days, from the date of the Order, i.e. on 10.11.2022, as per Section 61(2) of the I B Code, 2016 - In the present case, the 45 days period lapsed on 25.11.2022. The E-filing of the Appeal Papers were made on the side of the Petitioner / Appellant, on 23.12.2022. After 45 days (30 + 15), there is a Delay of 28 days. In fact, the Certified Copy of the Impugned Order was issued to the Petitioner / Appellant, on 24.11.2022. Thus, it is candidly clear that the Petitioner / Appellant, had E-filed the Appeal Papers on 23.12.2022, i.e. on 73rd day, and the physical filing, was made, on 28.12.2022. By taking into account of the fact that 30 days Limitation Period, ends on 10.11.2022 (from the date of Impugned Order, i.e., on 11.10.2022) and the 45 days period, comes to an end, on 25.11.2022, and keeping in mind of another fact that the E-filing of the Appeal Papers, were done on behalf of the Petitioner / Appellant, on 23.12.2022, and after deducting (30 + 15 = 45 days - the Outer Limit Period), still there is a Delay of 28 days, and there is no power, enjoined upon Appellate Tribunal, to condone the Delay, beyond the permissible / prescribed period, as per Section 61 of the I B Code, 2016. Application dismissed.

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• 2023 (3) TMI 448
  Direction to Resolution Professional (RP) to exclude 205 Flats from the pool of the Assets of the Corporate Debtor - lifting of Corporate Veil - whether the Adjudicating Authority was justified in excluding 205 Flats from the pool of the Assets of the Corporate Debtor? HELD THAT:- Having regard to the nature of transactions involved herein and the contention of the Corporate Debtor that the amount involved is a Sale Consideration and not a loan and the argument of M/s. Nisus Finance and Beacon Trusteeship Limited that right, title and interest of 268 Flats rests with them, we are of the considered view that this is a fit case for the Corporate Veil to be lifted, to the extent to see the Nature of Transaction whether loan or Sale Consideration as contended by the Appellant as laid down by the Hon ble Supreme Court in ARCELORMITTAL INDIA PRIVATE LIMITED VERSUS SATISH KUMAR GUPTA ORS. [ 2018 (10) TMI 312 - SUPREME COURT ]. The Homebuyers and the effected parties are not estopped from approving that a Transaction is a Loan Transaction . Contractual interpretation must ascertain the real intention of the parties. The genesis of an Agreement and the context is to be seen as a whole and the intent of a Transaction cannot be at variance with the actual objective. Clauses 7.1 and 7.2 of Part II of the DTD were amended which provide that the Principle Amount was to be paid by the Issuer Company in four instalments namely 31.03.2019, 30.06.2019, 30.09.2019 31.12.2019 meaning thereby that the Issuer Company and the Corporate Debtor were under legal obligation to pay the 1st instalment by March 2019 - This Tribunal is of the earnest view that the Corporate Debtor had failed to fulfil the obligations under the DTD and other documents executed to guarantee/secure the repayment of the amount disbursed by the Financial Creditors towards issuance of the Non-Convertible Debentures. In the instant case, keeping in view the flow of funds, the nature of transactions, the amended DTD, the Term Sheets and the entire material on hand, this Tribunal is of the earnest view that the amount received from the Issuer company is a Loan and not a Sale Consideration and the BBAs executed are secured documents - Once the Resolution Plan is approved by the CoC, the Financial Creditors are estopped from seeking any Amendments/Modifications in the Information Memorandum. In the instant case, the Information Memorandum was prepared on 14.01.2021 and the Resolution Plan was approved in the 8th CoC Meeting which concluded on 03.05.2021. There are no substantial reasons given for the Creditor not having raised this issue or filed an Application in the Interim Period between 14.01.2021 and 03.05.2021. The Order of the Adjudicating Authority excluding the 205 Flats from the pool of the Assets of the Corporate Debtor, is set aside - Appeal allowed.

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• Service Tax

• 2023 (3) TMI 447
  Refund of sum deposited as pre-deposit during investigation - petitioner s grievance as against this communication is premised in the contention that the petitioner s request for refund of a sum deposited as pre-deposit during investigation, is decided without due opportunity - violation of principles of natural justice - HELD THAT:- It is obvious on perusal of the impugned communication, the petitioner s claim is not considered in the light of whether the petitioner, if entitled to credit of pre-deposit under the SVLDR Scheme and has deposited a similar amount to avail the benefit of the Scheme because there was no communication, would be entitled for refund. This Court is of the considered view that this question should have been considered with due opportunity to the petitioner which admittedly is not accorded. Therefore, this Court must intervene quashing the impugned order and restoring the petitioner s application for re-consideration by the first respondent within a time frame. The petition is allowed in part, and the impugned communication dated 01.06.2021 [Annexure-S] is quashed restoring the petitioner s request for refund to be reconsidered by the first respondent, who shall within eight [8] weeks from the petitioner s first date of appearance after this order decide on such request.

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• 2023 (3) TMI 446
  Refund of unutilised CENVAT Credit - exporter of services - rejection of refund on the ground that credit is not reflected in the ST-3 return - HELD THAT:- From the perusal of the order of tribunal while remanding the matter it is evident that tribunal has held that the appellant is eligible to avail the Cenvat Credit of the input services for the period prior to 14.03.2006. It is not even the case of revenue that the CENVAT Credit is not available in respect of these services however said credit has not been reflected in the return filed by the appellant during the period 2005-06 or as opening balance in the ST-3 return filed for the period April to September 2006. It is evident that ST-3 return has not been mentioned as the document relevant for the purpose of considering the admissibility of the credit and the refund. Accordingly rejection of refund claim by referring to the ST-3 return, cannot be justified, provided the fact of the admissibility and availability of the credit claimed as refund can be determined from the records maintained under the Central Excise Rules, 2002, the CENVAT Credit Rules, 2004, or the Service Tax Rules, 1994. Reliance placed in the case of PRINCIPAL COMMISSIONER OF SERVICE-TAX VERSUS BROADCOM INDIA RESEARCH PVT. LTD. [ 2016 (6) TMI 877 - KARNATAKA HIGH COURT] where it was held that the relevant documents on the basis of which credit was taken, nature of service and its nexus and utilization of the service for there was some mistake in the ST-3 returns, substantive right of assessee for refund cannot be rejected. Thus, the refund claim could not have been denied for this reason. It is stated/ unstated policy which govern the exports of goods or services across the globe that the local taxes should not be exported along with the goods or services exported. Appeal allowed.

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• 2023 (3) TMI 445
  Short payment of service tax - Construction of Residential Complex Service - non filing of periodical ST-3 returns - allegations against the assessee are that they were engaged in the construction of residential complexes, which became taxable on 16.06.2005, but they have taken registration with the Department only during June 2008 - HELD THAT:- The demand period in the impugned order covers the period from May 2006 to June 2010, ie under the category of Construction of Residential Complex Service for the periods from May 2006 to September 2009 in respect of project namely, SIS Danube and under the category of Works Contract for the period from March 2008 to September 2009 in respect of project namely, SIS Safaa and another Notice dated 06.04.2011 proposing to levy Service Tax under the category of Works Contract for SIS Safaa for the period from October 2009 to June 2010. Works Contract Service came under Service Tax levy with the introduction of section 65(105)(zzzza) in the Finance Act 1994 from 01/06/2007. The period covered under the demand for works contract as per the impugned order is post 01/06/2007 and hence the service rendered by the appellant is prima facie eligible for the levy of service tax - the co-ordinate Delhi Bench of the Tribunal in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] has examined the liability of a builder/developer/promoter to pay service tax on the construction of residential complex for its customers. The Tribunal has taken notice of C.B.E.C. Circular No. 332/35/2006-TRU dated 01/08/2006 wherein it was clarified that where a builder/developer/promoter builds a residential complex engaging a contractor, the contractor shall be liable to pay service tax on the gross amount charged under construction of complex service and if no person is engaged by the builder/developer/promoter and who undertakes construction work on his own, the question of providing taxable service to any person by any other person does not arise and it would be in the nature of self service. Since the period where duty has been demanded in the impugned order is prior to 01/07/2010, no liability for paying tax either under construction of complex service or works contract would lie on the builder/developer/promoter during the period covered by the impugned order. Appeal allowed.

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• 2023 (3) TMI 444
  Classification of services - Cargo Handling Service - Clearing and Forwarding Agency Service - Stevedoring Service - Customs House Agency Service - value of the services calculated separately under the appropriate categories for levy of duty - services rendered on a turnkey basis under the CHA category - Show Cause Notice issued was time-barred under the normal time period - allegation of suppression of fact etc. for issue the Show Cause Notice under the extended time limit - liability to pay interest and penalties. HELD THAT:- The clarification in C.B.E.C. vide circular F. No. B43/1/97-TRU dated 06/06/1997 with reference to the CHA service covers a gamut of service activity which could when rendered individually be covered under other specific service categories. However, when the whole range of activity is performed by a CHA in relation to the entry or departure of conveyance or the import or export of goods, it will be covered under CHA Service and Service Tax is to be computed only on the gross service charges, by whatever head / nomenclature billed by the CHA to his client. This clarification is squarely applicable in the case of the CHA services provided by ASPIN to their clients, in relation to the entry or departure of conveyances or the import or export of goods. The services rendered by ASPIN on turnkey basis during the period under appeal would fall under the category of CHA Services and the value of taxable service has to be computed in the manner stated at paragraph 2.5 of the C.B.E.C. Circular dated 06.06.1997 above. Having decided the matter of classification and valuation on merits in favour of the appellant, the issues relating to interest and fines do not survive - Appeal allowed.

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• 2023 (3) TMI 443
  Classification of services - Business Auxiliary service or not - business of promoting and marketing post-paid mobile connections and providing services of finding prospective customers, billing, collection of cash/cheques of mobile bills, evaluation of prospective customers and other customer care services for M/s. Aircel Ltd. in their capacity as an authorized agent, for which they received commission from M/s. Aircel Ltd. - waiver of penalty u/s 80 of FA. HELD THAT:- In the case of CHOTEY LAL RADHEY SHYAM VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, LUCKNOW [ 2015 (11) TMI 979 - CESTAT ALLAHABAD] , the Tribunal had set aside the demand observing that the assessee therein, who is an agent of M/s. BSNL, being engaged only in the purchase and sale of SIM cards and recharge coupons, the demand could not sustain, as M/s. BSNL had already paid the Service Tax on the SIM cards and recharge coupons. The said decision, however, would not be applicable to the case of the appellant on merits since the appellant herein is not only engaged in the purchase and sale of SIM cards, but also doing the activity of procurement of clients, promotion of sales, evaluation of prospective customers and other customer care services. The facts, however, reveal, that the appellant was under the bona fide belief that they were not liable to pay the Service Tax as the commission paid to them was part of the charges received by the telecommunication service provider for providing the post-paid connections. Taking note of this, it is opined that the appellant has furnished reasonable cause for failure on their part to pay the Service Tax. It is also noted that they have paid up a major part of the Service Tax. Penalty - HELD THAT:- Section 80 of the Finance Act, 1994, as it stood during the relevant period, provided that penalty not to be imposed in certain cases when the assessee is able to establish reasonable cause for non-payment of Service Tax - this is a fit case to invoke Section 80 of the Act ibid. to set aside the penalty imposed on the appellant under Sections 77 and 78. The impugned order is modified to the extent of setting aside the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, without disturbing the confirmation of demand of Service Tax along with interest - appeal allowed in part.

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• 2023 (3) TMI 442
  Levy of penalties u/s 77 and 78 of the Finance Act, 1994 - delayed payment of Service Tax as well as non-payment of service tax - delay in filing returns - suppression of facts or not - HELD THAT:- The provision of Sub-section (3) of Section 73 of the Finance Act, 1994 provides that no Show Cause Notice is to be issued when the assessee has paid the Service Tax along with interest. The Learned Counsel for the appellant has submitted that the delay in paying the Service Tax was due to financial hardships. On being pointed out by the internal audit group, the appellant has immediately paid the Service Tax along with interest. It is also to be stated that the appellant has accounted the amounts received by them as well as the details of transactions. To such extent, there has been no suppression of facts on their part. The words suppression of facts are preceded by the word fraud and therefore, there should be some positive act on the part of the appellant so as to evade payment of Service Tax, to saddle the burden of intention to evade payment of Service Tax. In the present case, there are no suppression of facts on the part of the appellant. Delay in payment of Service Tax due to financial hardships cannot always be considered to be suppression of facts. - An assessee who has suppressed figures in their account or issued parallel invoices so as to evade the payment of tax will not be covered under sub-section (3) of Section 73 of the Finance Act, 1994. Here, apart from a vague allegation, there is no evidence that the appellant has suppressed facts with the intent to evade payment of tax. In the case of COMMISSIONER OF SERVICE TAX, SERVICE TAX COMMISSIONERATE VERSUS VEE AAR SECURE [ 2011 (1) TMI 716 - KARNATAKA HIGH COURT] , it was held that when upon being pointed out, the assessee got themselves registered with the Service Tax Department and paid the entire Service Tax with interest, the penalty imposed was unwarranted. The Learned Authorized Representative for the Department has relied upon the decision in the case of M/S. NEBULA COMPUTERS PVT. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2023 (2) TMI 897 - CESTAT CHENNAI] . In the said case, the Tribunal has refused to take note of the plea raised by the appellant therein that the tax was not paid due to financial hardship, which is a view taken on the facts and circumstances of the said case that undue sympathy is not required. The said decision is therefore distinguishable on facts. The penalties imposed are unwarranted and require to be set aside - The impugned order is modified to the extent of setting aside the penalties imposed under Sections 77 and 78 of the Finance Act, 1994 - Appeal allowed in part.

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• 2023 (3) TMI 441
  Refund of service tax paid on input services used for export of goods - correlation of export documents with the export shipping bill - non submission of RCMC Certificate - classification of port services and technical inspection and certification service. Correlation of export documents with the export shipping bill - HELD THAT:- It is found that the appellant have submitted all the documents and A1 form before the Adjudicating Authority as well as before the Commissioner (Appeals). the Commissioner (Appeals) on this point discussed in detail that the A1 form bearingthe details of shipping bill on the basis of which the corelation was established. the Commissioner (Appeals) observed that in form A-1 submitted by the respondent they had provided the names of the service provider as per the shipping bill as well as the corresponding service tax invoice. On the perusal of such A1 form, the Commissioner (Appeals) came to the conclusion that the respondent had corelated the shipping bills with the invoices issued by the service provider. In view of this, the objection of the revenue on this ground is not sustainable. Non submission of RCMC Certificate - HELD THAT:- It is undisputed position that there was no Export Promotion Council sponsored by the Ministry of Commerce or the Ministry of Textiles for promotion of export of metallurgical coke, when this be so then there is no need of RCMC certificate for sanction of a refund claim. Classification of port services and technical inspection and certification service - revenue has objected that looking to the nature of water front royalty charges and weigh bridge charges the same having no nexus to a vessel or goods - HELD THAT:- There is no dispute that for these services the Mundra port and SEZ Ltd raised the invoices in the favour of respondent and classifying the same under port services. It is the settled position of law that the classification of service at the recipient end cannot be questioned therefore, the services classified under port service attained finality and the consequential benefit should go to the assessee. Similarly in the case of technical inspection and certification service invoices for various services were raised by M/s. Inspectorate Griffith India Ltd under the service tax head of technical inspection and certification service therefore, it cannot be disputed that the service received by the respondent is different from technical inspection and certification service. The Learned Commissioner (Appeals) considering the fact of this case rightly extended the refund to the respondent. The issues raised by the Department have been considered in the various judgments. In the case of UNION OF INDIA THROUGH THE COMMISSIONER, CENTRAL EXCISE AND SERVICE TAX, UDAIPUR VERSUS M/S. ARIHANT TILES AND MARBLES (P) LTD. [ 2019 (1) TMI 73 - RAJASTHAN HIGH COURT] the Hon ble Rajasthan High Court allowed the refund under identical Notification No 41/2007-ST wherein it was observed that the Tribunal correctly holding that irrespective classification service, if service are provided within port they should qualify as port service for the purpose of benefit of refund - In the case of M/S. MACRO POLYMERS PVT. LTD. VERSUS CCE AHMEDABAD [ 2010 (6) TMI 257 - CESTAT, AHMEDABAD] this Tribunal held that refund under Notification No. 41/2007 is admissible on terminal handling charges even though same is not specified under the notification but for the reason that the said service is provided by the port authority. The ld. Commissioner (appeals) has passed a very reasoned order by giving proper finding on each issue arising out of the order-in-original - there are no infirmity in the impugned order, hence the same is upheld - appeal of Revenue dismissed.

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• 2023 (3) TMI 440
  Maintainability of appeal - non-compliance with the requirement of pre-deposit under service tax - Applicability of section 35F of the Central Excise Act - HELD THAT:- A Division Bench of Delhi High Court in M/S. VISH WIND INFRASTRUCTURE LLP, M/S. J.N. INVESTMENT TRADING CO. PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI [ 2019 (8) TMI 1809 - DELHI HIGH COURT] examined the provisions of section 35F of the Central Excise Act, 1944 and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. In coming to this conclusion, the Division Bench relied upon the judgment of the Delhi High Court in ANJANI TECHNOPLAST LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2015 (10) TMI 2446 - DELHI HIGH COURT] and also observed that in view of the peremptory words shall not , there is an absolute bar on the Tribunal to entertain any appeal unless the requirement of pre-deposit is satisfied. The Madhya Pradesh High Court in ANKIT MEHTA VERSUS COMMISSIONER, CGST INDORE [ 2019 (3) TMI 1342 - MADHYA PRADESH HIGH COURT] also dismissed the Writ Petition that had been filed against the order of the Tribunal dismissing the appeal for the reason that the required pre-deposit was not made. The contention that was advanced before the Tribunal and before the Madhya Pradesh High Court was that the appellant was not in a position to make the pre-deposit due to financial constraints. After examining the provisions of section 129E of the Customs Act, the Madhya Pradesh High Court observed that section 129E does not empower the Tribunal or the Commissioner (Appeals) to waive the pre-deposit or to reduce the pre-deposit , this Court is also not inclined, keeping in view the aforesaid statutory provisions of law to waive or reduce the pre-deposit and, therefore, no case for interference is made out in the matter. Accordingly, the Writ Petition is dismissed. The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. As the statutory requirement has not been complied with, the appeal would have to be dismissed and is, accordingly, dismissed.

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• 2023 (3) TMI 439
  Waiver of service tax - demand dropped on the ground that the respondent need not pay service tax as sub-contractor when the main contractor itself has discharged the service tax liability - service tax is liable to be paid on works contract prior to 1.6.2007 or not - extended period of limitation - HELD THAT:- This is deemed to be a fit case to remand the matter to the original authority to re-adjudicate the matter taking into account the liability of sub-contractor to pay service tax as per Melanage Developers Private Limited and the classification of the service and exigibility of the service tax on composite works as per COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] - As there was confusion regarding the exigibility of the service tax, we find that the respondent had reason to believe that it was not liable to pay service tax and, therefore, extended period of limitation could not have been invoked. Therefore, only the demand of the normal period of limitation can be sustained. The appeal is remanded to the original authority to re-determine the service tax liability. Appeal allowed by way of remand.

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• 2023 (3) TMI 438
  Classification of services - Port service or Cargo Handling Service? - service provided by the appellant within the port area - CENVAT Credit of service Tax on input services which has been provided for the services in relation to export Cargo - Credit was denied only on the ground that the same was utilized for payment of service tax on Cargo Handing Service in respect of export of Cargo which is excluded from the definition of Cargo Handling Service under Finance Act, 1994 - SCN is time barred or otherwise - penalties under Section 76 and 78 of Finance Act, 1994. CENVAT Credit - HELD THAT:- Even though the export Cargo Handling Service is not taxable but the appellant have admittedly paid the service tax and the same was accepted by the department as no objection was raised regarding the payment of service tax. In this fact, when the appellant has paid the service tax, the input service credit is admissible. The appellant have paid more amount of service tax as against the input tax credit, therefore, there is revenue neutral situation in the present case, however, this worksheet was given first time before this Tribunal which needs to be verified - As regard, the Cenvat credit in respect to the input service used in the non taxable output service on which the service tax paid this Tribunal has considered the issue in GATEWAY DISTRIPARKS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2018 (5) TMI 1138 - CESTAT MUMBAI] where it was held that Though the adjudicating authority decided the matter on principle but did not verify factual aspect of amount of cenvat credit attributed to the exempted cargo handling service vis-a-vis service tax paid by the appellant in respect of export cargo handling service, if it is found to be correct that that appellant have paid service tax which is more than the cenvat credit attributable to the export cargo handling then the demand will not exist. The matter needs to be re considered in the light of the above observation as well as the judgment on the identical issue - Appeal allowed by way of remand.

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• Central Excise

• 2023 (3) TMI 437
  Valuation of Specially Denatured Spirits (SDS) - Rejection of the highest rate - respondent-assessee, contended that upon a proper valuation in terms of Rule 6(p)(ii) of the Central Excise Rule, 1994, the value of SDS was determinable on the basis of its in-house production at Kaptanganj - extended period of limitation - penalty - HELD THAT:- This Court is of the opinion that the impugned order cannot be faulted. This Court in its judgment reported as AK ROY AND ANOTHER VERSUS VOLTAS LIMITED [ 1972 (12) TMI 37 - SUPREME COURT ] held that No data was placed before the High Court by the appellant to show that the 22 per cent discount did not represent trade discount is a percentage deduction from the regular list or catalogue price of goods. As there was no case for the appellants that there was any secret arrangements between the wholesale dealers and the respondent in respect of the sales to them or that the price of the articles was understated in the agreements or that any extra-commercial advantages to the dealers were taken into account in fixing the price we do not think that we should go into the question whether the discount allowed to the wholesale dealers was trade discount or not for the purpose of the explanation. In view of the clear principle enunciated by this Court which is that the most conservative price is to be taken into account while determining the value of goods, CESTAT approach and conclusions, in the opinion of this Court cannot be faulted. The impugned order of the CESTAT is accordingly affirmed. Appeal dismissed.

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• 2023 (3) TMI 436
  Application filed under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 dismissed - applicants have submitted that they have reversed the CENVAT credit involved in the inputs used in manufacture of WIP goods alleged to have been destroyed in the fire - HELD THAT:- This order was passed on 14.11.2018 and the petitioner has reversed the CENVAT credit as is evident from the letter dated 06.01.2018 (Annexure P-8). Even though in the order dated 14.11.2018 (Annexure P-9) it has been observed that they have not disputed that the CENVAT credit has been reversed by the petitioner and even while passing this order, they are not disputing this fact. Since this fact was in the knowledge of the respondent while rejecting his application for remission and while passing order 14.11.2018 (Annexure P-9), even then in this order, it has been observed that the applicant did not give any detail of credit taken reversed and inputs used in the material with respect to which they have sought remission. The letter (Annexure P-8) was in the knowledge of the Department and reversal was made in the November-December 2016. There has been miscommunication and lack of knowledge since this reversal order was made in the year 2016 and information was sent in the year 2018 vide letter dated 06.01.2018 (Annexure P-8) by way of an application under the Scheme, but the Designated Committee has not considered this aspect while rejecting the application of the petitioner under the Scheme by taking into account that the CENVAT credit has been reversed and information has been sent to the Authorities vide Annexure P-8. The petition is allowed and order of the Designated Committee dt.11.04.2017 is being set aside and matter is remanded back to the Designated Committee to pass afresh order after examining the information that CENVAT credit has been reversed by the petitioner as is evident from letter dated 06.01.2018(Annexure P-8) and in this letter it was clearly mentioned that CENVAT credit was reversed in the year 2016. Petition allowed by way of remand.

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• 2023 (3) TMI 435
  Under-valuation - non-inclusion of cost of free supply materials in the assessable value for payment of excise duty on wooden crates cleared - HELD THAT:- The issue is whether value of free supplies have to be included in the assessable value for payment of central excise duty on the wooden crates cleared by the appellant M/s.Saint Gobain Glass India Pvt. Ltd. The Tribunal in the case of M/S. MAKWUDS INDIA P. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI - IV [ 2018 (6) TMI 707 - CESTAT CHENNAI] had occasion to consider a similar issue where it was held that while clearing the goods to their principal, the cost of free issue need not be included in the assessable value. The demand of duty alleging that cost of free supply material has to be included in the assessable value cannot sustain and requires to be set aside - Appeal allowed.

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• 2023 (3) TMI 434
  SSI Exemption - job worker - removal of the scrap to the job worker was done as per Rule 4 (5) (a) of Cenvat Credit Rules, 2002 - Department was of the view that the appellant ought to have paid duty on scrap while removing them to the job worker - recovery of Central Excise duty on scrap removed to job worker for the period from September 2008 to February 2010 - whether the appellant is liable to pay duty on the scrap that has been sent to the job workers for manufacture of intermediate products such as angles and channels. HELD THAT:- It is not disputed that removal of the scrap to the job worker was done as per Rule 4 (5) (a) of Cenvat Credit Rules, 2002. So also, it is not disputed that the job worker cleared intermediate goods in the nature of angles and channels to the appellant by paying duty and raising invoices. The show cause notice dated 14.06.2012 is issued invoking the extended period. It is not disputed that the appellant has accounted the removal of scrap to the job worker as well as the clearance of the intermediate goods (angles and channels) by payment of duty. The Department has vaguely alleged that the appellant has suppressed facts with intention to evade payment of duty. There is no evidence to show that the appellant has done any positive act to deliberately suppress the facts so as to evade payment of duty. The appellant therefore succeeds on the ground of limitation also. Appeal allowed.

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• 2023 (3) TMI 433
  Clandestine removal - Corroborative evidences - case of the Department is that the stock of raw material and scrap which was earlier not recorded and the same was recorded on the investigation of the Income Tax Department, the said goods may have been used to produce finished goods which may have been cleared clandestinely - HELD THAT:- The demand was raised in the present case on the basis of IT search according to which the appellant had allegedly on account for some quantity of raw material and scrap which was duly accounted for in the excise records of the appellant. Once the unaccounted stock of raw material and scrap was accounted for obviously the same would be cleared on payment of duty. In this fact the department s case is of no basis that goods might have been cleared clandestinely. Moreover except relying on the IT Search the revenue has not independently investigated the case, no evidence of clandestine manufacture and removal and transportation of the goods was investigated or brought on record. Therefore, merely, on this IT Search demand cannot be confirmed. The department has demanded duty assuming that goods have been cleared clandestinely is without any basis. Even, the accounting made by the appellant on the instance of IT Search does not show that the goods have been cleared clandestinely. The difference which was pointed out by the income tax department is very negligible i.e. raw material 0.6 % and scrap of 0.21% against the total raw material and scrap dealt by the appellant. For this reason also it cannot be assumed that the goods have been cleared clandestinely. As regard the reliance placed on the IT search, it is settled law that on the basis of Income Tax demand of Central Excise Duty cannot be confirmed without independent investigation and bringing tangible evidence on records. In absolutely identical facts of the present case in the case of CCE., RAIPUR VERSUS M/S. SAINI INDUSTRIES LTD. [ 2014 (7) TMI 617 - CESTAT NEW DELHI] this Tribunal has held that even though stock verification received from Income Tax Department but nothing on record that assessee had actually manufactured and removed the goods clandestinely . The stock verification done of Income Tax Authorities cannot be accepted on its face value in view of doubts raised by assessee and in the absence of corroborative evidence, hence, no duty of excise can be confirmed. The Tribunal has taken a consistence view that merely on the basis of income tax investigation the case of clandestine removal under the Central Excise Act cannot be confirmed without bringing independent tangible evidence on record - the department could not establish the case of clandestine removal. Hence, the impugned order is not sustainable and the same is set aside. Appeal allowed.

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• 2023 (3) TMI 432
  Valuation - collection of charges from customers in the name of consumable charges through debit notes - case of the department is that the said charges are includible in the assessable value of DG sets - HELD THAT:- The appellant have 2 separate activities one is manufacture and sale of DG sets on which excise duty is paid on transaction value. The other activity is Installation Commissioning and Repair Maintenance which is provided through their sub contractor. There is separate contract for such services. In this fact, the activity of manufacture is completed when the DG set is sold by the appellant from their factory on transaction value. The other activities such as supply of spares for Installation Commissioning and Repair Maintenance of DG sets is all together different activity which cannot be clubbed with the assessable value of manufactured DG set sold by the appellant. It is also observed that in the show cause notice the department failed to even corelate the consumable charges raised through debit note with a particular DG set manufactured and sold by them. Therefore, the case of the department cannot be sustained. This issue is no longer res- integra as the same was decided in the appellant own case reported at M/S. VEENA INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., VAPI [ 2016 (1) TMI 161 - CESTAT AHMEDABAD] wherein this Tribunal has held that It is an independent activity of service therefore the cost of diesel which was recovered by the appellant from the customer as reimbursement for the testing of the DG set is not includable in the transaction value towards the sale of DG set. The activity of filling of Diesel in the DG Set at the site Company is at most can be considered as pre-delivery inspection charges. The impugned order is set aside - Appeal is allowed.

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• Indian Laws

• 2023 (3) TMI 431
  Dishonour of Cheque - signatory of the cheque, authorized by the Company , is the drawer of the cheque or not - ratio decidendi/obiter dicta - whether such signatory could be directed to pay interim compensation in terms of section 143A of the Negotiable Instruments Act, 1881 living aside the company? - deposit of a minimum sum of 20% of the fine or compensation is necessary under Section 148 of NI Act in an appeal filed by persons other than drawer against the conviction and sentence under section 138 of the NI Act or not? HELD THAT:- A legal entity has rights and responsibilities and the capacity to sue and be sued under the law. Legal persons, being the artificial creations of the law, maybe as many kinds as the law pleases. They include corporations or companies. A legal person is any subject matter other than a human being to which the law attributes personality. A juristic person is a body of persons, a corporation or company, a partnership or other legal entity recognised by law as the subject of rights and duties, also called an artificial person. An entity, such as a company, is created by law and given certain legal rights and duties of a human being. It is therefore evident that authorised signatory being individual cannot be equated with or termed as a legal entity created under a statute. For appreciating submissions on interpretation of statute, well-settled rule of interpretation of a statute needs to be borne in mind that when a language of a provision is plain and unambiguous and capable of only one meaning, there is no question of the construction of a statute, as the provision speaks for itself. The natural and ordinary meaning of words should only be departed from if it is shown that the legal context in which the words are used requires a different meaning. In that case, it would not be open to the courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the act. It appears that the legislature s purpose was to provide interim relief to the drawee by directing the drawer to pay temporary compensation. This compensation was made payable by the cheque s drawer or issuer. By specifically fastening the liability on the drawer/issuer, the legislature excluded anyone else from being made liable to pay interim compensation. The plain language section 143A clearly spells out the intention of the parliament by resorting to the golden rule of interpretation that a statute must be read plainly to arrive at its meaning. Principal offender under Section 138 in case cheque issued by the company is the drawer (company). Drawer alone would have been the offender thereunder if the Act did not contain section 141. By virtue of Section 141 of the Act that penal liability under Section 138 is cast on other persons connected with the company. Therefore there is no need to interpret the word drawer to include authorised signatory. It is true that on considerations of judicial uniformity and judicial discipline, the High Courts must accept as binding not only the ratio decidendi in the decisions of the Supreme Court but also the obiter dicta. In determining the binding nature of the expression of opinion, the courts should consider Whether the expression of opinion was casual or considered. Whether it was connected with any point arising in the case. It is true that under Article 141 of the Constitution, the law declared by the Supreme Court is binding on all the courts and therefore, even the principles enunciated by the Supreme Court, including its obiter dicta, when they are stated in clear terms, have a binding force. But when a question is neither raised nor discussed in a judgment rendered by the Supreme Court, it is difficult to deduce any principles of a binding nature from it by implication. In ANEETA HADA VERSUS GODFATHER TRAVELS TOURS (P.) LTD. [ 2012 (5) TMI 83 - SUPREME COURT] , the point for determination before the Supreme Court was whether a complaint under Section 138 read with Section 141 of the NI Act was maintainable against a Director or Authorised signatory of a company without joining the company as an accused. Answering the same in negative, it is held that in terms of the provisions of Section 141 NI Act, a commission of the offence by the company is an express condition precedent to attract vicarious liability of another. It is observed that the words as well as the company appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. Therefore the prosecution of other persons under Section 138 NI Act is permissible only when the company is named as an accused in the complaint. Having held that the expression drawer in section 143A does not include the authorized signatory of a company, amended section 148 needs to be interpreted accordingly. The plain language of section 148 makes it clear that the Appellate Court is granted the power to direct deposit of a minimum sum of 20% of the fine or compensation awarded by the Trial Court in an appeal by the drawer . Section 148 emphasizes such power being conferred only in an appeal by the drawer - Proviso to section 148 clarifies that such payment shall be in addition to the amount payable under section 143A. The expression drawer under section 143A does not include the authorized signatory of a company; therefore, the language of the proviso to section 148 lends support to the interpretation that such power is available only in an appeal filed by the drawer . It needs to be clarified that section 148 starts with the non-obstante clause having an overriding effect on the provisions under the Code of Criminal Procedure, 1973. Thus, the signatory of the cheque, authorized by the Company , is not the drawer in terms of section 143A of the NI Act and cannot be directed to pay interim compensation under section 143A - In an appeal under section 148 of NI Act filed by persons other than drawer against the conviction under section 138 of the NI Act, a deposit of a minimum sum of 20% of the fine or compensation is not necessary. Petition disposed off.

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