Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 16, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - Forward Charge Mechanism (FCM) or Reverse Charge Mechanism - Service Received by a registered person by way of renting of residential premises used as guest house of the registered person - it may be concluded that irrespective of the purpose of use, if the residential dwelling is rented to a registered person under GST, the tenant has to discharge the GST liability under RCM - AAR
Income Tax
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Addition u/s 41(1) - outstanding balances of sundry creditors and other liabilities - Unconfirmed bill, advance from customers and sundry creditors which are static creditors were there for which the assessee could not provide any confirmation or explanation - Additions confirmed - AT
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Revision u/s 263 by CIT - assessee while arriving at the balances of capital of the partners in the assessee firm, incorrectly took the share of loss in the aforesaid JVs as share of profit. It is quite understandable that interest on the partners’ capital balance must have been calculated on the figure including this wrong treatment. The apprehension of Ld. Pr. CIT that excessive interest has been claimed on the closing balances of capital of partners which includes this claim on account of inadvertent mistake of share of loss in the aforesaid JV. However, the facts do not corroborate the apprehension of the Ld. Pr. CIT. - Revision order is not correct - AT
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Rectification of mistake u/s 154 - non- inclusion of surrendered income in the Book Profits of the assessee as per section 115JB - the non- inclusion of surrendered income in the Book Profits of the assessee as per section 115JB of the Act, was not a patent error amenable to rectification u/s 154 of the Act.The adjustment so made, therefore, is directed to be deleted. - AT
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Unaccounted/unexplained payments u/s 69C - unexplained expenditure - Revenue authorities have not enquired with the vendors or brought any statement on record of the vendors to substantiate the claim of the Revenue that extra cash has actually change hands - CIT(A) rightly deleted the additions. - AT
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TP Adjustment - ESOP considered as operating cost by the Ld.AO/TPO - TPO failed to consider the basic fact that, purchase cost of the shares of foreign AE is charged from the employees of the assessee directly and the assessee deducts TDS on the 15% discount received by such employees, who have opted for the scheme. In our view, based on the option scheme and the “Employee Information Supplement India”, the 15% discount received by such employees of the assessee cannot be treated as operating in nature. - AT
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TDS u/s 195 - non deduction of tax at source - Residential status of payee unknown - Bonafide belief that the payee is resident of India (who is non-resident) - This argument cannot be accepted as he was with the company since long time and this argument of the assessee do not come to present assessee’s rescue or absolve him of the duty to do what the law required the present assessee to do. - AT
Customs
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Exemption from customs duties - allegation that aircraft used for private purposes and not for providing non-scheduled (passenger) services - notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in the Explanation to the Condition No.104 of the Notification in question. - HC
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Classification of imported goods - I Stat Blood Gas Investigation Cartridges - I Stat Wireless Analysers with printer kit - I Stat Alinity Instruments with accessories - The Court Below have erred in deciding the classification relying on the facts that the goods in question are mostly used on bedside or in an ICU - the goods under consideration are appropriately classifiable under CTH 9027 - AT
Corporate Law
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Provisional attachment of property - Power of the NCLT to protect the assets of corporate debtor - Action under the Prohibition of Benami Property Transactions Act, 1988 - issues/disputes, pertaining to an Attachment, effected under The Prohibition of Benami Property Transactions Act, 1988, cannot be gone into, by an Adjudicating Authority (Tribunal), under the I & B Code, 2016. - AT
PMLA
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Money Laundering - proceeds of crime - Freezing of bank accounts of petitioner - This Court is of the considered view that though there is power to direct freezing of the account or to issue the communications as has been issued in the present case to the Banks, under Section 5 or/and Section 17, but such power/direction which has the effect of freezing the property/bank account under Section 17 (1-A) is to be exercised as per the law by following the procedure prescribed. - HC
Service Tax
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Invocation of extended period of limitation - Valuation of services - Short Term Accommodation Services - certain charges collected from the customers towards in-room dining, in-room beverages supply and mini bar and also on laundry, Miscellaneous Income and Telephone - Assuming the levy is valid, the impugned proceeding invoking the extended period of limitation cannot be sustained. - HC
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CENVAT Credit - services provided by the Commission Agent - In the present case, the Commission Agent is not rendering any service towards sale/Sales Promotion of the present Appellant. The Commission Agent is only an Agent engaged in collection of debts from various subscribers. Therefore, the very premise to issue Show Cause Notice basing on the decision of the Hon’ble Gujarat High Court is erroneous on the part of Department. - AT
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Levy of service tax - Fee collected by the SEBI for various activities - extended period of limitation - the finding of fact arrived at by the CESTAT to the effect that there was no suppression, misrepresentation or fraud committed by the respondent, to enable the appellant to invoke the extended limitation clause in Section 73 is proper and based upon the correct appreciation of the record. - HC
Central Excise
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Clandestine Removal - statements recorded by Revenue - The Commissioner has clearly ignored this findings and come to a difference conclusion. While doing so he is relied on the confessional statements of buyers. There are no opportunity of cross-examination has been given and the test of Section 9D of the Central Excise Act has not been passed in respect of this statements. In absence of cross-examination no reliance can be placed on these statements. - AT
Case Laws:
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GST
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2023 (3) TMI 629
Maintainability of petition - availability of alternative remedy of appeal - Violation of principles of natural justice - validity of assessment order - HELD THAT:- The present special leave petition is dismissed with liberty to file a petition assailing the same order afresh.
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2023 (3) TMI 628
Rectification of clerical errors in the details uploaded by it in Form GSTR -1 for the period 2017-18 and cause amendment of the Forms - recipients GSTIN/name has been wrongly mentioned - invoice number/date have been wrongly mentioned - some of the invoice wise details have been omitted to be reported in Form GSTR 1 - IGST was inadvertantly remitted under the heads SGST and CGST. HELD THAT:- The fact remains that this Court has taken a view in very similar circumstances as in the present case, in the case of M/S. SUN DYE CHEM VERSUS THE ASSISTANT COMMISSIONER (ST) , THE COMMISSIONER OF STATE TAX [ 2020 (11) TMI 108 - MADRAS HIGH COURT] in PENTACLE PLANT MACHINERIES PVT. LTD. VERSUS OFFICE OF THE GST COUNCIL, NEW DELHI, OFFICE OF THE ASSISTANT COMMISSIONER (ST) , PALLAVARAM ASSESSMENT CIRCLE, CHENNAI, OFFICE OF THE SUPERINTENDENT OF CENTRAL TAX, OFFICE OF THE SUPERINTENDENT, CENTRAL GOODS SERVICE TAX, RANGE V,U.P. [ 2021 (3) TMI 524 - MADRAS HIGH COURT] to the effect that those petitioners must be permitted the benefit of rectification of errors where there is no malafides attributed to the assessee. The errors committed are clearly inadvertant and, the rectification would, in fact, enable proper reporting of the turnover and input tax credit to enable claims to be made in an appropriate fasion by the petitioner and connected assessees. In light of the consistent view taken by the Court and in deference to the position that such matters, where an expansive view of the issue is called for, are few and far between, as on date, this Court is inclined to accept the prayer of the petitioner and issues mandamus to the respondents to do the needful to enable uploading of the rectified GSTR 1. Let the parties ensure that this exercise is completed within a period of six (6) weeks from today. Petition allowed.
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2023 (3) TMI 627
Refund of service tax paid in cash along with the applicable interest under the transitional provision of Central Goods Service Tax - It is the case of the petitioner that under Rule 6(3) of the Service Tax Rules, the petitioner is entitled to claim credit of the differential service tax paid in advance - HELD THAT:- While learned advocate for the petitioner raised various contentions on merits to assail the impugned order including on the aspect of applicability or otherwise of section 142(6)(a) of the Act, the Court does not find it necessary to go into all those contentions inasmuch as there is no gainsaying that the petitioner has alternative statutory remedy under section 35B of the Central Excise Act, 1994 read with section 86 in Chapter V of the Finance Act, 1994 read with section 174 of the Central Goods and Services Tax Act, 2017. Thereunder, the appeal is available to the appellate tribunal. It is trite that when the statutory alternative remedy is available, High Court would be slow to entertain the petition directly to exercise the writ jurisdiction. The petitioner is required to exhaust the statutory alternative remedy before invoking the extraordinary jurisdiction of this Court. The Court is of the view that the issues and aspects raised in the petition on merits with regard to the challenge to the impugned order and rejecting the refund claim of the petitioner could be better agitated before the appellate tribunal. While permitting the petitioner to approach the Tribunal, the present petition is dismissed on the said ground alone without expressing any opinion of the merits.
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2023 (3) TMI 626
Cancellation of GST registration of petitioner - non-filing of GST returns for more than six months - HELD THAT:- This Court in NITHYA CONSTRUCTIONS VERSUS THE UNION OF INDIA [ 2022 (7) TMI 186 - TELANGANA HIGH COURT] where it was held that we remand the matter back to the file of respondent No.2 to consider the grievance expressed by the petitioner against cancellation of GST registration and thereafter pass an appropriate order in accordance with law. Needless to say, when the respondent No.2 hears the matter on remand, petitioner shall submit all the returns as per the statute. The matter remanded back to respondent No.3 to consider the grievance expressed by the petitioner against cancellation of GST registration and thereafter pass an appropriate order in accordance with law.
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2023 (3) TMI 625
Provisional attachment of property - power to issue a direction to stop payment by the summoning party to the assessee - Section 70 (1) of G.S.T Act - HELD THAT:- The impugned notice was issued under Section 70(1) of GST Act but not under Section 83 of GST Act. Section 70 (1) of GST act only says that the proper officer shall have the power to summon any person whose attendance is considered necessary either to give evidence or to produce a document or any other thing in the enquiry and nothing more. Therefore, it is obvious that under Section 70 (1) of GST Act the proper officer cannot exercise powers to direct the summoning party to stop payment to the assessee which is beyond the scope of 70 (1) of GST Act. Of course, under Section 83 of GST Act, if the Commissioner is of the opinion that for the purpose of protecting the government revenue, he may by order provisional attachment of any property including bank account belonging to the taxed person or any person specified in Sub Section 1 (A) of Section 122 in such manner as prescribed. The impugned notice was issued under Section 70 (1) of GST Act but not in exercise of powers conferred under Section 83 of GST Act. This writ petition is allowed and the impugned portion of the notice issued under Section 70 (1) of GST Act i.e., in view of the above explanation you are hereby requested stop all further payments from here onwards until clearance is given by the undersigned is set aside and liberty is given to the 3rd respondent to proceed in accordance with law so far as the other part of the notice issued by him under section 70 (1) of GST Act is concerned.
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2023 (3) TMI 624
Liability to pay towards CGST and SGST in respect of tax invoices - alleged mismatch - According to the respondent though the input tax credit in respect of the invoices has been claimed by the petitioner, the supplier has not paid the tax amounts to the respondent - HELD THAT:- Admittedly, the petitioner has challenged only the notice in this writ petition. No final orders have been passed by the respondent in respect of the amounts claimed by them in the impugned notice against the petitioner. Even before a final order has been passed, the petitioner has chosen to file this writ petition, which in the considered view of this Court is premature. However, the adjudicating authority will have to necessarily consider the reply submitted by the petitioner in respect of the impugned notice dated 12.12.2022 on merits and in accordance with law. As seen from the impugned notice only an intimation has been made by the respondent to the petitioner about the proposal to reverse the input tax credit availed by the petitioner and no final order has been passed. Hence, the question of entertaining this writ petition at this stage will not arise. This writ petition is disposed of by directing the adjudicating authority to give due consideration to the reply dated 06.01.2023 submitted by the petitioner and to take a final decision on merits and in accordance with law and the respondent, if they come to the conclusion that the reply is acceptable to them, they shall drop any further proceedings against the petitioner, but if they decide otherwise, the respondent shall follow the due procedure established under law for taking further action against the petitioner.
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2023 (3) TMI 623
Maintainability of appeal - appeal rejected for the reason that it was beyond the period of limitation - HELD THAT:- This Court is of the view that restoring the registration would not cause any harm to the department on the other hand it would be beneficial for the state to earn revenue. Further, reliance placed in the case of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT ]. There some of the petitioner had filed an appeal beyond the period of limitation either for filing application for revocation of cancellation, while some of them had directly filed a writ petition against the order cancelling the registration. While some of them filed appeal beyond the statutory period of limitation, there was further delay in filing the writ petition. However, considering the over all facts and circumstances of the case, it was held that no useful purpose will be served by keeping those petitioners out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods/services. By not bringing them back to the Goods and Services Tax fold/regime, would not further the interest of the revenue. Petition allowed.
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2023 (3) TMI 622
Levy of GST - Forward Charge Mechanism (FCM) or Reverse Charge Mechanism - Service Received by a registered person by way of renting of residential premises used as guest house of the registered person - HELD THAT:- It is clear that GST will be applicable even if the residential property is rented out to a registered person w.e.f. 18th July 2022. Liability to pay GST @ 18% under the reverse charge mechanism will arise on the recipient (tenant), if he is a registered person under GST with no other condition. Further, It may be noted that type or nature/purpose of use of residential dwelling i.e. for residence or otherwise by the recipient, has not been a condition in the said RCM notification. Hence, service of renting of residential dwelling to a registered person, would attract RCM irrespective of the nature of use. A residential property given on rent to a registered person whether for residential purpose or otherwise shall attract RCM provisions. At the outset it is pertinent to understand whether in this case, the property on rent is a residential property or not and what shall be the GST implication if the same is being used as guest house by the Applicant? In the instant case, the Applicant has stated that it has taken on rent certain premises at New Delhi and Jajpur in Odisha, for use as guest house. The guest house is used to provide food and accommodation for the employees of the company. From the written submission made, contentions advanced by the representatives of the Applicant company and rent agreement copies furnished, the nature of rented properties under discussion clearly appear to be residential properties used for commercial purpose. Thus, it may be concluded that irrespective of the purpose of use, if the residential dwelling is rented to a registered person under GST, the tenant has to discharge the GST liability under RCM as per Notification No. 05/2022 Central Tax (Rate) dated 13th July 2022.
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Income Tax
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2023 (3) TMI 621
Admission to the posts of Members of the ITAT - rejection on the ground of non-filing of ITR for relevant assessment year - whether the applicant would be governed by the provisions contained in the Income Tax Act 1961? - HELD THAT:- Rule 11 of the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules 1963 stipulated that the age of retirement of the Members of the ITAT would be 62 years. In terms of those provisions, the applicant would have been entitled to continue in service until the age of 62 years. The applicant had offered her candidature for appointment in pursuance of the circular of 2013. The selection process which was conducted in pursuance of the circular ended in the grant of letters of appointment to those who were found to be qualified and were selected. The applicant was deprived of the selection at that stage only on the ground that she had not filed her income tax return for the relevant assessment year. The applicant pursued her claim before the Calcutta High Court. In the judgment of the Calcutta High Court dated 28 June 2017, it was held that the candidature of the applicant shall not be rejected on the ground that her income tax return for Assessment Year 2010-2011 was not available, as reported by the Under Secretary to the Government of India in the Ministry of Finance, Department of Revenue. This judgment of the Calcutta High Court attained finality. Thus, the only ground which weighed in the rejection of her candidature was found to be untenable by the Division Bench of the Calcutta High Court. Though the appointment letter was issued to the applicant on 19 March 2018 (in pursuance of the letter of offer dated 24 October 2017), the appointment of the applicant was pursuant to the selection process which had been initiated with the circular of 17 April 2013 - clear position on the facts of this case is that the right of the applicant to appointment had been crystallized even before the 2017 Rules. Therefore, the appointment of the applicant would be governed by the position as it existed prior to the 2017 Rules. In other words, her tenure shall be extended until she attains the age of 62 years. Application disposed off.
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2023 (3) TMI 620
Reopening of assessment u/s 147 - Eligible reasons as recorded by the Assessment Officer for reopening of the assessment - income related to alleged transaction being undisclosed income - Bogus/non disclosure of LTCG - HELD THAT:- As we are clear in our mind that the impugned notice, other than merely quoting that the Insight portal contains information as stated by the AO in his reasons for the reopening, does not further investigate the information or come to an independent assessment connecting the petitioner to the particular transactions specified in the information. The entire notice proceeds on the basis of suspicion that the petitioner has entered into the fictitious transactions of the script M/s. Confidence Finance Trading Ltd. AO has not even bothered to compare the information furnished by the petitioner in its reply or go through the income tax return of the petitioner, which was before the Assessment Officer, wherein long term capital gain transactions of securities were specifically disclosed. Also in its reply/objections, to the re-opening, the petitioner had in support of its contention made specific references to documents to support the genuineness of the concerned share transactions, some of which are, statements of long term capital gains claimed as exempt under Section 10 (38) of the Act, bills cum contract notes issued by the Bombay Stock Exchange to substantiate that the stock was traded on market, his Demat statements where the delivery of shares was reflected, the confirmation of SEBI that the stock was traded through recognized brokers and the fact that the entire sale consideration was received through regular banking channels. None of these documents were examined by the Assessing Officer while rejecting the objections of the petitioner, leading us to believe that the entire exercise of a re-opening of assessment was purely based upon suspicion in the face of all the material disclosed by the petitioner to the Assessing Officer. We do not find that any information of the petitioner has remained undisclosed in relation to the income offered by him to tax for the relevant assessment year. We also find that the material which the Assessment Officer has considered as information for the purpose of arriving at a satisfaction and having reason to believe that income of the petitioner has escaped assessment is not based upon any tangible information in order to proceed with the notice under Section 148 of the Act, beyond the prescribed period of limitation. Decided in favour of assessee.
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2023 (3) TMI 619
Validity of Reopening of assessment u/s 147 - Reasons to believe - method of determining the Fair Market Value of the rights shares issued - HELD THAT:- Paragraph No.2 of the reasons for the reopening has referred to the terms of the rights issue being 5% of the issue price per share and the balance unpaid amount of 95% of the issue price amounting to Rs.5,46,250/- per share being capitalized. However, this time around, the respondent No.1 claimed that on the very same transaction and valuation, which was earlier accepted, the excess of the issue price of the share over the Fair Market Value would attract the provisions of Section 56(2) (viib) and excess price or share for the Fair Market Value would be taxable under that provision. The notice does not refer to any other information forming the basis for the reasons for reopening. This is, therefore, a clear case of a change of opinion on the very same material which was before the earlier Assessment Officer and on which basis, the first assessment order was passed after scrutiny. This line of action is impermissible under Section 147 of the Act. Even otherwise, the impugned notice under Section 148 appears to suffer from total non-application of mind, in that, respondent No.1 has not considered all the documents furnished by the petitioner along with its reply / objections to the reopening notice, wherein its valuation report of all the details of calculation and disclosures made in the earlier scrutiny proceedings had been produced. The impugned notice does not even deal with a single line of the objections of the petitioner to conclude that there was some element of suppression of material by the petitioner in the previous scrutiny assessment, or that, there was any material facts, which the assessee had failed to disclose in the earlier assessment, which had now come to the knowledge of the Assessing Officer to conclude that there was escapement of income which was assessable to tax. The order rejecting the objections has not even once adverted to the valuation report submitted by the petitioner during the earlier assessment proceedings after scrutiny, nor does it refer to the method used by the petitioner for valuation. It therefore appears that the only reason and purpose for issuing the impugned notice under Section 148 appears to be that the Assessing Officer has come to a different opinion on the question of valuation from one adopted by the petitioner, which has been accepted in the earlier assessment order dated 19/12/2017.For the reasons stated above, we are of the opinion that the impugned notice dated 30/03/2021 issued under Section 148 of the Act is without jurisdiction and is barred by limitation - Decided in favour of assessee.
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2023 (3) TMI 618
Validity of search and seizure conducted - Section 37 of FEMA read with Section 132(1)(C) of the Income-tax Act, 1961 as ultra vires of Articles 14, 19(1)(g) and 21 of the Constitution of India - HELD THAT:- On perusal of the provisions of Section 132(8A) of the Act, it is evident that order under Sub-Section (3) of Section 132 of the Income Tax Act would not be in force beyond sixty days from the date of the order. In light of the provisions of Section 132 (8A), the impugned notices dated 25/10/2018 at Annexures-F1 and F2 have lost their efficacy by efflux of time as the period of sixty days has expired. See Greenpeace India Society [ 2019 (2) TMI 1982 - KARNATAKA HIGH COURT] Accordingly, the impugned order at Annexures-F1 and F2 are not sustainable.The writ petition is allowed.The impugned notices are hereby quashed.
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2023 (3) TMI 617
Addition u/s 41(1) - outstanding balances of sundry creditors and other liabilities - HELD THAT:- We note that despite several notices none appeared on behalf of the assessee and the notices of hearing have returned unserved. Hence, we are proceeding to adjudicate the issue by hearing the DR and perusing the records. We note that the issue has been dealt with by the Ld. CIT(A) elaborately as above. Unconfirmed bill, advance from customers and sundry creditors which are static creditors were there for which the assessee could not provide any confirmation or explanation. In these circumstances, in our considered opinion, the authorities below have passed a reasonable order, we do not need any interference on our part. Accordingly, we uphold the same. Appeal of the assessee stands dismissed.
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2023 (3) TMI 616
Addition u/s 40(a)(ia) - Non deduction of TDS on commission and professional fees - assessee claims exemption for non deduction of TDS under Form 26A r.w. Rule 31ACB - HELD THAT:- Assessee has not filed Form 26A as per Rule 31ACB to prove that the payee has furnished its return of income u/s. 139 of the Act; and the payee has taken into account the amount paid by the assessee while computing the income in such return of income; and the payee paid the tax due on the income declared by it in such return of income. When the assessee files Form -26A before the authorities, it proves that assessee is not in default. Further, in the present case it is fact on record that assessee has not deducted TDS while making the payment to above said two parties. However, assessee has acquired the Form 26A. However, failed to submit the same before CPC as well as Ld.CIT(A). As per the submissions of the assessee due to system glitch it could no upload the same in time and it has submitted a copy of Form -26A before us in the form of Paper Book. Therefore, it clearly indicates that assessee has genuinely possesses the Form 26A at its disposal and as per the Rule 31ACB it has to be submitted to the DGIT(Systems). Since the case of the assessee is falling in the above category and there is no restriction that assessee has to file within such a period, that is, there is no bar on the assessee to file such form within such period. Therefore, the case seems to be genuine and assessee should be given one more opportunity for the sake of overall justice. Thus we remit this issue back to the file of Ld.CIT(A) and to consider the Form 26A, adjudicate the same after considering the above said Form 26A and as per law. Appeal filed by the assessee is allowed for statistical purpose.
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2023 (3) TMI 615
Addition as unexplained money u/s. 69A - HELD THAT:- Addition is reduced by the CIT(A) to the extent of ₹.2.50 lakhs by not agreeing with the submissions of the assessee that this money was from her mother. Before us, at the time of hearing assessee has filed an affidavit/confirmation that assessee s mother has given ₹.2.5 lakhs to her daughter. We observe that assessee has deposited excess money after the completion of her daughter marriage and the disputed amount is only ₹.2.5 lakhs which is less than the amount specified in Instruction NO. 3/2017 by CBDT in relation to cash deposits during demonetization period. The cash deposited by the assessee is within the limit prescribed under above said instructions of the CBDT. Therefore, the addition sustained by the CIT(A) is accordingly deleted and the appeal filed by the assessee is accordingly allowed.
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2023 (3) TMI 614
Revision u/s 263 by CIT - excessive interest has been claimed on the closing balances of capital of partners which includes this claim on account of inadvertent mistake of share of loss in the aforesaid JV - HELD THAT:- We take note of the fact that assessee while arriving at the balances of capital of the partners in the assessee firm, incorrectly took the share of loss in the aforesaid JVs as share of profit. It is quite understandable that interest on the partners capital balance must have been calculated on the figure including this wrong treatment. The apprehension of Ld. Pr. CIT that excessive interest has been claimed on the closing balances of capital of partners which includes this claim on account of inadvertent mistake of share of loss in the aforesaid JV. However, the facts do not corroborate the apprehension of the Ld. Pr. CIT. This makes us understand that there is no prejudice to the interest of revenue owing to the inadvertent mistake. CIT has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act. We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice issued by the Ld. PCIT, supporting its contentions by corroborative documentary evidences. We find that the issue in the present case is purely on facts verifiable from the records of the assessee which revealed that the issue raised by the Ld. Pr. CIT for invoking revisionary proceedings are ill founded. We also note that observation made by the Ld. Pr. CIT for the potential under statement of income owing to this inadvertent mistake of treating the share in loss as share in profit of one JV in the subsequent assessment year i.e. 2017-18 does not justify the present proceeding of revision undertaken by the Ld. Pr. CIT u/s. 263 - The mistake committed by the assessee is rectifiable in its books of accounts and has to be dealt in the respective assessment year. Accordingly, on the issue raised by the Ld. Pr. CIT in the present revisionary proceeding action u/s 263 of the Act is not justifiable, we therefore, quash the impugned order u/s. 263 - Appeal of assessee allowed.
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2023 (3) TMI 613
Exemption u/s 11 - Disallowance of claim as assessee has not e-filed the audit report in Form No. 10B along with or before filing the return of income - demand created u/s 143(1) - HELD THAT:- Considering the fact that the A.O./ CPC, Bangalore has already rectified the mistake dated 06/08/2019 wherein the demand raised against the assessee was reversed and the income return for the Assessment Year 2017-18 was accepted by the Department, the Appeal filed by the Revenue challenging order of the CIT(A) deleting the addition made by the A.O. on merit does not survive. Accordingly, the Grounds of Appeal of the Revenue fails. Appeal filed by the Revenue is dismissed.
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2023 (3) TMI 612
Rectification of mistake u/s 154 - non- inclusion of surrendered income in the Book Profits of the assessee as per section 115JB - re-computing the book profits u/s.115JB by considering the adhoc disclosure made during the course of survey as income of the Appellant for the purpose of computation of book profits u/s. 115 JB - HELD THAT:- We are in agreement with the assessee in this regard that it is surely not a clear case of the amount being invariably included in the book profits of the assessee on the basis of the facts before us. In the absence of any incriminating material found, substantiating the surrender made, the same cannot invariably be said to represent the profit of the assessee for disclosure to its shareholders. If the surrender was corroborated with some undisclosed asset or incriminating document found, revealing the nature and manner of earning the income surrendered, it necessarily represented profits which needed to be disclosed in the profit and loss account also for the benefit of shareholders of the company. But without any incriminating material and without any clue about the nature of the disclosure also, the same could not be said to invariably represent undisclosed income/profits of the assessee to be included in its profit and loss account. The assessee at its discretion may include the surrender in its income for paying taxes thereon, but this fact ipsodixit will not mandate inclusion of the surrender in its Book Profits also. Therefore it is not plain and simple that the surrender made during survey, on adhoc basis without any incriminating material found, was to be necessarily included in its profit and loss account/ book profits. We agree with assessee that to arrive at such a conclusion required a long drawn process of reasoning and debate. For the above reasons therefore, we hold, that the non- inclusion of surrendered income in the Book Profits of the assessee as per section 115JB of the Act, was not a patent error amenable to rectification u/s 154 of the Act.The adjustment so made, therefore, is directed to be deleted. Decided in favour of assessee.
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2023 (3) TMI 611
Addition u/s 69A - cash deposit in old denomination in his bank account maintained with HDFC Bank during demonetization period - HELD THAT:- As assessee has explained deposits shown in the return of income much before demonetization period. So far as remaining part of cash deposit find that cash deposit is clear from cash book, which shows the opening cash balance of Rs. 4.92 lakhs. The assessing officer disputed the said figure of opening cash balance without verifying or cross checking from the entry in the capital account. The capital account and the computation of income for earlier years is not disputed by the assessing officer. The assessee is not showing meagre income in his return of income. Once, the cash flow statement is not controverted by assessing officer as well as by ld CIT(A), which is based on the entry made in the cash book, then the source of cash deposit in the bank account cannot be brushed aside by the lower authorities. My view is also supported by the decision of Perminder Kaur Matharoo [ 2022 (11) TMI 779 - ITAT DELHI] and Ahmedabad Tribunal in Kavitaben Chintanbhai Patel [ 2022 (8) TMI 246 - ITAT AHMEDABAD] In view of the above factual discussion, no merit in the addition made by assessing officer and sustained by ld CIT(A), and accordingly direct the assessing officer to delete the addition. In the result, the grounds of appeal raised by the assessee are allowed.
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2023 (3) TMI 610
Unexplained cash credit u/s 68 - As per AO assessee failed to provide the complete details of the lenders to prove the identity, creditworthy and genuineness of transaction - AO taxed such addition under section 115BBE - HELD THAT:- We find that not only before assessing officer but before ld CIT(A) as well the assessee filed complete details of the lenders, consisting their name, PAN, which is otherwise reflected on their Form-16 alongwith addresses, contra confirmation, their bank pass books, return of income with capital accounts. No investigation against such evidences was carried out either by assessing officer or by ld CIT(A). No contrary evidences are brought on record to discard such evidences filed by the assessee. We find that in absence of any comment of the evidences furnished by the assessee in discharging its primary onus, assessing officer was not justified in making such additions. We find that in the case of CIT vs. Orissa Corporation (P.) Ltd. [ 1986 (3) TMI 3 - SUPREME COURT ] and M/s Pankaj Enka Pvt limited [ 2016 (1) TMI 1463 - GUJARAT HIGH COURT ], and CIT vs. Ranchhod V. Nakhava [ 2012 (5) TMI 186 - GUJARAT HIGH COURT ] held that if the transaction is through regular banking channels and the assessee has filed confirmation along with PAN of the creditors, the assessee has discharged its onus. Thus we find that the assessee furnished all such details of the lenders/ depositors. There is no evidence that credit/ advance in the books of assessee was result of some circular transactions or any cash was deposited before issuing cheques to the assessee. In case of Chunilal Jivanram, the assessee has square up the loan during the present financial year. Thus, in view of the aforesaid factual and legal discussion, we do not find justification in making addition under section 68 of the Act - Decided in favour of assessee.
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2023 (3) TMI 609
TDS u/s 195 - business expenditure being the race-promotion fee [RPF] paid by the appellant-assessee to Formula One World Championship Ltd of UK - HELD THAT:- No part of the RPC fee paid by the assessee is liable to be disallowed under clause (i) of s. 40(a) because the second proviso clause (i) of Section 40(a) has been inserted w.e.f. 1.4.2020. The said proviso essentially provides that where the relevant income has been declared by the payee and tax thereon has been paid by him then no disallowance shall be made in the hands of the payer. This proviso is similar to the second proviso to clause (ia) of s. 40(a) which was inserted w.e.f. 1.4.2013. Both these provisos were inserted to remove an anomaly and were therefore curative and declaratory in nature. Hence they had to be given retrospective effect. Grounds of the appeal of the assessee deserves to be allowed and the disallowance/addition made by the A.O. which was sustained by the CIT(A) is hereby quashed.
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2023 (3) TMI 608
Insolvency proceedings - continuation of proceedings in respect to a claim, which is not a part of the resolution plan - Assessment proceedings u/s 143 (3) of Income-tax Act on corporate debtor for a period which was squarely covered by resolution plan as approved by NCLT - HELD THAT:- From the above findings of Hon`ble High Court of Telangana in the case of Sirpur Paper Mills Ltd [ 2022 (1) TMI 977 - TELANGANA, HIGH COURT] it is vivid that all claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not a part of the resolution plan. We also note that provisions of section 238 of the IBC which clearly says that provisions of IBC shall have an overriding effect over all other laws. This, if there is any doubt, section 238 IBC makes it abundantly clear that provisions of the IBC would prevail over the Income Tax Act. In the order the ld NCLT has already appointed Interim Resolution Professional (IRP). We find that ld IRP had not impleaded himself to represent the assessee-company in the present appeal, hence, in view of Section 14 of I B code there cannot be any continuation of any pending proceedings before this Tribunal. Hence, we deem it fit to dismiss the appeal of the Assessee and all appeals of Revenue, as not maintainable in the present format. However, liberty is given to the IRP or his successor in interest to implead himself on behalf of the assessee company by filing a Miscellaneous Application before us, if he so desires, at later stage, in which event these appeals shall be restored. Likewise, liberty is given to Revenue to file Miscellaneous Application before us, if the Revenue so desires, at later stage, in which event these appeals shall be restored. With these observations, the appeal of the Assessee and all appeals of Revenue are hereby dismissed as not maintainable in the present format.
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2023 (3) TMI 607
Deduction u/s 11(1) - benefit of accumulation u/s 11 - HELD THAT:- The right person in right manner and shall not disallow the eligible deductions on mere technicalities. The Revenue Authorities ought to have followed the ratio laid down by the Hon ble Delhi High Court in the case of Pawan Kumar Agarwal [ 2014 (5) TMI 449 - DELHI HIGH COURT ] and should have been allowed the benefit of accumulation u/s 11 Sub Section 2 of the Act to the assessee. We allow the assessee s Grounds of appeal and direct the authorities to allow the benefit of accumulation u/s 11 sub Clause 2 of the Act to the assessee. Appeal of the assessee is allowed.
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2023 (3) TMI 606
Validity of reopening of assessment - Reopening made beyond four years - nexus between the information received by the Assessing Officer and the escapement of income - information regarding premature surrender of L.I.C Policy - HELD THAT:- The Tribunal in assessee s husband s case [ 2023 (3) TMI 265 - ITAT AHMEDABAD ] AO needed to conduct some more inquiry, determine the quantum of income which the assessee had been returning in the past years, and whether considering his life style and other factors he could have reasonably accumulated the amount to the extent of Rs.10 lakhs for making investment in LIC premium. He ought to have sought explanation from the assessee of the source of investment, and if his inquiries and investigation would have not satisfied him only in such circumstances, the AO could have formed belief of escapement of income on account of source investment in LIC premium remaining unexplained. I am therefore in complete agreement with the contention of the ld.counsel for the assessee that the information in the possession of the AO could not have lead to belief of escapement of income so as to assume valid jurisdiction to reopening the case of the assessee under section 147 of the Act. CIT(A) has proceeded on the exactly wrong premise as that on which the AO had proceeded that the source of investments is to be co-related or explained through income earned during the year, that is why, the ld.CIT(A) has noted that the AO had verified the returned income and the amount of investment and had rightly come to the conclusion that the assessee had no sufficient source of making such investment. Jurisdiction assumed under section 147 to be invalid, the assessment order passed, as a consequence is not sustainable in the eyes of law and without jurisdiction. Therefore, the same is directed to be set aside.Appeal of the assessee is allowed.
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2023 (3) TMI 605
Condonation of delay - sufficient cause for not presenting appeal within that period - assessee is counting the period of limitation from this date, whereas the assessee is required to explain the delay from the date of its passing - HELD THAT:- Whenever any explanation of the assessee falls for consideration about the delay in filing the appeal, then such explanation is to be appreciated with a justice oriented mind. However, we find that it is a shell company, which is trying to play with the Income Tax Authorities and the position of law. It has been filing the appeal only for the sake of filing otherwise not contesting the litigation and not justifying anything. After perusing the whole record, which has been brought to us, we are of the view that it is not a case where delay even if of any number of days deserves to be condoned. Therefore, we reject this application of the assessee and dismiss the appeal being time-barred.
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2023 (3) TMI 604
TDS u/s 194A - interest was credited to the depositor's account only on the date of maturity of the deposit - orders under Sections 201(1) 201(1A) of the Act making the assessee as an assessee in default - CIT(A) concluded that the assessee ought to have deducted tax at source on credit to the account of interest income instead of making deduction of tax at source when interest is paid on maturity - HELD THAT:- Assessee s contention that a part of the interest charged to the P L Account has neither been paid nor credited to the customers account, rather credited to the interest payable account and thereore the same is not liable to TDS under Section 194A is devoid of any merit. Section 194A of the Act mandates that any persosn responsbile for paying to a resident any income by way of interest (other than interest on security) shall at the time of credit of such income to the account of the payee or payment thereon in any mode shall deduct TDS thereon at the rate in force. The Explanation below sub-section (1) of Section 194A of the Act clarifies that where any income by way of interest is credited to any account, whether called interest payable account or suspense account or any other name in the books of account of the payer, such credit shall be deemed to be credit for the purpose of Secton 194A of the Act. Therefore the above contention raised by the assessee is rejected. Assessee contends that it had deducted tax at source on a later point of time, i.e. at the time of maturity of deposit and to such kind of deduction of tax at source, the assessee ought to be granted credit/adjustment for treating the assessee as an assessee in default - When the assessee has already deducted tax at source (though at a latter point of time) to the same extent assessee cannot be made an assessee in default under Section 201(1) of the Act, as this would amount to collection of tax at source under Section 194A of the Act twice. However, we make it clear that the assessee would be liable for interest under Section 201(1A) of the Act in respect of the said amount. Therefore, it is for the assessee to prove the above contention raised. Hence, we restore grounds C D to the files of the AO. The assessee shall provide necessary details/ proof for the amount of tax that is deducted at source under Section 194A of the Act at a later point of time for claiming credit/adjustment against the orders passed under Section 201(1) of the Act. Once again we make it clear that the assessee shall be liable for interest as per the provisions of Section 201(1A) of the Act in respect of the tax deducted at source at a later point of time. Appeals filed by the assessee are partly allowed for statistical purposes
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2023 (3) TMI 603
Deduction u/s 54F - assessee has neither claimed this benefit during the course of assessment nor provided the complete evidences in support of this claim - condition required under sub-section (2) of section 54F of the Act not satisfied as assessee actually sold property which was a plot of land - HELD THAT:- Neither the AO nor the ld. Sr. DR controverted the factual position that the assessee received consideration of Rs.7,31,76,075/- as consideration of sale of plots and had invested an amount of Rs.7,42,40,524/- in purchase of residential property during the relevant financial period in which the property was sold. It has also not been controverted that at the time of selling the plots and purchasing residential property, the assessee was owning only one other residential house during FY 2016- 17. For making claim u/s 54F, the cost of acquisition of house and full consideration, its fair market value is not relevant for the purpose of adjudication of claim of the assessee because the full consideration has to be considered for eligibility for deduction u/s 54F of the Act and, in the present case, the assessee has demonstrated that she has invested higher amount in purchase of residential property than the total amount of consideration received by her against sale of plots. CIT(A) was right in holding that the condition required under sub-section (2) of section 54F of the Act and other requirements have been successfully satisfied by the assessee, therefore, the assessee was eligible for deduction u/s 54F to the extent of consideration invested in acquisition of new residential property which is undisputably higher than the amount of consideration received by the assessee on sale of plots. Therefore, we are unable to see any valid reason to interfere with the findings arrived and recorded by the ld.CIT(A) and, thus, we uphold the same. Accordingly, grounds of the Revenue are dismissed.
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2023 (3) TMI 602
Levy of fee u/s.234E - demand notices u/s 200A - delay in filing the TDS statements in respect of the quarterly statements namely 24Q and 26Q during various quarters relating to periods prior to 01.06.2015 - HELD THAT:- Delhi in the case of Shri Raj Veer Singh vs ACIT, CPC-TDS, Vaishali, Ghaziabad [ 2021 (7) TMI 376 - ITAT DELHI] has held that the fee levied for periods prior to 01.06.2015 is not sustainable in the eyes of law. We are of the considered view that there is no provision under section 200A of the Act, while processing quarterly TDS statements filed prior to 01.06.2015 to levy late filing fees u/s.234E of the Act. As regards arguments of the ld. DR that correction statements have been filed after 01.06.2015 and intimations have been issued after 01.06.2015 and thus, there is provision for levy of late fee u/s 234E of the Act, we find that once, an assessee filed original quarterly TDS statements before 01.06.2015, then even if correction statements are filed after amendment on 01.06.2015, there is no question of levy of late fee because law provided for filing correction statements to rectify any mistakes in original statements. Thus, we reject arguments of the ld. DR present for the Revenue. We, therefore are of the considered view that late fee charged u/s.234E of the Act, while processing quarterly TDS returns filed prior to 01.06.2015 is not sustainable under the law. Thus, we direct the Assessing Officer to delete late fee charged u/s.234E of the Act. Decided in favour of assessee.
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2023 (3) TMI 601
Rejection of books of accounts - necessity to point specific defects pointed out by the Assessing officer - HELD THAT:- It is admitted fact that the appellant had maintained books of accounts of the business carried out by him and the same were audited by a CA and the tax audit report along with audited accounts was placed before the AO in the assessment proceedings, but no specific defect was pointed out in the books of accounts. Merely because the appellant did not submit separate trading and profit and loss account for purchase and sale of edible oil and pesticides, it cannot be said to be specific defect for rejecting the books of accounts and the case of the assessee is covered by the decision in the case of CIT vs. Smt. Salochana Bhatia [ 2011 (5) TMI 838 - PUNJAB AND HARYANA HIGH COURT ] and in the case of CIT vs. Om overseas [ 2008 (3) TMI 44 - HIGH COURT PUNJAB AND HARYANA ] In view of the matter, we hold that the rejection of books of account is without any basis. Since, there have been no specific defects pointed out by the Assessing officer and, as such, the whole basis of rejection of books of account is on presumptions, conjectures and surmises and, thus, the Ld. CIT (A) has rightly held that the rejection of books of accounts u/s 145(3) of the Act is not liable to be rejected and thus, in our view, the rejection of books of account in such manner is unsustainable. This ground of revenue is rejected. Speculative transaction and set off of business loss - We find no infirmity or perversity in the finding of the Ld. CIT(A) in holding that the transactions of trading in edible oil by the appellant are not speculative in nature within the meaning of section 43(5) of the Act and therefore, the business loss incurred by the appellant is eligible for set off against other business income in terms of the provisions of section 71(1) of the Act. Thus, the grounds on the issue of speculative transaction and set off of business loss is rejected. Interest on FDR pledged with bank for foreign letter of credit - We hold that the goods imported by the assessee are backed up with LC [letter of credit] and that FDR made by it was not surplus FDR but as per bank s term and hence, the interest from these fixed deposits which were inextricably linked to the business of the assessee would taxed as business income and not as income from other sources. Accordingly, the department ground that interest earned on FDRs kept in bank as margin money for obtaining LOC and bank security for high Sea Business Transaction to be income from other sources as against business income are rejected. So far as the interest from parties is concerned, the same cannot be said to be also linked to the business of the assessee. Even otherwise, since there was current year loss in the business of edible oil, the loss is liable to be adjusted against the business income derived from this year and for this reason, the Ld AR has no objection to our view that the interest from the parties would be charged to tax under the head Income from other sources.
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2023 (3) TMI 600
Unaccounted/unexplained payments u/s 69C - unexplained expenditure mainly on the basis of documents seized and impounded from the premises of Mr. Madan Kolambekar - CIT-A deleted the addition - HELD THAT:- The fact in the present case is similar to the case of Krupa Land Ltd. [ 2018 (10) TMI 1987 - ITAT MUMBAI] as the present proceedings also arise from the same search. Instead of the statement of Mr. Dilip Dheria,one of the land aggregator, the Revenue is relying on the statement of Mr. Madan Kolambekar in the present proceedings. However, in the present case also, Mr. Madan Kolambekar has withdrawn his statement and other than loose papers, no further material has been brought on record by the Revenue to justify the addition in the hands of the assessee. The Revenue has not supported the allegation by any material showing cash passing hands. Further, the Revenue authorities have not enquired with the vendors or brought any statement on record of the vendors to substantiate the claim of the Revenue that extra cash has actually change hands. In view of the above facts, we are inclined to accept the findings of the Ld.CIT(A). No reason to interfere with the findings of the Ld.CIT(A) by deleting the additions proposed by the Assessing Officer u/s. 69C - Decided against revenue.
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2023 (3) TMI 599
Business expenditure u/s 37 - Allowability of advertisements, sales and marketing expenses - CIT-A allowed deduction - HELD THAT:- Hon ble Gujarat High Court in the case of Smt. Virmati Ramkrishna [ 1976 (2) TMI 4 - GUJARAT HIGH COURT] held that the said expenses was allowable as business expenditure as per the provision of section 37 of the Act in which case also the A.O. has not questioned the genuinity of the expenses. The Hon ble Tribunal has stated that earning of income is not a criteria for allowability of the business expenditure when the said expenditure was incurred wholly in the course of business activity. The co-ordinate bench has also laid its hands on the proposition laid down by the Hon ble Gujarat High Court in allowing the business expenditure and the criteria for the eligibility of claiming of the expenditure which are expended for the purpose of business. As this issue has been already dealt with by the co-ordinate bench for A.Y. 2016-17 [ 2022 (8) TMI 1355 - ITAT MUMBAI] we do not find any justification in deciding otherwise. Charging of 35% of the total receipts from on-money on the basis of the order of the Hon ble Settlement Commission passed u/s. 245D(4) - An assessee s case for A.Y. 2016-17, on similar facts the Tribunal has held the addition on on-money to be restricted to the extent of 35% of the total on-money by stating that the order of the Hon ble Settlement Commission is appealed before the Hon'ble High Court, does not bar the ld. CIT(A) from adhering to the said order. Tribunal also held that unless any of the order passed by the Revenue authority is stayed, it does not prevent the lower authorities to rely on the said decision. By holding so, the Tribunal has restricted the addition to 35% of the total on-money. As in this appeal also, the facts are identical to that of A.Y. 2016-17, we find no justification in interfering with the decision of the tribunal in the previous year. From the above observation, we find no infirmity in the order of the ld. CIT(A). Hence, the ground nos.3, 4 5 raised by the Revenue are dismissed.
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2023 (3) TMI 598
TP Adjustment - exclusion/inclusion of comparables under SWD MSS segment - HELD THAT:- An admitted position that coordinate bench of this Tribunal in assessee s own case in [ 2022 (2) TMI 1353 - ITAT BANGALORE] excluded comparables with high turnover and have been consistently following the turnover range of Rs.1 to 200 Crores and Rs.200 to Rs.2000 crores, so on and so forth. Thus we direct the Ld. AO/TPO to exclude the comparables with high Turnover, mentioned herein above. Two comparables that assessee seeks to exclude on functional dissimilarities - Infobeans Technologies Ltd. - On perusal of financial statement we note the revenue recognition is only under one head being Expert - We also notice that in Related Party Transaction details this company has earned revenue from it s AE. From this it is clear that this company is rendering services to non-AE customers also, whereas the assessee before us is a captive service provider only catering to the requirements of its AE. Under such circumstances we do not deem it fit to be considered in the final set of comparables. Cygnet Infotech Pvt. Ltd. - In the annual report it is mentioned that this company derives revenue various services by providing Enterprise Solutions, Application content, Management services etc. It is also mentioned that the revenue recognition is by providing man power support to its customers. AT page 2033 of the paper book, we note that this company bares all the risks attributable to a full fledged entrepreneur. In our view this company cannot be considered as a good comparable. Excluding R. Systems International Ltd. confirmed. Incorrect computation of margins of comparables by the Ld.TPO - We note that the Ld. TPO has not correctly computed the margins of the comparables those have been finally retained post DRP s directions. As in the present appeal, assessee has already alleged inclusion/exclusion of comparables, we direct the AO/TPO to adopt and compute the correct margins of the comparables that would be finally sustained based on the directions herein above. Accordingly, this ground raised by the assessee stands allowed. Pressman Advertising Ltd. - As business over view of this company is shown to be advertising, public relation, design and digital. As there is no segmental details available, it is difficult to analyse the revenue generated by this company from the advertising segment. Therefore, in our view, cannot be considered to be functionally comparable with that of assessee. Majestic Research Services and Solutions Ltd. - We note that this comparable is into various activities like Digital Network Services and into analysing media and marketing information based on various concepts through different mediums of interactions. Therefore, in our considered opinion, this comparable cannot be compared with assessee and deserves to be excluded. ESOP considered as operating cost by the Ld.AO/TPO - HELD THAT:- As no cost is charged to the assessee, and that the employees of the assessee is informed regarding the taxability of the option exercised by the employee. On perusal of the financials, it is noticed that, nothing has been debited as ESOP expenses.TPO has not drawn the complete facts of the case and has also not provided complete details of the decision by the Supreme Court of Iserael. The Ld.TPO has recorded that the Israeli company is remunerated at cost plus mark up by foreign affiliate for services. In the present facts, the re is no mark up paid by the AE to the assessee. Such abstract reference by the revenue authorities is least expected. TPO failed to consider the basic fact that, purchase cost of the shares of foreign AE is charged from the employees of the assessee directly and the assessee deducts TDS on the 15% discount received by such employees, who have opted for the scheme. In our view, based on the option scheme and the Employee Information Supplement India , the 15% discount received by such employees of the assessee cannot be treated as operating in nature. Non-granting of working capital adjustment - HELD THAT:- We note that this issue is no longer res integra, as the Tribunal has been consistently granting working capital adjustment to the assessee while computing ALP of international transactions on actual. This view is fortified by the order of this Tribunal in the case of Huawei Technologies India Pvt. Ltd.[ 2021 (8) TMI 1334 - ITAT BANGALORE] - we direct the Ld.AO/TPO to grant working capital adjustment. Delayed remittance of PF - HELD THAT:- This issue has been now settled by the decision of Hon ble Supreme Court in case of Checkmate Services (P.) Ltd [ 2022 (10) TMI 617 - SUPREME COURT] thus we hold that the employees contribution to PF and ESI should be remitted before the due date as per explanation to section 36(1)(va) i.e. on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s.43B. We therefore see no reason to interfere with the order of the CIT(A). The grounds taken by the assessee on this issue is dismissed.
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2023 (3) TMI 597
TP Adjustment - addition on account of software development and related IT services segment - comparable selection - HELD THAT:- Comparability of Infosys Limited, Larsen Toubro Infotech Limited, Tata Elxsi Limited (seg), Persistent Systems Limited, Mindtree Ltd and E-Info Chips Pvt. Ltd , such entities are not at all good comparables to the assessee and directed the deletion of the same from the final list of comparables. We direct the exclusion of Infosys Limited, Larsen Toubro Infotech Limited, Tata Elxsi Limited (seg), Persistent Systems Limited, Mindtree Ltd, Cybage Software Private Limited and E-Info Chips Pvt. Ltd from the list of final comparables on the ground of either functional dissimilarity or scales of turnover and profits or non-availablity of segmental information. Interest on receivables - credit period determination - As submitted that in the agreement, 90 days period is prescribed and, therefore, the Revenue authorities cannot substitute their notions of collectability of interest in this period - HELD THAT:- When the parties entered into an agreement in respect of the credit period to be allowed, the interest relatable to such allowable credit period will be subsumed into the price of the goods or services, which are subject to the ALP examination. It is only the period subsequent there to has to be considered for calculation of deemed interest. While respectfully following the view taken by the Co-ordinate Bench of the Tribunal in assessee s own case for the assessment year 2014-15 [ 2019 (9) TMI 973 - ITAT HYDERABAD ] we set aside the assessment order on this aspect and restore the issue to the file of learned Assessing Officer/ Ld. TPO, for considering the credit period allowed by way of agreement and in the absence of any such agreed credit period, to consider 90 days or the industry average credit period, as the case may be, for calculating the interest. Grounds No. 8 to 10 are treated as allowed for statistical purposes. Allowability of management fee - as submitted that for this assessment year, the details were submitted and available before the Ld. DRP but the Ld. DRP missed this aspect and did not consider the material available before them - HELD THAT:- Considering the facts and circumstances, we are of the considered opinion that it would be in the fitness of things to restore this issue to the file of the learned Assessing Officer/ Ld. TPO to consider the material filed by the assessee. Ground No. 11 is accordingly treated as allowed for statistical purposes. Credit of Tax Deducted at Source and credit of advance tax - HELD THAT:- It is a matter of verification of record and consequential grant of credit of credit of Tax Deducted at Source and credit of advance tax. Learned Assessing Officer will verify the material and accordingly take a view. Interest under section 234B of the Act is consequential in nature and dependent upon the above.
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2023 (3) TMI 596
TDS u/s 195 - non deduction of tax at source - Residential status of payee unknown - Bonafide belief that the payee is resident of India (who is non-resident) - assessee is engaged in the business of real estate and developed a residential apartment complex - consideration paid in terms of the 'Agreement' entered into with Mr. Bhupathi as assessee sold one of the apartments in this residential complex to him - residential status of Mr. Mahesh Bhupathi - HELD THAT:- As in the present case, the assessee has not brought on record any evidence to show that at that time of payment it was aware that no amount will be chargeable to tax in the hands of the payee. In fact, as also mentioned above, as per the assessment order in the case of the payee, positive income under the head capital gains has been arrived at, as against loss claimed. The seller was non-resident and he has been associated with the assessee company since 2005, though he provided Indian address for all the transactions carried by him. The claim of the assessee that he is unaware of the residential status of Shri Mahesh Bhupathi cannot be accepted as he was with the company since long time and this argument of the assessee do not come to present assessee s rescue or absolve him of the duty to do what the law required the present assessee to do. In our opinion, facts on record show that the assessee well aware of the residential status of Shri Mahesh Bhupathi and the assessee liable as per the provisions of section 195 of the Act to deduct at a specified rate from the purchase price before making payment to seller, who is being NRI. CIT(A) rightly held that assessee is required to determine the income component involved in the payment to non-resident on account of transfer of immovable property on which withholding tax liability is to be computed and the payer would be considered as being in default for non-withholding of taxes only in relation to such income component. In the present case, Ld. CIT(A) rightly held that assessee is liable to deduct TDS on the income component of Rs.1,74,47,180/- as against the income component determined by AO at Rs.1,97,27,780. Accordingly, these grounds of appeal of the assessee are dismissed. Charging of interest u/s.201[1A] - The action of the A.O. in charging the assessee interest u/s 201(1A) is consequent to the quantification of tax demand u/s 201(1) r.w.s. 195 of the Act and is chargeable in respect of any person who has failed to deduct the whole or any part of tax at the rates and specified therein. We, therefore, uphold the charging of interest u/s 201(1A) of the Act. This ground of appeal of the assessee is rejected.
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Customs
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2023 (3) TMI 595
Non-compliance with the conditions of providing non-scheduled (passenger) services as defined in the Explanation to the Condition No.104 of the N/N. 21/2002-Cus. dated 01.03.2002 as amended by the Customs Notification No.61/2007-CUS dated 03.05.2007 - aircraft used for private purposes and not for providing non-scheduled (passenger) services - HELD THAT:- The question whether an undertaking, as furnished in terms of the Condition No.104 of the Notification in question is complied with or not is required to be considered by the Custom Authorities. The Custom Authorities are not bound by the decision of the DGCA. It is not disputed that the respondent has provided the said services for remuneration. In the aforesaid view, notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in the Explanation to the Condition No.104 of the Notification in question. The question as projected by the Revenue, is decided in its favour and the impugned order to the said extent is set aside - Appel disposed off.
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2023 (3) TMI 594
Illegal detention of imported goods - dry dates - goods detained without executing any detention memo, which are still lying uncleared as the same has been illegally detained by the respondents - goods not detained by Customs authorities - seeking waiver from demurrage charges - HELD THAT:- Without going into further details and merits of the case, the respondent Nos.3 and 4 are hereby directed to release the goods which are under their custody and not under the detention of the Customs Authorities by implementing the order dated 19.04.2022 for waiver of the demmurage charges under Regulation 10(1)(l) of the SCMTR. Such exercise shall be completed within two weeks from the date of receipt of this order. Petition disposed off.
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2023 (3) TMI 593
Classification of imported goods - I Stat Blood Gas Investigation Cartridges - I Stat Wireless Analysers with printer kit - I Stat Alinity Instruments with accessories - whether the said goods are classifiable under Customs Tariff Heading 9027 as classified by the Appellant Importer or under CTH 9018, as contended by Revenue and further regarding eligibility of concessional duty/exemption under Notification Nos.24/2005-Cus and 25/2005-Cus, both dated 1st March, 2005? HELD THAT:- The instrument I Stat System along with cartridges, etc are prima facie used for anylysis of various parameters of blood, and is prima facie a blood analyser. Both in case of glucometer or in the case of the present I Stat System with cartridge, blood is drawn and a few drops of blood are put on the cartridges or test strip and thereafter, on being attached to the I Stat System/Analyser, gives the readings. The only difference is that the item under consideration is more sophisticated than the glucosemeter. The testing of blood by analyzing and indicating the various parameters is undisputedly an outcome of chemical analysis, etc. In the facts and circumstances, we find that the heading 9027, which covers instruments for chemical analysis is more specific than CTH 9018, which covers instruments used in medical/surgical science, etc. Further, we find that Rule 3 of General Rules of Interpretation provides that a specific description is to be preferred over a general description. The Court Below have erred in deciding the classification relying on the facts that the goods in question are mostly used on bedside or in an ICU - the goods under consideration are appropriately classifiable under CTH 9027. Extended period of limitation - HELD THAT:- The extended period of limitation is not attracted in the facts and circumstances, the issue being wholly interpretational in nature and there being no res judicata in tax matters. Appeal allowed.
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Corporate Laws
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2023 (3) TMI 592
Provisional attachment of property - Power of the NCLT to protect the assets of corporate debtor - Action under the Prohibition of Benami Property Transactions Act, 1988 - clear cut stand of the Respondent is that, in the instant case, the Adjudicating Authority (Prohibition of Benami Property Transactions Act, 1988), having passed an Order, treating the Appellant s Assets as Benami Assets, only the Appellate Tribunal, under PBPT Act, can test the veracity of the PBPT Adjudicating Authority. HELD THAT:- It transpires that the Appellant / Liquidator, had placed the proposed Resolution Plans, before the Committee of Creditors, during the 9th CoC Meeting, that took place on 02.11.2018. After due consideration of the Resolution Plans submitted, the CoC, had rejected the Resolutions Plans, and consciously had resolved to prefer an Application for Liquidation of the Corporate Debtor, before the Adjudicating Authority. In MA/604/2018, filed by the Appellant / Liquidator /Petitioner, under Section 33 (2) of the I B Code, 2016, for Liquidation of the Corporate Debtor, a Liquidation Order, was passed on 14.02.2019. It appears that the Appellant / Petitioner / Liquidator (pending the Liquidation Proceeding), had received a Notice dated 01.11.2019, from the Respondent, to Show Cause, as per Section 24(1) of the The Prohibition of Benami Property Transactions Act, 1988, as to why the Property being the proportionate share of the Land, owned by the Corporate Debtor, out of the total extent of 889.82 Acres, where the factory of the Corporate Debtor, was located, should not be treated as Benami Property, and that, any Reply ought to be provided on or before 21.11.2019. The Respondent, also had issued a Provisional Attachment Order dated 01.11.2019, as per Section 24(3) of the Act, 1988. The crystalline stand of the Appellant / Liquidator is that, there was no Cash Inflows into the Company, either in the form of Cash or Cheque, from the Promoters of the Company or others, and the same is evidenced from the Disclosure on Specified Bank Notes, given by the Statutory Auditor, in his Report for the Financial year 2016-17, filed with the Ministry of Corporate Affairs. To support the fact that there was no Cash Flows into the Corporate Debtor, the Appellant / Petitioner, had enclosed the Copy of the Audited Balance Sheets for the Financial Years 2016-17, 2017-18 and 2018-19, Income Tax Returns for the Years 2016-17, 2017-18 and 2018-19 and the Bank Statements from October 2016 to March 2017 of the Corporate Debtor. In the instant case, it is quite evident that the Respondent / Department had attached the Property of the Corporate Debtor, as per the ingredients of the Provisions of The Prohibition of Benami Property Transactions Act, 1988. Therefore, an Attachment effected, under The Prohibition of Benami Property Transactions Act, 1988, is to be assailed under the relevant provisions of the said Act, 1988, and in fact, the I B Code, 2016, only pertains to questions concerning the Insolvency Resolution or Liquidation Proceedings of the Corporate Debtor - the Attachment, made as per Section 24(3) of The Prohibition of Benami Property Transactions Act, 1988, cannot be a subject matter of proceedings, under Section 60(5) of the I B Code, 2016, in the considered opinion of this Tribunal. To put it differently, the Adjudicating Authority (National Company Law Tribunal), is not the proper FORA, to determine the controversies, revolving around the Attachment of the Property, under The Prohibition of Benami Property Transactions Act, 1988, as held by this Tribunal. As such, it is held by this Tribunal, that the filing of the instant Comp. App (AT) (CH) (INS.) Nos. 188 and 189 of 2022, by the Appellant / Petitioner / Liquidator, per se are not Maintainable, in the eye of Law. A closure scrutiny of The Prohibition of Benami Property Transactions Act, 1988, and the I B Code, 2016, clearly exhibit that they do operate in their own field and without any simmering doubt, this Tribunal, without any haziness, holds that an element of public interest, is involved in PBPT Act - Only when a Resolution Plan was approved by the Adjudicating Authority (Tribunal), Section 32A of the I B Code, 2016, gets attracted. In reality, an Adjudicating Authority (Tribunal), cannot traverse upon matters which is beyond its scope. To put it precisely, issues/disputes, pertaining to an Attachment, effected under The Prohibition of Benami Property Transactions Act, 1988, cannot be gone into, by an Adjudicating Authority (Tribunal), under the I B Code, 2016. In short, the Appellant / Liquidator, cannot take umbrage, either under the ingredients of Section 32A, coupled with Section 60(5) of the I B Code, 2016. This Tribunal, taking note of the divergent contentions advanced on either side, considering the fact that Liquidator, cannot bypass a remedy, provided under The Benami Transactions (Prohibition) Act, 1988, in assailing the Order, passed by the Adjudicating Authority, before the Appellate Tribunal, under the PBPT Act, 1988, keeping in mind of the surrounding facts and circumstances of the case, in a holistic fashion, comes to a resultant conclusion that the view arrived at, by the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai), in dismissing the MA/1373/2019 and MA/1372/2019 in MA/1130/CAA/2019 in CP/612(IB)/2017, through its Impugned Order, dated 29.03.2022, is free from Legal Infirmities. Appeal dismissed.
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Insolvency & Bankruptcy
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2023 (3) TMI 591
Seeking approval of Resolution Plan - claim filed by the Appellant cannot be considered at this stage and the same was not entertained - stand of the Petitioner/Appellant is that due to the second waive of COVID 2019, the Petitioner/Appellant could filed an application against the rejection of the claim and on 11.05.2021, the Petitioner/Appellant had inadvertently filed the above before the Adjudicating Authority/Tribunal, against the rejection of the claim by the Resolution Professional. HELD THAT:- The ingredients of Section 61(1) and (2) of the Insolvency and Bankruptcy Code, in person being aggrieved in respect of order passed by the Adjudicating Authority is to prefer an Appeal before this Appellate Tribunal within 30 days and this means from the date of pronouncement of the concerned orders. However, in the instant Case, admittedly according to the Petitioner/Appellant, the Petitioner seeks to condone delay of 289 days from 10.03.2022 till 23.12.2022 in preferring the instant Company Appeal and also seeks for an exclusion of 302 days between 11.05.2021 [Period between filing of application IA/262/2021] till 09.03.2022 (date of disposal of the Application by the Adjudicating Authority]. Rule 150(3) of the NCLT Rules, enjoins that a certified copy of every order passed by the Tribunal shall be given to the parties etc. In view of the clear-cut position of Section 61(1) of the Insolvency and Bankruptcy Code coupled with 150 of the NLCT Rules, this Tribunal is of the considered opinion that the delay of 289 days as afforded by the Petitioner/Appellant from 10.03.2022 to 23.12.2022 in filing the instant Company Appeal cannot be condoned as there is no power to enjoin upon this Appellate Tribunal to condone not even a single day beyond the condonable period prescribed as per Section 61 of the Insolvency and Bankruptcy Code, 2016. Application dismissed.
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2023 (3) TMI 590
Seeking direction to Resolution Professional to change the status of the Applicants from 'Collateral' to 'Allottees and consider them as Financial Creditors (Real Estate Investors i.e. Allottee) u/s 5(8)(f) of the Code - rights of the applicants as per the provisions of the I B Code' 2016 - direction to Resolution Professional to provide Proper signed Valuation Reports of both the valuers - direction to Resolution Professional to provide the Inventory details of CD as on ICD - Avoidance Applications filed u/s 25(2)(i) r/w Rule 35A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. HELD THAT:- It is well settled that Resolution Professional has no adjudicatory power and its jurisdiction is only administrative to collate and verify the claims as per the CIRP Regulation, 2016. When the application was filed before the Adjudicating Authority inviting a decision on the status of the applicant Adjudicating Authority ought to have decided the application on merit instead of asking the appellant to file the documents before the Resolution Professional and directing the Resolution Professional to pass the reasoned decision. The decision was required to be taken by Adjudicating Authority itself. The impugned order passed by Adjudicating Authority cannot be sustained and is hereby set aside - Appeal disposed off.
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PMLA
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2023 (3) TMI 589
Money Laundering - proceeds of crime - Freezing of bank accounts of petitioner - case of petitioners is that the order under Section 17 (1-A), PMLA to freeze the Bank accounts, has not been passed, which order is a pre-condition to issue directions to the Bank - Seeking to furnish the balance held in the accounts maintained in those banks by the petitioner(s)/fixed deposits, with further request not to entertain debit transactions from the said accounts until further directions from the Office of the Enforcement Directorate - Power of Assistant Director to pass the order under Section 17 (1-A) being below the rank of the Deputy Director. Whether, in the absence of any order to freeze the property (Bank Accounts), under Section 17 (1-A) of the PMLA, the action of the respondents in directing the Bank Respondent Nos.3 and 4, vide the impugned e-mails, not to entertain the debit transactions from the Bank accounts of the petitioners mentioned in the e-mails, is legally sustainable? HELD THAT:- In OPTO Circuit India Limited [ 2021 (2) TMI 117 - SUPREME COURT ], the Hon'ble Apex Court held that the pre-requisite, is that the Director or such authorised Officer in order to exercise the power under Section 17 of the PMLA should on the basis of information in his possession, have reason to believe that such person has committed acts related to money-laundering and there is need to cease any record or property found in the search and such belief of the Officer should be recorded in writing. Sub-section (1A) of Section 17 of the PMLA, provides that the Officer authorised under sub-section (1) may make an order to freeze such record or property where it is not practicable to seize such record or property, but it was clarified and emphasized that the freezing of the account will also require the same procedure since a bank account having proceeds of crime shall fall, both under the ambit of property and records - the Hon'ble Apex Court observed that in that case, except issuing the impugned communication dated 15.05.2020 to Anti-Money Laundering Officer to seek freezing, no other procedure contemplated in law was followed. Such impugned communication also did not even refer to the belief of the authorised Officer. It was held that though it was not the requirement that the communication addressed to the Bank should contain all the details but what was necessary was an order in the file recording the belief as provided under Section 17 (1) of the PMLA before the communication is issued and thereafter the requirements of Section 17 (2) of the PMLA, after the freezing was made, was required to be complied with. In the present case, the basic facts to attract the applicability of the law laid down in OPTO Circuit India Limited (supra), are almost the same. The respondent No.2 herein issued the E-mail/communication to the respondent Nos.3 and 4 Banks, requesting not to entertain debit transactions hence forthwith from the accounts of the petitioners. The communication, though it is not required to mention all the details, containing the reasons for the belief of issuance of such direction to the Bank in the communication e-mails, does not mention about any order to freeze the account as per the procedure prescribed, on the record/file of the ED. The admitted case of the respondents taken in their counter affidavit is that any order under Section 17 (1-A) of PMLA has not been passed. This Court is of the considered view that though there is power to direct freezing of the account or to issue the communications as has been issued in the present case to the Banks, under Section 5 or/and Section 17, but such power/direction which has the effect of freezing the property/bank account under Section 17 (1-A) is to be exercised as per the law by following the procedure prescribed. - It is settled in law by various pronouncements, and reiterated in OPTO Circuit India Limited, by the Hon'ble Apex Court, that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner alone and in no other manner. The impugned E-mails cannot be sustained in law and are liable to be quashed. As this Court found that the impugned E-mails deserve to be quashed on the ground of there being no order passed under Section 17 (1-A), this Court is of the view that there is no need to enter into the submission of the learned counsel for the petitioners that the Assistant Director, the respondent No.2, is not competent to pass the order under Section 17 (1-A) being below the rank of the Deputy Director, though prima facie, the Court is not in agreement, for, the use of the expression the officer authorized under sub-section (1) in Section 17 (1-A) in the phrase the officer authorized under sub-section (1) may make an order to freeze such property . Considering the object of the PMLA which is to achieve preventing money laundering and bring the offenders to book as also at the same time to safeguard the rights of the persons who would be proceeded against under the PMLA by ensuring fairness in procedure, in the light of the facts of the present case, as brought on record from both the sides, but without making any observation on the merit of the correctness thereof or otherwise, that the amount in accounts of the petitioners with the respondent Banks is alleged to be proceeds of crime , while setting aside the impugned e-mails it would be in the interest of justice to prevent the alleged money laundering, to keep it open to the authorized officer of E.D under Section 17 of the PMLA to take necessary action, by proceeding in accordance with law and further, for a period of 15 days from today to restrain the petitioners with direction to the respondent Nos.3 to 4 Bank, that there shall be no debit transaction from the aforesaid accounts. Petition allowed in part.
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2023 (3) TMI 588
Seeking grant of bail - Money Laundering - predicate offences - it is alleged that the present applicant has cheated so many persons and after his resignation from the Company, other persons, who were Directors of the Company, started cheating the people at the behest of the present applicant - rigours of Section 45 of the PMLA. HELD THAT:- There is no complaint of the E.D. that the present applicant did not cooperate in the investigation and after completion of the investigation, the prosecution complaint has been filed on 24.05.2019 and learned trial court has taken cognizance on 23.09.2019. At the time of filing prosecution complaint or taking cognizance, the E.D. has not requested before the learned trial court for taking custody of the applicant, however, the custody of the application has been taken on 01.09.2022 without assigning any reason and reason to believe as to why the custody of the present applicant would be required after four years from filing the ECIR. It has been noted that more than four years' period has passed since the present applicant is in jail and the maximum punishment under the offences of PMLA is seven years; so, in that way, the applicant has already served more than half punishment. Undoubtedly, there are some more cases against the present applicant wherein the FIRs have been registered under various sections of Indian Penal Code wherein trial would go and the outcome of the trial proceedings in all the predicate offences would impact the proceedings of E.D. inasmuch as the Hon'ble Apex Court in re; Vijay Madanlal Choudhary and Others Vs. Union of India and Others, [[ 2022 (7) TMI 1316 - SUPREME COURT] ], has held that if any accused person is discharged or acquitted in the predicate offence, he may not be prosecuted under the PMLA. Rigours of Section 45 of the PMLA - HELD THAT:- The present applicant has served more than half punishment, has not misused the process of law and appeared before the E.D. on the summons and about three years have passed since filing of the charge sheet and there is no likelihood of the trial proceedings to be concluded with expedition, therefore, in view of para-86 of the dictum of Apex Court in re; Satender Kumar Antil Vs. Central Bureau of Investigation Another, [[ 2022 (8) TMI 152 - SUPREME COURT] ], whereby the Apex Court has observed that more the rigour, quicker the adjudication ought to be. So the rigours of Section 45 of the PMLA are satisfied. Let applicant- Rajesh Kumar Singh be released on bail in the aforesaid complaint case on his furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned with the conditions imposed - application allowed.
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2023 (3) TMI 587
Freezing of the bank accounts of petitioner - reasons to believe - submission is that the freezing of bank account of the petitioner is a draconian act which would entail serious civil consequences and if the statute directs performance of act of freezing in a particular manner, the respondents cannot deviate from the said procedure and if there is deviation it would become non est in the eye of law. HELD THAT:- It is germane to notice that there is huge proliferation of mobile loan apps and their modus operandi is in public domain. The operation is alleged to be this way, a gullible borrower is given a call and is lured into, for getting a small loan without any documentation. All that the borrowers are informed is that they should download the loan app and give access to the contents of the smart phone. A small time borrower desirous of getting money without any documentation would grab at the opportunity and accept every condition and give access to his smart phone. It is then the trouble crops up when the representatives of such mobile loan apps/companies begin to haunt the borrower threatening leakage of contents in the smart phone while seeking such repayment. It is alleged in some cases that repayment is sought 16 to 20 times more than what a borrower has to pay as EMI. It is again in public domain that several borrowers have committed suicide unable to bear the harassments of the representatives of such loan apps. The office bearers of several of these companies which control and operate such mobile loan apps are said to be entities of China or individuals from China sitting as Directors of such mobile loan apps. Therefore, it becomes necessary for an investigation, in the least to be conducted of any such company who would operate such loan apps and has transactions between each other. The investigation would be imperative, as any effort of any neighbouring nation to destabilize this country, either economically or otherwise, by any method which would touch upon the security of the nation and safety of its citizens, cannot be turned a blind eye to, and in certain cases, certainly in the case of the petitioner, investigation cannot be stalled on this specious plea of procedural aberration as alleged by the petitioner. There are no warrant to interfere with the impugned proceedings at this juncture. The challenge to both the freezing order and the show cause notice deserves to be rejected and the defreezement order shall remain subject to the proceedings before the Adjudicating Authority. Petition dismissed.
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2023 (3) TMI 586
Money Laundering - criminal conspiracy - illegal mining - large scale theft of the natural resources like stone chips and boulders which are public property - link between the predicate offence and proceeds of crime generated by the said offence - invocation of burden to prove in the pre-charge stage - HELD THAT:- This Court is of the view that the argument advanced on behalf of the E.D. is persuasive enough to reject the petition for bail. Contrary to the submission by the learned Counsel on behalf of the petitioner, the offence of money laundering is an independent offence and it is not necessary that the accused charged with the offence of money laundering are the same who are made accused in predicate offence as per the ratio decided in Vijay Madan Lal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ]. The law enforcement agencies are now confronted with a new species of crime in the form of money laundering, which necessitated the special Act. The law is evolving with different amendments and judicial pronouncements. These are not like conventional crime and the modus operandi involves three stages: (a) Placement: which is to move the funds from direct association of the crime. (b) Layering: which is disguising the trail to foil pursuit. (c) Integration: which is making the money available to the criminal from what seem to be legitimate sources. A normal business transaction between the different entities involved in the criminal conspiracy cannot be expected in such cases and therefore, the provision for reverse burden has also been made under Sections 23 and 24 of the PMLA. In the present case, the role of this petitioner has come-up in the statement of Ravi Kejriwal and Anil Jha - Huge cash transactions have been shown in the account of the company in the name of this petitioner, regarding which no plausible explanation has been offered. The investigation revealed that the cash receipts amounting to Rs. 5,65,17,000/-in Punjab National Bank Account No. 21881132000179 of M/s Herbal Green Solutions Pvt. Ltd, and subsequent payments worth Rs. 5,31,18,000/-to one company M/s Aurora Studio Pvt. Ltd., a company of Amit Agarwal, required to be satisfactorily answered by the petitioner, but he failed to do so. Quite interestingly, even two AK 47 rifles were seized from his house which are said to be of the security guards not posted in his place. Petition dismissed.
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2023 (3) TMI 585
Seeking grant of anticipatory bail - money laundering - predicate offences - proceeds of crime - requirements of section 45 of PMLA fulfilled or not - HELD THAT:- The Court has gone through the materials on the record and finds that the money laundering amount alleged to be Rs.141,47,59,798/- and proceeds of crime has also been enjoyed by the petitioner. The petitioner was proprietor of M/s DJN Commodity and M/s Divya Jyoti Securities. The argument of the learned counsel for the petitioner is not accepted by this Court looking into para 3.10 of the complaint with regard to employment on the post of Director of the said company on salary basis. Thus, there are materials against the petitioner. So far as the order relied by the learned counsel for the petitioner in Dalip Singh Mann [ 2015 (10) TMI 2580 - PUNJAB HARYANA HIGH COURT ] that was the order of the year 2015 and the judgment in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] has been delivered recently in the year 2022. Thus, that judgment is also not helping the petitioner. Moreover, the petitioners of that case were father-in-law and mother-in-law of Jagdish Singh @ Bhola, who was alleged to be the kingpin of drug mafia and considering this aspect of the matter, anticipatory bail was granted to the petitioners by Punjab and Haryana High Court. The facts of the present case are otherwise not helping the petitioner. Considering that Section 45 of PMLA are not fulfilled by the petitioner, the Court is not inclined to grant anticipatory bail to the petitioner and his prayer for anticipatory bail is rejected. Petition dismissed.
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Service Tax
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2023 (3) TMI 584
Levy of service tax - Fee collected by the SEBI for various activities - in the nature of Discharging of sovereign function or not - non-filing of proper returns - applicability of extended period to the demand of Service Tax in the first Show Cause Notice - demand for normal period as per provisions of section 73(2A) of the Finance Act, 1994 - violation of principles of Natural Justice (second SCN) - legality in remanding back the second Show Cause Notice without considering that the same was issued as a statement of demand under Section 73(1A) of Finance Act, 1994. HELD THAT:- In the present case, Paragraph Nos. 7 to 9 of the show cause notice dated 17/03/2016 (first SCN) refers to all the correspondence between the respondent and the Commissioner. However, it does not refer to any specific instances of fraud, collusion, misstatement or suppression of facts indulged in by the respondent. At Paragraph No. 10 of the first show cause notice, the Department only states that it appears from the correspondence referred to therein that the respondent has wilfully suppressed facts from the Service Tax Department with an intention to evade payment of service tax. It does not specify any material particulars of how wilful misstatements or suppression of facts has been indulged in by the respondent or in what manner the acts of the respondent are wilful or with an aim to evade tax. In Cosmic Dye Chemical [ 1994 (9) TMI 86 - SUPREME COURT ], the Hon'ble Supreme Court has also considered a similar issue on the question of what constitutes fraud, collusion or wilful misstatement or suppression of facts for the purpose of invocation of the extension of period of limitation under section 11-A of the Excise Act, where it was held that [ 1994 (9) TMI 86 - SUPREME COURT ] - From a reading of the decision of the Hon'ble Supreme Court, it would be incumbent upon the appellant to demonstrate from the correspondence / material on record or on the specific averments made in the first show cause notice, as to how the respondent has indulged in fraud, collusion or wilful misstatement or suppression of facts. In fact all disclosures as required by the earlier notice issued by the appellant were made by the respondent in its correspondence laid before the Appellant. Thus, the finding of fact arrived at by the CESTAT to the effect that there was no suppression, misrepresentation or fraud committed by the respondent, to enable the appellant to invoke the extended limitation clause in Section 73 is proper and based upon the correct appreciation of the record. Accordingly, it is concluded, that the substantial questions raised by the appellant in its appeal on the question of holding that the extended period of limitation was not applicable, do not arise in the present appeal, in view of the specific factual finding arrived at by the CESTAT. The other substantial questions of law sought to be raised, as to whether the CESTAT was right in holding that the respondent was discharging sovereign function does not arise as the CESTAT has clearly refrained from giving its finding on that question. This is evident from reading of the contents of Paragraph Nos.23, 24 and 25 of the impugned order, whereat, the CESTAT had recorded that it has withheld ascertainment of the legality of the claim made by the respondent on the question of whether it was exercising sovereign functions under the SEBI Act and therefore, not liable to pay service tax. Thus, no substantial question of law arises for our determination in the present appeal which is hereby dismissed.
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2023 (3) TMI 583
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - payments not made on or before the deadline fixed under the said Scheme - HELD THAT:- Being a show cause notice issued under Section 174 of the Central Goods and Services Tax Act, 2017 on account of the non payment of the interest and penalty amount by the petitioner, the question of interfering with the impugned show cause notice will not arise, as the same has been issued only under authority prescribed under law. However, necessarily, the respondents will have to consider the reply dated 11.05.2022 submitted by the petitioner on merits and in accordance with law and only thereafter pass final orders after adhering to the principles of natural justice including granting the petitioner the right of personal hearing. This Writ Petition is disposed of by directing the petitioner to submit an additional reply to the impugned show cause notice dated 28.04.2022, within a period of two weeks from the date of receipt of a copy of this order.
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2023 (3) TMI 582
Unauthorized recovery made without even serving copies of the--adjudication order - Seeking for a direction upon the appellants to-consider the claim of refund, which they made in their-representation dated 28th March, 2022 - case of the-respondents/writ petitioners was that even before the order of-adjudication could be served, by way of attachment a sum of-Rs.29,14,853/- from the bank account of the first respondent-and a sum of Rs.15,43,673/- from the bank account of the-second respondent were swiped off/debited. Whether they could have approached this Court by filing a writ-petition when admittedly their appeal against the order passed-by the Commissioner (Appeals) dated 16th March, 2021 is pending-before the Tribunal? HELD THAT:- The prayer-sought for by the respondents/writ petitioners cannot be admitted, though not on-merits but on the ground that they cannot bypass the statutory-remedy, which they have availed and approach this Court as if-this Court is an executing Court while the appeal at the-instance of the respondents is pending before the Tribunal. The learned advocate for the respondents has also-referred to the provisions of Finance Act, 1994 and Section-35F of Central Excise Customs Act. As pointed earlier the-respondents were wholly unjustified in bypassing the remedy-which they have already availed by filing an appeal before the-Tribunal. However, according to the respondents the-Department is not entitled to retain anything over and above-the amount of 10% which was pre-deposited at the time of-filing appeal before the Tribunal. Such a prayer should have-been made before the Tribunal and not by way of writ petition.-More importantly, the prayer sought for in the writ petition-is to consider the representation whereas the direction issued-is a positive direction to effect refund which was-impermissible for the writ Court to do. The appeal filed by the-Revenue is allowed and order passed by the learned writ Court-is set aside. Consequently, the writ petition stands-dismissed.
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2023 (3) TMI 581
Invocation of extended period of limitation - Valuation of services - certain charges collected from the customers towards in-room dining, in-room beverages supply and mini bar and also on laundry, Miscellaneous Income and Telephone - inclusion in the assessable value or not - Department was of the view that these charges should be included in the value of room rent and the petitioner ought to have paid service tax on these charges under Short Term Accommodation Services . HELD THAT:- Admittedly the impugned proceedings are initiated invoking the extended period of limitation under Section 73 of the Finance Act, 1994. Thus, the notice issued on 16.10.2015 culminating in the impugned order dated 05.04.2017 can be sustained only if it is shown that service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. Assuming the levy is valid, the impugned proceeding invoking the extended period of limitation cannot be sustained. To invoke the extended period, it ought to be demonstrated that service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. It has been consistently held by the Hon'ble Supreme Court that any non-disclosure or claim of non-liability on the basis of bonafide interpretation of law would not enable the Respondent to invoke the extended period of limitation. This Court also finds that the attempt made by the learned counsel for the Respondent to sustain the impugned proceedings, by invoking extended period of limitation cannot be sustained, in view of the fact that the view taken by the Petitioner has also been approved by at least two High Courts - the question of existence of mental element/mens rea, which is a condition precedent for invoking the extended period, is absent, thus the invocation of extended period is unsustainable. The proceedings having been challenged as bad for want of jurisdiction, the question of alternate remedy may not have a bearing for exercise of discretion under Article 226 of the Constitution of India. In this regard, it may be relevant to note that the remedy under Article 226 of the Constitution of India, is a discretionary remedy and existence of an alternative remedy, would not result in an embargo against exercise of jurisdiction under Article 226 of the Constitution of India, more-so, where the impugned proceedings are challenged on the ground of want of jurisdiction. The proceedings being barred by limitation, thus, the same is bad for want of jurisdiction and a nullity. In such circumstances, interference under Article 226 of the Constitution of India is warranted inasmuch as question of limitation relates to jurisdiction. An order barred by limitation is a nullity. It appears that there is no room for invoking the extended period on the facts - the impugned order dated 05.04.2017 is thus set aside as barred by limitation and thus bad for want of jurisdiction and a nullity. Petition disposed off.
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2023 (3) TMI 580
Levy of Service Tax - consideration received for construction services which are composite in nature including both supply of materials and provision of services - period prior to 01.06.2007 - HELD THAT:- The said issue stands answered in the case of SPRINGFIELD SHELTERS P. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, COIMBATORE [ 2018 (10) TMI 1280 - CESTAT CHENNAI] where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service. For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. The demand cannot sustain and requires to be set aside - Appeal allowed.
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2023 (3) TMI 579
Levy of penalty under Section 78 and 77 (1)(c) of FA - suppression of turnover and/or mis-classification of taxable service - Extended period of limitation - disallowance of cenvat credit along with interest and further penalty - abatement under N/N. 30/2012-ST - HELD THAT:- It is evident on the face of the impugned order, that no case of suppression or fraud, or misrepresentation is found on the part of the appellant/assessee. In this view of the matter, I set aside the penalty under Section 78 of the Finance Act and also under Section 77(1)(c) of the Act. The appellant is entitled to cenvat credit of Rs.1,25,018/-, which is towards Group Insurance taken for the medical and accident claim benefits. In the facts and circumstances, the penalty under Rule 15 of Cenvat Credit Rules read with Section 78 of the Act also set aside. It is further noticed that the appellant have also deposited the differential amount payable (during adjudication proceedings) as per the impugned order - the Adjudicating Authority is directed to recalculate their tax liability as per order of this Tribunal and after adjustment, if any, amount is found paid in excess, grant the refund to the appellant of the balance amount in cash. Appeal allowed.
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2023 (3) TMI 578
Misdeclaration in SVLDR Scheme - Non-payment of Service tax - appellant engaged in providing services as Direct Selling Agent of M/s. Safe Secure Online Marketing Private Limited - no summons were served upon the appellant before filing of the declaration in Form-SVLDRS-I under the Scheme - HELD THAT:- The issue herein is squarely covered by the ruling of Hon ble Bombay High Court in the case of M/s. New India Civil Erectors Pvt. Ltd. [[ 2021 (3) TMI 545 - BOMBAY HIGH COURT] ]. Further, it is observed that no mis-declaration has been found in the declaration filed under the Scheme by the appellant. Further, no enquiry was pending against the appellant as on the date of filing of the declaration under the scheme. Appeal allowed - decided in favor of appellant.
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2023 (3) TMI 577
Non/short payment of service tax - advertisement expenses incurred by the local franchisees - non-payment of service tax on management consultancy services by wrongly claiming the same as export service - Interest on late payment of service tax on franchisee fees to McDonald s USA - HELD THAT:- In the instant case it has been stated by the appellant that the appellant had filed an application with the Reserve Bank of India on 17 August, 2021 for granting permission for adjustment of the receivables. In response to the request made, the Reserve Bank of India accorded the approval and the appellant made the remittance of the net amount of Rs. 3,38,13,31,677/- to McDonald s Corporation USA on 30 March, 2022. The impugned order in so far as it seeks to confirm the demand of service tax in regard to the first issue, namely non-payment of service tax on advertisement expenses incurred by franchisees deserves to be set aside. Non-payment of service tax on management consultancy services by wrongly claiming the same as export service - HELD THAT:- The matter needs to be remitted to the Commissioner to pass a fresh reasoned order in the light of the observations made above and the additional facts brought to the notice of the Tribunal by the appellant. Appeal allowed in part and part matter on remand.
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2023 (3) TMI 576
Refund of unutilized CENVAT Credit - part of the refund claims were rejected stating that the CENVAT Credit in respect of such rejected amounts are not admissible to the appellants - Time Limitation - Rule 14 of the CENVAT Credit Rules - HELD THAT:- There was no initiation of proceedings to recover alleged inadmissible CENVAT Credit by invocation of provisions of Rule 14 of CENVAT Credit Rules, 2004 in the present case. The appellants were entitled for the refund of CENVAT Credit which was rejected to them. Appeal allowed.
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2023 (3) TMI 575
CENVAT Credit - services provided by the Commission Agent - appellant submits that the Services of the Commission Agent is not in relation to either sale of their product or for providing any sales promotion services - HELD THAT:- Hon ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD II VERSUS M/S CADILA HEALTH CARE LTD. [ 2013 (1) TMI 304 - GUJARAT HIGH COURT ] has held that the commission agent merely acts as an agent of the principal for sale of goods and such sales are directly made by the commission agent to the consumer - it can be observed that the issue before the Hon ble High Court was in respect of sale of goods, promotion of sale of goods, etc. by the Commission Agent The Hon ble High Court held as Commission Agent in this case is only selling the goods and not undertaking any Sales Promotion work, the Respondent would not be eligible for the Cenvat Credit. Further it would be relevant to note here that an amendment was brought in w.e.f. 3.2.2016 to allow Cenvat Credit on Sales Promotion also, so as to overcome the difficulty faced by the assesses in view of Gujrat High Court Decision. In the present case, the Commission Agent is not rendering any service towards sale/Sales Promotion of the present Appellant. The Commission Agent is only an Agent engaged in collection of debts from various subscribers. Therefore, the very premise to issue Show Cause Notice basing on the decision of the Hon ble Gujarat High Court is erroneous on the part of Department. The Hon ble Gujarat High Court judgment is on an entirely different type of Commission Agent and is not applicable to the facts of present case. The Hyderabad Tribunal in the case of PEPSICO INDIA HOLDINGS (PVT.) LTD. VERSUS COMMISSIONER OF CENTRAL TAX, TIRUPATI [ 2021 (7) TMI 1094 - CESTAT HYDERABAD ] has held that Services used in setting up the factory are, therefore, unambiguously covered as input services under Rule 2(l)(ii) of the Cenvat Credit Rules, 2004 as they stood during the relevant period (post 1-4-2011). The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. Once it is covered in the main part of the definition of input service, unless it is specifically excluded under the exclusion part of the definition, the appellant is entitled to Cenvat credit on the input services used. Extended period of limitation - HELD THAT:- The fact of taking Cenvat Credit on Commission Agent Service is regularly reported in the periodical STReturns filed by the Appellant. Further, the issue of Cenvat Credit on Commission Agent Service is a matter of interpretation and the Department was in error in equating Collection Agent s service in the present case with that of the service provided by the Commission Agent towards sale of goods/sales promotion in the Cadilla Case [[ 2013 (1) TMI 304 - GUJARAT HIGH COURT] ]. Therefore, the allegation of suppression with an intent to evade cannot be sustained. Hence, the proceedings are hit by limitation and the confirmed demand for the extended period is set aside. Appeal allowed - decided in favor of appellant.
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2023 (3) TMI 574
Liability to pay service tax for the period post 01.07.2003 - franchise service was provided post its enactment i.e on 01.07.2003, and prior to that date, but the contract for the franchise service and payment therefore, was made prior to 01.07.2003 - whether the appellant s demand under commission service is time barred when the service of commission provided by giving table space to the finance company for sale of their finance product? HELD THAT:- The fact which is not under dispute is that the appellant have entered into a contract of franchise agreement before 01.07.2003. and the payment of such contract was also made at the time of entering into the contract. In this fact the Hon ble Rajasthan High Court in [[ 2018 (3) TMI 1288 - RAJASTHAN HIGH COURT] ] has decided the matter holding that when the contract was entered and payment thereof was made at a subsequent stage if the service was brought under the levy of service tax, the appellant is not liable to pay the service tax, for the reason that the the provision of services shall be treated as provided on the date of contract on payment of service value - it is settled that in respect of Franchise Service the service tax will arise as per the date of contract and date of payment for the service and if the same is at a time when there is no levy, no service tax can be charged. Accordingly, in the present case also the service tax on franchise service is not chargeable. Levy of service tax - Business Auxiliary Service under the head of commission - HELD THAT:- The issue was not free from doubt and this Tribunal in the case of SILICON HONDA VERSUS COMMISSIONER OF C. EX. (APPEALS-II), BANGALORE [ 2007 (4) TMI 27 - CESTAT, BANGALORE ], TRIBHUVAN MOTORS LTD. VERSUS COMMISSIONER OF SERVICE TAX, MANGALORE [ 2009 (5) TMI 382 - CESTAT, BANGALORE ] held in favour of the assessee that mere providing the table space to the financial institutions, it is not taxable. However, the issue was subsequently referred to the larger bench and in the case of M/S PAGARIYA AUTO CENTER VERSUS CCE, AURANGABAD [ 2014 (2) TMI 98 - CESTAT NEW DELHI (LB) ], It was held that the commissioner received from the financial institution shall be liable to service tax. Extended period of limitation - suppression of facts - HELD THAT:- The suppression of fact cannot be alleged against the appellant. Therefore, the demand being covered under the extended period will not sustain as the same is hit by limitation. Appeal allowed.
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2023 (3) TMI 571
Refund of service tax paid on input services - export of services - April 2016 to September 2016 and October 2016 to March 2017 - Rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- When the CENVAT Credit is availed by the assessee so long as the same has not been recovered by proceedings initiated by invocation of Rule 14 of CENVAT Credit Rules 2004, such credit remains on the books of accounts of the assessee and he can utilize the same in the manner provided by law. In the present case, the appellants had exported the services and, therefore, were eligible for refund of unutilized CENVAT Credit. The appellants were entitled for refund of Rs.23,73,694 claimed by them for the period from April 2016 to March 2017 - Appeal allowed.
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2023 (3) TMI 570
Works Contract Service - demand for the period before and after 01.06.2007 - HELD THAT:- So far as the period prior to 01.06.2007 is concerned it is not in doubt that the demand has been made in the category of works contract service . The works contract service was not taxable prior to 01.06.2007 has held by Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] consequently the demand for the period 01.06.2007 made under the category of the works contract service is set aside. The definition of residential complex excludes from the levy of Service Tax complex which is constructed by a person directly engaging any other person for designing or planning of the lay out and the construction of such complex is intended for personal use as residence by such persons. - Reliance can be placed in the case of M/S. SIMA ENGINEERING CONSTRUCTIONS, S. RAJANGAM, T.M. SARAVANAN, M/S. MARIMUTHU GOUNDER SONS VERSUS CCE, TRICHY [ 2018 (5) TMI 405 - CESTAT CHENNAI] where it was held that the appellant, has engaged sub- contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service tax. The use of the residential complex by (GSPHCL) is excluded from the definition of residential Complex as intended for personal use as residence by such persons . Appeal allowed.
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Central Excise
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2023 (3) TMI 573
Clandestine Removal - demand based on certain documents recovered from the appellant and certain statements recorded by Revenue - HELD THAT:- The appellants have heavily contested the fact that no cross-examination of the buyers was allowed and therefore no reliance on statements can be made. It is noted that the matter has travelled between commissioner and Tribunal number of times and on earlier occasion the directions of Tribunal were not followed. The direction of Tribunal made in para 3 of its order dated 26.11.2007, has been followed and relief has been granted by the Commissioner to that extent for the period 1999-2000. The Commissioner has clearly ignored this findings and come to a difference conclusion. While doing so he is relied on the confessional statements of buyers. There are no opportunity of cross-examination has been given and the test of Section 9D of the Central Excise Act has not been passed in respect of this statements. In absence of cross-examination no reliance can be placed on these statements. The Commissioner has quantified the amount of duty payable for the year 1999-2000 has Rs. 1,11,113/- in para 3.09 of the impugned order. The amount of duty for financial year 2000-01 has been confirmed in total ignoring the directions given by the Tribunal in the order dated 26.11.2007. The impugned order is therefore set aside, and the matter is remanded to the Commissioner for determination of the duty liability for the Financial year 2000-01 in terms of para 4 of the Tribunal order dated 26.11.2007. Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2023 (3) TMI 572
Exemption from payment of sales tax on the sales turnover of finished products namely molasses, bagasse and filter mud - G.O. No. CI 30 SPC 96 dated 15-03-1996 read with notification No. FD 32 CSL 96 (I) dated 15-11-1996 - Revenue s specific case is, the exemption notification specifically mentions the word manufacture , hence, the by-products cannot be considered as products manufactured. Whether the petitioner is entitled for exemption from payment of tax on molasses, bagasse and filter mud under 1996-2001 Industrial Policy? HELD THAT:- It is not disputed that the activities of both petitioner and Chamundeshwari are identical. There is no pleading on behalf of the State Government that the benefit is denied to the petitioner based on the interpretation of the words manufacture and production . It is only at the time of final hearing of this writ petition the learned Additional Advocate General sought to justify the action of the State Government by placing reliance of Arihant Tiles. The indubitable fact remains that, according to both petitioner and the State Government, the activities of petitioner and Chamundeshwari are one and the same. The State Government s action amounts to conscious discrimination between two similarly situated industrial units. It is relevant to note that Chamundeshwari Industry was granted sales tax exemption on sale of by-products of sugar under Industrial Policy 1993-98 and it also enjoyed the benefit of deferral of purchase tax as interest free loan from 2000 to 2010. The petitioner being similarly situated as that of Chamundeshwari shall be entitled for exemption from payment of sales tax on by-products namely molasses, bagasse and filter mud - petition allowed.
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