Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 16, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of GST registration of petitioner - The Court noted the reasons for cancellation as non-filing of returns for over six months, a violation under the Central Goods and Services Tax Act, 2017. - Despite the dismissal of the appeal by the appellate authority due to the delay in filing, the Court acknowledged the petitioner's health issues and the need for a remedy. - Referring to a precedent case, the Court directed restoration of the registration subject to certain conditions, ensuring compliance with tax obligations.
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Search and seizure - The case involved a challenge to a prohibitory order issued under the GST Act following a search and seizure procedure. The petitioners sought release of seized goods, but the court emphasized the necessity of following prescribed mechanisms under the Act for such requests. Without an application for release under Section 67(6), the court found no grounds for interference and disposed of the writ petition accordingly.
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Rejection of petitioner's application for grant of registration by a non-speaking order - In this case, the petitioner, a successful Resolution Applicant under the Insolvency Resolution Process, was denied registration under the Uttar Pradesh Goods and Services Tax Act, 2017, despite its Resolution Plan being accepted by the NCLT. The Court found the denial of registration to be a violation of the petitioner's fundamental right to carry on business and ordered the Registering Authority to reconsider the application on its merits within a week.
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Seeking grant of Regular Bail - The case involves a bail application under Section 439 of the CrPC in connection with an FIR registered under the CGST Act. The applicant is accused of issuing fake invoices without supplying goods, causing substantial loss to the government. The defense argues innocence and coercion during investigation, while the prosecution highlights the seriousness of the offence and potential tampering with evidence. Despite the gravity of the allegations, the court grants bail, balancing the applicant's right to liberty with the need for judicial process and constitutional rights.
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Maintainability of petition - availability of alternative remedy - Stay of demand - The petitioner sought relief due to the non-constitution of the Appellate Tribunal, which deprived them of their statutory right to appeal against an order issued under the CGST/OGST Acts. The Court, considering the circumstances, granted interim relief to the petitioner while outlining the procedure for future appeal filing once the Tribunal became operational.
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Lack of mention regarding tax demand in the show cause notice - Apparent discrepancy in treatment of refund claim and tax demand. - Scope for granting interim order on the writ petition - The Court observed that there was no error in the order passed by the learned Single Bench, which refused to grant interim relief on the writ petition. As of the date of the appeal, no demand notice had been issued to the appellant by the concerned authority. Therefore, the appeal was disposed of with the liberty granted to the appellant to file a fresh stay application before the learned Single Bench once a demand notice is issued.
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Classification of goods - Bike and Scooter seat cover - to be classified under CTH 87089900 or not - rate of tax of 28% is correct or not - The Appellate Authority found that seat covers are not integral to the seat's function but are accessories enhancing comfort, convenience, or aesthetics. Thus, they do not qualify as 'parts' of seats. The Authority clarified the distinction between parts and accessories, emphasizing that parts are essential for functionality, whereas accessories are not. Consequently, it was determined that seat covers are correctly classified under CTH 87141090, attracting a 28% GST rate, thereby modifying the AAR's classification to 8714 10 90 but maintaining the tax rate.
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Classification of goods - car seat Cushion Suspension wires - Steel hooks - The Authority for advance ruling extensively reviewed the function and use of the products, the relevant legal and tariff provisions, and the general rules for interpretation of the Customs Tariff Act, 1975. - The Authority noted that Chapter 94 provides a specific entry for seats and their parts, while Chapter 87 offers a general entry for motor vehicle parts and accessories. Since the products in question form an essential part of the car seat structure, their classification under Chapter 94 was deemed more appropriate. - The Authority ruled that both the Car Seat Cushion Suspension Wires and Steel Hooks should be classified under HSN 94019900, subject to a GST rate of 9% CGST and 9% SGST.
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Input Tax Credit (ITC) - availability of inputs to the Assesses when the Godowns constructed by him is entirely meant for renting it out for Commercial purposes to registered dealers - The Authority for Advanced Ruled (AAR) analyzed Section 17(5)(d) of the CGST Act, which clearly states that no ITC is available for goods or services used in constructing immovable property for one's own account. It rejected the applicant's argument that denial of ITC violates Article 14 of the Constitution, stating that legislative intent prevails. - The AAR ruled that the legislative scheme restricts the flow of credit in certain situations, and taxpayers must adhere to these restrictions. Therefore, the AAR held that no Input Tax Credit is available on inputs when godowns are constructed for renting out for commercial purposes.
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Levy of GST - transmission or distribution of electricity services provided by them is exempt from GST - various charges collected along with network/wheeling charges, cross subsidy surcharge and additional charges - This case clarifies the GST implications for various charges collected by electricity distribution licensees. While the distribution of electricity itself is exempt from GST, ancillary services that do not form an integral part of this distribution may be subject to GST. This distinction is crucial for electricity distribution companies to accurately classify their services and apply the correct GST rates. The ruling underscores the importance of distinguishing between the principal supply and ancillary services in the context of GST legislation.
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Nature of activity - replacing the old scrap received from the customers with the already processed Winding wire, then and there, at a fixed differential price - sale of goods or service? - Applicability of reverse charge mechanism (RCM) - The Authority for Advance Ruling determined that the applicant's activity constituted a sale of goods, not a service. Therefore, the applicable tax structure was provided, clarifications were made regarding composite supply and RCM applicability, and the appropriate HSN code was specified. The ruling concluded that the applicant was not liable for RCM on purchases from unregistered persons.
Income Tax
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Stay of demand - payment of 20% of the outstanding demand - ITAT rejecting its application for stay on the recovery of demand during the pendency of appeal - The Delhi High Court dismissed the petition challenging the ITAT's order on the recovery of tax demand from a national political party. The judgment underlines the importance of compliance with statutory requirements, especially timely filing of tax returns and adherence to conditions for receiving donations, to qualify for exemptions. It also highlights the significance of the taxpayer's conduct in seeking relief from tax demands, concluding that the petitioner's lackadaisical approach and failure to engage with the tax authorities in a timely manner undermined its position.
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Addition u/s 14A r.w.r. 8D - Addition under special provision u/s 115JB - Minimum Alternate Tax (MAT) - the case revolved around the disallowance made under Section 14A of the Income Tax Act and its implications for computing Minimum Alternate Tax (MAT) under Section 115JB. The Court upheld the ITAT's decision to delete the disallowance under Section 14A and concluded that such disallowance cannot be added back to book profit for MAT computation under Section 115JB.
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Liability for salary and wages arising out of the Justice Palekar Award - ascertained lability or not - The High court referred to precedent and held that the liability accrued when the provision was made, regardless of the actual agreement date. It emphasized that the provision made was for services already rendered and was a prudent business practice. - The court disagreed with the tribunal's decision and held that the liability for salary and wages arising from the specific award should be allowable as expenditure in the relevant assessment year.
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Reopening of assessment u/s 147 - Disallowance of CSR amount u/s 37(2) - reason to believe or suspect - tangible material to reopen - AO power to review not to be confused with the power to re-assess - The petitioner argued that the notice was based on a change of opinion and lacked fresh tangible material. They also contested the treatment of CSR expenses and claimed that their practice was lawful. The High Court ruled in favor of the petitioner, holding that the notice for reopening the assessment was invalid and unsustainable, and the treatment of CSR expenses was permissible under the law. - The Court agreed with the petitioner's contention that donations made to eligible trusts, even if funded by CSR, qualified for deduction under Section 80G of the Act
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Disallowance of TDS on account of mismatch & later on TDS matched but AO not given credit - Although the rectification application was filed beyond the permissible time limit, the Tribunal invoked Section 155, which empowers the AO to rectify apparent errors in credit of taxes. Considering the appellant's efforts to rectify the TDS credit and the genuineness of the tax credit denied by the AO, the Tribunal directed the AO to pass a consequential order granting the tax credit due to the appellant.
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Disallowing claim of expenditure - non-carrying of business activity during the year under reference - The case involved an appeal by an assessee against the disallowance of expenditure claimed during the assessment year due to the absence of revenue generation. The assessee, engaged in real estate business, argued that it had commenced its business by purchasing land, which was reflected in its balance sheet. The ITAT, relying on relevant precedent, concluded that the acquisition of land marked the initiation of business operations, irrespective of revenue generation during the assessment year. Consequently, the Tribunal allowed the appeal, affirming the allowability of the claimed expenditure.
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LTCG - Exemption claimed u/s. 54F - Failure to deposited in capital gain deposit scheme - The appellant sold a property, deposited the sale proceeds in a capital gain account scheme, and intended to utilize the funds for the purchase or construction of a new property within the statutory period. However, the completion of construction was delayed beyond the prescribed time frame. The ITAT ruled in favor of the appellant, emphasizing that the utilization of funds from the capital gain account scheme for the new investment was not mandatory, and the appellant could use other available funds without affecting their claim for deduction.
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The ITAT Mumbai's judgment in this cross-appeal largely favored the assessee, addressing complex issues related to disallowances, the nature of expenses, additional depreciation claims, prior period expenditure and the treatment of subsidies. The Tribunal meticulously applied legal principles and precedents to guide its decisions, ensuring that each disputed item was carefully analyzed in light of the Income Tax Act's provisions and judicial interpretations.
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TP Adjustment - notional interest on outstanding receivables due from Associated Enterprises (AES) - assessee not charging any interest from its AEs - Treatment of outstanding receivables as a separate international transaction - Common policy of not charging interest on delayed payments from AEs and third parties - Ultimately, the ITAT partly allowed the assessee's appeal, directing adjustments to be computed following the directions of the DRP. This included considering the receivables cleared within specific timeframes and applying appropriate interest rates. - The Tribunal emphasized the need for a case-by-case examination of transactions and directed the AO to set off receivables cleared within certain periods.
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Validity assessment proceedings u/s 153C - recording of satisfaction - The ITAT examined the language of Section 153C and referenced the judgment in Ganpati Fincap Services P. Ltd & Ors v. Commissioner of Income Tax. It concluded that only one satisfaction note is required, even if the Assessing Officer of the searched person and the other person is the same. The satisfaction note must confirm that the seized documents belong to the other person, fulfilling the requirements of Section 153C. - It was clarified that the failure of the Assessing Officer of the searched person to make a note in the file of the searched person after transmitting documents to the Assessing Officer of the other person does not invalidate the proceedings under Section 153C.
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Capital gain - Denial of benefit of 1st proviso to section 50C(1) which allows the consideration value fixed in the agreement to be considered instead of the stamp valuation for the computation of full value of consideration for transfer. - Proof of agreement prior to application of section 50C - The Tribunal noted that a part of the consideration must be received through specific banking channels before the agreement date. As the payment did not meet this requirement, the benefit of the first proviso was denied. - The ITAT also dismissed the contention regarding the denial of deduction under section 54B, upholding the lower authorities' decision.
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Assessment against company dissolved/insolvent - This case revolved around an appeal against the order of the CIT(A) by an assessee undergoing Corporate Insolvency Resolution Process under the IBC, 2016. The ITAT Kolkata dismissed the appeal as infructuous, acknowledging the ongoing CIRP and its implications on income tax proceedings. The tribunal highlighted the overriding effect of the IBC over other laws, including the Income Tax Act, and noted the binding nature of an approved resolution plan on all stakeholders, including tax authorities.
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Validity of reopening of assessment - The case involved a dispute over the deletion of addition on account of undisclosed capital gain and the validity of the assessment order. The Revenue's arguments regarding undisclosed capital gain were dismissed by the Tribunal, highlighting the lack of responsibility on the assessee's part and the significance of matching amounts in documents. Furthermore, the Tribunal found the assessment order invalid due to improper notice under section 148 of the Act, emphasizing the jurisdictional requirement for proper notice and quashing the reassessment proceedings as a result.
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Addition of excess stock found during the course of survey - unexplained investments u/s 69 r.w.s.115BBE - The Tribunal observed that the assessee provided plausible explanations supported by evidence, including invoices, ledger accounts, bank statements, and acknowledgments from the parties. Despite this, the AO made the addition solely based on the partner's statement during the survey. However, the Tribunal found that the explanations provided by the assessee were credible and that there was no basis for the addition.
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Additions on various grounds during post search Assessment u/s 153A - The ITAT's decision showcases a detailed analysis of each issue, balancing the need for legal compliance with fairness to the taxpayer. While the tribunal upheld some of the additions made by the AO, it provided relief on several counts by setting aside the contentious additions for re-examination or deleting them, particularly highlighting the importance of accurately tracing the source and beneficiary of transactions in tax assessments. This case underscores the complex nature of tax litigation and the critical role of evidence and documentation in resolving tax disputes.
Customs
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The notification includes Bihta, Bihar, as a designated location for the purpose of "Unloading of imported goods and loading of export goods" at Inland Container Depots (ICDs). This signifies a significant expansion in the geographical scope of customs activities in Bihar.
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Effective rates of customs duty on import of goods - The notification introduces changes to the tariff classification for certain goods related to X-ray machines used in medical, surgical, dental, or veterinary fields, reducing the customs duty rate from 15% to 10%. Specifically, amendments include substitutions and additions of specific items such as High Frequency X-Ray Generators and related components.
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The Government issued notification to raise the basic rate of import duty for two specific categories of goods: (i) X-ray tubes, classified under tariff item 9022 30 00. (ii) Other goods falling under tariff item 9022 90 90. - Importers and manufacturers of X-ray tubes and other related equipment will bear the brunt of the increased import duty rates from 10% to 15% - However effective rate of duty on specified times reduced to 10% by another notification.
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Notification issued by the Ministry of Finance, under the authority of the Customs Act, 1962 and the Customs Tariff Act, 1975 exempting gold imports under Customs Tariff Heading 7108 when imported by the Reserve Bank of India from customs duties and the Agriculture Infrastructure and Development Cess.
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The Ministry of Finance, through Notification No. 01/2024-Customs (CVD), has extended the countervailing duty on imports of pneumatic radial tyres from China PR until July 23, 2024. This extension, in accordance with the Customs Tariff Act and Rules, aims to address concerns related to subsidized articles and injury determination.
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Waiver of pre-deposit - dismissing the appeal for non-compliance of the deposit order - Unless Section 129E is complied with, the Appellate Authority cannot proceed to hear the appeal on merits. - Considering the facts, the court found that the appellants did not comply with the pre-deposit order despite dismissal of their waiver applications and rejection of their writ petitions. Consequently, the CESTAT was justified in dismissing the appeals for non-compliance.
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Wilful misdeclaration or suppression of facts - benefit of Merchandise Export from India Scheme (MEIS) - Export of various frozen seafood - exporting goods as ‘Frozen Leather Jacket Fish’ - The Tribunal noted that the appellant's classification of the product under the contested HSN code was based on a legitimate interpretation and that the customs had accepted this classification at the time of export. The reclassification by the department after issuing a Public Notice could not retroactively invalidate the appellant's eligibility for MEIS benefits. - The Tribunal also addressed the legal validity of the MEIS scrips obtained based on the exports under dispute, concluding that if the scrips were deemed valid for the importers, they must also be considered valid for the exporter (the appellant).
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Classification of imported goods - Boronated Calcium Nitrate - to be classified under CTH 3102 60 00 of the First Schedule to the Customs Tariff Act, 1975 or not - concessional rate of 5% BCD - The Appellant argued that their submissions were not considered and relevant reports were not provided during the proceedings, violating principles of natural justice. The Tribunal, emphasizing the need for clarity on the product's nature, set aside the impugned order and remanded the matter for reconsideration by the Adjudicating Authority.
DGFT
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The public notice issued by the DGFT announces amendments to Para 4.14 and 4.06 of the Handbook of Procedures 2023, under the authority of the Foreign Trade Policy 2023. The amendments aim to modernize and simplify procedures related to norm fixation and the notification of Standard Input-Output Norms (SION) under the Advance Authorisation Scheme. By leveraging rule-based IT environments and empowering the Norms Committee, these changes seek to enhance efficiency, transparency, and compliance in international trade operations.
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The Public Notice No. 50/2023 issued by the DGFT, amends the Foreign Trade Policy (FTP), 2023, to exempt certain Ministries/Departments from mandatory Quality Control Orders (QCOs) for inputs used in manufacturing export products. Effective immediately, this amendment streamlines import processes for entities like Advance Authorisation holders, Export Oriented Units (EOUs), and Special Economic Zones (SEZs), aiming to bolster export manufacturing and improve administrative efficiency in trade facilitation.
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DGFT issues Public Notice regarding the procedure for import allocation of Calcined Petroleum Coke (CPC) for the Aluminium Industry and Raw Petroleum Coke (RPC) for CPC manufacturing industry for the financial year 2024-25. This notice follows directives from the Hon'ble Supreme Court and the Commission for Air Quality Management, which set import limits for these materials.
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Incorporation of Policy condition for export of Chitin, Chitosan, Chitosan Salts, Chitosan Salts (Chitosan Hydrochloride, Chitosan Acetate, Chitosan Lactate) and Chitosan Derivatives (Chitosan Succinamide) - While the export of these products is declared as 'Free', exporters are required to adhere to specific conditions when exporting to the EU. This includes obtaining a 'Shipment Clearance Certificate' from CAPEXIL and a 'Health Certificate' jointly issued by CAPEXIL and the Regional Animal Quarantine Officer, Department of Animal Husbandry, Dairying and Fisheries, Government of India.
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Amendment in export Policy of Human Biological Samples under Chapter-30 of ITC HS schedule-2 of export policy. - The revised policy now mandates obtaining a No Objection Certificate (NOC) from either the Central Drugs Standard Control Organization (CDSCO) or the Indian Council of Medical Research (ICMR)/Department of Health Research (DHR) for the export of human biological materials falling under Chapter 30. While items related to activities covered under the Drugs & Cosmetics Act 1940 require NOC from CDSCO, those not covered necessitate NOC from ICMR/DHR.
Corporate Law
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Corporate Social Responsibility - Determination of net worth - Company fall within the purview of section 135 of Companies Act or not - Exclusion of reserves created from amalgamation - The High court found that the petitioner company did not comply with the CSR obligations despite having a net worth exceeding the prescribed threshold. The court noted that the company failed to make CSR expenditures or provide reasons for not doing so in its Board's report, as required by the law. - The court disagreed with the petitioners’ interpretation of net worth. It held that the benefits of excluding reserves created from amalgamation from the net worth calculation do not extend beyond the year of amalgamation. Consequently, the petitioners could not continuously exclude these reserves to avoid CSR obligations in subsequent years. - There is thus sufficient materials on record making out a prima facie case against the petitioners in respect of the offences alleged.
IBC
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Admission of section 9 application - initiation of CIRP - pre-existing disputes or not - he National Company Law Appellate Tribunal (NCLAT) found ample evidence of a pre-existing dispute between the parties. The correspondences and the issues raised by the Corporate Debtor regarding the quality and supply of cables were sufficient to establish a dispute. The court highlighted that the operational creditor's failure to respond to the Corporate Debtor's notices and to file a Section 9 application promptly after receiving the dispute notice further indicated the persistence of a dispute. - The NCLAT set aside the NCLT's order and dismissed the Section 9 application filed by the operational creditor.
PMLA
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Seeking grant of anticipatory bail - This case revolves around allegations of a sophisticated money laundering scheme linked to illegal coal levy collection. The court meticulously examined the legal arguments, the evidence presented, and the applicable legal standards under the PMLA. Despite the defense's arguments regarding the applicant's eligibility for anticipatory bail, the court found compelling reasons to deny the application based on the seriousness of the offences, the evidence suggesting the applicant's involvement, and the overarching principles governing bail under the PMLA. - Ultimately, the court decided against granting anticipatory bail to the applicant.
SEBI
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The circular issued by the Securities and Exchange Board of India (SEBI) announces the repeal of previous circulars concerning the procedure for dealing with cases involving the issuance of securities to more than 49 but up to 200 investors in a financial year, under the Companies Act, 1956. It states that the repeal is enacted to protect the interests of investors in securities and regulate the securities markets. The circular outlines a procedure wherein companies were given the option to avoid penal action by providing investors with an option to surrender the securities and receive a refund amount along with interest.
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The circular issued by the Securities and Exchange Board of India (SEBI) on March 12, 2024, addresses the need for simplification and streamlining of Scheme Information Documents (SIDs) for mutual fund schemes. It extends the timelines for implementing the revised SID format, with the updated format to be applicable from June 01, 2024. Draft SIDs are required to be filed with SEBI by May 31, 2024, and existing SIDs must be updated with data as of May 31, 2024, by June 30, 2024.
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This circular issued by SEBI signifies a significant step towards strengthening regulatory oversight in the Indian securities market. By expanding the framework of Qualified Stock Brokers and imposing enhanced obligations on market participants, SEBI aims to foster greater investor trust and market integrity. The introduction of additional parameters for designation as QSBs reflects SEBI's commitment to comprehensive evaluation and regulation of stockbrokers. The staggered implementation approach ensures a smooth transition, allowing market participants ample time to adapt to the new requirements.
Service Tax
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Refund claim of service tax paid on cancelled transactions - Post GST era - Rejection of refund under Rule 6(3) of Service Tax Rules read with Sec 142(5) of CGST Act - payment of service tax and GST on a transaction where no service was ultimately provided - Relying on precedent cases, the tribunal held that the appellant was entitled to a refund under Rule 6(3) of Service Tax Rules read with Sec 142(5) of CGST Act due to the change in tax regime. - Consequently, the court set aside the impugned order and directed the Adjudicating Authority to grant the refund within a specified time frame along with interest.
Case Laws:
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GST
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2024 (3) TMI 684
Condonation of delay of 167 days in filing the Special Leave Petition - sufficient reasons for delay or not - HELD THAT:- There is a delay of 167 days in filing the Special Leave Petition. The explanation for the delay is not sufficient. Consequently, the Special Leave Petition is dismissed on the ground of delay.
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2024 (3) TMI 683
Cancellation of GST registration of petitioner - non-filing of returns for a continuous period of seven months - petitioner assails an appellate order rejecting the appeal against cancellation of the petitioner's GST registration and also such order of cancellation - petitioner suffered from kidney and heart related issues - HELD THAT:- The appellate authority cannot be faulted for rejecting the appeal in view of the language of Section 107 of the Central Goods and Services Tax Act, 2017. At the same time, the petitioner should not be left without remedy. The reasons set out in the order of cancellation is non filing of returns for a continuous period of more than six months. In Suguna Cutpiece v. The Appellate Deputy Commissioner (ST)(GST) and others, [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , this Court directed restoration of registration subject to certain conditions. In the over all facts and circumstances, the petitioner is entitled to an order on similar lines. The petitioner is directed to file returns for the period prior to the cancellation of registration, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order - restoration of the GST registration is allowed subject to and conditional upon fulfilling the conditions imposed - petition disposed off.
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2024 (3) TMI 682
Validity of assessment order - petitioner was provided sufficient opportunities to contest the tax demand and penalty or not - violation of principles of natural justice - HELD THAT:- The reply dated 280.08.2023 of the petitioner is on record. By such reply, the petitioner asserted that a sum of Rs. 1,79,806/- each was paid towards CGST and SGST along with interest of Rs. 77,903/- each towards CGST and SGST. When the impugned assessment order is examined against this backdrop, it is unclear as to how the liability of Rs. 1,43,048/- each towards SGST and CGST was arrived at. The assessment order also refers to the payment of Rs. 2,57,709/- by the petitioner, whereas documents on record indicate that the sum paid was Rs. 1,79,806/- each towards CGST and SGST. In addition, as contended by learned counsel for the petitioner, penalty was imposed without providing the petitioner an opportunity to issue show cause in respect thereof. For all these reasons, the impugned assessment order warrants interference. Hence, the assessment order dated 29.09.2023 is quashed and the matter is remanded for reconsideration. The respondents are directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within two months from the date of receipt of a copy of this order. Petition disposed off.
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2024 (3) TMI 681
Validity of the Notification No. 09/2023 dated 31.3.2023 and Notification No. 515/SI-2-23-9(47)/17-T.C215-U.P. Act- 1-2017-Order-(273/2023) dated 24.4.2023 - no valid reason existed to grant second extension of time to issue show cause notice under Section 73(10) of the U.P. GST Act, 2020 - HELD THAT:- In the present case, it has further been submitted that the further impugned Notification No.56 of 2023 dated 28th December, 2023, has been issued only under the Central GST Act, 2017, that too, without prior approval of the GST Council. In any case, no parallel notification may have been issued under the UP GST Act, 2017. The matter requires consideration - Connect with Writ Tax No.1256 of 2023.
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2024 (3) TMI 680
Search and seizure - Challenge to order of prohibition dated 25th March, 2023 issued under Section 67(2) of the CGST/WBGST Act, 2017 - HELD THAT:- Admittedly in this case it is noticed that a prohibitory order has been passed by invoking the first proviso to Section 67(2) of the GST Act. Admittedly, the assessee has not approached the respondent no. 1 for release of goods under Section 67(6) of the GST Act and the Hon ble Supreme Court in the case of THE STATE OF UTTAR PRADESH ORS. VERSUS M/S KAY PAN FRAGRANCE PVT. LTD. [ 2019 (12) TMI 95 - SUPREME COURT] has clearly highlighted that the assessee in order to seek release of the goods must invoke the provisions of the GST Act to seek release of the goods. Insofar as the judgment delivered in the case of BEST CROP SCIENCE PVT. LTD. VERSUS SUPERINTENDENT, CGST, DELHI WEST AND ORS. [ 2023 (9) TMI 996 - DELHI HIGH COURT] , it is found that the Hon ble Delhi High Court taking note of the provisions of Section 67(7) of the GST Act has observed that the prohibitory order cannot be permitted to continue indefinitely. In this case it may be relevant to consider that the assessee has not approached the respondents under Section 67(6) of the GST Act and as such, there is no reason for this Court to interfere at this stage save and except, if any application is made by the assessee with the respondent no. 1 in terms of Section 67(6) of the GST Act, the same shall be considered in accordance with law. The writ petition is disposed off.
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2024 (3) TMI 679
Rejection of petitioner's application for grant of registration by a non-speaking order - violation of principles of natural justice - The petitioner, a successful Resolution Applicant under the Insolvency Resolution Process (CIRP under IBC) - HELD THAT:- In absence of any consequence shown to have been provided by any law and in face of any other undoubted position that registration granted may apply prospectively and further since the petitioner is not claiming the registration retrospectively, it is found constrained to observe that the order rejecting the grant of registration is practically an order infringing on the petitioner's fundamental right to carry on business. Since facts are not in dispute and the issue is wholly with respect to registration which only enables the business to abide by the regulatory laws and further since there is no objection on part of the revenue authorities that the petitioner is seeking registration for business purpose, no useful purpose would be served in keeping the petition pending or calling for a counter affidavit. The impugned order dated 27.02.2024 is quashed - petition allowed.
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2024 (3) TMI 678
Seeking grant of Regular Bail - allegedly issued GST invoices without any supply of the goods to the buyers on commission basis - HELD THAT:- There is no dispute that the applicant is involved in an economic offence of considerable magnitude and gravity. The department has already filed complaint against the applicant, wherein list of documentary evidences has also been furnished. The proprietors of other firms have also been made witnesses in the complaint, who were also the beneficiary of the allegedly illegal conduct of the applicant. The evidence collected against the applicant has been described in the complaint. The offences with which the applicant-accused has been indicted, are all exclusively triable by the Court of Magistrate. The applicant is in jail since 07.11.2023 and there is no allegation that he is having any past criminal history of any economic offence against him. The Hon ble Supreme Court in case of SANJAY CHANDRA VERSUS CBI [ 2011 (11) TMI 537 - SUPREME COURT] has referred the case of STATE OF KERALA VERSUS RANEEF [ 2011 (1) TMI 1396 - SUPREME COURT] to observe that in deciding the bail applications an important factor which should certainly be taken into consideration by the court is the delay in concluding the trial. Here, taking into consideration the course of investigation adopted by the Department and the evidences so collected, the trial may take considerable time and thus it may happen, if nixed the bail, that the judicial custody of the applicant would be prolonged beyond the statutory period of punishment of five years as provided under the Act. Section 132(1)(i) provides for punishment in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; and section 132(2) provides that, where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine - Taking into consideration the aforesaid provisions of law and the fact that the Commissioner is empowered to recover the due amount and propose for abating the proceedings and as the trial will take its own time to conclude, this Court deems it proper to exercise discretion in favour of the applicant-accused. The applicant is ordered to be released on regular bail subject to the fulfilment of conditions imposed - bail application allowed.
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2024 (3) TMI 677
Maintainability of petition - availability of alternative remedy - appealable order under Section 112 of the CGST/OGST Act, 2017 - non-constitution of the Appellate Tribunal - HELD THAT:- The petitioner is desirous of availing the statutory remedy of Appeal under the said provisions. Apparently, acknowledging the absence of constitution of Appellate Tribunal, in exercise of the power conferred under section 172 of the CGST Act, 2017, the Government of India based on the recommendation made by the G.S.T. Council, has issued Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 on 03.12.2019 - In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No. 132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal. Subject to verification of the fact of deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, or deposit of the same, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the CGST/OGST Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the CGST/OGST Act, for the petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed - statutory relief of stay on deposit of the statutory amount, in the opinion of this Court, cannot be open ended. Petition disposed off.
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2024 (3) TMI 676
Lack of mention regarding tax demand in the show cause notice - Apparent discrepancy in treatment of refund claim and tax demand. - Scope for granting interim order on the writ petition - HELD THAT:- When the order was tested before the Appellate Authority, namely, the Joint Commissioner (Appeals), CGST CX, Appeal-II Committee, Kolkata, it is found that the order only deals with the correctness of the rejection of the refund claim and there is no mention about anything with regard to the demand of tax to the tune of Rs.29,63,488/-. That apart, till date no demand notice was issued. The appeal along with the connected application stand disposed of granting liberty to the appellant to file a fresh stay application before the learned Single Bench as and when demand notice is issued by the respondent Department and if such an application is filed the learned Single Bench is requested to consider the same on merit.
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2024 (3) TMI 675
Classification of goods - Bike and Scooter seat cover - to be classified under CTH 87089900 or not - rate of tax of 28% is correct or not - HELD THAT:- In the said manufacturing process the U Foam which is purchased from other dealers are cut to the shape of Two-Wheeler Seats and along with Rexine sheets are stitched and the said Seat Covers are fitted into the Two Wheelers like Bike and Scooter. Then they supply the same to the two-wheeler dealers and also to local market. As per the Appellant, these seat covers are meant for the protection of the seats and there is no comfort or convenience to the rider or the pillion rider. The main contention of the Appellant is that seat covers manufactured by them for two wheelers are parts of seat and thereby, the goods are to be classified under 94019900. They contend that the finding of AAR that it is an accessory to Two-wheeler falling under 87141090 is factually incorrect and as per the Rules of interpretation, seat cover is part of the seat, which has a specific entry 94019900. From the definition of part, it is clear that part per se means a portion of an equipment or a machinery which is essential to the functioning of that particular equipment or machinery. In other words, part is an integral element of machinery or equipment without which the specific product cannot function. The part in question should be so inextricably linked to the product that the product cannot be brought into use without the part in question. As against this, an accessory is an addition to the main product, which merely adds to its beauty or convenience or effectiveness. The seat covers are generally not manufactured or cleared by the O.E. manufacturer of motorcycle seats when the supply is made by them to the motorcycle manufacturer. Instead it is the dealers of motorcycles that sell the seat covers separately, on optional basis, to the purchasers of motorcycles - Hence seat covers are not integral element of seats and thus not by any means, part of the seat. Seat covers are only accessories to the seat. The two-wheeler seat covers are specifically covered under CTH 8714 10 90 and are taxable @ 14% CGST + 14% SGST - the lower authority (AAR) had ruled that two-wheeler seat covers merit classification under 8714 99 90, whereas the product is rightly classifiable under 8714 10 90, at applicable rates. Therefore, the ruling of the lower authority (AAR) is modified to the extent of CTH, whereas the rate of tax remains the same.
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2024 (3) TMI 674
Classification of goods - car seat Cushion Suspension wires - Steel hooks - to be classified under HSN 87089900 thereby attracting CGST of 14 % plus SGST of 14% or will fall under HSN 94019900 thereby attracting CGST of 9% plus SGST of 9%? - HELD THAT:- Chapter Heading 8708.00 covers 'parts and accessories' of motor vehicles and this chapter heading is wide enough in its scope so as to cover all accessories of motor vehicles as well whereas Chapter heading 9401.00 covers all type of seats and 'parts' thereof. For any product to classify under chapter 9401 9000(classification given in para 3.2 above), the same has to be in the nature of 'part of seats'. The term 'part' per se means a portion of an equipment or a machinery which is essentially linked to the functioning of that particular equipment or machinery. In other words, 'part' is an integral element of machinery or equipment without which the specific product cannot function. The 'part' in question should be so inextricably be linked to the product that the same cannot be brought into any form without the 'part' in question. From the write-up, it is found that these cushion suspension wire is now-a-days used instead of coil springs and these are used both in front and back seats of a car. Also these are forming part of the basic skeleton steel structure of the seats. During personal hearing, the Applicant displayed the entire steel structure and explained how the cushion suspension wire is used in the steel structure. We observed that, without the said item, the basic structure of the seat cannot be achieved and basic function of cushion effect in the car seats cannot be achieved. Hence, the said item is a part of the seat, as it is one of the building blocks of the steel structure and an integral part of the seat. The steel hooks are used to keep the steel wires in place and in taut position, so the structure is achieved and also the functional usage, i.e. to give cushion effect, is also achieved. During personal hearing, the Applicant displayed the entire steel structure and how the steel hooks are used in the steel structure. Hence, the said item is a part of the seat, as it is one of the building blocks of the steel structure and an integral part of the seat. The goods viz. 'Car seat Cushion Suspension wires' and 'Steel hooks' manufactured by the Applicant will fall under HSN 94019900 thereby attracting CGST of 9% plus SGST of 9%.
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2024 (3) TMI 673
Input Tax Credit - availability of inputs to the Assesses when the Godowns constructed by him is entirely meant for renting it out for Commercial purposes to registered dealers - HELD THAT:- The Applicant is proposing to rent out to large companies for storing their stock for future sale i.e. for furtherance of his business. Therefore, as per section 17(5) (d), no ITC is available on any goods or services received by them for such construction and the same cannot be claimed by them. The Legislative Scheme is amply clear. The input tax paid on the goods/services received for construction of an immovable property on one s own account is unavailable. The restriction is provided in the Act which is passed by the Legislature. The power to restrict flow of credit exists under Section 16(1) of the GST Act, which shows a Legislative intent that Input Tax credit may not always be allowed partially or fully. As the suitability and requirement of taxpayer varies from person to person, rule/Act, cannot be changed/amended accordingly and it is mandatory for the taxpayers to adhere the restrictions prescribed in Act and Rule. No Input Tax Credit is available on Inputs to the Applicant when the Godowns constructed by him is meant for renting it out for Commercial purposes to registered dealers.
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2024 (3) TMI 672
Levy of GST - various charges collected along with network/wheeling charges, cross subsidy surcharge and additional charges - these are charges for distribution of electricity and collected in connection with supply of electricity - HELD THAT:- TANGEDCO, the Applicant, is a distribution licensee in terms of section 14 read with section 131 of the Electricity Act, 2003 and they are authorized to operate and maintain distribution system for supplying electricity to the consumers. Thus they are undoubtedly 'Electricity transmission or distribution utility' and the transmission or distribution of electricity services provided by them is exempt from GST as per the Notification No. 12/2017-CT(Rate) dated 28.06.2017. The service provided by the Applicant to the users as 'wheeling/network charges' are only for providing the service of transmission of electricity and hence charges collected form the part of consideration for the same single service. Further it is seen that the charges are on the basis of the energy input to the system. Hence the wheeling/network charges collected is for the service of transmission of electricity and hence covered under the exemption stated in the notification - there are force in the Applicant's contention regarding charges collected for dishonoured cheque and belated payment. Based on the Board's Circular No. 178/10/2022-GST dated 03.08.2022, the charges collected for dishonoured cheque are not taxable and charges collected for belated payments are naturally bundled with the main supply, i.e. transmission of electricity, which is exempted and thereby these charges are also exempted. The following charges collected for the services rendered by the Applicant are directly or closely related to transmission or distribution of electricity and therefore we hold that these charges will be completely exempted as per Notification No. 12/2017-CT(Rate) dated 28.06.2017: Belated payment surcharge (BPSC), Dishonoured cheque service charge and Network/wheeling charges - the Applicant is bringing the entire gamut of services under composite supply. As per GST law, whether a supply consisting of two or more goods or services or both, is composite supply or not is given under Section 8 of CGST Act, 2017. For a supply to be considered as a composite supply, it constituent supplies should be so integrated with each other that one is not supplied in ordinary course of business without or independent of other. In other words, they are naturally bundled, and if supply of one service is removed, then the nature of service will be affected. It is found that not all services rendered by the Applicant for which they charge, are naturally bundled with the main service i.e. transmission or distribution of electricity. The services are not naturally bundled with the principal supply i.e. transmission/distribution of electricity. The main supply may take place without above ancillary charges. The provision of service such as consumer meter card replacement charge, excess contracted load charges, Temporary disconnection charges at the request of the consumer etc. are infrequent, need based and provided upon specific request of the consumer at a cost which is independent of the cost for service of the main supply. The main supply, i.e. supply of electricity is not affected even if any of the services above are not rendered - the services are not composite supply and thereby charges for the services will be taxed at the appropriate prevailing rate, i.e. 18% GST (CGST 9% SGST 9%) as per Notification 11/2017-CT(Rate) dated 28.06.2017.
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2024 (3) TMI 671
Nature of activity - replacing the old scrap received from the customers with the already processed Winding wire, then and there, at a fixed differential price - sale of goods or service? - composite supply or not - rate of tax - HSN code / SAC code - If RCM is applicable on the purchase old Copper Scraps from the Motor Mechanics, then what is the Tax rate? - If RCM is applicable, can they take Input Tax Credit on the RCM paid? - Tax Structure and the related procedures and documents to be followed for the movement of goods from Hub to Factory to Hub. HELD THAT:- The instant transaction of the applicant involving replacement of copper scrap, with the enameled copper winding wire cannot be considered as a supply of service , whatsoever, and that the same amounts to supply of goods. That is to say, the supply of enameled copper wire by the applicant to the customer is to be considered as an outward supply of goods by the applicant, and that the receipt of copper scrap from the customers is to be considered as an inward supply of goods to the applicant. Overall, it is clear that both the legs of this transaction (inward and outward) are independent of each other, and we hold that both relates to supply of goods . Having held that the supply of enameled copper wire by the applicant to the customer is an outward supply of goods by the applicant, the HSN code relating to the same is now required to be determined. From the submissions made by the applicant, it is observed that it is not just the winding wire of copper which is being supplied to the customers, but enameled copper winding wire. While plain copper wire of different specifications merit classification under 7408, we observe that an enameled winding wire of copper serves a specific purpose of insulation, as the enamel coating forms an electrical insulation film in order to provide thermal and chemical resistant properties. Therefore, enameled winding wire of copper which operates as an insulated electric conductor merits classification under chapter sub-heading 8544 11 10 of the GST Tariff which attracts IGST at 18%, or CGST at 9% plus SGST at 9%, as the rate of tax. Composite supply or not - HELD THAT:- Composite supply, as the name denotes, involves two or more taxable supplies which are naturally bundled and supplied in conjunction with each other - the supply of the fully finished manufactured product, viz., enameled copper winding wire to the customers is the one and only outward supply of goods made by the applicant. It can also be seen that the illustration attached to the definition of composite supply explains the case in point. Therefore, as only one outward supply of goods is made by the applicant in the instant case, it does not get covered under the category of composite supply . Liability under reverse charge mechanism (RCM) applicable on the purchase old Copper Scraps from the motor mechanics (customers), the tax rate to be adopted and whether input tax credit (ITC) can be availed on the same by the applicant - HELD THAT:- RCM provisions on purchases from unregistered persons was applicable only on the class of registered persons to be notified in future, and hence the temporary blanket exemption from RCM provisions on such purchases was made permanent through the said amendment. It is observed that only one notification since then have been notified to specify Promoters and Builders, as the category of registered persons liable to pay taxes under RCM under this section, vide Notification No. 07/2019-Central Tax (Rate) dated 29.03.2019. As on date, except Promoters , no other registered person is liable to pay taxes under RCM in respect of the receipt of goods or services from an unregistered supplier, and therefore, the applicant is not liable to pay taxes under RCM on the purchase of copper scraps from Motor mechanics. Once the issue relating to discharge of liability under RCM by the applicant stands settled, i.e., answered in negative, the other related queries as to the tax rate to be adopted for such RCM payments, and whether ITC can be availed on the taxes under RCM paid by the applicant are rendered redundant and does not merit consideration.
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Income Tax
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2024 (3) TMI 685
Late fee levied u/s 234E r.w.s. 200A - applying section 200A(l)(c) of the Act retrospectively - HELD THAT:- As decided in True Blue Voice India (P.) Ltd. [ 2023 (10) TMI 1141 - MADRAS HIGH COURT ] respondent had had imposed the late fee only under section 234E of the Act for the assessment years 2012-2013, 2013-2014, 2015- 2015. However, section 200A(c) of the Act was not introduced during the said assessment years. In the absence of any provisions under section 200A of the Act, when they have processed the application for TDS under section 200A, no late fee can be imposed under section 234E. Thus we are of the considered view that the Ld.CIT(A) has fallen in error in sustaining the levy of penalty - Decided in favour of assessee.
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2024 (3) TMI 670
Accrual of income in India - Royalty receipts - income earned from licensing/sale of software and subscription received against cloud services offered by assessee - scope of Indo-USA DTAA - HC said [ 2024 (3) TMI 581 - DELHI HIGH COURT] Tribunal has ruled that neither income earned from licensing of software products nor subscription fee earned for providing cloud services, could be construed as royalty and as revenue says that the proposed questions are covered by the judgment rendered in Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] , no substantial question of law arises for our consideration HELD THAT:- Following the earlier order passed by this Court in the Case of Commissioner of Income Tax V/s. M/s. Gracemac Corporation [ 2023 (8) TMI 98 - SC ORDER] which had followed the earlier judgment of this Court in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] this Special Leave Petition is also dismissed.
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2024 (3) TMI 669
Stay of demand - payment of 20% of the outstanding demand - ITAT rejecting its application for stay on the recovery of demand during the pendency of appeal - HELD THAT:- The tone and tenor of submissions clearly appear to have been concentrated upon the merits of the assessment order. Although the issue of payment of 20% of the outstanding demand appears to have been raised, the same came to be summarily rejected by the ITAT in cryptic terms. Notwithstanding the above, it becomes pertinent to observe that the 20% deposit which is spoken of in the OM dated 31 July 2017 is not liable to be viewed as a condition etched in stone or one which is inviolable. The OM merely seeks to provide guidance to the authorities to bear in mind certain aspects while considering applications for stay of demand pending an appeals remedy being pursued. The OM is not liable to be read as conferring an indefeasible right upon the assessee to claim a stay of a tax liability by merely offering or consenting to deposit 20% of the outstanding liability. Ultimately, it is for the authorities to examine and consider what amount would be sufficient to securitise the interest of the Revenue and thus a just balance being struck. The quantum of the deposit that would be required to be made would ultimately depend upon the facts and circumstances of each case. The position which thus emerges is that while 20% is not liable to be viewed as an entrenched or inflexible rule, there could be circumstances where the respondents may be justified in seeking a deposit in excess of the above dependent upon the facts and circumstances that may obtain. This would have to necessarily be left to the sound exercise of discretion by the respondents based upon a consideration of issues such as prima facie, financial hardship and the likelihood of success. This observation we render being conscious of the indisputable position that the OM applies only upto the stage of the appeal pending before the CIT(A) and being of little significance when it comes to the ITAT. All that we additionally deem appropriate to observe is that merely because the AO had disposed of the stay application on 28 October 2021 or the fact that the petitioner failed to comply with the conditions so imposed, would not detract from the right of the ITAT to independently consider whether appropriate interim measures were liable to be framed for the purposes of protecting the interest of the assessee and at the same time securitizing the outstanding demand. In the end, we take note of an amount of Rs. 65.94 crores having been recovered by the respondents in the interregnum and that amount translating to roughly 48% of the outstanding demand. This changed circumstance is an aspect which, in our considered opinion, would merit consideration by the ITAT in case the petitioner chooses to move a fresh application for stay. Notwithstanding the refrain of the ITAT and which had also taken note of the continued adjournments which were sought by the writ petitioner as well as it having turned down its offer for the appeal itself being put down for final hearing, we deem it appropriate to accord liberty to the writ petitioner to move a fresh application for stay before the ITAT bearing in mind the developments which have occurred in the meanwhile including that of an amount of Rs. 65.94 crores having been recovered by the respondents pursuant to encashment of the bank drafts. Whether the aforesaid circumstance would merit protective measures being granted in respect of the balance outstanding demand, and if so to what extent, is an issue which must necessarily be considered by the ITAT in the first instance it being the tribunal which is in seisin of the principal appeal. We thus refrain from rendering any conclusive opinion in this respect and leave this aspect open for the consideration of the ITAT. No ground to interfere with the order impugned, we dispose of the writ petition according liberty to the petitioner to approach the ITAT by way of a fresh stay application bringing to its attention the change in circumstances noticed above.
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2024 (3) TMI 668
Reopening on the basis of income declared in the IDS and Form-4 - HELD THAT:- Reopening on the basis of income declared in the IDS and Form-4 having been issued, there can be no escapement of income as alleged in the information, thus quashing the impugned reopening notices u/s 148.
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2024 (3) TMI 667
Addition u/s 14A r.w.r. 8D - Addition under special provision u/s 115JB - whether the disallowance u/s 14A of the Act can be imported to Section 115JB of the Act, particularly in light of Clause (f) of Explanation 1 to Section 115JB of the Act, for computation of MAT? - HELD THAT:- Sub-Section (1) prescribes the mode and manner for computing the total income of the assessee under Section 115JB of the Act. However, Clause (f) of Explanation 1 only alludes to the amounts of expenditure relatable to any income to which Section 10 (excluding provisions contained in Clause 38 thereof) or Section 11 or Section 12 apply. Thus, the said explanation nowhere mentions or denotes any mandate to import the disallowance as per Section 14A of the Act for computing MAT under Section 115JB The scheme of Section 115JB, particularly in relation to Clause (f) of Explanation 1 therein, does not envisage any addition of disallowance computed u/s 14A of the Act to calculate MAT as per Section 115JB of the Act. Rather, both the provisions stand separately as no correlation exists between them for the purpose of determining the taxable income. The addition of the concerned disallowance made by the AO while computing MAT is dehors the provisions of the Act and hence, cannot be sustained. Decided against the Revenue.
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2024 (3) TMI 666
Liability for salary and wages arising out of the Justice Palekar Award - Whether allowable as expenditure in the present year or only in the year in which the agreement between the Management and the employees is entered into? - HELD THAT:- ITAT decided the issue in one paragraph by simply stating that the arguments of the learned DR that the impugned liability to pay salary and wages is a contractual liability out of the agreement with the employees and hence, the liability would arise only when it is ascertained find support from the decision of Swadeshi Cotton Mills Co. Ltd. [ 1979 (9) TMI 26 - ALLAHABAD HIGH COURT] - We have to note that the portion, which is quoted allegedly from the judgment, is not found in the copy of the judgment made available to this Court. This Court in Commissioner of Income Tax V/s. United Motors (India) Ltd. [ 1989 (9) TMI 73 - BOMBAY HIGH COURT] has held on identical facts that the payment by assessee in the aggregate sum to its workmen was for the services that were rendered by them during the previous year under consideration and since such expenditure was incurred for the purpose of earning the income of the previous year, it must be deducted in the previous year. Ex-gratia bonus paid to the employees over and above the eligible bonus under the Payment of Bonus Act - allowable expenditure u/s 37 (1) or not? - As in Commissioner of Income Tax V/s. Maina Ore Transport P. Ltd. [ 2008 (8) TMI 504 - BOMBAY HIGH COURT] a Division Bench of this Court, after considering Rajaram Bandekar Sons (Shipping) Pvt. Ltd. (Supra), held that the Tribunal was justified in holding that the ex-gratia payment in excess of the limit prescribed under the Payment of Bonus Act, 1965, either under Section 36(1)(ii) or Section 37(1) of the Act was allowable as business expenditure. The Court also held that the Tribunal was justified in holding that ex-gratia amount paid over and above the amount paid in accordance with the Bonus Act was an allowable expenditure although the payment did not cover contractual payment or customary payment. We answer the questions of law in negative. We hold that the ITAT was not right in law in holding that the liability for salary and wages arising out of the Justice Palekar Award is not allowable as expenditure in the present year but only in the year in which the agreement between the management and the employees is entered into. We further hold that the ITAT was not right in law in holding that ex-gratia bonus paid to the employees over and above the eligible bonus under the Payment of Bonus Act is not allowable as expenditure u/s 37 (1) of the Act.
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2024 (3) TMI 665
Reopening of assessment u/s 147 - Disallowance of CSR amount u/s 37(2) - reason to believe or suspect - tangible material to reopen - AO power to review not to be confused with the power to re-assess - amount being 50% of the aggregate donation was deducted and claimed u/s 80G - This amount was donation in respect of approved trusts/institutions, for the purposes of Section 80G - HELD THAT:- From the perusal of the documents, two glaring facts emerge. One is that all material/documents necessary for computing the income were disclosed and submitted by Petitioner during the course of assessment proceedings leading to an irrefutable conclusion that there was no failure on the part of Petitioner to disclose fully and truly all material facts. Secondly, there is a notable absence of any fresh tangible material coming to the knowledge of the AO and the reopening of assessment is purely on a re-examination of the very same material on the basis of which the original assessment order was passed. It is a well settled principle of law that an AO has no power to review and this power is not to be confused with the power to re-assess. The Apex Court in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd. ( 2010 (1) TMI 11 - SUPREME COURT] has reiterated that mere change of opinion cannot be a ground for reopening concluded assessment. AO without appreciating the true import of the decision of RAJESH JHAVERI STOCK BROKERS P. LIMITED [ 2007 (5) TMI 197 - SUPREME COURT] continue to reopen assessments on the ground of income having escaped assessment despite the fact that all the material and information was already available with him while passing the original assessment order. Furthermore, while conclusive proof of escapement of income may not be necessary to reopen an assessment, the least that is required is a requisite belief based on tangible material which was not accessible to the AO or that which was deliberately withheld by Assessee, which then would amount to non-disclosure of relevant information. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. An AO, who has plainly ignored relevant materials in arriving at an assessment acts contrary to law. The facts in the present case clearly show that the AO was infact in the knowledge of and in possession of all the relevant details regarding the deductions on account of CSR. The computation sheets, the tax audit report, the receipts from the donees and the other relevant documents were all provided and disclosed by Petitioner. It is thus a clear case of change of opinion by the AO. The notice of reopening assessment does not by any measure disclose any material leave aside any information leading to formation of cogent and requisite belief. The finding of the Apex Court in Rajesh Jhaveri [ 2007 (5) TMI 197 - SUPREME COURT] must not be used by AO to reopen assessments to review the original assessment order on the basis of a change of opinion of the AO, as done in the present case. Further, the reasons to believe notice itself indicates that the AO was already seized with information prior to passing of the original assessment order and as such, there is no tangible information on the basis of which he has allegedly formed the requisite belief. Decided in favour of assessee.
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2024 (3) TMI 664
Disallowance of TDS on account of mismatch later on TDS matched but AO not given credit - assessee could get rectified TDS return and after showing in Traces the said credit the assessee made application u/s 154 to the ITO Ward 4 Udaipur owhich was rejected on the ground that rectification is more than 4 years old and it s not allowable - HELD THAT:- The bench noted that the assessee is a senior citizen and retired from Dena Bank, the purpose of the bench in this appeal is to grant justice to the assessee, though the assessee s application may get filed after 4 year u/s. 154 of the Act, but the provision of section 155 of very well give powers to the ld. AO to rectify the apparent credit of taxes to be given as the assessee has taken efforts to get rectified the TDS credit which is matching with the consequential salary offered by the assessee and is supported by the form no. 16 and the online credit of taxes appearing in his account the said tax credit cannot be denied to the assessee and therefore, considering the specific facts placed before us and there is genuine tax credit denied by the ld. AO even the tax credit reflected in the form no. 16 cannot be denied which is denied and demand is raised is required to be rectified and the ld. AO is directed to pass the consequential order giving the tax credit due to the assessee as per the fresh records submitted by the assessee. In terms of these observation the appeal of the assessee is allowed.
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2024 (3) TMI 663
Penalty u/s. 271A - AO treating the assessee as being in default for not maintaining books of accounts as required per the mandate of Section 44AA - HELD THAT:- Considering the fact that the assessee had uploaded the relevant extract of his cash book for the year under consideration (as was called for by the A.O in the course of the assessment proceedings), we are unable to comprehend why and on what basis it had been concluded by the A.O that the assessee was not maintaining its books of accounts. Thus not being able to persuade ourselves to subscribe to the saddling of penalty imposed on the assessee u/s. 271A of the Act, vacate the same. Decided in favour of assessee.
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2024 (3) TMI 662
Reopening of assessment u/s 147 - reopening done beyond the period of four years - Reasons to believe - action of the AO holding that cost claimed is neither through transfer of asset nor part of cost of acquisition/improvements - CIT (A) has confirmed the action of the AO holding that there was a clear link between information available with the ld. AO and the reason of belief that income chargeable to tax had escaped escapement - HELD THAT:- After examining these details and computation of short term capital gain,AO has accepted the claim of the assessee and the short term capital gain disclosed by the assessee was accepted. From the perusal of the reasons recorded as noted above, it is seen that nowhere there is any reference of any information or material coming on record and it is only from verification of same records which was there before the ld. AO during the course of original assessment proceedings, the ld. AO has entertained the reason to believe interest paid on closure of loan cannot be added to the purchase value and therefore, there short term capital gain has been worked less and excess claim has been made Admittedly, the reopening has been done beyond the period of four years from the end of the relevant assessment year and since original assessment was completed u/s. 143(3), therefore, limitation provided in proviso to Section 147 has to be strictly adhered to. The permissible condition for reopening the assessment beyond the period of four years is that there should be a failure on the part of the assessee to file the return of income or failure to disclose fully and truly all material facts necessary for assessment. There is neither failure on part of the assessee to file return of income nor failure to disclose wholly and truly all material facts, nor there is any material or information on record to show that there is failure on the part of the assessee. In fact assessee has made full disclosure in the return of income and also before the AO during the course of assessment proceedings. Once these material facts were there on the record, AO cannot reopen the case beyond the period of four years without fulfilling the conditions laid down in the proviso to Section 147. Thus, the entire reasons recorded for reopening the computed assessment beyond the period of four years is bad in law and is hereby quashed. Accordingly, the entire assessment is being quashed as same is beyond the time limit provided under proviso to Section 147. Decided in favour of assessee.
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2024 (3) TMI 661
Disallowing claim of expenditure - non-carrying of business activity during the year under reference - only reason for not allowing the expenditure/loss claimed by the assessee is that the assessee did not generate any revenue during the assessment year under consideration and, therefore, the assessee did not carry out any business operations - whether the assessee commenced its business operations during the year under consideration and as to whether the expenditure claimed by the assessee is an allowable expenditure or not? - HELD THAT:- It is not in dispute that the assessee is into real estate business. It is also not in dispute that the assessee has purchased land for its real estate purchases and has shown in the balance sheet as inventories/stock-in-trade. Therefore, in our view once the assessee has purchased the land for its business purposes and shown it as inventory and as stock-in-trade in the balance sheet it cannot be said that the assessee did not commence its business operations during the year under consideration. The Jurisdictional High Court in the case of CIT Vs. Dhoomketu Builders Development P. Ltd. [ 2013 (4) TMI 668 - DELHI HIGH COURT] on identical facts held that the commencement of real estate business would normally start with the acquisition of land or immovable property. It has been held that once the land is acquired by the assessee it can be said that assessee has actually commenced its business which is development of real estate. We hold that the assessee had commenced its business operations during the assessment year under consideration and the expenditure incurred by the assessee is an allowable expenditure. Non generation of any revenue during the assessment year under consideration cannot be the reason for holding that the assessee has not commenced any business operation . Ground no.1 of grounds of appeal of the assessee is allowed.
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2024 (3) TMI 660
LTCG - Exemption claimed u/s. 54F - disallowance on the ground that the amount deposited in capital gain deposit scheme was not invested in purchase or construction of any property within the stipulated time period as per sub-section (1) of Sec.54F - HELD THAT:- Assessee has deposited the sale consideration in capital gain account scheme which was withdrawn on 27-02-2014 and 28-02-2014. On the other hand, the assessee purchased new asset (plot) on 07-02-2011 and entered into construction agreement on 19-01-2011. The lower authorities has considered these dates as the relevant dates to examine the claim of the assessee overlooking the fact that the construction agreement had stipulations that the construction would be completed in 18 months from the date when the builder gets approval. The payment towards construction has been made between 01-06-2011 to 14-06-2013 and the possession has been obtained on 05-02-2013. All these events are within the stipulated period of one year prior and two years thereafter as counted from 24-02-2012. In our opinion, there is no requirement that specific money as deposited in capital gain account scheme should be utilized towards new investment. The assessee may make investment from other funds as available with him and the same would not jeopardize the claim of the assessee. The decision of Pune Tribunal in Sohanlal Mohanlal Bhandari vs. ACIT[ 2019 (4) TMI 203 - ITAT PUNE] supports this view. The bench held that it is open for the assessee to use either own or borrowed funds for purchase or construction of new residential house and it is nowhere provided that only sale proceeds of original asset should be utilized for this purpose. Therefore, we direct Ld. AO to grant impugned deduction to the assessee. Appeal of assessee allowed.
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2024 (3) TMI 659
Unexplained cash credit u/s 68 - increase in capital was added to the income of the assessee as unexplained cash credit - Addition made as assessee could not explain the increase in value of the remaining assets - HELD THAT:- There is increase in the value of liabilities with corresponding increase in the value of assets. In the absence of any finding that there is actual introduction of new capital through cash or banking channels, no addition could have been made u/s 68 since it is the primary requirement that there should be cash credit in the books of accounts. The same is missing in the present case. Therefore, the impugned addition as made by Ld. AO invoking the provisions of Sec.68 is not sustainable in law. The case law in the case of M/s V.R.Global Energy Pvt. Ltd. ( 2018 (8) TMI 866 - MADRAS HIGH COURT] duly supports the case of the assessee as concurred that when there was no cash involved in the transaction of allotment of shares, the provisions of Section 68 of the Act treating it as unexplained cash credit are not attracted. Therefore, we delete the impugned addition and allow the appeal of the assessee.
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2024 (3) TMI 658
Disallowance u/s 14A - mandation of recording any satisfaction regarding the claim of the assessee in respect of expenditure incurred in relation to exempt income proceeded to compute the disallowance - AO without recording any satisfaction regarding the claim of the assessee in respect of expenditure incurred in relation to exempt income proceeded to compute the disallowance under section 14A read with Rule 8D of the Rules. Therefore, respectfully following the decision rendered in assessee s own case [ 2024 (3) TMI 484 - ITAT MUMBAI] we do not find any reason for upholding the disallowance made by the AO under section 14A read with Rule 8D of the Rules. Accordingly, the same is directed to be deleted. As a result, ground no.1 raised in assessee s appeal is allowed. Disallowance of expenditure incurred for the evaluation of various business opportunities HELD THAT:- In the year under consideration, the assessee has filed the summary of expenditure incurred on exploring various business opportunities. From the perusal of the aforesaid summary, we find that the entire expenditure was incurred on home improvement projects, furniture and furnishings business, bathroom space business, modular kitchen, market research in Saudi Arabia project, etc. Unlike the assessment year 2014-15, the assessee has not furnished the copy of engagement letters/scope of work in respect of the exploration of various business opportunities by the consultants. However, since in the preceding year, the coordinate bench has examined each business evaluation separately, which appears to have also been undertaken during the year under consideration, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication - AO is directed to decide on the allowability of each expenditure after duly examining the engagement letter with the consultants and the scope of work. Disallowance of prior period expenditure HELD THAT:- Undisputedly, the assessee is following the mercantile system of accounting, and therefore only such expenses which are crystallised during theyear can be allowed as a deduction while computing the income. Since the issue pertains to the reconciliation of expenses vis- -vis the year of crystallisation, therefore in the interest of justice we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The assessee is directed to furnish all the details in support of its claim that the expenses claimed as prior period expenses were crystallised during the year under consideration. Disallowance of provision for doubtful debts HELD THAT:- In the present case, admittedly deduction has been claimed by the assessee in respect of provision for doubtful debts, without any write-off of irrecoverable debt. Since the claim of the assessee is contrary to the provisions of section 36(1)(vii) of the Act, for this short reason, we find no merits in the submissions of the assessee. Further, we agree with the findings of the lower authorities that the decision of Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] is not applicable in the case of the assessee, as the aforesaid decision was rendered in the case of a banking company after considering the guidelines issued by the Reserve Bank of India. Accordingly, we are of the considered view that the provision for doubtful debts, as claimed by the assessee, has rightly been disallowed by the lower authorities. Nature of expenses - disallowance of expenditure incurred by the assessee on Colour Idea Stores by treating the same as capital expenditure HELD THAT:- The assessee is in the business of manufacturing paints and enamels and therefore in order to promote its brands and products, through a network of retail outlets, wherein the customers can have a complete experience of assessee s products, apart from having the literature and pamphlets pertaining to its various types of products which include wall finishes for interior and exterior use, enamels, wood finishes and ancillary products such as primers, putties, etc., the assessee set up Colour Idea Stores at the shops of its dealers. It is pertinent to note that for any customer, who wishes to buy the assessee s products, touch, texture, and appearance either on the wall (exterior or interior), wood, etc. are material for making the decision, as these aspects of assessee s products cannot be better appreciated from the brochures and pamphlets available at the retail store. Considering the expenditure incurred by the assessee on Colour Idea Stores , having the above aspect in perspective, we are of the considered view that the same was only for the purpose of having a better reach to its customers so as to increase the sales of its products and therefore, the expenditure is nothing but a brand promotion expenditure. Colour Idea Stores can be at any shop of the dealer so long as the dealer is representative of the assessee and is in the business of sale and distribution of assessee s products. Thus, once the agreement between the dealer and the assessee concludes, even the dealer cannot use the Colour Idea Stores for products of any other company. Therefore, the entire exercise is a joint sales promotion activity by the assessee and the dealer, wherein both parties would benefit from the brand promotion and resultant increase in the sale of the products. Accordingly, we are of the considered view that the expenditure incurred by the assessee on Colour Idea Stores is in the nature of revenue expenditure and the AO is directed to allow the same. Since the AO has granted the depreciation to the assessee by treating the expenditure as capital in nature, the same may be reversed in view of the aforementioned findings. As a result, ground raised in assessee s appeal is allowed. Allowability of expenditure u/s 35(2AB) denial of weighted under section 35(2AB) of the Act on the basis of the certificate issued by the DSIR in Form No.3CL - HELD THAT:- We find that while deciding a similar issue the coordinate bench of the Tribunal in assessee s own case in Asian Paints Ltd v/s Addl. CIT, [ 2014 (1) TMI 16 - ITAT MUMBAI for the assessment year 2007-08, restored the issue to the file of the AO with a direction to decide the same afresh after verifying whether the expenditure in question has been incurred by the assessee on research and development, which is eligible for deduction under section 35(2AB) of the Act. Allowance of balance additional depreciation Asset put to use less than 180 days - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in Addl. CIT v/s Asian Paints Ltd [ 2022 (7) TMI 1508 - ITAT MUMBAI] decided the similar issue in favour of the assesse consedering decision in assessee's own case for the A.Y. 2010-11 and also following the principle of Rule of consistency dismiss the ground raised by the revenue holding that Ld.CIT(A) is correct in allowing the additional depreciation at the rate of 10% for asset purchased in the earlier year. TDS under section 194H - expenses disallowance under section 40(a)(ia) - Allowance of expenditure incurred on the Trip Scheme HELD THAT:- As in assessee s own case in ACIT v/s Asian Paints Ltd [ 2022 (2) TMI 1428 - ITAT MUMBAI] held that scheme is closely linked to assessee's business activity. It is also a fact that the assessee has not paid any amount to the dealers and distributors, but amount spent has been paid to SOTC for organizing the trip. It is also a fact on record that the amounts paid to SOTC has been subjected to TDS as per the relevant provision. Therefore, the allegation of the Assessing Officer that the amount has not been subjected to deduction of tax is without any basis. As regards the applicability of section 194H of the Act, by no means, the Assessing Officer has established on record that dealers/distributors are agents of the assessee. Further, as we find, the trip scheme has been introduced by the assessee from past 20 years and the deduction claimed by the assessee on account of such trip scheme has never been disallowed by the Assessing Officer except for the impugned assessment year. Therefore, even applying the rule of consistency, the expenditure claimed by the assessee has to be allowed. Addition on account of waiver of Royalty received from two subsidiaries income accrued in India or not? - assessee has various associated enterprises all over the globe situated in various countries from which income in the form of Royalty is received for providing them with Brand Name along with other technical support - Royalty is calculated @3% of associated enterprises sales as per the agreement duly signed and executed - HELD THAT:- As decided in [ 2024 (3) TMI 484 - ITAT MUMBAI] for the assessment year 2012-13 prior to the end of the financial year, no amount accrues or arises to the assessee outside India. In the present case, prior to the determination of the net sale price of the products sold, the assessee had decided to waive Royalty by 2%. No material has been brought on record to show that there is no understanding between the assessee and its overseas subsidiaries to waive the Royalty. Such being the facts, we are of the considered view when only 1% Royalty is payable by the overseas subsidiaries, therefore the AO has no authority to make an addition of the balance 2% Royalty waived by the parties, which is nothing but a notional income considered taxable by the AO in assessee s hands. Before concluding, it is pertinent to note that in the assessment year 2011-12, the coordinate bench of the Tribunal decided a similar issue in favour of the assessee. Sundry balances written off assessee could not prove that the alleged advances were made in the ordinary course of the business and such advances written off cannot be treated at par with the bad debts written off - HELD THAT:- As in assesse own case [ 2024 (3) TMI 484 - ITAT MUMBAI] 2012-13, assessee submitted that the expenditure is normal business expenditure and allowable as deductible expenditure. However, from the perusal of the record, we find that neither there is an examination of the aforesaid claim of the assessee nor any details were furnished. Accordingly, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The assessee is directed to file necessary details/documents in support of its claim of deduction of sundry balances written off. Nature of receipt - Addition of subsidy received from the Government of Maharashtra under Package Scheme of Incentives, 2007 HELD THAT:- We find that while deciding a similar issue pertaining to the taxability of subsidy received by the assessee under Package Scheme of Incentives, 2007 of the Government of Maharashtra, the coordinate bench of the Tribunal vide order dated 05/03/2024 passed in assessee s own case in ACIT v/s Asian Paints Ltd [ 2024 (3) TMI 485 - ITAT MUMBAI] for the assessment year 2013-14 held that the subsidy received by the assessee is capital in nature as the incentives/subsidy granted was only to encourage the setting up of industries in the less developed areas of the State and the same was not for the purpose of running the business more profitably. Addition of the electricity grant received from the Government of Haryana HELD THAT:- We find that while deciding a similar in assessee s own case in ACIT v/s Asian Paints Ltd [ 2024 (3) TMI 542 - ITAT MUMBAI] for the assessment year 2014-15 held that the incentives/subsidy received by the assessee is capital in nature as the same has been received under the Industrial Policy, 2005 of the Government of Haryana for setting up a project at Industrial Model Township, Rohtak for the manufacturing of paints and the same was not to enable the assessee to run its business more profitably. Since in the year under consideration, the assessee received the electricity grant under the Industrial Policy, 2005 of the Government of Haryana, therefore, respectfully following the decision rendered in assessee s own case cited supra, we find no infirmity in the impugned order on this issue in treating the electricity grant as capital in nature.
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2024 (3) TMI 657
TP Adjustment - notional interest on outstanding receivables due from Associated Enterprises (AES) - assessee not charging any interest from its AEs - Treatment of outstanding receivables as a separate international transaction - Common policy of not charging interest on delayed payments from AEs and third parties - HELD THAT:- As per explanation (i)(c) of Section 92B of the Income Tax Act as amended by Finance Act, 2012 w.r.e.f. 01.04.2002, the interest receivables is an international transaction. Section 92B(i)(c) reads capital financing, including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business. In CIT Vs. EKL Appliances ( 2012 (4) TMI 346 - DELHI HIGH COURT ] it was held that the delay in receipt of the amounts has to be investigated on case to case basis and examination has to be conducted by the TPO/AO by analyzing the statistics over a period of time and to find out a pattern intended to benefit its AE In the case of Apache Footwear India Pvt. Ltd 2023 (4) TMI 521 - ITAT HYDERABAD] Tribunal concluded that interest on outstanding receivables from the AE is required to be separately benchmarked and interest should be charged on the delayed period @ 6% on the receivables. We also make it clear that interest cannot be charged on each and every receivable and has to be examined on case to case basis and the TPO has to enquire and analyze the statistics over a period of time to discern a pattern to come to a conclusion that the arrangement reflects an international transaction. The AO has to examine the transactions of similar in nature with non-AEs to come to a conclusion to charge interest and also to determine the basis of interest to be charged. We have also examined the order in the case of Orange Business Services India Solutions (P.) Ltd. [ 2022 (12) TMI 1070 - ITAT DELHI] and also the order of the Tribunal for the earlier years. Each year has to be looked into separately based on the facts of the each case. In this case, the inter company services agreement provides for charging of interest on delay of receivables after 60 days. Hence, we direct that the adjustment on account of receivables be computed after following the directions of the ld. DRP. The AO has considered each and every transaction and arrived at right conclusion to determine the adjustment. While computing so, it is directed that the AO shall set off the receivables cleared by the AEs in less than 30 days or received in advance as ordered by the ld. DRP. These directions are applicable to the year in question as the chargeability on interest receivables varies from year to year. The LIBOR is an internationally recognized rate which is appropriate to benchmark and to determine ALP on receivables. The mark-up decided by the ld. DRP is held to be reasonable. In the result, the appeal of the assessee on this ground is partly allowed.
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2024 (3) TMI 656
Validity assessment proceedings u/s 153C - recording of satisfaction - ITAT essentially proceeded on the basis that in the absence of a satisfaction recorded in the file of the searched person, no proceedings against the other person u/s 153C could have been initiated - HELD THAT:- We note that the aforesaid view as taken appears to be wholly untenable bearing in mind the language employed in Section 153A as well as the judgment rendered by this Court in Ganpati Fincap Services P. Ltd Ors [ 2017 (5) TMI 1425 - DELHI HIGH COURT] as held it is only in certain cases, where the document is such that it may belong to more than one person (including the searched person) that the AO will have to indicate in the satisfaction note the reasons why he is of the opinion that the document belongs to the other person and not the searched person and where the AO of the searched person records that the seized document in question belongs to the other person, and where necessary, gives the reasons therefor, the requirement of section 153C stands satisfied. The failure by the AO in such case to record in the satisfaction note that such document does not belong to the searched person will not vitiate the proceedings u/s153C against the other person. The said opinion as expressed by this Court in Ganpati Fincap was not interfered with by the Supreme Court [ 2024 (2) TMI 1051 - SC ORDER] dismissed the Special Leave Petition preferred by the assessees. It is also apposite to observe the findings as rendered by the Supreme Court in Super Malls Private Limited [ 2020 (3) TMI 361 - SUPREME COURT] held in case, where the assessing officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the assessing officer, as he himself is the assessing officer of the searched person and also the assessing officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the assessing officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. We, consequently allow the instant appeal and set aside the order of the ITAT [ 2019 (12) TMI 1225 - ITAT DELHI]
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2024 (3) TMI 655
Capital gain - Denial of benefit of 1st proviso to section 50C(1) which allows the consideration value fixed in the agreement to be considered instead of the stamp valuation for the computation of full value of consideration for transfer - Denial of benefit of exemption u/s 54B to assessee - submission of Ld. AR that the cheque received by assessee from buyer was post-dated 09.10.2006 - HELD THAT:- Although the cheque was cleared on 11.10.2006, it could be treated as having been received on 09.10.2006. But it cannot be accepted as having been received on 29.09.2006. Had the assessee received on 29.09.2006, a present-dated cheque and not post-dated cheque and the same would be have been cleared in bank in 2-3 normal working days, there might have been strength in the argument that it should be treated as having been received on 29.09.2006 but this is not so in present case. AR has not quoted any decision holding that in a case where cheque itself is post-dated 09.10.2006 and cleared on 11.10.2006, the payment can be treated to have been received on 29.09.2006. In any case, we also agree with Ld. DR that if the stand taken by assessee/Ld. AR is accepted, it would give an unfettered leeway to persons to by-pass the requirement of 2nd proviso to section 50C(1) by applying a trick where a person can receive a post-dated cheque of any period and thereby mis-use the benefit of 1st proviso. We do understand that such a situation ought to be stopped. Therefore, we are not convinced by arguments of Ld. AR in this respect. In conclusion, we are not satisfied that the assessee has received any part of consideration through cheque on or before 29.09.2006 (date of agreement) and therefore we hold that the AO was right in not giving benefit of 1st proviso to section 50C(1) to assessee. The first grievance projected by assessee is therefore rejected. Benefit of exemption u/s 54B - whether the investment made by assessee after execution of sale-agreement but before registration of sale-deed, from the moneys received under sale-agreement, is eligible for exemption or not? - On a careful consideration, we find that the issue is settled in favour of assessee by the decisions quoted by Ld. AR as mentioned in foregoing paragraph. Therefore, we hardly need to delve this issue. We are inclined to carry the view taken in those judicial rulings and accordingly hold that the investment by assessee in the new land from sale-proceed of old land, even if made before registration of sale-deed, is eligible for exemption. Accordingly, we direct the AO to allow exemption. This grievance of assessee is accepted.
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2024 (3) TMI 654
Assessment against company dissolved/insolvent - proceedings initiated against the corporate debtor/assessee company including income tax proceedings and recovery of demand or giving effect of any order - Addition u/s 68 - transaction of share capital and share premium which was taken from different entities against the high premium - HELD THAT:- As per the provisions of section 14 of the IBC Code institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority shall be prohibited during the moratorium period. Section 31 of the IBC relates to approval of the resolution plan and in terms of Section 31(1) of the IBC on approval, the resolution plan becomes binding on corporate debtor and its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force. The Hon ble Supreme Court in the matter of Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT] has considered the scope of Section 31 (1) of the IBC and has held that once the resolution plan is sanctioned under Section 31(1) of the IBC, the claims provided in the plan will stand frozen and all such claims which are not part of the plan will stand extinguished. Thus, the law is well settled that on the approval of the resolution plan in terms of Section 31 of the IBC, the dues including the statutory dues of the Government or local authority, if not part of the resolution plan, gets extinguished and no proceedings in respect thereof for a period prior to the date of approval under Section 31 would continue. The decision of the Hon ble Calcutta HighCourt in West Bengal State Electricity Distribution Company Limited vs. Sri Vasavi Industries Limited [ 2022 (7) TMI 580 - CALCUTTA HIGH COURT] makes it clear that any claim not made during the course of CIRP and before approval of resolution plan shall automatically be extinguished and the corporate debtor is deemed to start its operations with a clean slate after the resolution plan is approved. It has been consistently held by the Hon ble Supreme Court that the IBC is a complete Code in itself and in view of the provisions of Section 238 of the IBC, the provisions of the IBC would prevail notwithstanding anything inconsistent therewith contained in any other law for the time being in force. We are of the view that as per section 31 of the Code, resolution plan as and when approved by the Adjudicating Authority shall be binding on the corporate debtor and its employees, members, creditors, guarantors, and other stakeholders involved in the resolution plan. Thus, this will prevent State authorities and Regulatory bodies including Direct Indirect Tax Departments from questioning the resolution plan. Thus, in view of the above, no proceedings can be initiated against the corporate debtor, that is, assessee company including income tax proceedings and recovery of demand or giving effect of any order. It is well settled now that IBC has an overriding effect on all the acts including Income Tax Act which has been specifically provided u/s 178(6) of the I.T. Act as amended w.e.f. 01.11.2016. However, depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant. We, therefore, granting, leave to the appellant to seek the restoration of the appeal, if necessitated by the orders in the Corporate Insolvency Resolution Proceedings. Issue of limitation in filing fresh appeal , if need be, has already been dealt with in Hon ble Supreme Court in NDMC-v-Minosha (India) Ltd. [ 2022 (5) TMI 1123 - SUPREME COURT] wherein on consideration of Section 60(6) of the Insolvency and Bankruptcy Code, 2016, it was held that the entire moratorium period will be excluded in computing limitation in respect of proceedings at the hand of a corporate debtor.
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2024 (3) TMI 653
Validity of reopening of assessment - onus to prove the service of notice - Notice u/s 148 is not a valid notice - HELD THAT:- It is settled position in law that valid notice u/s 148 of the Act is a jurisdictional requirement must be complied with this contention of assessee is supported by case of Commissioner of Income-Tax Vs. Rajesh Kumar Sharma [ 2007 (8) TMI 322 - DELHI HIGH COURT] Non-service of notice u/s 148 - It is relevant to mention assessment u/s 147/143(3) r.w.s. 144 of the Act has been framed without service of notice u/s 148 of the Act and this action of AO is contravention section 148 of the Act, which impose binding condition on the Assessing Officer to serve on the notice u/s 148 of the Act before making assessment u/s 147. It is settled position in law that service of notice under section 148 of the Act is a jurisdictional requirement must be complied with and the onus to prove the service of notice lies upon the Revenue and this contention of assessee is supported by the order of the Hon ble Delhi High Court in the case of CIT Vs. Chetan Gupta [ 2015 (9) TMI 756 - DELHI HIGH COURT] . Thus as service of notice under section 148 of the Act is a jurisdictional requirement must be complied with and the onus to prove the service of notice lies upon the Revenue, we hold that the re-assessment proceedings completed without service of valid notice u/s 148 of the Act are liable to be quashed. Decided in favour of assessee.
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2024 (3) TMI 652
Addition of excess stock found during the course of survey - unexplained investments u/s 69 r.w.s.115BBE - assessee is a firm engaged in sale and purchase of gold jewellery - HELD THAT:- Assessee has produced complete books of accounts during assessment proceedings. No defects have been pointed out and the books of accounts have been accepted. Thus when the difference in physical stock found during survey and as recorded in the books is duly reconciled by the assessee and supporting evidences have also been furnished before the AO ld. CIT(A) in which no defect or discrepancy whatsoever has been pointed out by the Assessing Officer or ld. CIT(A), no addition is called for. Merely because some differences were found in stock during survey would not indicate any automatic addition be made in the hands of the assessee when assessee has duly reconciled the differences with necessary evidences and neither the AO nor ld. CIT(A) has pointed out any defects or discrepancies in the reconciliation submitted by assessee or the documents and evidences furnished by the assessee. Addition made on account of excess stock found during the course of survey is directed to be deleted. Assessee appeal allowed.
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2024 (3) TMI 651
Unexplained loans - addition towards loans to M/s. Kangaroo Impex and interest thereon - HELD THAT:- Fact remains that the assessee claims to have paid loan only through bank account and claimed that it has filed necessary evidences including source thereof. The loan given to the party in the books of accounts of the assessee shows different figure when compared to loan given and repayment thereof confirmed by M/s. Kangaroo Impex. If at all, loan is given only through bank account as claimed by the assessee, then the source thereof needs to be examined, in light of relevant bank statements pertains to the period of loan. Even if you go by the assessment order, there is no clear observation with regard to the mode of payment, whether it is cash loan or payment through bank. In fact, the loan details tabulated by the AO for both assessment years shows loan by way of cheque and by way of cash also. Since, facts are contradictory from both the sides, issue needs to be re-examined by the Assessing Officer, in light of averments of the assessee that loans given to M/s. Kangaroo Impex is through bank account only and source for said loan is explained. Additions towards interest income from loans given to M/s. Kangaroo Impex - Since, we set aside the issue of addition towards unexplained loan given to M/s. Kangaroo Impex, consequent addition towards interest on said loan also needs to go back to the file of the Assessing Officer. Thus, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to re-verify the additions made towards interest on loan. Addition towards investment in M/s. Mars Exports - It is very difficult to ascertain whether the appellant has discharged Rs. 11 crores to creditors of M/s. Mars Exports or not. The Assessing Officer, refers to three cash receipts dated 08.06.2010, 12.06.2010 18.06.2010, given by the creditors through five representatives as per mortgage deed and claimed that the appellant has settled Rs. 11 crores to creditors. The facts are contradictory. The assessee claims that he has settled outstanding creditors of Rs. 1,93,50,250/- and said payment has been cleared through bank, whereas, the Assessing Officer claims that the appellant has settled Rs. 11 crores to creditors by cash payments. Therefore, we are of the considered view that, this fact needs to be verified by the Assessing Officer with reference to seized documents. Repayment of outstanding dues to karur Vysya Bank - AO himself admitted in his assessment order that the settlement of dues to Karur Vysya Bank is not mentioned in the documents and the assessee has not clarified as to when and how the payment has been made to bank - there is no evidence with the Assessing Officer to allege that the assessee has repaid a sum of Rs. 5.5 crores to Karur Vysya Bank. AO has not made any attempt to gather information from the bank regarding settlement of loan to M/s. Mars Exports and how said loan has been repaid either in cash or through bank. Therefore, we are of the considered view that this issue also needs to be verified by the AO in light of above discussion. Unaccounted income - difference between estimated value of the property and sale consideration received by the assessee for sale of property - HELD THAT:- Assuming for a moment, the value of the property is Rs. 20 crores and assessee has received a sum of Rs. 20 crores for sale of property, but fact remains that the Assessing Officer has made addition of Rs. 16.5 crores towards settlement of dues of M/s. Mars Exports, and this fact is correct then, additions partakes the character of cost of acquisition to the assessee. In case, the Assessing Officer sustained the additions towards settlement of outstanding dues of M/s. Mars Exports, then the same needs to be considered as cost of acquisition for the purpose of computation of cost of acquisition for sale of property. Therefore, for all these reasons, the issue needs to go back to the file of the Assessing Officer for fresh consideration. Thus, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to re-examine the issue of additions of Rs. 16 crores for assessment year 2011-12, in light of our discussion given herein above and decide the issue in accordance with law. Additions towards unaccounted cash loans - Although, the assessee claims to have made payment for purchase of property, but it is evident from the receipts seized during the course of search, which clearly shows that these are loan transactions, but not for purchase of property. Further, the payments made for purchase of property are altogether different from reference to in seized material found during the course of search. From the above, it is abundantly clear that, the assessee could not explain source for cash loans given to Shri. C. Giridharan. Therefore, there is no error in the reasons given by the ld. CIT(A) to sustain additions made towards cash loans of Rs. 3.96 crores given to Shri. C. Giridharan and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the assessee. Unaccounted cash loans to Shri C. Hariharan - Incriminating material found during the course of search reveals that the appellant had given cash loans to Shri C. Hariharan, but the assessee could not explain source for cash loans - HELD THAT:- The assessee could not file any evidence to prove source for said loans. Even before us, except oral statement no evidence has been filed to justify source for cash loans to above party. Therefore, there is no error in the reasons given by the ld. CIT(A) to sustain additions made towards unaccounted cash loans to Shri C. Hariharan. Thus, we reject arguments of the assessee and uphold addition made towards unaccounted cash loan given to Shri C. Hariharan. Cash payment for purchase of property from Shri. C. R. Narayanasamy - The documents furnished by the assessee shows that payment by cheque only. The facts are not clear which needs further verification from the Assessing Officer to ascertain, is there any cash payment for purchase of property or not. Therefore, we are of the considered view that, this issue needs to go back to the file of the Assessing Officer for further verification. Thus, we set aside the addition made towards cash payment for purchase of property from Shri. C. R. Narayanasamy, to the file of the Assessing Officer and direct the Assessing Officer to reexamine the claim of the assessee in light of various evidences filed to justify source for payment for purchase of property, in light of incriminating material found during the course of search. The Assessing Officer is directed to reconsider the issue in accordance with law. Unaccounted cash loans to Shri. N. Venkataraman - Assessing Officer, observed that the RTGS number referred to by the assessee against payment of Rs. 40 lakhs to Shri. N. Venakataraman is incorrect, because said RTGS reference number is the payment made to Shri. T. Dhamodaran, but not to Shri. N. Venkataraman. Further, the documents found during the course of search clearly shows that, the assessee has paid loan against bank cheque, signed white blank sheets and surety of immovable property documents. The assessee could not explain source for said loan. Therefore, we are of the considered view that there is no error in the reasons given by the AO to make additions towards unaccounted cash loans to Shri. N. Venkataraman. CIT(A), after considering relevant facts has rightly made additions and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject grounds taken by the assessee. Unaccounted cash loan to Shri. Ponnappan - Assessee has paid a sum of Rs. 15 lakhs in cash for the assessment year 2009-10, but could not explain source for said loan. Even before us, except making a general statement no evidence has been filed to explain source for said loans. Therefore, we are of the considered view that there is no error in the reasons given by the AO to make additions towards unaccounted cash loans to Shri. Ponnappan for Rs. 15 lakhs and thus, we uphold the findings of the ld. CIT(A) and reject grounds taken by the assessee. Unaccounted cash loan to Dr. S. Ramesh Kumar - The assessee could not file any evidence to negate the documents found during the course of search coupled with statement from Dr. S. Ramesh Kumar, except making an oral statement that loan given to Dr. S. Ramesh Kumar has been accounted in the books of accounts. Therefore, no error in the reasons given by the ld. CIT(A) to sustain addition towards unaccounted cash loan given to Dr. S. Ramesh Kumar and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject arguments of the assessee. Unaccounted cash loan to Shri. Thangavel - Although, the assessee claims that loans given to Shri. Thangavel has been accounted in the books of accounts, but the details filed by the assessee did not refute the evidence in the form of seized material found during the course of search which clearly shows unaccounted cash loan of Rs. 55 lakhs to Shri. Thangavel on behalf of Amala Jothi Co., Coimbatore. Therefore, assessee could not explain source of unaccounted cash loan given to Shri. Thangavel and thus, we uphold the addition made by the AO towards unaccounted cash loan to Shri. Thangavel. Unaccounted cash loans given to Shri. Paulraja - As admitted by the AO himself, out of Rs. 20 lakhs a sum of Rs. 15 lakhs has been paid through Kotak Mahindra Bank for which the AO did not verify the source. In respect of balance of Rs. 5 lakhs, said loan has been paid in cash and there is no dispute. The assessee could not explain source. Since, there is no clear finding with regard to the mode of payment of Rs. 15 lakhs and also the assessee claims that a sum of Rs. 15 lakhs is paid through bank account, in our considered view, the matter needs further examination. Therefore, we direct the AO to re-examine additions made towards unaccounted cash loan of Rs. 20 lakhs given to Shri. Paulraj, in light of various evidences filed by the assessee and decide the issue in accordance with law. Unaccounted cash loan to Shri. Ponnappan - Although the assessee claims to have paid loan through RTGS, but could not reconcile payment through bank to incriminating material found during the course of search. Therefore, we are of the considered view that there is no error in the reasons given by the AO to make additions towards unaccounted cash loan of Rs. 25 lakhs given to Shri. Ponnappan. Unaccounted cash loan to Shri. S. Muruganathan - Since, the assessee could not explain source for cash loan, in our considered view the AO has rightly made additions. Undisclosed business income, being money swindled by ex-employee - Addition on protective basis - HELD THAT:- The amount swindled by Smt. Dhanalakshmi has already been assessed in the hands of M/s. Miracle Cars India Pvt Ltd., on substantiate basis. Therefore, in our considered view additions made in the hands of the assessee towards money swindled by Smt. Dhanalakshmi on protective basis cannot be upheld, because addition, if any, then same has to be in the hands of the M/s. Millennium Motors but not in the hands of the assessee. Therefore, the addition if any to be made, then it should be made in the hands of M/s. Millennium Motors itself. Since, the Assessing Officer already made additions towards money swindled by Smt. Dhanalakshmi in the hands of the company on substantive basis, protective addition made in the hands of the assessee has no legs to stand. Difference between income returned originally and income returned in response to 153A notice - The assessee could not satisfactorily explain reduction in income declared in the return of income filed u/s. 153A of the Act, when compared to income admitted in the return of income filed u/s. 139 of the Act. Therefore, we are of the considered view that there is no error in the reasons given by the Assessing Officer to make additions towards difference in income returned and admitted for assessment year 2009-10 to 2011-12 and thus, we uphold the additions made by the Assessing Officer. Addition towards unaccounted sales - Since, there is no clear finding from the AO with regard to the said addition, except so called sales abstract found in the computer of the assessee and also it was the claim of the assessee that said transaction pertains to M/s. Arputharaj Associates, a partnership firm, we are of the considered view, that the issue needs to go back to the file of the AO for further verification. Thus, we set aside the orders of the lower authorities on this issue and restore the issue to the file of the AO for further verification. The Assessing Officer is directed to examine the issue in light of relevant material and ascertain the real beneficiary of said transactions.
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2024 (3) TMI 633
TDS u/s 195 - assessee made payments to concerns (USA) without deducting TDS u/s 195 r.w.s. 9(1)(vi) and (vii) - Assessee in default u/s 201(1) - as per AO assessee having not made any deduction of tax at source without making any application u/s 192(2) before the AO (TDS) and without ensuring that an application under section 195(3) of the Act was filed by the recipient to obtain necessary exemption, was liable to be treated as an assessee in default - assessee pleaded that a certificate u/s 195(3) was issued subsequently - HELD THAT:- We are of the considered opinion that it is only if the contents of the certificate issued in section 195(3) are verified and found to be correct and genuine, then the consequences would be that the remittances that have been made to M/s. IGTL Solutions (USA) would be non-taxable so far as the TDS is concerned, since if the contents of such certificate are accepted, then the action on the part of the Revenue in carrying out a deduction at source on the remittances made to M/s. IGTL Solutions (USA) would be bad. Thus AO is directed to cause verification of the certificate dated 10/02/2003, issued u/s 195(3)and if it is found to be genuine, the consequence shall be that the entire remittances that were made to M/s. IGTL Solutions (USA) would be non-taxable so far as TDS is concerned, and the impugned order u/s 201(1A) of the Act will have no legs to stand. Appeal of the assessee is treated allowed for statistical purposes.
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Customs
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2024 (3) TMI 650
Waiver of pre-deposit - Whether the Tribunal erred in law in dismissing the appeal for non-compliance of the deposit order, in view of the provisions of Section 129 (2A) read with proviso to Section 129E of the Customs Act, 1962? - HELD THAT:- No doubt, Section 129E does not expressly provides for the rejection of appeal for non-compliance with the requirements regarding the deposit of penalty or duty but the provision makes it obligatory on the appellants to deposit the duty or penalty pending the appeal and if a party does not comply either with the main Section or with any order that may be passed under the proviso, the Appellate Authority is fully competent to reject the appeal for non-compliance with the provisions of Section 129E. Unless Section 129E is complied with, the Appellate Authority cannot proceed to hear the appeal on merits. Therefore, the logical consequence of failure to comply with Section 129E, is the rejection of appeal on that ground. The law on the subject is not res integra. If the statute gives a right to appeal upon certain conditions, it is upon fulfillment of those conditions that the right becomes vested and exercisable to the appellant. The proviso to Section 129E of the Act gives a discretion to the Tribunal in cases of undue hardships to dispense the obligation to deposit the duty/interest or penalty. Admittedly, in this case the application for waiver of pre-deposit was dismissed by the learned Tribunal and the writ petitions challenging the orders passed by learned CESTAT have already been dismissed by the High Court. Admittedly, appellants did not make compliance of pre-deposit order even thereafter and therefore learned Tribunal was constrained to dismiss the appeals. Thus, the question of law is answered holding that there is no error in the orders passed by learned CESTAT, thereby, dismissing the appeal for non-compliance of the deposit order dated 17.06.2009, as per the provisions of Section 129 read with proviso of Section 129-E of the Customs Act, 1962. The appeals are therefore dismissed.
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2024 (3) TMI 649
Wilful misdeclaration or suppression of facts - Benefit of Merchandise Export from India Scheme (MEIS) - Export of various frozen seafood - exporting goods as Frozen Leather Jacket Fish - classified under 03031900 Or under 03038999 - interest and penalty - whether the appellant is eligible for the benefit of MEIS scrips - HELD THAT:- The Commissioner in the impugned order states that the goods were misclassified to avail the benefit of MEIS but the fact remains that the goods were clearly described as Leather Jacket Fish classified under Chapter Heading 03031900 which was eligible for MEIS during the relevant period. And only an account of reclassification, the Revenue alleges wilful mis-classification without any evidence on record to prove that the appellant had suppressed any facts or wilfully misclassified their products. On the other hand, the classification by the appellant was accepted and the exports were allowed based on these approved documents and on verification of the export documents the scrips were issued by DGFT. There is no allegation by the DGFT that there had been any suppression or mis-declaration of any of the facts for the issuance of the scrips. Moreover, when the authorities hold that the scrips were valid scrips in the hands of the importers, the question of them becoming invalid in the hands of the exporter appears to be too farfetched. The letter which has been reproduced above categorically states that the exports even though have taken place under chapter heading 03031900 during the relevant period need to be regularised, therefore, since the scrips issuing authority has no objection to accept these shipping bills for the benefit of MEIS the question of denying the benefit by the customs only for the reason that the change in classification is not sustainable. None of the elements in Section 28AAA have been adduced by the Revenue to invoke these provisions after nearly 3 years of the issue of the Public Notice No.27/2015 dated 14.7.2015. Admittedly in all the relevant documents Leather Jacket Fish is the description of the products and therefore, the allegation of mis-declaration does not sustain. Thus, we do not find any reason to uphold the impugned order and therefore, the impugned order is set aside. The appeal is allowed with consequential benefits if any.
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2024 (3) TMI 648
Classification of imported goods - Boronated Calcium Nitrate - to be classified under CTH 3102 60 00 of the First Schedule to the Customs Tariff Act, 1975 or not - concessional rate of 5% BCD under Sl. No. 225(I)(b) of Notification No. 50/2017 Cus - HELD THAT:- There is no dispute as regards the fact that the impugned goods are fertilizers, it is the claim of the Appellant that the disputed goods are a water-soluble fertiliser whereas the Department has alleged that since Boronated Calcium Nitrate is a fortified fertilizer it cannot be treated as a water-soluble fertiliser and therefore not eligible for exemption under the terms of Sl. No. 225(I)(b) of Notification No. 50/2017 Cus. It is observed that clarity on the nature of product is important to decide the eligibility of the Appellant for exemption under Notification No. 50/2017 Cus. It is the Appellant s claim that the submissions made by the Appellant have not been considered by the Department nor have they received such reports that have been relied upon by the Department to derive the nature of the impugned goods in order to deny exemption to the Appellant. The submissions made by the Appellant need to be considered owing the technical composition of the goods, that the factual dimensions of the issue needs to be verified first in order to determine eligibility under Notification No. 50/2017 Cus. - the matter needs to be reconsidered - Appeal allowed by way of remand.
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Corporate Laws
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2024 (3) TMI 647
Initiation of prosecution proceedings for the alleged offence of non-copliance with Corporate Social Responsibility (CSR) obligation - Company fall within the purview of section 135 of Companies Act or not - whether the reserves created out of amalgamation (as in this case), can be kept out of Net Worth in the years following the year of amalgamation? - HELD THAT:- Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices. In the present case the amalgamation took place on 01.04.2008 - All assets, liabilities, properties interest of the Transferee Company was vested into the Transferee Company (petitioner no. 1) vide order dated July 14, 2009 of the Hon ble Court and order dated 09.08.2011 when the other companies (2) merged with the petitioner Company - Thus as per Section 2(57) of the Act. The Company gets the benefit of Section 2(57) of the Act, for the said financial year and not there after (subsequent financial years) - But the Company herein continued filing the Balance Sheet for the subsequent financial years being 2011-2012, 2012-2013, 2013-2014 2014-2015 in this case to take the benefit of amalgamation, year after year, to avoid their corporate social liability for which the case has been initiated by the complainant. There is thus sufficient materials on record making out a prima facie case against the petitioners in respect of the offences alleged, and as such the case is required to be permitted to proceed towards trial. Interference at this stage would amount to abuse of the process of Court. Revision dismissed.
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Insolvency & Bankruptcy
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2024 (3) TMI 646
Admission of section 9 application - initiation of CIRP - pre-existing disputes or not - appellant submits that even though no reply of Section 9 application could be filed but reply to demand notice contains specific details by which Corporate Debtor has given notice of dispute - HELD THAT:- The Adjudicating Authority has not noticed the contents in the reply to demand notice given by the Appellant fully and the observation that reply raises issue only two invoices 203 and 205 is incorrect. It is true that the Corporate Debtor could not file reply to Section 9 application although in the appeal, Suspended Director of the Corporate Debtor has sought to given reason as to why it could not appear and file reply, it is not necessary to enter into the said issue. The fact remain that no reply has been filed. The Corporate Debtor, however, has filed certain other correspondences between the parties prior to demand notice to which reply has also been filed by the Operational Creditor. The correspondence which was brought on the record in the appeal prior to demand notice has not been denied. The demand notice dated 25.08.2021 was sent on the basis of ledger confirmation treating to be principal amount due as Rs.1,79,93,691/-. The demand notice was replied on 20.11.2021 and with regard to faulty cables, the Corporate Debtor has issued a debit note for Rs.67,96,800/- and further stated debit note for amount of Rs.50,00,000/- towards non-supply of G.I. Pipe for Bill number 203. The above reply to demand notice clearly indicate the dispute regarding the claim of the Appellant - there are ample materials on record to indicate that there was pre-existing dispute between the parties and reply dated 20.11.2021 replying the demand notice was not disputed, reply cannot be said to be based on no material or no evidence nor the defence raised by the corporate debtor in the reply to demand notice can be said to moonshine dispute or frivolous dispute as contended by the counsel for the Appellant. Issue of faulty cables between the parties was going on immediately after supply of the goods and joint inspection was also done on 08.12.2019 but there is no redemption was seen when faulty cables was measured. The fact thus, clearly indicate that dispute persisted between the parties and reply to the demand notice was clearly notice of dispute and, therefore, pre-existing dispute between the parties, Section 9 application ought not to have been admitted. The Hon ble Supreme Court in M/S S.S. ENGINEERS VERSUS HINDUSTAN PETROLEUM CORPORATION LTD. ORS. [ 2022 (9) TMI 377 - SUPREME COURT] clearly held that the operational creditor can only trigger the CIRP process, when there is an undisputed debt and a default in payment thereof. If the claim of an operational creditor is undisputed and the operational debt remains unpaid, CIRP must commence. However, if the debt is disputed, the application of the operational creditor for initiation of CIRP must be dismissed - Present is a clear case where claim raised by the operational creditor where payment was disputed, notice of dispute was given on 20.11.2021. It is also noticed the correspondences between the parties prior to issuance of demand notice which indicate that the dispute persisted between the parties with regard to default in cable supplied. Thus there is pre-existing dispute between the parties and the Adjudicating Authority committed error in admitting Section 9 application. The order passed by the Adjudicating Authority set aside - Section 9 application filed by the operational creditor dismissed - appeal allowed.
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PMLA
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2024 (3) TMI 645
Quashing of summons dismissed - whether Section 120-B IPC is a standalone scheduled offence for invocation of provisions under the Prevention of Money Laundering Act, 2002? - HELD THAT:- The High Court, vide the impugned judgment, has held that Section 120-B IPC is a standalone scheduled offence on the basis of which provisions of PMLA can be invoked - the reasons assigned by the High Court in the impugned judgment cannot be sustained. Appeal allowed.
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2024 (3) TMI 644
Seeking grant of anticipatory bail - Money Laundering - applicant though not named in the FIR, prosecution complaint filed by the Income Tax Department nor named in the ECIR submitted by the Enforcement Directorate, can be involved in the commission of offence under the PMLA or not - twin conditions for grant of bail under Section 45 of the PMLA, 2002 are available on record to release the applicant by granting anticipatory bail or not. Whether the applicant though not named in the FIR, prosecution complaint filed by the Income Tax Department nor named in the ECIR submitted by the Enforcement Directorate, can be involved in the commission of offence under the PMLA? - HELD THAT:- The applicant can be subjected to prosecution under the PMLA, 2002 if it can be established that the applicant has prima facie committed an offence under Section 3 of the PMLA, 2002 - From the statement recorded as reflected in the ECIR that there is evidence to suggest that the applicant had knowledge that the money he has received was derived from criminal activity related to a scheduled offence and did he knowingly assist accused Laxmikant Tiwari in concealing or transferring illicit proceeds of crime which is essential to constitute an offense under Section 3 of the PMLA, 2002. Therefore, the money obtained by the applicant is deemed to proceed of crime and as such, he has prima facie committed the crime under Section 3 of the PMLA, 2002 - Question is answered against the present applicant. Whether the twin conditions for grant of bail under Section 45 of the PMLA, 2002 are available on record to release the applicant by granting anticipatory bail? - HELD THAT:- The material so collected by the investigation prima facie reflects that many hand written entries in the diaries, name of the present applicant exist. Thus, he was knowingly and actively obtained the proceeds of crime and committed the offence under Section 3 of the PMLA, 2002 - material collected by the Enforcement Directorate, prima facie, involvement of the applicant is reflected. The material collected by the Enforcement Directorate has not been rebutted which also prima facie reflects about involvement of the applicant. The record of the case would further demonstrate that the applicant is unable to fulfill the twin conditions which are required for grant of bail under the PMLA, 2002, is equally applicable for grant of anticipatory bail, which has not been satisfied by the present applicant - considering the fact that the applicant is unable to satisfy twin conditions of Section 45 of PMLA, 2002 for grant of anticipatory bail, the anticipatory bail cannot be granted - question also answered against the present applicant. The bail application filed under Section 438 of the Cr.P.C. is liable to be and is hereby rejected.
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Service Tax
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2024 (3) TMI 643
Levy of service tax - activity of construction of Mechanised fertiliser handling and bagging facility on the land leased out - invocation of extended period of limitation - It was held by CESTAT that Since, on the grounds of limitation itself, the SCN is not sustainable, the case on merit as to whether or not the Appellants were eligible for the benefit of Notification No.25/2012-ST, is not examined in the facts of the case - HELD THAT:- There are no merit in the present Civil Appeals - appeal dismissed.
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2024 (3) TMI 642
Classification of service - activity of transporting waste from mine head to waste dump yard within the mine leased area - taxable as mining service or as Goods Transport Agency service - expenditure incurred by the appellant on feasibility study for acquiring/procuring coal mines outside India would be classified under Management Consultants Service or not - Cenvat Credit rightly taken on tippers and dumpers supplied to M/s AMR Constructions Ltd during the course of providing output service supply of tangible goods or not - extended period of limitation. Whether the activity of transporting waste from mine head to waste dump yard within the mine leased area, would be taxable as mining service or as Goods Transport Agency service in facts of present case? - HELD THAT:- The services are, therefore, primarily of transportation as the assessee is not engaged in winning the ore. Further, there are force in the submission of the appellant that the tenor of the agreement is an important factor while determining the classification. The agreement between the parties simply provides the rate for transportation per tonne from mine head to the dump Yard. Merely because transportation services are being rendered within the mine lease area cannot make the services mining services, unless it is an integrated contract, which includes transportation of waste as well as mining activity, which we find from record is not the case of the department - appropriate classification in so far as the aforesaid activity is concerned would be goods transport agency services and not mining services - no case of suppression or willful misstatement has been made out in the present case as the department is not clear about the classification issue when they had issued the Show Cause Notice. Therefore, the demand of Service Tax confirmed against the appellant is set aside. Whether the expenditure incurred by the appellant on feasibility study for acquiring/procuring coal mines outside India would be classified under Management Consultants Service ? - HELD THAT:- The services rendered should be in connection with management of any organization or business. If the services are not related to management of any business or organization, then it would not fall under meaning of the term management or business consultant - issue of classification of feasibility study services is now settled in the case of M/S BMD PVT. LTD. VERSUS CCE, JAIPUR [ 2016 (12) TMI 1395 - CESTAT NEW DELHI] , relied upon by the appellant wherein it has been held that feasibility study would be covered under market research agency service - the demand of Rs.5,63,009/-, confirmed against the appellant, is set aside. Whether Cenvat Credit was rightly taken on tippers and dumpers supplied to M/s AMR Constructions Ltd during the course of providing output service supply of tangible goods ? - HELD THAT:- The issue is squarely covered by the precedent decision of this Tribunal in M/S IBC LTD. VERSUS CC, ST, TIRUPATI [ 2016 (8) TMI 1029 - CESTAT HYDERABAD] - it is found that under similar circumstances for the period April 2008 to September 2009 it was held that the for supply of tangible goods namely dumpers and tippers, will need to be considered as primary requirement for providing the output service of SOTG. We also find that insertion of goods like tippers dumpers and equipments as eligible input/capital goods vide notification dated 22/06/2010, is Clarificatory in nature. This is further explained or amplified vide Board instructions/circular dated 23/10/2008. We therefore hold that taking of cenvat credit on tippers and dumpers cannot be said to be irregular. Therefore, the demand confirmed by denying the Cenvat credit of Rs.5,88,51,540/- and Rs.4,94,41,516/- are set aside. Whether extended period of limitation have been rightly invoked? - HELD THAT:- Appellant was registered with the department, had been maintaining regular books of accounts and were also filing the returns regularly. The issues involved and are allegations are as a result of change of opinion on the part of revenue. This is evident on the face of record, as for the same service of transportation in mining area, when provided by the Appellant was proposed to be classified as mining service instead of GTA service, on the other hand the same service when received by the Appellant for a different site/mine was proposed to be taxed as GTA services. Accordingly, extended period of limitation is not available to revenue. The impugned order set aside - appeal allowed.
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2024 (3) TMI 641
Short levy of service tax - Manpower Supply Services and Works Contact Services under Reverse Charge Mechanism (RCM) in terms of proviso to Section 68(2) of the Finance Act, 1994 read with Notification No. 30/2012-ST dated 20.06.2012 - transmission or distribution of electricity by an electricity transmission or distribution utility and covered under negative list of services under clause (k) of Section 66D of the Finance Act, 1994 - HELD THAT:- Section 67(2) of the Finance Act, provides that where the gross amount charged by the service provider, for the service provided or to be provided is inclusive of service tax payable the value of such taxable service shall be such amount as with the addition of tax payable is equal to gross amount charged. It is therefore clear that where service tax is not separately collected by the assessee, than the price of the goods or gross amount charged for such service rendered shall be deemed to include service tax as may be applicable. It is also a settled proposition in law that no tax is leviable on state dues in the nature of tax/duty/cess etc. As no tax can be recovered on the component of labour cess discharged by the appellant, it is incumbent upon the authorities to rework the demand amount after discounting the aforesaid labour cess component from the value of taxable services as arrived at by the Revenue in the light of the aforesaid example. In view of the findings, the order of the lower authority is set aside and the matter remanded to the original authority to work out the demand amount afresh after giving due consideration from the contractual value for the labour cess amount paid for which all documentary evidence as placed on record shall be considered by the original authority. Needless to state that natural justice shall be adhered to and the appellant given reasonable opportunity to present their case. Appeal disposed off by way of remand.
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2024 (3) TMI 640
Classification of services - Works Contract Services or not - development of shipyard facilities at Kakinada for which they had entered into a Contract - Dredging service or not - applicability of provisions under Sec 75, 76, 77 78 of FA. Whether the appellants are entitled for the exemption notifications claimed by them for not paying service tax in respect of certain activities undertaken by them pursuant to their contract with M/s Sembmarine? - HELD THAT:- The perusal of the Agreement dt.06.04.2011, as also the amendment dt.24.02.2014, clearly brings out that this is an Agreement for development of shipyard facilities at Kakinada port. It is also not disputed that they were doing certain limited work in terms of the scope of work covered within the agreement, which primarily involved three broad categories viz., land and land development, marine infrastructure development and new building facilities. Essentially, it is part of the work which was undertaken by them towards the development of shipyard facilities at Kakinada Port - The nature of work described in the RA Bills, as also from the terms of agreement, it is obvious that those activities cannot be covered but for construction, repair, alteration or renovation of any of the specified structures viz., wharves, quays, docks, stages, jetties, piers and railways. Thus, on strict construction of Notification No. 11/2011, exemption is not admissible in the facts of the case. There are no force in this line of argument as the notification issued declaring certain areas within a Customs station as Customs area is for the limited purpose as envisaged in the Customs Act and that in itself cannot declare that space as a deemed port or otherwise. A Customs area within a port is a specified area but the entire Customs area cannot become port, if it is not otherwise a port, in terms of definition of port in the Statute. Thus, on this count also, the appellants have no case. Dredging services or not - services rendered were dredging for approach channel, repair berth and floating dry dock - HELD THAT:- It is obvious that as long as these activities were being in relation to construction of shipyard, these activities will also not be entitled to exemption either under Notification No. 25/2007 or under 11/2011. Time limitation - HELD THAT:- The appellants have not been able to bring anything concrete on record to suggest that they were under any bonafide belief regarding non-payment of service tax, whereas, the department has been able to clearly establish that they were collecting service tax but neither paying the same nor reflecting the same in their ST3 Returns, or claiming any specific exemption notification for exemption - The fact that appellants have argued that in terms of agreement dt.06.04.2011, clause 70.4, they were aware about exemption from service tax and cess and yet they collected service tax, further, indicating their determinate disregard to statutory obligations. Thus, on this count also, the extended period of limitation has been rightly invoked. Penalty - HELD THAT:- The Original Authority has not imposed penalty in terms of Sec 76 as penalty has been imposed under Sec 78 of the Act. There are no infirmity in the impugned order passed by the Original Authority and hold that the appellants are not entitled to the benefits of the notifications claimed by them, in the facts of the case and evidence on record - appeal dismissed.
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2024 (3) TMI 639
Levy of Service Tax - Business Support Service - amount collected by the appellant on account of electricity and water charges from the tenants being initially paid by them to the Technopark - time limitation - HELD THAT:- The charges on account of electricity, water etc. is required to be paid by the tenants / lessee in addition to the lease rent to designated agencies / Technopark. Therefore, the Revenue s allegation that they have provided Business Support Service to the lessee / tenants, in our view, cannot be sustained. The issue of eligibility to service tax of these reimbursable expenses viz. water charges and electricity charges is no more res integra and covered by the judgment of this Tribunal in the case of M/S ICC REALITY (INDIA) PVT LTD OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2013 (12) TMI 854 - CESTAT MUMBAI] and Kiran Gems Pvt. Ltd. Vs. CCE ST, Surat [ 2018 (11) TMI 1388 - CESTAT AHMEDABAD] , where it was held that the said facility charges are not leviable to service tax. Extended period of Limitation - HELD THAT:- It is found that the appellant was paying service tax under the category of Renting of Immovable Property Service and were filing ST-3 Returns periodically with the Department. Hence, suppression of facts, willful misstatement with intent to evade tax etc. cannot be fastened upon the appellant alleging non-payment of service tax. Accordingly, invocation of extended period in confirming the demand on the facility charges, when the same is reflected in the Lease Deed is not sustainable. Following the aforesaid settled principles on the subject, the electricity and water charges collected by the appellant from the tenants cannot be leviable to service tax under Business Support Service . Consequently, the impugned order is set aside - appeal allowed.
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2024 (3) TMI 638
Refund claim of service tax paid on cancelled transactions - Post GST era - Rejection of refund under Rule 6(3) of Service Tax Rules read with Sec 142(5) of CGST Act - payment of service tax and GST on a transaction where no service was ultimately provided - HELD THAT:- The issue herein is squarely covered in favour of the appellant by the decision of the Coordinate Bench of this Tribunal at Delhi in M/S RATNAWAT INFRA CONSTRUCTION COMPANY LLP VERSUS COMMISSIONER, CENTRAL EXCISE CGST-JAIPUR I [ 2023 (2) TMI 479 - CESTAT NEW DELHI] , wherein, there being no dispute with regard to booking, cancellation and the refunds made by the appellant/builder to the buyer including the amount of service tax, in such circumstances, it was held that the appellant/builder is entitled to credit under Rule 6(3) of ST Rules read with Sec 142(3) of CGST Act, the assessee is entitled to refund due to change of regime to GST. The impugned OIA is erroneous and against the provisions of Rule 6(3) of Service Tax Rules read with Sec 142(5) of CGST Act. Accordingly, the appeal is allowed and the impugned order is set aside. The Adjudicating Authority is directed to grant the refund within a period of 45 days from the date of receipt of copy of this Order along with interest, as per Rules. Appeal allowed.
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Central Excise
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2024 (3) TMI 637
Recovery of Arrears of tax dues / duties - Denial of Exemption in terms of notification No.8/2003-CE dated 01.03.2003 - eligibility for CENVAT Credit - HELD THAT:- The appellate authority modified the impugned order to the extent of affirming the tax demand subject to verification of the petitioner's eligibility for cenvat credit and the extension of benefit of such credit, if applicable. The said order has attained finality in view of the rejection of the petitioner's appeal before the CESTAT. In those circumstances, it was necessary for the original authority to give effect to the order of the appellate authority. A remand is necessary for such purpose. Meanwhile, the recovery notice was issued by treating the petitioner under the category of 'arrears'. On examining circular No.1081, such circular specifies that if there is a remand for de novo adjudication, the case will not fall within the category of 'arrears'. As indicated earlier, the appellate authority did not set aside the order of the original authority and remand the matter for de novo adjudication. Hence, the conclusion that the petitioner's case falls within the category of 'arrears' does not contain any infirmity. Nevertheless, since the direction issued by the appellate authority was not given effect to, W.P.No.2222 of 2024 is disposed of by directing the first respondent to examine the petitioner's claim for cenvat credit - petition disposed off.
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2024 (3) TMI 636
Demand of duty based on discrepancy in Invoice towards quantity of goods cleared - Validity of Demands Based on Proforma Invoices - Duty on Goods Found in Factory Premises without declaring in RG-1 stock register - Levy of penalty under rule 209A of CER - assisting and abetting in evasion of duty by SIPL or not - benefit of SSI Exemption. Demand of Excise Duty of Rs 1,06,687.52 for the goods cleared as per Invoice No 16 18 dated 24.04.2001 - HELD THAT:- The Central Excise Invoices referred to the description for which order was placed on the appellants giving the number of complete credenza/ storage cabinets supplied by the appellant. To ascertain the correctness of the claim no enquiries were conducted from HFCL in respect of the alleged discrepancies. Further the transaction/ Assessable Value for 44 pieces, as appearing in the RG-I Register is the same as appearing in the Central Excise Invoice No 16 and 18, both dated 20.04.2001. In view of the above revenue authorities have totally failed to adduce evidence to show that appellant had cleared 44 pieces against these invoices. The order for confirming the demand by taking 44 number as appearing in RG-1 register as complete credenza/ storage cabinets is contrary to the facts on record and no effort has been made to ascertain true facts by making any enquiry/ investigation at the customer end. There are no merits in this demand. Demand of Rs 90,720/- for the goods alleged to be cleared to Sita Resorts on the basis of the proforma invoices - HELD THAT:- It is not placed on record through any tangible evidence to show that the goods were cleared against these proforma invoices. Even Shri Soni has in his statement stated so. Two more statements of Shri Soni were subsequently recorded and no question on these clearances was put to him. Appellant had asked for the cros s examination of Shri Soni which was also not allowed. Impugned order records that allowing/ non-allowing of Cross Examination is the discretion of the Adjudicating Authority, ignoring the fact that entire demand is based on the statement of Shri Soni, goes contrary to the settled position in law. Demand of Rs 70,320/- towards the goods lying within the factory as per the panchnama - HELD THAT:- The fact that appellants have removed the goods for consumption by installing them in their own office and canteen premises is not in dispute. In my view the removal of the goods for personal consumption within the office and canteen premises of the appellant is removal of the goods as per the provisions of Central Excise Law. The value as has been indicated in the Panchnama has been ascertained from the coordinating architect. Both the authorities have concluded similarly in respect of this demand and there are no merits in the submissions made by the appellant in this respect. Thus this demand along with the interest as applicable confirmed. Rs 5,59,158.48 for the period 06.04.2001 to 21.08.2001 in respect of the goods cleared by wrongly availing the benefit of SSI exemption - HELD THAT:- Undisputedly appellant were not eligible to the benefit of exemption under this notification. However it is also undisputed that appellant were duly filing their RT-12 returns during the Financial Year 2000-01 and the value of clearances of dutiable goods was indicated on the Rt-12 returns. The fact that they continued to clear the goods availing the benefit of this exemption during the year 2001-02 was duly reflected in their Rt-12 Returns filed. Original Authority has in the order in original recorded the fact that the appellant was filing the Rt-12 returns giving all the details (Para 14.2). That being so when the appellant 1 has duly declared all the facts in their Rt-12 returns, a fact acknowledged in the order in original, there are no merits in the order making this demand by invoking extended period of limitation as per proviso to section 11 A (1) - there are no merits in this demand by invoking the extended period of limitation as per proviso to section 11A (1). Imposition of Penalty on Appellant 1 - HELD THAT:- In view of the fact that against the total demand of Rs.8,26,886/- which has been upheld by impugned order, there exists no position to the demand beyond Rs 70,320/-. Accordingly penalty under Section 11AC imposed on the Appellant is reduced to Rs 70,320/- from Rs 8,26,886/- imposed by the original authority and affirmed by the impugned order. Penalty on Appellant 2 and Appellant 3 - HELD THAT:- No active role played by the appellant 2 and appellant 3 in respect of the evasion/ short payment of duty to the extent upheld by me, by the Appellant 1. Hence there are no position to uphold the penalties imposed upon Appellant 2 and Appellant 3 under Rule 209A of the Central Excise Rules, 1944. Appeal allowed in part.
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2024 (3) TMI 635
Valuation - non-inclusion of After Sales Service (ASS) and Pre-Delivery Inspection (PDI) charges in the assessable value - HELD THAT:- This Tribunal in the appellant s own case for the previous period [ 2023 (11) TMI 370 - CESTAT CHANDIGARH] has decided the issue in favour of the appellant involving identical issue - this issue is no more res integra and has been settled by various judicial forums as relied upon by the appellant. It has been consistently held that the cost of ASS shall not be includible in the assessable value of the goods. The impugned order not sustainable - appeal allowed.
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2024 (3) TMI 634
Penalty imposed on them under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - appellant has taken CENVAT Credit on the strength of fake invoices, but the same was reversed along with interest - HELD THAT:- In the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX VERSUS M/S. JUHI ALLOYS LTD., ANIL KUMAR SHUKLA [ 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT] , the issue before the Hon ble High Court of Allahabad was the availment of CENVAT Credit to the manufacturer whereas the invoices had been issued by the registered dealer which were found to be fake. Therefore, it was held that CENVAT Credit could not be denied. Further, in the case of M/S. RAJAN ENGINEERING WORKS VERSUS CCE, DELHI-IV, FARIDABAD [ 2011 (7) TMI 626 - CESTAT, DELHI] . The demand in the said case was raised only on the basis of the statement of the input supplier, which is not the case in hand as, in this case, the appellant has admitted that they had taken the CENVAT Credit on the strength of fake invoices although it was not known to them; the same has been reversed along with interest and they are seeking immunity from the penalty imposed on them. As the appellant has already reversed the amount of CENVAT Credit along with interest and contesting the same, in these circumstances, we hold that penalty on the appellant is to be imposed at only 25% of the amount involved. Therefore, in terms of proviso to Section 11AC of the Act, the penalty on the appellant is reduced to 25% of the penalty imposed as the appellant has already reversed the CENVAT Credit along with interest. Appeal disposed off.
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