Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 27, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of Supply - sale from the portion of the sweetmeats and bakery shop - input tax credit - Supply of food and beverages from the sweetmeats counter by the applicant, where the customers have not been provided with any services in relation to consume the same in the premises, shall be categorized as supply of goods and the applicant is eligible to avail input tax credit in respect of such supply of goods subject to conditions as laid down in Chapter V of the GST Act and rules made there under. - Supply of food and beverages to the auditor, guests/ parents on programme days, as it appears from the agreement shall be treated as ‘outdoor catering’ and shall attract tax @ 5% of GST - AAR
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Seeking to allow rectification of Form GST TRAN-2 filed for the month of July 2017 - The writ-applicants cannot be made to lose the benefit of deemed transitional tax credit from August 2017 onwards only on account of an inadvertent and bonafide typographical error made in the Form GST TRAN-2 for the month of July 2017 - HC
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Grant of transitional credit u/s 140(1) - The respondents failed to resolve the issue as raised by the writ applicant in the present writ application, despite the fact that, the Form TRAN-1 was filed within time limit, but it was not successfully uploaded due to technical glitches/error on the portal - there are no fault on the part of the writ applicant while claiming the CENVAT credit. - Directions issued - HC
Income Tax
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Exemption u/ 11 - declining to condone the delay in filing Form No.10B - mandate of section 119(2)(b) - at this stage, petitioner may approach CBDT under the aforesaid provision seeking a special order to the Commissioner of Income Tax (Exemptions), Mumbai to condone the delay in filing Form No.10B for the assessment year 2018-19 which is beyond 365 days and thereafter to deal with the said claim on merit and in accordance with law. - HC
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Rectification u/s 154 - Transfer pricing adjustments - The assessee carried the matter on appeal to the Tribunal and once again, the assessee never raised any contention with regard to the validity of the notice dated 28.03.2006. Thus, considering this factual situation, we are of the clear view that the present attempt of the assessee is not tenable and accordingly rejected. - The assessment order dated 28.02.2006 is an order u/s 143(3) and not an order u/s 92C(3) of the Act. - The argument of the assessee before us is that the Assessing Officer has exercised jurisdiction u/s 92C(3) and the TPO parallely cannot exercise his power u/s92CA. On facts, the assessee is wrong. - HC
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Claim of depreciation @ 60% on switches and routers - it can be safely held that the switches and routers as they cannot be used without computer, they form part of peripherals of the computer and entitled to depreciation at 60%. - HC
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Transfer of the proceedings u/s 127(2)(a) - Centralization of case under search - Faceless Assessment - The Income Tax department has recently introduced a scheme of Faceless Assessments with a view to avoid personal hearing and physical interaction of the assessee and the Assessing Authority altogether. The assessee need not even know the name of the Assessing Authority who will deal with his case. - one of the judgments are of any avail to the writ-applicant. - HC
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Representative assessee u/s 160 or u/s 161 - In the present case, the assessing officer has passed an order in the name of the assessee without specifying that the above income is chargeable to tax in the hands of the assessee as a representative assessee of a non-resident i.e. not passing a separate order but adding the income of the non-resident in the hands of the assessee is not in accordance with the provisions of Section 161 - AT
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Income from house property - Income received on leasing of land and building - the assessee had correctly shown the said income under the head “income from house property” as the assessee had fulfilled all the basis conditions of Section 22 of the Act for treating the income under the head “income from house property”, therefore, it was rightly held that the assessee was also entitled for deduction U/s 24(a) and 24(b) of the Act. - AT
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Addition u/s 68 - acquiring shares of certain companies from certain shareholders without paying any cash consideration - provisions of section 68 of the Act does not apply to cases of purchase of shares and allotment of shares when the purchase and allotment are under a barter system. - AT
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Penalty u/s 271AAB on the undisclosed income - the assessee has very much admitted the undisclosed income and surrendered the undisclosed income. The assessee also paid the tax thereon. Besides this, the notice upon which the assessee is bound to give reply is vague and not as per provisions of the Income Tax Statute. The Revenue Authorities have not properly adjudicated/ invoked in true spirit of the penalty Provisions to impose penalty on the assessee. Thus, on the technicality as well as on merit, the penalty does not survive. - AT
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Claim of higher depreciation of ‘Bizerba weighing scales’ - A photocopy (xerox) machine can also be attached to a computer, however, that does not entitle it for depreciation @ 60%. CIT(A) has allowed assessee’s claim of depreciation on the weighing scales without proper reasoning. Therefore, while allowing assessee’s claim of depreciation on printer, router, scanner, switches, etc. We uphold disallowance of assessee’s claim of depreciation on bizerba weighing scales @ 60%. - AT
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Income accrued in India - permanent establishment (PE) - Withholding of tax in India - vessel engaged in seismic survey at high sea - The sum paid by the applicant to the vessel providing companies (VPCs) under global usage under bareboat charter (BBC) agreements is deemed to accrue and arise in India and is liable to tax in India under the Income-tax Act and, therefore, subject to withholding tax in India. - The income liable to tax is to be assessed as business income under the provisions of section 44BB of the Act. - AAR
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Revision u/s 263 - AO allowed of the assessee‟s claim for deduction of forfaiting charges as revenue expenditure - as the A.O while framing the assessment had after making exhaustive verifications arrived at a plausible view as regards the assessee‟s entitlement towards claim of deduction of the forfaiting charges therefore, the PCIT could not have invoked his revisional jurisdiction under Sec. 263 - AT
Customs
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Violation of principles of natural justice - Release of imported goods of the petitioner - No notice in writing under section 124(a) of the Customs Act was given to the petitioner before passing the impugned order in original which not only confiscated the goods but also imposed penalty on the petitioner. All that the impugned order in original says is that a personal hearing was given to the authorized representative of the petitioner on 18.09.2020 through video conferencing. There is nothing on record to show or indicate that a request was made on behalf of the petitioner for oral notice or oral representation. - order set aside - HC
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Production of “installation” certificate of the goods imported free of duty under the “Project Import Regulations, 1986” - The Tribunal after considering the documents placed, was satisfied that the assessee has produced proof to establish installations and therefore, it was held that the Department cannot sustain the demand of merit rate of duty in respect of goods imported - Revenue appeal dismissed - HC
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Valuation - related party transaction - respondent has furnished the Impugned Investigation Report concluding that the petitioner’s relationship with its group companies has influenced the declared prices - Since the personal hearing was held by different officer and Investigative Report is filed by another officer, the same is quashed, matter remanded back. - HC
IBC
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Seeking to withdraw resolution plan after approval - EMD and the Performance Bank Guarantee - With the withdrawal of the Plan by the Applicant and the entire CIRP coming to nought, the Applicant should bear a part of the burden of expenses incurred during the CIRP. Also some amount may be lost as the liquidation value of the project may be very low, though however the Applicant has submitted that there is a small gap between what was offered in the Plan and the estimated liquidation value, ie of about ₹ 13 lakh only. - it would meet the interests of justice if an amount of ₹ 75,00,000/- is forfeited in total and the balance amount of ₹ 2,76,32,780/-, is refunded to the Resolution Applicant. - Tri
Service Tax
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Extended period of limitation - The extended period cannot be invoked because the show-cause notice was issued on the basis of departmental audit undertaken for the period October 2011 to September 2015 and all the facts were disclosed in the audit. Hence, suppression of fact with intent to evade service tax cannot be alleged against the appellant - AT
Central Excise
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Reversal of Cenvat Credit - Scope of exemption notification - Notification exempting the basic excuse duty but not additional duty of excise - As per Rule 2(d), “exempted goods” would mean excisable goods which are exempt from the whole of the duty of excise leviable thereon or the goods which are chargeable to “Nil” rate of duty. In the present case, we have held that the exemption Notification dated 21.01.2004 as amended subsequently cannot be seen as a Notification granting unconditional exemption from payment of duties. - HC
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CENVAT Credit - input services - much water has flown after the amendment in the definition of input services with effect from 1.4.2011 and prior to 1.4.2011, construction of road and drainage system inside the factory premises was considered to be falling under the definition of input service and the assessee was entitled to CENVAT credit of the same - Credit allowed - AT
Case Laws:
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GST
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2021 (3) TMI 1093
Classification of Supply - sale from the portion of the sweetmeats and bakery shop - input tax credit - supply of food items and beverages from the facility which offers the opportunity of eating at the same premises - can be classified as restaurant services attracting a rate of GST of 5% or not? - input tax credit be availed on restaurant service - receipt of common input tax credit in the form of inputs, input services and capital goods, will amount of reversal of input tax credit or not - catering services provided to the educational institution, is exempt supply or not. Supply of food and beverages from the sweetmeats counter by the applicant - HELD THAT:- Supply of food and beverages from the sweetmeats counter by the applicant, where the customers have not been provided with any services in relation to consume the same in the premises, shall be categorized as supply of goods and the applicant is eligible to avail input tax credit in respect of such supply of goods subject to conditions as laid down in Chapter V of the GST Act and rules made there under - It appears from the mode of business as carried out by the applicant that when goods are supplied from the sweetmeats parlour without any element of supply of services or as a part of any services, it cannot be considered as a composite supply . Such supplies shall be treated as supply of goods and shall attract tax accordingly. Restaurant services or not - Supply of food items and beverages by the applicant which offers the facility of eating in the same premises along with takeaway - HELD THAT:- Supply of food and beverage items made in the restaurant or as takeaways from the restaurant counter having an element of supply of services shall qualify as composite supply . The principal supply being the supply of restaurant service, tax on such supply shall be levied according to entry serial number 7 of the Notification No. 11/2017- Central Tax (Rate) dated the 28th June, 2017, as amended from time to time (corresponding West Bengal State Notification No. 1135 F.T. dated 28.06.2017). Supply of catering services to an educational institution - HELD THAT:- The term catering has not been defined under the GST Act. In Cambridge Dictionary, catering is defined as any job making or serving food. In Collins Dictionary, catering has been defined as the activity or business of providing food for people - In the present case, the applicant provides catering services to an educational institution which provides education services up to secondary school. Reference may be drawn to para 2 of the Circular No. 85/04/2019-GST dated 01.01.2019 issued by the Tax Research Unit, Department of Revenue, Ministry of Finance, Government of India, where it has been clarified that A supply which is specifically covered by any entry of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 is exempt from GST notwithstanding the fact that GST rate has been prescribed for the same under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. - thus, Supply of catering services to an educational institution providing education services up to higher secondary school or equivalent, therefore, shall get covered under the entry serial number 66 (b)(ii) of the Exemption Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and shall be exempted from payment of tax. Outdoor Catering services or not - Supply of food and beverages to the auditor, guests/ parents on programme days - HELD THAT:- The agreement made between the applicant and Sri Sri Academy also requires the applicant to provide food and beverages to the auditor, guests, guests /parents on programme days. Evidently such supplies of services are event based and occasional in nature and falls under the category of outdoor catering . The supply, therefore, shall attract tax @ 5% vide entry serial number 7(iv) of the Notification No. 11/2017- Central Tax (Rate) dated the 28th June, 2017, as amended from time to time (corresponding West Bengal State Notification No. 1135 F.T. dated 28.06.2017, as amended from time to time) without credit of input tax charged on goods and services used in supplying the services. Input Tax Credit - HELD THAT:- The applicant shall follow the principle of apportionment of credit as laid down in sub-section (1) and (2) of section 17 of the GST Act read with rule 42 and 43 of the CGST/WBGST Rules, 2017 in respect of common input tax credit in the form of inputs, input services and capital goods.
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2021 (3) TMI 1087
Grant of Regular Bail - availment of fake Input Tax Credit - fake/bogus firms - clubbing of firms - HELD THAT:- It is found that main allegations against the petitioner are regarding availment of fake Input Tax Credit (ITC) Limit of 04 firms and on clubbing of the same, the amount as calculated by the respondent is approximately ₹ 18 crores, however, considering the fact that the custody of the petitioner is less than 03 months, it is deemed appropriate to grant the concession of regular bail to the petitioner, at this stage. Petition dismissed.
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2021 (3) TMI 1086
Search and seizure - retraction of statements - reconciliation of the alleged variation in the stock - HELD THAT:- Although there is a general statement in paragraph 3 retracting the statement made by him, there is no specific denial vis-a-vis paragraph 14 though there is a reference to certain other paragraphs, i.e., 15, 19, 20 and 22. For whatever it is worth, the concerned officer will take this communication into account as well. Application disposed off.
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2021 (3) TMI 1085
Seeking to allow rectification of Form GST TRAN-2 filed for the month of July 2017 - filing of returns in Form GST TRAN-2 - transitional credit for supplies made in the months of August 2017 to December 2017 - Section 140(3) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The controversy in the case on hand is squarely covered by a judgment of this Court in the case of JAKAP METIND PVT LTD. VERSUS UNION OF INDIA THROUGH THE SECRETARY AND 6 OTHER (S) [ 2019 (11) TMI 710 - GUJARAT HIGH COURT] , wherein it was held that respondents are directed to either open the online portal so as to enable the petitioner to again file the rectified Form GST TRAN-1 electronically or accept the manually filed Form GST TRAN-1 with corrections on or before 30th November 2019 - The judgment of this Court in the case of Jakap Metind Pvt. Ltd., is in the context of an inadvertent error in the Form GST TRAN-1. However, the ratio should apply even in the case on hand. The writ-applicants cannot be made to lose the benefit of deemed transitional tax credit from August 2017 onwards only on account of an inadvertent and bonafide typographical error made in the Form GST TRAN-2 for the month of July 2017 - respondents are directed to either open an online portal so as to enable the writ-applicants to again file a rectified Form GST TRAN-2 electronically - Application allowed.
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2021 (3) TMI 1080
Grant of transitional credit under Section 140(1) of the Central GST Act in electronic credit ledger or otherwise as claimed by the petitioner in GST TRAN-1 - HELD THAT:- It is not in dispute that, to avail the benefit of unutilized input credits under the pre-GST regime, the writ applicant had filed TRAN-1 on 10.07.2010 electronically, however, it was not successfully uploaded due to some technical glitches, but at the same time, the form was saved on the portal. It is also an admitted fact that, during the internal audit dated 24.04.2019 undertaken by the jurisdictional tax officer, the writ applicant came to know that the transitional credit had not been reflected in the electronic credit ledger due to technical glitches in the GSTN system. In view of the Circular issued by the Government of India, Ministry of Finance, the writ applicant had ventilated the grievance to resolve the technical issue at the GST portal and accordingly, the respondents had advised to the writ applicant to approach jurisdictional tax officer with the evidence of technical glitches/errors. The respondents failed to resolve the issue as raised by the writ applicant in the present writ application, despite the fact that, the Form TRAN-1 was filed within time limit, but it was not successfully uploaded due to technical glitches/error on the portal - there are no fault on the part of the writ applicant while claiming the CENVAT credit. This writ application is disposed off directing the respondents to consider and act upon the representation dated 30.01.2019 made by the writ applicant and decide the claim of the writ applicant in accordance with law.
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2021 (3) TMI 1078
Permission to file TRAN-1 statutory form either electronically or manually or for revising the form submitted earlier electronically or manually - extension of time limit prescribed under rule 117 of CGST Rules read with Section 140 of CGST Act, 2017 - Carry forward of ineligible credit - HELD THAT:- This court in the case of Asiad Paints Limited v. Union of India [ 2019 (12) TMI 464 - KARNATAKA HIGH COURT ] has allowed the petitions involving the same questions and that therefore, the present petitions are also to be allowed in terms of the directions passed in the mentioned writ petitions. The writ petitions are allowed directing the respondents to permit the petitioners to file/revise, the TRAN-1 either electronically or manually on or before 31.03.2021.
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Income Tax
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2021 (3) TMI 1092
Carry forward of unabsorbed depreciation - HELD THAT:- In view of the judgments on the interpretation of Section 32(2) of the Income Tax Act delivered by Delhi High Court, Gujarat High Court, Madras High Court and Bombay High Court, upheld by this Court by special leave petitions being dismissed, we do not agree with the learned Additional Solicitor General that the question of law has to be determined in these special leave petitions.
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2021 (3) TMI 1089
Direct Tax Vivad se Vishwas scheme - settlement in respect of tax arrear - ineligibility to file declaration - petitioner seeks a declaration that the clarification given by respondent No.2 to question No.73 vide circular No.21/2020 dated 04.12.2020 is violative of Article 14 of the Constitution of India and thus is arbitrary and ultra vires to the provisions of the Direct Tax Vivad se Vishwas Act, 2020 and the Direct Tax Vivad se Vishwas Rules, 2020 - debar to petitioner from filing a declaration for settlement of tax arrear - HELD THAT:- As discussed in detail section 9(a)(ii) and we have no hesitation to hold that either on a literal interpretation or by adopting a purposive interpretation, the only exclusion visualized under the said provision is pendency of a prosecution in respect of tax arrear relatable to an assessment year as on the date of filing of declaration and not pendency of a prosecution in respect of an assessment year on any issue. The debarment must be in respect of the tax arrear as defined under section 2(1)(o) of the Vivad se Vishwas Act. To hold that an assessee would not be eligible to file a declaration because there is a pending prosecution for the assessment year in question on an issue unrelated to tax arrear would defeat the very purport and object of the Vivad se Vishwas Act. Such an interpretation which abridges the scope of settlement as contemplated under the Vivad se Vishwas Act cannot therefore be accepted. In so far the prosecution against the petitioner is concerned, the same has been initiated under section 276-C(2) of the Act because of the delayed payment of the balance amount of the self-assessment tax. Such delayed payment cannot be construed to be a tax arrear within the meaning of section 2(1)(o) of the Act. Therefore such a prosecution cannot be said to be in respect of tax arrear. Because such a prosecution is pending which is relatable to the assessment year 2015-16, it would be in complete defiance of logic to debar the petitioner from filing a declaration for settlement of tax arrear for the said assessment year which is pending in appeal before the Tribunal. Considering the above, the clarification given by respondent No.2 by way of answer to question No.73 vide circular No.21/2020 dated 04.12.2020 is not in consonance with section 9(a)(ii) of the Vivad se Vishwas Act and, therefore, the same would stand set aside and quashed. Declaration of the petitioner dated 23.09.2020 would have to be decided by respondent No.1 in conformity with the provisions of the Vivad se Vishwas Act dehors the answer given to question No.73 which we have set aside and quashed.
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2021 (3) TMI 1088
Exemption u/ 11 - declining to condone the delay in filing Form No.10B - Power of CBDT to condone delay u/s 119 - There was thus delay of more than 365 days in filing Form No.10B Commissioner expressed inability to condone the delay and hence rejected the application for condonation of delay - HELD THAT:- No error or infirmity in the view taken by the CBDT vide Circular No.2 / 2020 or by the Commissioner while passing the impugned order dated 19.02.2020. Fixing a period of one year s delay i.e., 365 days of delay for condonation of delay in filing Form No.10B for the assessment year 2018-19 and onwards cannot be said to be arbitrary or irrational. Therefore the general order passed by the CBDT in this regard under section 119(2)(b) cannot be faulted. However, there is also nothing in section 119(2)(b) preventing or precluding CBDT from passing a special order in any given case from condoning the delay in filing Form No.10B beyond 365 days despite passing a general order. That being the position and having regard to the mandate of section 119(2)(b), we feel that even at this stage, petitioner may approach CBDT under the aforesaid provision seeking a special order to the Commissioner of Income Tax (Exemptions), Mumbai to condone the delay in filing Form No.10B for the assessment year 2018-19 which is beyond 365 days and thereafter to deal with the said claim on merit and in accordance with law. Order :- Petitioner shall file an application before the CBDT under section 119(2)(b) of the Act to authorize the Commissioner of Income Tax (Exemptions), Mumbai to condone the delay in filing Form No.10B for the assessment year 2018-19 and to deal with the same on merit in accordance with law; If such application is filed by the petitioner within a period of three weeks from today, CBDT shall pass an appropriate order in terms of direction No.1 above within a period of four weeks from the date of receipt of such application with due intimation to the petitioner.
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2021 (3) TMI 1082
Rectification u/s 154 - Transfer pricing adjustments - It is submitted that, under the guise of invoking his power under Section 154 of the Act, seeks to review the assessment order - Jurisdiction of TPO to conduct a transfer pricing adjustment once the assessment has been completed by the Assessing Officer under Section 143(3) - HELD THAT:- it is seen that the assessee, at no point of time, questioned the jurisdiction of the Assessing Officer to implement the directions of the TPO vide order dated 16.03.2006. The thin line of argument, which is now placed before us, is by referring to the printed notice form under Section 154, which was issued to the assessee. The order passed by the TPO shows that the assessee had cooperated in the proceedings and their authorized representative, i.e. AGM (Finance) of the company, has attended the hearings on various dates. The conduct of the assessee clearly demonstrates that they rightly understood the legal position and the present attempt of the assessee to question the jurisdiction of the Assessing Officer deserves to be rejected. Even before CIT(A), no where the jurisdiction of the Assessing Officer has been questioned. - CIT(A) proceeded to decide the matter on merits and passed orders dated 30.09.2016. The assessee carried the matter on appeal to the Tribunal and once again, the assessee never raised any contention with regard to the validity of the notice dated 28.03.2006. Thus, considering this factual situation, we are of the clear view that the present attempt of the assessee is not tenable and accordingly rejected. The assessment order dated 28.02.2006 is an order under Section 143(3) and not an order under Section 92C(3) of the Act. - The argument of the assessee before us is that the Assessing Officer has exercised jurisdiction under Section 92C(3) and the TPO parallely cannot exercise his power under Section 92CA. On facts, the assessee is wrong. Thus, the assessee having been fully aware of the factual position, the faint attempt made before us alleging the question to be a substantial question of law is not sustainable. We draw support to this conclusion from not only the decision in Samtel India Ltd.[ 2012 (9) TMI 806 - SUPREME COURT] but the decision in K.Ravindranathan Nair [ 2000 (11) TMI 3 - SUPREME COURT] wherein it was held that unless the finding of the Tribunal on facts is perverse, the question of considering the correctness of the order in an appeal under Section 260A of the Act would not arise. Substantial question of law No.1 is answered against the assessee. Assessee is estopped from contending that the TNMM is the MAM after having adopted the CUP method in their TP study at the first instance - TPO has observed that from the steps listed down in his order, it is clear that the assessee company has adopted weighted average method for comparison of the transactions and Rule 10A of the Income Tax Rules, 1962 clearly gives the definition of uncontrolled transaction. Assessee was not non-suited on the ground that he is estopped from raising the plea that TNMM method cannot be adopted as the MAM, but on facts, the TPO held that such plea is not tenable. The matter went before the CIT(A), who took note of the report and then additional submissions were made by the assessee. No doubt, in one sentence, in the order passed by the CIT(A), there is an observation that the authorized representative of the assessee is resorting to approbate and reprobate and that is a species of estoppel and that substituting TNMM method for CUP method is an after thought. If one reads these two sentences dis-juncted from the other portion of the order of the CIT(A), one may get an impression that the CIT(A) concluded that the assessee is estopped from raising a contention that they seek for adopting a different MAM. However, the order of the CIT(A) has to be read as a whole and in doing so, we have to read the order in its entirety, wherein the CIT(A) has referred to the earlier transactions, the grounds of appeal, the additional grounds of objections and then proceeded to adjudicate the matter - CIT(A) referred to the remand report in extenso and held that the order passed by the TPO has answered the assessee's arguments and he has accepted the findings recorded by the Assessing Officer in the remand report and the speaking order passed by the TPO and accordingly confirmed the additions made. Therefore, it would be incorrect to pick out couple of sentences from the order of the CIT(A) and to state that the assessee has been shut out on the ground of estoppel, we are fully convinced that the assessee's case was dealt with on merits at every stage from the stage of the order passed by the CIT(A) as well as the remand report and the CIT(A) has recorded reasons as to why he is convinced on facts that the findings recorded by the TPO is an answer to the assessee's arguments. Assessee has not been non-suited on the ground of estoppel, but the entire matter has been analysed on facts and a finding has been rendered. This finding has been reappreciated by the Tribunal, which can be seen from paragraph 8.0 of the order. No doubt, in paragraph 11.0, the Tribunal made an observation that the reopening of assessment is possible as per the provisions of Section 147 of the Act. In our view, such issue will not raise in the present case. In the preceding paragraphs while answering the substantial question of law No.1, have assigned reasons as to why the assessee is precluded from raising any contention with regard to the jurisdiction of the officer to issue notice dated 28.03.2006 apart from rendering a finding as to the purport and scope of the notice qua the assessment order under Section 143(3), dated 28.02.2006 and the order dated 16.03.2006 under Section 92CA(3) of the Act. We hold that there is no summary rejection of the assessee's plea that TNMM alone should be adopted, but findings of fact have been recorded and affirmed by the last fact finding forum, namely the Tribunal. Therefore, substantial questions of law 2 and 3 are answered against the assessee. CUP method, necessary adjustments are required to be made in order to arrive at the ALP and under Rule 10B(1)(a)(ii), the price can be adjusted to account for any differences between the international transaction - We find that this issue has been elaborately dealt with by the TPO as well as examined for its correctness by the CIT(A) and the Tribunal. We remind ourselves that we are exercising jurisdiction under Section 260A of the Act and required to answer a substantial question of law and not reappreciate the factual position.Therefore, we find that there is no substantial question of law arising for consideration on this issue. Accordingly, the same stands rejected. Tribunal fell in error in remanding the issue of trading segment to the CIT(A) when all the facts to adjudicate the issue were before it and applicability of CUP method itself was in question - As could be seen from the finding recorded by the Tribunal, it is the assessee, who had requested to remit the matter back to the CIT(A) for adjudication, for which the Revenue did not object and accordingly, the matter was remanded back to the CIT(A) to decided the same on merits. Before us, the assessee does not state that no such request was made to the Tribunal, but rather seek to argue the matter on merits stating that comparison of SPCEN with SPCEN-HMI is not appropriate and that the assessee's case is supported by Mill Test Certificate produced for the imports made by the assessee. These issues cannot be adjudicated by us in an appeal under Section 260A and the assessee, having pleaded before the Tribunal for a remand, which was not objected to by the Revenue, is precluded from now contending before this Court that the Tribunal fell in error in remanding the issue of trading segment to CIT(A). No substantial question of law.
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2021 (3) TMI 1073
Vivad Se Vishwas Scheme - petitioner s application under the aforesaid scheme has been rejected noting non-compliance with the deposit of tax in terms of Section 249(4)(a) - HELD THAT:- Division Bench of this Court while noticing the conditions precedent under Section 249(a) of the Act has exercised its discretion while permitting assessee to pay the admitted amounts before the authority while directing the Commissioner appeals to consider the appeals on its merits. Noting that the application of the petitioner under the direct tax Vivad Se Vishwas Scheme has been rejected solely on the ground of non-compliance for not having made deposit under Section 249(4)(a) of the Act it would be a fit case while taking note of the observations of the Division Bench referred to above to permit the petitioner to pay the remaining dues in terms of Section 249(4)(a) of the Act within a period of four weeks from the date of release of this order. While so permitting the order at Annexure-A is set aside and the appeal stands restored. Consequential order of setting aside endorsement at Annexure-L is also set aside and the application of the petitioner in Form-1 to be re-considered by the respondent No.1. The respondent no.1 to consider processing of the petitioner s application afresh in light of the restoration of the appeal as per the order passed herein. It is made clear if the petitioner commits default in making payment within the time stipulated, the benefit of restoration of appeal and so also reconsideration by the respondent No.1 would stand revoked. Accordingly, the petition is disposed off.
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2021 (3) TMI 1072
Claim of depreciation @ 60% on switches and routers - HELD THAT:- The judgment delivered by the Delhi High Court in the case of CIT vs. BSES YAMUNA POWERS LTD[ 2010 (8) TMI 58 - DELHI HIGH COURT] has concluded the controversy as held that the computer accessories and peripherals such as printers, scanners and server etc., form an integral part of the computer system. Thus it can be safely held that the switches and routers as they cannot be used without computer, they form part of peripherals of the computer and entitled to depreciation at 60%. The revenue has not been able to controvert the said finding of the Tribunal and therefore, in light of the judgment delivered by the Delhi High Court, the first substantial question of law is answered in favour of the assessee and against the revenue. Disallowance of foreign exchange loss on forward contracts - allowable revenue expenditure u/s 37 - HELD THAT:- The issue stands covered by the judgment delivered by the Bombay High Court in the case of CIT vs. D.CHETAN CO. [ 2016 (10) TMI 629 - BOMBAY HIGH COURT] . As carefully gone through the entire record and the case of the assessee is that the loss is on account of the restatement of debtors and creditors, book liability etc., which was incurred on account of the forward contracts which includes both realized and unrealized losses. The details of gain and loss on account of the fluctuations of foreign exchange were filed before the assessing officer. However, the assessing officer merely relying upon Instruction No.3/2010 issued by the Central Board of Direct Taxes concluded that it is a notional loss and has to be treated as a speculative loss in terms of Section 43(5) of the Act. Assessing officer did not dispute the fact that the loss incurred by the respondent assessee is in the ordinary course of its business and therefore, would fall within the exceptions provided in the proviso to Section 43(5) of the Act. Therefore, the judgment delivered in the case of D.Chethan and Co., (supra) squarely covers the present case. As held that the assessing officer has not given a finding that the transaction entered into by the assesseee was a speculative in nature and the revenue at no point challenged the assertion of the assessee that the activity of entering into the forward contract was in the regular course of its business. Therefore, in the present case when the assessing officer has neither disputed the fact that the loss was in the regular course of business nor rendered any finding that the transaction was speculative in nature except making a bald statement, the Tribunal was justified in relying upon case of D.Chetan and Co., (supra). - In WOODWARD GOVERNOR INDIA P. LTD. M/S HONDA SIEL POWER PRODUCTS LTD. [ 2009 (4) TMI 4 - SUPREME COURT] held the loss on account of foreign exchange fluctuation is allowable as a deduction under Section 37(1) - Decided in favour of assessee.
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2021 (3) TMI 1069
Transfer of the proceedings u/s 127(2)(a) - Centralization of case under search - Faceless Assessment - whether the authority concerned committed an error in passing the order of transfer under Section 127 ? - jurisdiction of the Assessing Officer as per section 124 - HELD THAT:- It appears from the materials on record that the main purpose of transfer on the ground of centralization of cases is to investigate the dubious transactions of the writ-applicant with various related entities during the relevant period. At this stage, we may refer to the reasons assigned by the Commissioner of Income Tax (Exemption) for centralization while disposing of the objections raised by the writ-applicant. The transfer order passed under Section 127 of the Act is more in the nature of an administrative order rather than a quasi-judicial order and the assessee cannot have any right to choose his Assessing Authority, as no prejudice can be said to have been caused to the assessee depending upon which authority of the department passes the Assessment Order. The assessee can only be concerned with getting an opportunity of hearing before the concerned Assessing Authority and adduce his evidence and make his submissions before the concerned Assessing Authority. The Income Tax department has recently introduced a scheme of Faceless Assessments with a view to avoid personal hearing and physical interaction of the assessee and the Assessing Authority altogether. The assessee need not even know the name of the Assessing Authority who will deal with his case. We have also looked into the judgments relied upon by Mr.Darshan Patel, the learned counsel appearing for the writ-applicant. However, none of the judgments are of any avail to the writ-applicant. We are convinced that no case is made out for interference.
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2021 (3) TMI 1067
Cessation of liability u/s. 41(1) - trading liability ceased to exist - HELD THAT:- In the present case, the assessee had received the amount in the course of its business, which are originally treated as an advance. These deposits neither claimed nor returned to the party concerned. There is no dispute that this impugned amount was received in the course of carrying on the normal course of business of the assessee, the amount was written off by the other party, who was given this to the assessee and there was no necessity of fulfilment of contract which was originally entered by the assessee as ILC Industry Limited has written of it. Since the advance was taken in the course of normal business affairs of the assessee and it was unclaimed amount and not required to returned by the assessee will be its trade receipts. Because of the trading operation, the assessee had received it and it become richer by the amount on written of by the ILC Industry Limited in its books of account. Though the amount received originally were not of income nature, the amount remained with the assessee for a long period unclaimed by the third parties, i.e., ILC Industries Limited and become definite trade surplus and to be treated as taxable income. If an amount received in the course of trading transaction, even though it is not taxable in the year of receipt as being the revenue character, the amount changes its character when the amount becomes assessee s own money because of written of by ILC Industry Limited in its books of account and there was no contractual obligation on the part of the assessee to perform its obligation and it should be treated as income of the assessee. Being so, we are of the opinion that the lower authorities are justified in treating the amount as income of the assessee u/s 41 of the I.T.Act. Where the assessee s business profit was enhanced on account of addition by invoking the provisions of section 41(1), the assessee is entitled to deduction u/s 10B on the enhanced profit - In the case of Yahoo Software Development (P.) Ltd. [ 2020 ( 5) TMI 53 - ITAT BANGALORE] disallowance u/s. 40(a)(ia) was made and business income was enhanced, on this count exemption u/s. 10A was granted on the enhanced income. In the case of Anthelio Business Technologies (P.) Ltd. [ 2017 (1) TMI 257 - ITAT MUMBAI] deduction u/s. 10B was granted on account of enhancement of income due non-deduction of tax at source by invoking the provisions of section 40(a)(i). The assessee received business income through convertible foreign exchange and as such reduced the same by claiming various expenditure without deduction of tax at source. Non-disallowance of expenditure increased business income of assessee in actual terms. In the present case, the assessee received amount from the local party, M/s. ILC Industries Ltd. and the assessee has not received the earnings in convertible foreign exchange. Being so, this cannot be equated with disallowance made u/s. 40(a)(i) or 40(a)(ia) of the Act. Therefore, we reject the alternative ground of the assessee also. Appeal by the assessee is dismissed.
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2021 (3) TMI 1066
Assessment u/s 153C - Addition u/s 68 - bogus bogus share capital introduced - HELD THAT:- No grounds have been raised by the Revenue to challenge the Order of the Ld. CIT(A) in allowing the appeal of assessee because no satisfaction note have been recorded in the case of the person-searched for invoking jurisdiction under section 153C. Sufficient time was already granted to the Department to revise its grounds of appeal. No steps have been taken by the Department. It is, therefore, clear that the findings of the Ld. CIT(A) as produced above, have not been challenged by the Revenue on any of the grounds of appeals. Therefore, the grounds of appeal raised by the Revenue on merit would not arise from the findings of the Ld. CIT(A). Thus, the appeal of the Revenue would not be maintainable in the absence of any challenge to the findings of the Ld. CIT(A) with regard to quashing of proceedings under section 153C in the absence of any satisfaction note recorded by the A.O. of the person searched. In view of the above, Departmental appeal is dismissed.
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2021 (3) TMI 1065
Penalty u/s 271(1)(c) - Defective notice - HELD THAT:- As relying on M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] and M/S. BHARAT IMMUNOLOGICAL AND BIOLOGICAL CORPORATION LTD. [ 2019 (5) TMI 28 - ITAT DELHI] A.O. has not pointed-out as to for which limb of Section 271(1)(c) of the I.T. Act, 1961, penalty proceedings are initiated i.e., whether for concealment of particulars of income or for furnishing inaccurate particulars of income. Therefore, the penalty notice is invalid and bad in Law and as such the entire proceedings are vitiated and no penalty is leviable against the assessee - Decided in favour of assessee.
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2021 (3) TMI 1064
Unexplained cash deposits in syndicate bank account - HELD THAT:- Assessee has explained the total cash deposit in his Syndicate Bank account - CIT(A) has held that sale of car was not for ₹ 5 lakhs but ₹ 5.50 lakhs and therefore he has granted a relief of ₹ 50,000/- only and sustained the addition of ₹ 7,70,000/-. In view of the fact that to deposit in the bank account of the assessee, assessee has received ₹ 550,000 on sale of car and further ₹ 517,397/- available with the assessee is an opening cash on hand, further the assessee has also cash flow generated during the year of approximately ₹ 320,000 out of his professional income justifies the deposit of cash into the bank account of the assessee of ₹ 1,320,000. In view of above uncontroverted facts, we do not find any justification for addition of all the above sum of ₹ 7,70,000/- in the hands of the assessee. In view this ground No. 2 of the appeal of the assessee is allowed. Representative assessee u/s 160 or u/s 161 - Addition on account of long-term capital gain chargeable to tax on account of sale of property by non-resident - Addition holding assessee as an agent of the non-resident as he is holding a power of attorney and the property is sold by the assessee and the money is transferred to the non-resident owner - HELD THAT:- Provisions of Section 161 provides that every representative assessee as regards the income in respect of which he is a representative assessee shall be subject to the same duties, responsibilities and liabilities as if income is received by or accruing to or in favour of him beneficially and shall be liable to assessment in his own name in respect of that income but such assessment shall be deemed to be made upon him in his representative capacity only. The tax subject to other provisions of the income tax act be levied upon and recovered from him in like manner and to the same extent as would be leviable upon and recoverable from the person represented by him. Therefore, the assessing officer should have passed a separate assessment order from the income of the assessee with respect to the income of the non-resident holding the assessee as a representative of a non-resident. In the present case, the assessing officer has passed an order in the name of the assessee without specifying that the above income is chargeable to tax in the hands of the assessee as a representative assessee of a non-resident i.e. not passing a separate order but adding the income of the non-resident in the hands of the assessee is not in accordance with the provisions of Section 161 - AO has also charged the tax in the hands of the assessee in the residential status of resident and not non-resident. On this score, the addition made by the learned assessing officer of the income of the non-resident Under the head capital gain is required to be deleted. Thus, ground number of the assessee is allowed.
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2021 (3) TMI 1062
Exemption u/s 11 - registration u/s 12AA denied - as per CIT-E since the objects of the assessee include both religious and charitable objects, registration u/sec. 12A cannot be granted to the assessee - HELD THAT:- As decided in Social Service Centre [ 2001 (2) TMI 69 - ANDHRA PRADESH HIGH COURT ] if the primary or dominant purpose of an institution is charitable than any other object which by itself might not be charitable but just merely ancillary or incidental to the primary or dominant purpose, would not prevent the trust or institution from being a valid charity. While coming to the instant appeal, the observations and conclusion of the ld.CIT(E) having no strength of law. There is no bar for grant of registration to the Trust/Institution which is having mixed activities i.e. charitable and religious in nature as held by the ITAT, Hyderabad Bench in the case of Rehoboth Mission case [ 2010 (5) TMI 669 - ITAT HYDERABAD ] and though we did not find any fault in the objects of the Assessee, however the Ld. CIT(E) is empowered and at liberty to restrict the activities of the trust in consonance with the objects only , hence on the aforesaid analyzations and respectfully following the judgment of the Hon'ble Jurisdictional High Court and Co-ordinate bench of the Tribunal, we are unable to substantiate the 1st ground for rejection of registration by the ld.CIT(E). Assessee trust has been formed in the year 2015 and as seen from the Income Expenditure account of the assessee filed for various years, the charitable activities carried out are either meagre or nil. Hence, it is premature to grant registration u/sec. 12A of the Act to the assessee - The Apex Court in the case of M/s. Ananda Social and Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT ] reminded that carrying out of any activities is not a stipulation for grant of registration u/s 12A of the Act and even section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done and the term activities in the provision includes proposed activities . There is no such bar as held and observed by the ld.CIT(E) that the charitable activities carried out by the Assessee are either meagre or nil, hence, it is premature to grant registration u/sec. 12A to the Assessee. In our considered view, 2nd ground of rejection is also contrary to the law as the law has not specified any earmark as such observed by the Ld.CIT(E), for grant of registration u/sec. 12A of the Act. Registration can be sought at the nascent stage and/or after carrying out any activities. Hence we are unable to sustain the 2nd ground of rejection as well. The order of the ld. CIT(A) is set aside and the Ld. CIT(E) is directed to grant the registration to the Assessee forthwith - Decided against revenue.
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2021 (3) TMI 1061
Income from house property - Income received on leasing of land and building - allowing deduction u/s 24F - assessee was not entitled for deduction @ 30% U/s 24A and interest expenses U/s 24B - HELD THAT:- A.O. has failed to pin point any violation of any condition regarding chargeability of income under the head income from house property . A.O. was not competent to treat the income earned by the assessee from rentals to be considered under the head income from other sources . More particularly when the assessee had fulfilled all basic conditions for treating the income under the head income from house property as enumerated in Section 22 - as meticulously gone through the orders passed by the revenue authorities and we found that the ld. CIT(A) while dealing with these amounts have elaborately discussed the provisions of Section 22 of the Act and the ingredients contained therein for treating the income earned by the assessee by giving portion of the property on rent and had rightly concluded that the assessee had correctly shown the said income under the head income from house property as the assessee had fulfilled all the basis conditions of Section 22 of the Act for treating the income under the head income from house property , therefore, it was rightly held that the assessee was also entitled for deduction U/s 24(a) and 24(b) of the Act. No new facts or circumstances have been brought before us in order to rebut or controvert the findings so recoded by the ld. CIT(A). Therefore, we find no reasons to interfere into or deviate from the findings recorded by the ld. CIT(A). Hence, these grounds raised by the revenue stand dismissed and the order passed by the ld. CIT(A) qua these issues stand affirmed. N.P. on declared sales - Assessee excluded the rent receipts from the net profit - HELD THAT:- In NP rate chart the NP has been shown at ₹ 77,23,674/- which includes rent receipts. However, in the above chart which has now been filed by the assessee which excludes the rent receipt from the net profit claimed by the assessee. Thus, in our view, the assessee had rightly excluded the rent receipts from the net profit as from the financial statements i.e. from the computation of total income, we noticed that the rental income had been considered separately under the head income from house property and on which tax has already been paid. Therefore, in order to avoid double taxation, the assessee had excluded the rent receipts from the net profit which has now been reflected in the above chart which is termed as Annexure-A. Under these facts and circumstances, we direct the A.O. to apply N.P. rate after excluding the rent receipts from the total income of the assessee. With these directions, we restore this issue back to the file of the A.O. for deciding the issue afresh on the basis of above direction.
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2021 (3) TMI 1060
Scope of Limited Scrutiny - Disallowance of interest as sought to be claimed as deduction from Short Term Capital Gains - HELD THAT:- It is not in dispute that the assessee had claimed deduction towards interest under the head short term capital gains. Admittedly the short term capital gains falls under the ambit of Securities Transactions and hence would fall within the scope of Limited Scrutiny . Accordingly, the Ground No. 1 raised by the assessee is hereby dismissed. Deduction of interest under the head short term capital gains - HELD THAT:- As borrowed funds were indeed utilized for purchasing the shares of Indiabulls Hsg Fin Ltd. It is not in dispute that the said borrowings had suffered interest and that the said interest was debited by the share broker himself in the ledger account of the assessee. Hence one to one nexus of borrowed funds being utilized for making investment in shares which had yielded short term capital gains to the assessee, has been proved beyond doubt. Admittedly, the assessee had not claimed the interest cost as revenue expenditure under the head Income from Business as he had rightly bifurcated the brokerage income which is offered under the head Income from Business and share transactions under the head Capital Gains being an investor in shares and securities. Since the interest cost of ₹ 12,15,500/- has been capitalized by the assessee , it partakes the character of cost of acquisition and gets added to the same thereon and hence would be eligible for deduction u/s 48 of the Act while computing the capital gains. The genuineness of the borrowings utilized for purchase of shares and payment of interest thereon to the broker is not disputed by the revenue. As relying on S. BALAN ALIAS SHANMUGAM BALKRISHNAN CHETTIAR. [ 2008 (1) TMI 489 - ITAT PUNE-B] we hold that the assessee is entitled for deduction of interest under the head short term capital gains .
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2021 (3) TMI 1058
Addition u/s 68 - acquiring shares of certain companies from certain shareholders without paying any cash consideration - HELD THAT:- Provisions of section 68 are not applicable in a case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and, instead, considerations were settled through issuance of shares to the respective parties. In other words, provisions of section 68 of the Act does not apply to cases of purchase of shares and allotment of shares when the purchase and allotment are under a barter system. In this view of the matter, we do not find any infirmity in the order of the CIT(A) in deleting the addition of ₹ 6,75,00,000 /- (wrongly typed in the grounds as ₹ 6,76,00,000/-). Therefore, the ground of appeal No.1 raised by the Revenue is dismissed. Addition u/s 68 on the ground that the same is shown in the name of M/s Wamil Clothing Pvt. Ltd. and the summons issued u/s 131 was received back unserved - As order of the AO is very cryptic on this issue and the ld.CIT(A) has not at all given any finding on this issue. Considering the totality of the facts and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law. We hold and direct accordingly. The second ground raised by the Revenue is accordingly allowed for statistical purposes.
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2021 (3) TMI 1057
Revision u/s 263 - certain facts have emerged which were not available on record at the time of assessment u/s 147 - addition u/s 68 - allegation of the Ld. PCIT that the AO should have conducted further enquiry which were necessary to gather relevant material which the AO failed to do and there was non application of mind on the part of the AO - HELD THAT:- We find in the instant case thorough enquiries were conducted by the AO at the time of reassessment proceedings. Full details giving the names, addresses, number of shares of nominal value and share premium amount of all the share holders alongwith their bank statements, copy of IT returns, PAN etc. were filed before the AO. Even if the share holders were bogus as per allegation of the revenue in view of the reasons recorded for reopening, however, as per prevailing law at that time in view of decision of Hon'ble Supreme Court in the case of Lovely Exports (P) Limited [ 2008 (1) TMI 575 - SC ORDER] addition could not have been made in the hands of the assessee and addition, if any, could have been made only in the hands of such bogus share holders. Since AO has taken a plausible view, therefore, it cannot be said that the order of the AO is erroneous. We find from a perusal of the paper book that the assessee during the course of reassessment proceedings had filed the requisite details as called for by the AO and the Assessing Officer after considering the same completed the assessment which is in consonance with the decision of the Hon ble Supreme Court in the case of Lovely Exports prevailing at that time. Therefore, in view of our discussion in the preceding paragraphs the order of the AO in the instant case cannot be held as erroneous. Since for invoking jurisdiction u/s. 263 the twin conditions i.e. order must be erroneous and the order must be prejudicial to the interest of revenue must be satisfied and since, we have held that the order cannot be held to be erroneous since the view of the AO in accepting the share capital is a plausible view, therefore, the twin conditions are not satisfied. Therefore, the Ld. PCIT in our opinion could not have invoked jurisdiction u/s. 263 of the IT Act. We, therefore, set aside the order of the PCIT passed u/s. 263 of the IT Act and the grounds raised by the assessee are allowed.
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2021 (3) TMI 1055
Rectification u/s 254 - coordinate bench has failed to consider the financial statement of the associated enterprises - HELD THAT:- The coordinate bench considered the financial statements of the associated enterprise, which were placed by the assessee to show that the financial condition of the associated enterprise was not good and therefore the associated enterprise was not paying price of the services of the assessee. In the transfer pricing analysis we were supposed to look at the operating margin of the assessee and in analyzing the comparable prices, the financial condition of the associated enterprise was not at all required to be considered. Further the associated enterprise as we have already held in the order that has taken away the whole money from the associated enterprise, which was lying as reserve and surplus in the hands of the assessee. We do not now hesitate to state that the associated enterprise has withdrawn the full results are available with the assessee in the form of outstanding advances which are really in the form of dividend payment to the associated enterprise from India. Therefore, in our view it is immaterial whether the associated enterprise is making a losses or it is making of profit for working out the operating margin of the assessee. Coordinate bench has inadvertently overlooked that assessee is providing ITeS services to its associated enterprise and amounts outstanding was only in respect of the services provided and that it had not made any loan or had made any advances to its associated enterprise and the sum outstanding was only in respect of services provided and nothing else - We failed to understand why the distinction is required to be made from sale of goods or sale of services. According to us fact that it is for services or goods. According to us, assessee has made advances to the AE for more than usual credit period. In fact, it is an advance of the full reserve and surplus available with the assessee to its associated enterprise. It is immaterial whether the assessee has obtained any loan or has not taken any loan. Therefore, this contention is rejected. In paragraph number (iii) the note states that the coordinate bench did not record that such an amount had the character of making advances is interest free loan which has been the the material statement for not granting any working capital adjustment. The working capital adjustment is required to be given difference in the working capital employed by the different comparables compared to the assessee. In the case of the assessee we have already held that outstanding of associated enterprise was a device employed by the assessee in connivance with its associated enterprise to withdraw the full reserve and surplus available in India which otherwise could not have been withdrawn without paying dividend distribution tax but has been withdrawn by the making a device of keeping the outstanding receivable from associated enterprise to the extent of reserve and surplus available with the assessee.Therefore, this contention also deserves to be rejected. Demonstration by the assessee before the learned assessing officer for granting of any working capital adjustment - We do not find any error in the order of the coordinate bench as it has considered all the aspects of the working capital adjustment requested by the assessee. In fact, when the assessee could not show that the amount outstanding from its associated enterprises is towards outstanding service business or is a methodology to allow the associated enterprise enjoyment of four reserve and surplus available in India. We have held that assessee has allowed the associated enterprise to enjoy the reserve and surplus available with an Indian entity without paying dividend distribution tax thus there is no working capital adjustment required to be made in the comparability analysis. Thus the contention raised by the assessee deserves to be rejected The coordinate bench has followed the order in the case of the assessee for earlier years noted in para 16. That decision has been followed by the coordinate bench in assessee s own case. The coordinate bench in further para 2 stated that the peculiar facts of the case noted by the coordinate bench in para No. 17 to 20 are so startling that decision relied upon by the ld AR does not apply to the facts of the present case. Thus, all the decisions placed before the coordinate bench were considered and in view of the peculiar facts of the case of the assessee were held to be distinguishable. Vide para number D, it has been stated that sum of the grounds have not been considered. All these grounds are related to the working capital adjustment. Thus, all the grounds of the appeal were also on the same issue of adjustment on account of outstanding receivables. All these grounds were considered and decided against the assessee as the main issue has already been decided against the assessee for the reason that the outstanding receivable from its associated enterprise does not deserve to be considered for granting any working capital adjustment to the assessee. No error in the order of the coordinate bench in following the decision of coordinate bench in assessee s own case. That binds us and has been followed.
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2021 (3) TMI 1053
TP Adjustment - determining the ALP - Cost aggregation for the purpose of benchmarking - HELD THAT:- Given the range of transactions involved, the arm s length method cannot be adequately applied on a transaction-by-transaction basis. Accordingly, for the purpose of determining the ALP, the assessee has rightly aggregated for the purpose of benchmarking (i) purchase of raw materials, sale of finished goods and engineering services that are essentials to its business, (ii) payment of ASP charges, IT and service charges to assist in business administration and (iii) payment of commission that assists the assessee in obtaining purchase orders from third parties. Burden of proof - It is well-settled that the primary onus is on the assessee to maintain documentation to demonstrate that the price charged in an international transaction complies with the ALP and the method followed to ascertain the price is the most appropriate method. The assessee discharges this onus by maintaining the documentation; thereafter, the onus shifts to the tax authorities. In the event, the tax authorities disagree with the assessee s view and seek additional explanation, the burden of proof against shifts to the assessee to prove why the method adopted by the assessee is correct. In the instant case, as narrated hereinabove the assessee has discharged its onus by maintaining the documentation. Further, during the TP proceedings, the assessee has filed before the TPO sufficient details called for. Then the burden of proof has shifted to the TPO. However, the TPO has made the disallowances / adjustments on general propositions. We are reminded by the great aphorism of Justice Oliver Wendell Holmes in Lochner v. New York, 198 U.S. 45,76 (1905) that general propositions do not decide concrete cases. As mentioned earlier, the assessee vide letter dated 27.02.2015, 04.09.2015, 24.09.2015, 08.12.2015 and 15.12.2015 has filed sufficient details in response to the queries raised by the TPO during the course of TP proceedings. Further, the assessee has filed before the DRP additional evidence dated 06.06.2016. However, instead of examining / scrutinizing those submissions, the tax authorities have made disallowances/adjustments on general propositions.- Allow assessee ground. Adjustment relating to the international transaction of charges pertaining to Restricted Stock Units issued by associated enterprise, by determining its arm's length price at NIL - HELD THAT:- As per the date of joining Mr. Venkatasubramanian had been allocated 457 shares. The purpose of granting the RSUs to the employee was to retain and motivate him for continuing his employment with the assessee. The assessee expected to drive benefits from the employee s experience and exposure and hence had awarded RSUs to him. Considering the same, any cost incurred in exercise of the RSUs by the employee typically represents the cost of the assessee-company. Since the cost was initially incurred by the AE, the assessee reimbursed the same to its AE as the same was for the benefit of the assessee-company. Considering the above facts, we delete the adjustment and allow the 10th ground of appeal. Unreconciled income appearing in Form 26AS as unaccounted in the books of accounts - HELD THAT:- In the instant case, admittedly there is difference in the receipts as per the TDS certificates and the receipts as appear in the books of accounts of the assessee. It is not a question of reconciling 97.17% of the entries and only 2.83% of the entries to be reconciled. It is the question of genuineness of the receipts and the amount involved. Therefore, we set aside the order of the AO on the above ground of appeal and restore the matter to him to pass an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/ evidence before the AO. Accordingly, the 11th ground of appeal is allowed for statistical purposes. Amount paid by the assessee in the nature of Education Cess and Higher and Secondary Education Cess - whether allowed as deduction in computing its business income for the year under consideration? - HELD THAT: Since, the above issue has been raised for the first time before the Tribunal, we deem it appropriate to restore the issue back to the AO for passing an order in the light of the ratio laid down in Sesa Goa Ltd [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] . Thus the additional ground of appeal is allowed for statistical purposes.
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2021 (3) TMI 1052
Penalty u/s 271(1)(c) - Assessment u/s 153A - person has failed to comply with the notice under Sub Section 2 of Section 115WD or under Sub Section 2 of Section 115WE or under Sub Section 1 of Section 142 or Sub Section 2 of Section 143 or fails to comply with a direction issued under Sub Section 2 A of Section 142 or has concealed the particulars of his income or furnished inaccurate particulars of such income - HELD THAT:- In the present case, from the perusal of the assessment order, it is seen that the Assessing Officer has simply stated that I am satisfied that the assessee has concealed his income in the return filed u/s 139 thereby stating that the income was disclosed after the search and, therefore, expenditures are part of concealed income of the assessee. In-fact, the assessee filed his return u/s 153(A) after enhancing the income on account of house renovation/repair expenses and the expenditure, therefore, in our opinion, cannot be stated as concealment of income. Therefore, the satisfaction in the instant case in our opinion is inadequate. For invoking Clause (c) of Section 271(1)(c) of the Act, while issuing the notice, the Assessing Officer has to categorically state upon under which limb the penalty is initiated, since the assessee has to give reply to the notice issued u/s 271(1)(c) read with Section 274 in respect of concealment of particulars of income separately and that of furnishing of inaccurate particulars of income separately. In the present case, though the initiation in the assessment order was on concealment of particulars of income, the first primary stage of satisfaction was not given by the Assessing Officer. The initiation of penalty has been simply stated on concealment of income but which was not properly revealed in notice issued to the assessee. The Department cannot over look the technicalities and the procedure given under the Income Tax Statue which is a mandate to be followed by the tax authorities. The Revenue authorities cannot vaguely issue notices which are very much the basis of proceedings initiated under Income Tax statute. Coming to the actual penalty order, the same is though stated upon concealment of particulars of income has not given the specification as to how the income was concealed when the expenditures which was incurred was not accounted in original return but revealed in the return filed u/s 153A - penalty order has made the specification of furnishing of inaccurate particulars of income. AO though finally imposed the penalty on concealment of particulars of income was not sure whether it is for furnishing of inaccurate particulars or concealment of income. The assessee has suo moto /voluntarily surrendered the amount before the Assessing Officer and paid the taxes thereupon. Thus, on the merit also the assessee has proved that the penalty does not survive. - Decided in favour of assessee. Penalty u/s 271AAB on the undisclosed income - HELD THAT:- The insertion of this Section is from Finance Act, 2012 w.e.f 1/7/2012. The Section 271AAB shall be invoked in case where search has been initiated u/s 132 on or after 1st Day of July, 2012. In the present case, the search took place on 30/03/2016. This penalty can be imposed in addition to tax if any payable by him. The Assessing Officer specifically at the time of penalty proceedings contemplated Clause B of Section 271AAB of the Act. But the limb of Clause B specifically mentions that if such assessee in the course of search in a statement under Sub Clause 4 of Section 132 does not admit the undisclosed income. In the present case, the assessee has very much admitted the undisclosed income and surrendered the undisclosed income. The assessee also paid the tax thereon. Besides this, the notice upon which the assessee is bound to give reply is vague and not as per provisions of the Income Tax Statute. The Revenue Authorities have not properly adjudicated/ invoked in true spirit of the penalty Provisions to impose penalty on the assessee. Thus, on the technicality as well as on merit, the penalty does not survive. Hence, appeal filed by the assessee is allowed.
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2021 (3) TMI 1048
Addition on account of stock losses diminution - AO made the addition in absence of documentary proof regarding clear verifiable evidence in support of the expenditure claimed by the assessee - HELD THAT:- In the circumstances, where the assessee deals in thousands of stocks of goods, it is practically impossible to verify each and every aspect of claim of shrinkage, theft and expiry written off. But the assessee should explain the basis and the criteria of claim. As rightly pointed out by the Ld.DR, the A.O. should not be deprived to verify the facts on sample basis or in full and make enquiries and shall take a decision considering the assessee s past record. The revenue should be provided a minimum opportunity to verify the facts submitted by the assessee for the first time before the Ld.CIT(A) - We notice that though the information was submitted for the first time before the appellate authority, the Ld.CIT(A) having accepted the evidences should have called for the comments of the A.O. on vital specific issues before deciding the assessee appeal - We provide an opportunity to the revenue by restoring the disputed issue for limited purpose to the file of the CIT(A) to call for the remand report from the AO and also adequate opportunity of hearing be provided to the assessee and pass a reasonable and speaking order and allow this ground of appeal of the revenue for statistical purposes. Addition on account of depreciation of Bizerba weighing scales - AO has made the addition as the depreciation was claimed @ 60% on said plant and machinery instead of 15% as this was not forming part of computer and independent computers items - HELD THAT:- In assessee s own case for the earlier assessment year relying on CIT Vs. BSES Yamuna Power Ltd., [ 2010 (8) TMI 58 - DELHI HIGH COURT ] claim of depreciation @ 60% on Bizerba weighting scales is concerned, in our opinion nothing has been on record to demonstrate that this particular asset functions integral part of computer and cannot function independently. A photocopy (xerox) machine can also be attached to a computer, however, that does not entitle it for depreciation @ 60%. CIT(A) has allowed assessee s claim of depreciation on the weighing scales without proper reasoning. Therefore, while allowing assessee s claim of depreciation on printer, router, scanner, switches, etc. We uphold disallowance of assessee s claim of depreciation on bizerba weighing scales @ 60%. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Since, the appellant had not earned any exempt income during the year under consideration and the facts are similar to earlier years i.e AY 2011-12 2012-13 where the company had not earned exempt income. The same were adjudicated in favour of appellant s successor. Therefore, have no reason to deviate from the findings given by my processor in above mentioned cases of the successor or appellant. In view of these facts, the appeal of the appellant on this ground is allowed and the disallowance made by the AO is deleted. Books of accounts the doubtful debts and advances written off - AO found that out of the said amount being insurance claim is receivable has been written off - CIT(A) considered the submissions of the assessee and allowed the claim of the assessee - HELD THAT:- AR supported the orders of the CIT(A) and relied on the judicial decisions. Accordingly we are not inclined to interfere with the findings of the CIT(A) on this disputed issue and upheld the same and dismiss the ground of appeal of the revenue. The revenue appeal is partly allowed for statistical purposes.
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2021 (3) TMI 1046
Capital gain computation - reference to the matter to the DVO for determining the valuation of the property in question in terms of the Section 50C - HELD THAT:- It is mandatory on the part of the AO to refer the matter to the DVO under Section 50C(2) of the Act, even if it is not requested by the assessee before the authorities below. If that view has been taken by the different judicial forum then though admittedly the said plea was not taken before the AO rejection of such request made before the Ld. CIT(A) is palpably bad in view of Section 50C of the Act and in that view of the matter respectfully relying upon the judicial pronouncements we do not hesitate to delete the addition made by the Ld. CIT(A). We find it fit and proper to remit the issue to the file of the Ld. AO with a further direction upon him to make fresh assessment upon making reference of the matter to the DVO and to complete the assessment on the basis of the valuation so received from the DVO upon giving an opportunity of being heard to the assessee. Assessee's appeal is allowed for statistical purposes.
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2021 (3) TMI 1045
Addition on account of income earned on investment of corpus fund - income received from investments and credited to the corpus fund has been credited as per the directions of the Government of India - HELD THAT:- Respectfully following the earlier year precedent, we hold that amount cannot be treated as income of the assessee as it is a diversion of income by overriding title in view of letter from the Government of India, Ministry of Agriculture wherein it has been clearly stated that the corpus fund belongs to the Central and State Government and the interest thereto also belongs to the Government, and therefore, interest accrued on the corpus fund is required to be added in the corpus fund only. Accordingly, the appeal of the Revenue is dismissed. Disallowance u/s 14A - HELD THAT:- Once the assessee's income is to be computed u/s. 44 which relates to all insurance business which is a non obstante clause, therefore disallowance of Section 14A cannot be made.- Decided against revenue.
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2021 (3) TMI 1043
Penalty levied u/s. 271(1)(c) - Estimation of income on bogus purchases - HELD THAT:- It is a settled position of law that penalty cannot be levied when an ad hoc estimation is made. In both the cases an ad hoc estimation was made by the Assessing Officer restricting the profit element in the purchases @25%. As relying on SHRI DEEPAK GOGRI [ 2017 (11) TMI 1857 - ITAT MUMBAI] and AERO TRADERS (P) LTD. [ 2010 (1) TMI 32 - DELHI HIGH COURT] estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. On hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld. CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer for both the Assessment Years. Grounds raised by the revenue are rejected.
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2021 (3) TMI 1042
Penalty u/s 271(1)(c) - AO has not recorded any satisfaction as to whether the penalty u/s 271(1)(c) has been levied for furnishing of inaccurate particulars of income or it was a case of concealment of income - HELD THAT:- The show-cause notice dated 20.03.2015 also does not specify as to for which limb of Section 271(1)(c) of the Act the penalty proceedings are initiated i.e. whether it is for concealment of the particulars of income or for furnishing of inaccurate particulars of income. Even in the penalty order, no specific charge i.e. whether it is a case of furnishing of inaccurate particulars of income or a case of concealment of the particulars of income has been indicated. It is a settled law that while levying penalty for concealment, the AO has to record satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c) of the Act. The first step is to record satisfaction while completing the assessment as to whether the assessee had concealed its income or furnished inaccurate particulars of income. Notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the assessee. The Assessing Officer thereafter has to levy penalty under Section 271(1)(c) of the Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed its income or furnished inaccurate particulars of income. In the present case following the aforesaid decision in the case of Sahara India Life Insurance Co. Ltd.[ 2019 (8) TMI 409 - DELHI HIGH COURT] we are of the view that since the basic condition for levy of penalty has not been fulfilled the penalty order cannot be upheld. We accordingly set aside the penalty order passed by AO - Decided in favour of assessee.
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2021 (3) TMI 1041
Income accrued in India - Withholding of tax in India - vessel engaged in seismic survey at high sea constitutes a fixed place permanent establishment - Whether the sum paid by the applicant to the vessel providing company ( VPC ) under global usage bareboat charter agreements ( BBC Agreements ) could be said to accrue or arise or deemed to accrue or arise in India under the provisions of the Income-tax Act, 1961 and, therefore, subject to withholding tax in India ? - whether the sum paid by the applicant to the VPC's under the global usage BBC agreements are taxable in India under the provisions of section 44BB ? - sum paid or to be paid by the applicant to VPC's under global usage BBC agreements be construed to be in the nature of Royalty under section 9(1)(vi) - HELD THAT:- When we examine the facts of the present case in the perspective of the principle of source rule propounded by the apex court, it is seen that the payer, i. e., the applicant was located in the Indian Territory, i. e., in Bombay High where it was carrying the contract of ONGC. The commercial need of the deployment of vessel was generated by the contract of the applicant with ONGC and the services of the seismic vessels were utilized within the Indian Territory. Thus, all the parameters of the source rule as explained by the apex court in the case of GVK Industries is found fulfilled in this case and the business activity of the VPCs is found to have a clear nexus with the Indian Territory. There was existence of close, real, intimate relationship and commonness of interest between the non-resident VPCs and the applicant both of whom were operating in Indian Territory and which satisfies the essence of business connection and territorial nexus . The applicant has emphasized that sections 4, 5 and 9 of the Act are to be kept in consideration even in those cases where assessment is done under section 44BB of the Act, as held by the hon'ble Supreme Court in the case of Sedco Forex International Inc. [ 2017 (11) TMI 78 - SUPREME COURT] In this case the issue was whether mobilization fee on account of mobilization/movement of rig from foreign soil/country to offshore site at Mumbai (India) received by the non-resident assessees can be treated as income under section 5 of the Act and would fall within section 9, i. e., whether it can be attributed as having arisen or deemed to arise in India. The seismic vessels of the VPCs also constitute a permanent establishment (PE) for the business operation carried out by them The sum paid by the applicant to the vessel providing companies (VPCs) under global usage under bareboat charter (BBC) agreements is deemed to accrue and arise in India and is liable to tax in India under the Income-tax Act and, therefore, subject to withholding tax in India. The income liable to tax is to be assessed as business income under the provisions of section 44BB of the Act. The sum received by VPCs is not in the nature of royalty under section 9(1)(vi) of the Act. As already mentioned earlier the computation mechanism under section 44BB of the Act would apply. Therefore, the answer to this question is not found necessary.
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2021 (3) TMI 1040
Revision u/s 263 - AO allowed of the assessee‟s claim for deduction of forfaiting charges as revenue expendiure - CIT observed that, thus the A.O had rendered the assessment order as erroneous insofar it was prejudicial to the interest of the revenue - when the forfaiting charges had been capitalised by the assessee in its books of account, therefore, the raising of a separate claim for deduction of the said charges by the assessee in its profit and loss account which thereafter was allowed by the A.O while framing the assessment had resulted in a double deduction - HELD THAT:- Forfaiting charges were incurred by the assessee wholly and exclusively for the purpose of its business and was not in the nature a capital expenditure, the same, thus, was clearly allowable as a deduction under Sec. 37(1) - At this stage, we may herein observe that as per the settled position of law all expenditure incurred to bring an asset to use is to be capitalised. Analysing the term actual cost‟ as defined in Sec. 43(1) of the Act, as in the case of Challapali Sugars Ltd.[ 1974 (10) TMI 3 - SUPREME COURT] , had held, that as per the accepted rule of accountancy all expenditure that is incurred to bring a fixed asset into existence and put it in a working condition shall be included for determining its cost. It was further observed, that in case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalised and added to the cost of the fixed asset which had been created as a result of such expenditure. As regards the observation of the PCIT that the A.O had failed to consider as to whether the forfaiting charges incurred by the assessee were in the nature of a capital expenditure or a revenue expenditure, we are unable to find favour with the same. In our considered view, as the forfaiting expenditure incurred by the assessee had not resulted in any enduring benefit to the assessee company, therefore, the same could not have been considered as capital in nature. In our considered view, as the forfaiting charges borne by the assessee had not brought any capital asset into existence and were incurred merely with a view to carry on the business as per the terms of the EPC contract, the same, thus, was clearly in the nature of a revenue expenditure. Be that as it may, in our considered view as the A.O while framing the assessment had after carrying out necessary verifications arrived at a plausible view and allowed the assessee‟s claim for deduction of forfaiting charges of ₹ 3.85 crores, therefore, the PCIT stood divested of his jurisdiction to revise the assessment order for the purpose of substituting his view as against that arrived at by the A.O. As such, we are of a strong conviction that now when the A.O after making proper and detailed inquiries had arrived at a plausible view that the assessee‟s claim for deduction of forfaiting charges was in order, the PCIT could not have thereafter in the garb of the jurisdiction vested with him under Sec.263 of the Act directed the A.O to carry out further verifications, for the reason, that he held a view different than that arrived at by the A.O. We are of the considered view that as the A.O while framing the assessment had after making exhaustive verifications arrived at a plausible view as regards the assessee‟s entitlement towards claim of deduction of the forfaiting charges therefore, the PCIT could not have invoked his revisional jurisdiction under Sec. 263 - Decided in favour of assessee.
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Customs
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2021 (3) TMI 1090
Violation of principles of natural justice - Release of imported goods of the petitioner - service of notice - HELD THAT:- It is quite evident that mandate of section 124 is that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose the penalty and further the owner of the goods or such person must be given an opportunity of making a representation in writing within such reasonable time as may be stated in the notice against the grounds of confiscation or imposition of penalty and finally the owner of the goods or such person is given a reasonable opportunity of being heard in the matter. Thus three conditions are required to be fulfilled before an order of confiscation is passed or penalty is imposed. Admittedly in this case, no notice in writing under section 124(a) of the Customs Act was given to the petitioner before passing the impugned order in original which not only confiscated the goods but also imposed penalty on the petitioner. All that the impugned order in original says is that a personal hearing was given to the authorized representative of the petitioner on 18.09.2020 through video conferencing. There is nothing on record to show or indicate that a request was made on behalf of the petitioner for oral notice or oral representation. From a reading of the impugned order in original, it does not appear that the procedure laid down for rejection of declared value and redetermination of value was followed - it is quite evident that the impugned order in original stands vitiated due to statutory infraction leading to violation of the principles of natural justice thereby vitiating the impugned order-in-original. Petition allowed.
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2021 (3) TMI 1079
Production of installation certificate of the goods imported free of duty under the Project Import Regulations, 1986 - directory or mandatory direction - production of sale invoices for having sold the computerized PCB in-circuit Tester for test bench for Ticket Office Machines - discharge of the obligation to produce the proof of installation or not - failure to clear the validator imported vide Bill of Entry No.5668 dated 24.10.2009 - charging of ware house interest for the uncleared goods - levy/charge of interest under Section 61 of the Customs Act, 1962 (delayed clearance of goods from warehouse) - HELD THAT:- Bangalore Tribunal in the case of CREATIVE INDUSTRIES P. LTD. VERSUS CC. C. EX. (A-II), HYDERABAD [ 2008 (6) TMI 23 - CESTAT BANGALORE] , wherein it was held that non-production of installation certificate is only a procedural requirement and not a condition determining the eligibility of the impugned goods for the benefit of concessional rate of assessment. The Tribunal further noted that the said decision was affirmed by the High Court Of Andhra Pradesh as reported in CCE. C., HYDERABAD VERSUS CREATIVE INDUS. (RAJAHMUNDRY) P. LTD. [ 2012 (10) TMI 646 - ANDHRA PRADESH HIGH COURT] . The Tribunal also referred to the decision of the other Tribunal which also held that the installation certificate is only a procedural requirement. The Tribunal after considering the documents placed, was satisfied that the assessee has produced proof to establish installations and therefore, it was held that the Department cannot sustain the demand of merit rate of duty in respect of goods imported vide Bill of Entry No.5219 dated 25.01.1989. For such reasons, the assessee succeeded before the Tribunal. The appeal is dismissed as no substantial questions of law arises for consideration.
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2021 (3) TMI 1077
Reduction in quantum of redemption fine and penalty - foreign currencies - currencies were attempted to be exported in violation of the Foreign Exchange Management (Import and Export of Currencies) Regulation, 2000, which tantamount to prohibition under Section 11 of the Customs Act, 1962 - authority to give an option for redeeming the goods on payment of fine, which is a discretion provided under the Act. HELD THAT:- We would have taken note of the said decision rendered by us in Commissioner of Customs (Air), Chennai-1 Vs. M/s.Premium Tours and Travels (Chennai) Pvt. Ltd. [ 2021 (2) TMI 659 - MADRAS HIGH COURT ] and its applicability to the facts of the case provided provided that there was no earlier direction issued by the Tribunal dated 30.8.2007 where there was a positive direction issued to the Adjudicating Authority to grant redemption of the foreign currencies on payment of reasonable redemption fine. The Adjudicating Authority passed the order dated 26.12.2007 by fixing the redemption fine at ₹ 32 lakhs and levying penalty at ₹ 5 lakhs. The Tribunal exercised its discretion based on the direction issued by it in the earlier round of litigation and also taking note of its decision - Appeal dismissed.
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2021 (3) TMI 1068
Valuation - related party transaction - respondent has furnished the Impugned Investigation Report concluding that the petitioner s relationship with its group companies has influenced the declared prices warranting intervention and opining that the declared prices are to be rejected under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - whether the impugned Investigation Report is issued in violation of the principles of natural justice, and if it is issued in violation of the principles of natural justice, what would be the appropriate order? - HELD THAT:- When the procedure laid down in the Circular dated 09.02.2016 in No.5/2016 is examined as against these factors, there cannot be any doubt that a Deputy Commissioner, or an Assistant Commissioner (SVB), in furnishing an Investigative Report discharges a quasi-judicial function with the responsibility of extending suitable opportunity to submit evidence and to render an investigative finding with the grounds substantiating such finding. Further, the investigative finding by a Deputy Commissioner, or an Assistant Commissioner (SVB), in the scheme of the procedure contemplated under the Circular dated 09.02.2016, cannot be called as an institutional decision, the hallmark of which is a decision taken by a large number of people who take part in the collective decision-making process rather than one designated person. The Hon ble Supreme Court in Automotive Tyre Manufacturers Association v. Designated Authority and Others [ 2011 (1) TMI 7 - SUPREME COURT ] after an overview of the decisions on compliance with the principles of natural justice has held that principle holds good irrespective of whether the power conferred on a statutory body or Tribunal is administrative or quasi-judicial - It is further declared in this decision that it is trite that the concept of natural justice can neither be put in a strait-jacket nor is it a general rule of universal application. There can be exceptions to the said doctrine, but the question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of these matters that the question of application of the said principle can be properly determined. In the light of the undisputed fact that the personal hearing was held by Sri. H.C. Neelakantarya, the then Assistant Commissioner of Customs [SVB] and the Investigative Report is filed by the incumbent Assistant Commissioner Sri. K.S.V.Murthy, this Court will have to opine that this procedure, as held by the Hon ble Supreme Court, offends one of the basic principles. Therefore, the impugned Investigating Report is liable to be quashed - petition allowed.
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Corporate Laws
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2021 (3) TMI 1091
Seeking grant of regular bail - siphoning of funds - economic offences - Sick person or infirm person or not - interim bail already granted - HELD THAT:- Merely because the petitioner is on interim bail, it cannot be held that the petitioner s prayer seeking the grant of regular bail cannot even be considered till he surrenders for the very prayer made by the applicant seeking the grant of regular bail implicitly in the facts and circumstances of the instant case takes into account that the applicant was granted interim bail after he had been arrested on 02.12.2019 - in the facts and circumstances of the instant case, the petition filed by the petitioner seeking release on regular bail in terms of Section 439 of the Cr.P.C., 1973 is maintainable. Sick person or infirm person or not - HELD THAT:- This Court is of the considered view that the applicant cannot be considered to be a person so sick to fall within the ambit of grant of regular bail till disposal of the proceedings in the complaint case for all that he needs is the intravitreal injections and the angiography which he himself has chosen to be rescheduled after his eye injections and which angiography even as per the report of the Human Care Medical Trust would require hospitalization for a day, though the other procedure would take time depending upon the procedure required and the kidney function test. Though the Court does not consider it appropriate to grant the bail to the applicant in terms of Section 212(6) and the proviso thereto in the category of being a sick person or infirm person, nevertheless, in as much as, the applicant does require medical care despite the factum that it is the applicant who has chosen to get his angiography done in the month of April, 2021 conducted after his eye treatment, it is considered appropriate to extend the period of interim bail granted to the applicant vide order dated 08.04.2020 for a period of 60 days at the maximum whereupon he is directed to surrender without default. It is not considered appropriate to grant bail to applicant - application dismissed.
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2021 (3) TMI 1056
Seeking of Amalgamation Scheme - seeking to dispense with the convening and holding of the Meeting of Equity Shareholders of the Applicant Companies and Secured Creditors of the Applicant No.2 and Unsecured Creditors of the Applicant No.1 - seeking direction to convene the Meeting of Unsecured Creditors of the Applicant No.2 etc. - HELD THAT:- Various directions regarding holding and convening various meetings issued - various directions regarding issuance of notices of the meetings, also issued. Application allowed.
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2021 (3) TMI 1054
Eligibility of promoter to participate in the Resolution Process - an advertisement in Form-G was issued on 17.02.2020 inviting EOI to submit Resolution Plan for the Corporate Debtor - Section 29A of the Code - HELD THAT:- It is not in dispute that the Corporate Debtor came within the definition of Medium Enterprise w.e.f 01.07.2020 by virtue of the relevant notification. Thus, the Applicant as the promoter (suspended Director) of the Corporate Debtor becomes a promoter of a Medium Enterprise w.e.f. 01.07.2020. Admittedly, on 01.07.2020 the CIRP had not come to an end. The Notification dated 26.06.2020 became effective within the currency of the CIRP process. The expression at the time of submission of the resolution plan appearing in clause (c) of section 29A of the Code came to be inserted w.e.f. 06.06.2018. The eligibility of a person for taking part in any process or activity within the Code has to be taken into consideration as per the timeline provided in the Code for such activity or participation. Clause (c) provides that the person may be ineligible or otherwise as on the date of submission of the resolution plan . The CIRP in the instant case ordinarily expired on 21.03.2020. IA No. 973 of 2020 for extension (of 116 days) was filed on 18.03.2020. The Applicant was freed from the ineligibility prescribed under Clause (c) of Section 29A w.e.f. 01.07.2020, well within the period of CIRP and within the period when a person/entity could submit Resolution Plan to the CoC of the Corporate Debtor - Application allowed.
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Insolvency & Bankruptcy
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2021 (3) TMI 1063
Seeking extension of time period to complete CIRP of the Corporate Debtor from 270 to 330 days - initiation of Liquidation Proceedings against the Corporate Debtor - HELD THAT:- In reality, the act of extending the Insolvency Resolution beyond the time limit under section 12(3) of the Code is against the underlying policy of the Code for ensuring timely resolution of Company Insolvency . Undoubtedly, an extension of time for extension of time for CIRP is a critical arena . However, the exercise of the power of extending the time limit by the Adjudicating Authority in negation of the statutory provision of the Code may be desirable in an exceptional/extraordinary circumstances of a given case - Be it noted, that speed is the gist for the working of the Bankruptcy Code . It cannot be gainsaid that the Corporate Insolvency Resolution with approval of Plan of Resolution is ultimately the exclusive domain of the Committee of Creditors . This Tribunal directs the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad) to take up the application filed by the Appellant/Applicant seeking extension of 60 days for completion of CIRP pending on its file, on the next date of hearing, i.e. on 23.4.2021 and to dispose of the same on merits by passing a reasoned order , ofcourse, in a fair, Just and dispassionate manner in accordance with Law and in the manner known to Law, at an early date - application disposed off.
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2021 (3) TMI 1051
Seeking to admit applicants claim for interest on their admitted claims of gratuity and salary dues for the period from the dates of their respective dates of retirement up to the date of its payment - seeking to include the claims for interest thereof in the Information Memorandum under Section 29 of the said Act - resolution plan already approved - HELD THAT:- Since the Resolution Plan has already been approved, this Tribunal cannot direct the Respondent herein to grant any relief to the applicants. It is evident that the applicants have been granted interest on gratuity till the date of commencement of CIRP. Hence nothing survives for consideration in these applications. Application dismissed.
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2021 (3) TMI 1047
Seeking to withdraw resolution plan after approval - EMD and the Performance Bank Guarantee deposited by the Resolution Applicant to participate in the resolution process of the Corporate Debtor, to be returned or to be forfeited - HELD THAT:- The Resolution Applicant prepares a plan mainly based on the information provided in the information memorandum prepared by the Resolution Professional. The Resolution Professional is required to prepare the Information Memorandum very diligently ensuring that all the information necessary for the Resolution Applicant to prepare a commercially viable and feasible resolution plan suitable to the corporate Debtor be made available in the information memorandum. Therefore, although due diligence is also conducted by the Applicant on its own and the plan prepared is on an as is where is basis, unless the information provided in the IM is accurate and up to date, a true and fair evaluation of the status of the Corporate Debtor cannot be made by the Resolution Applicant and he cannot prepare a commercially viable Resolution plan. For this reason the Applicant has kept an option to exit in the Plan itself at sl. No. 5.1.1, reserving a right to withdraw from the Plan. The Resolution Professional admits in his objections that the erstwhile Promoter had not provided accurate information, as mentioned in the IM and had refused to cooperate, and that he was interested in blocking his efforts to complete the CIRP. In fact it is seen from his objections that in all parcels of land, the information provided is at variance, though he contests the contentions of the erstwhile Promoter. Whatever may have been the reason, either lacuna in estimating the requirement as well as availability of land for generation of power in a manner that is beneficial to the Applicant, or the lack of full and correct information provided by the erstwhile Promoters to the RP, the fact remains that there was a considerable disparity in what was represented to the Applicant regarding the area of land required for generating 20 million saleable units of power, which is required to maintain the Corporate Debtor as a going concern and what is actually required/made available. The Resolution Applicant cannot be compelled to perform and execute the Resolution Plan when he apprehends huge losses, and should be permitted to withdraw the Plan submitted by him for approval of this Adjudicating Authority. EMD in the form of Bank Guarantee and the Performance Bank Guarantee - HELD THAT:- With the withdrawal of the Plan by the Applicant and the entire CIRP coming to nought, the Applicant should bear a part of the burden of expenses incurred during the CIRP. Also some amount may be lost as the liquidation value of the project may be very low, though however the Applicant has submitted that there is a small gap between what was offered in the Plan and the estimated liquidation value, ie of about ₹ 13 lakh only. - it would meet the interests of justice if an amount of ₹ 75,00,000/- is forfeited in total and the balance amount of ₹ 2,76,32,780/-, is refunded to the Resolution Applicant. Application allowed in part.
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2021 (3) TMI 1044
Maintainability of application - initiation of CIRP against Corporate Debtor and Corporate Guarantor - Corporate Debtor has committed default in paying the financial debt - pre-existing dispute or not - Declaration of principal borrower's loan account to be NPA - Allegation that Financial Creditor did not comply the provision of Section 215 of the IBC, 2016 - Maintainability of application under Section 7 of IBC, 2016 against the guarantors for selfsame debt and its default, once the principal borrower is admitted in CIRP - Proper authorization of officer who had filed this application on behalf of bank - HELD THAT:- In this case, there is no dispute about following relevant facts (i) Financial debt is more than ₹ 1 lakh due and payable by these Corporate Debtors upon invocation of their guarantees by the bank, (ii) Corporate Guarantors committed default in paying the same and (iii) debt is not time barred. Declaration of principal borrower's loan account to be NPA - HELD THAT:- A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be - the defence raised by the corporate guarantor about non-observing guideline issued by RBI by the Financial Creditor cannot be the defence to be considered in this proceedings - It is not recovery proceedings, hence, rejected. Allegation that Financial Creditor did not comply the provision of Section 215 of the IBC, 2016 - HELD THAT:- Section 215 of IBC, 2016 states the procedure of submitting financial statements of the debtor to Information Utility Service Provers. However, atleast till date, it is not necessary for the Financial Creditor to file certificate of default issued by Information Utility for initiating CIRP of the Corporate Debtor - Financial Creditor can prove the facts i.e. debt is due and payable and its defaults by way of other evidence also. In above case, there is overwhelming evidence to establish both facts. Even otherwise both facts are not in dispute - this defence rejected. Maintainability of application under Section 7 of IBC, 2016 against the guarantors for selfsame debt and its default, once the principal borrower is admitted in CIRP - HELD THAT:- Upon reading of entire order of Hon'ble NCLAT in case of State Bank of India. Vs. Athena Energy Ventures Pvt. Ltd. [ 2020 (11) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI ] , it is clear that Hon'ble NCLAT has considered its earlier order and amendment made in Section 60(2)(3) of IBC, 2016 so also the decision of Hon'ble Supreme Court in the case of State Bank of India vs V. Ramakrishnan and Another [ 2018 (8) TMI 837 - SUPREME COURT ] and has ultimately held that CIRP proceedings against the principal borrower and guarantor can be proceeded with and there is no bar in IBC, 2016 against such proceeding - this defence as raised by the Corporate Debtor (corporate guarantor) is not maintainable. Proper authorization of officer who had filed this application on behalf of bank - HELD THAT:- These proceedings are filed on the basis of power of attorney are not maintainable. The officer presenting the application is not the Financial Creditor but it is the bank who is Financial Creditor. Since debt and default are admitted by the Corporate Debtor, it is not deemed proper to reject these applications on this technical ground more particularly when we are dealing with the matter pertain to commercial/economic law where huge public money is involved. The Corporate Debtor are required to be admitted in CIRP - application admitted - moratorium declared.
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Service Tax
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2021 (3) TMI 1050
CENVAT Credit - common input services used in taxable as well as exempt services - exempted activity - sale of space or time for advertisement in print media - input services - Air travel - accommodation charges - taxi hire charges - AMC for flat at Delhi - time limitation. CENVAT Credit - common input services used in taxable as well as exempt services - exempted activity - sale of space or time for advertisement in print media - applicability of Rule 6(3) of CCR - HELD THAT:- As per the Department noted in the impugned order in para 7.1 by relying upon Notification 15/2006-ST dated 24/04/2006 read with Notification 03/2011-CE dated 01/03/2011, the definition of exempted service has been granted to the effect that an explanation has been inserted to the said rule clarifying that exempted service includes sale of space or time for advertisement in print media - the activity of sale of space or time for advertisement in print media is specifically covered under the negative list in terms of Section 66D of the Finance Act, 1994 and therefore the same cannot be said to be an exempted service and the provisions of Rule 6(3) is not applicable to an activity which is in the negative list. Further, the appellant during the stage of the audit itself has produced record before the audit saying that appellant has duly prepared separate accounts for cenvat credit availed in respect of taxable service, common credit availed for exempted services and taxable services. CENVAT Credit - input services - Air travel - accommodation charges - taxi hire charges - AMC for flat at Delhi - HELD THAT:- As far as Air travel/visa, accommodation and AMC for flat at Delhi is concerned, keeping in view the nature of output service rendered by the appellant the employees have to travel to places to organize business exhibitions and events and hence the travel is in relation to the output service provided and moreover these services have been held to be input service in the case of M/S EMCON TECHNOLOGIES INDIA PVT LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2012 (11) TMI 1019 - CESTAT BANGALORE ] . AMC charges for the flat - HELD THAT:- When the accommodation bears a direct nexus with the output service, hence the AMC charges for the flat will also fall within the input service and registration of the premises where the said service is availed is not required in view of the decision of the Karnataka High Court in the case of Mportal India Wireless Solutions Pvt. Ltd. [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT ]. Extended period of limitation - HELD THAT:- The extended period cannot be invoked because the show-cause notice was issued on the basis of departmental audit undertaken for the period October 2011 to September 2015 and all the facts were disclosed in the audit. Hence, suppression of fact with intent to evade service tax cannot be alleged against the appellant - the appellant has also produced a certificate from the CA computing the cenvat credit to be reversed under Rule 6(3A) of CCR, 2004 and has reversed more than what was required to be reversed. Appeal allowed - decided in favor of appellant.
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2021 (3) TMI 1049
Scope of SCN - Levy of Service Tax - value of pre-fixed quantum of LNG identified towards allowed loss and consumption - inclusion of such free of cost supplies of LNG by the customers should have formed part of the consideration received by the Appellant - HELD THAT:- The show cause notice in the present appeal is dated April 8, 2016 and has been issued for the period July 2014 to March 2015 in continuation of the show cause notice dated October 10, 2014 that was issued for the period June 2009 to June 2014. The order arising out of this show cause notice dated October 10, 2014 had been assailed by the appellant. The Agreements referred to in this show cause notice are the same Agreements which were referred to in the earlier show cause notice and the same allegations have been made against the appellant. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (3) TMI 1084
Reversal of Cenvat Credit - Scope of exemption notification - Notification exempting the basic excuse duty but not additional duty of excise - interpretation of provisions of Rule 6(1) and 6(4) of the Cenvat Credit Rules, 2004 - conditional exemption - contention of the appellants that the final product being exempt from payment of basic duties ignored - benefit of the notification dated 09.07.2004 as amended from time to time - HELD THAT:- In case of COMMISSIONER OF SALES TAX, JAMMU AND KASHMIR AND OTHERS VERSUS PINE CHEMICALS LTD. AND OTHERS [ 1994 (10) TMI 262 - SUPREME COURT] , brief facts were that the Government of Jammu Kashmir had granted exemption to goods manufactured by large or medium industrial units within 5 years of its commencement of production and sold within the said period. In such context, it was observed that such exemption was a conditional exemption and not a general exemption. The Notification appears to have a dual purpose in the mind of the authority. First was to encourage investment in manufacturing units of specified products in the North-Eastern States. The second purpose also is equally important namely, that the element of duty waived by the Government of India is also ploughed back into the region by augmenting the manufacturing capability of a unit in the said region or for other purposes such as development of infrastructure or civil works or social projects in the region. The amount of duties saved by the manufacturer thus under this Notification, was to be utilized in a specified manner. As per Rule 2(d), exempted goods would mean excisable goods which are exempt from the whole of the duty of excise leviable thereon or the goods which are chargeable to Nil rate of duty. The exemption Notification dated 21.01.2004 as amended subsequently cannot be seen as a Notification granting unconditional exemption from payment of duties. Such exemption was conditional on various requirements which limited the scope of the assessee to utilize the duty element so exempted, for any purpose at all. Such exemption, thus, did not directly increase the profitability of the product since the assessee could not retain the sum equivalent to the duty payable and utilized it at will. Appeal dismissed.
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2021 (3) TMI 1081
Prayer to grant one month more time so that an appropriate decision can be taken - HELD THAT:- Time is granted to the Designated Committee to pass the final order in accordance with law upto 17th April, 2021. We make it clear that no further time shall be granted. Application disposed off.
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2021 (3) TMI 1070
Restoration of Notification dated 27.03.2008 - claim of special rate - certain add-ons to the goods manufactured by them - petition is instituted on the grievance that the Notification dated 27.03.2008 having been restored as per the judgment of the Supreme Court, two applications dated 02.02.2021 and 04.02.2021 under Clause 3(1) of the Notification No.20/2008-Central Excise dated 27.03.2008 was submitted by the petitioner claiming for a special rate, but the same has not been given its consideration and without giving a due consideration to the claim for special rate made by the petitioners - HELD THAT:- As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, we are of the view that without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. This petition stands disposed of by directing the Principal Commissioner of GST Guwahati to consider the aforesaid two applications of the petitioner dated 02.02.2021 and 04.02.2021 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured.
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2021 (3) TMI 1059
CENVAT Credit - input services - activity of construction of road and storm water drain/civil work at tanker parking facility - denial on the ground that the same are not integral part of the manufacturing activity of the appellant - HELD THAT:- The period involved in the present case was prior to 1.4.2011 when the definition of input service had wide ambit as it included the words activities relating to business . Further, the words activities relating to business includes all the services which are commercially required for the purpose of carrying on business of manufacture or provider of output service because in the absence of these services it is difficult for the appellant to carry on his business activities. This issue has been considered by the Tribunal in the case of M/S. RAYMOND UCO DENIM PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2017 (9) TMI 922 - CESTAT MUMBAI] wherein the Tribunal in para 5 has observed that much water has flown after the amendment in the definition of input services with effect from 1.4.2011 and prior to 1.4.2011, construction of road and drainage system inside the factory premises was considered to be falling under the definition of input service and the assessee was entitled to CENVAT credit of the same. Credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (3) TMI 1083
Seeking direction to issue C Form for the years 2007-08 to 2010-11 - concessional rate of duty on the goods supplied from outside State - HELD THAT:- The situation that emerges from the record is that the petitioner at the relevant time was a registered dealer in West Bengal. Since the petitioner was awarded a contract for execution of certain work for respondent No.4 in Tripura, the petitioner and respondent No.4 appeared to have entered into an agreement which is manifested in Clause 13.2 that on the goods supplied by the petitioner directly to respondent No.4, the respondent No.4 shall issue certificate of concessional rate of duty. According to the petitioner, the goods supplied were in the course of interstate trade. The objections of the respondent No.4 for issuing C Form are completely invalid - From the reply filed by the State authorities, it emerges that such C Forms were not issued on account of anomaly in the valuations. As a State authority respondent No.4 ought to have conveyed this reason to the petitioner who could have either pointed out that there is no anomaly or reconcile the figures if it was possible. In the meantime, for want of C Forms the petitioner went on suffering duty at the higher rates. The Assessing Officer in West Bengal who had jurisdiction over the petitioner could not postpone the assessments for the fear of the same getting time barred. The respondent No.2 shall communicate the mismatch in figures which has prevented the said respondent from issuing C Form so far to the petitioner as well as respondent No.4 simultaneously within a period of two weeks from today - Petition disposed off.
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2021 (3) TMI 1076
Issuance of notices - proper jurisdiction to issue notices - HELD THAT:- The notices have been issued by the competent authority under the provisions of Act 2003. The notices have not been issued by an authority who is not having jurisdiction in the matter - in view of the decision in the case of Hon ble Supreme Court in the case of UNION OF INDIA AND ANOTHER VERSUS KUNISETTY SATYANARAYANA [ 2006 (11) TMI 543 - SUPREME COURT] , as the authority who has issued the show cause notice is having jurisdiction to do so, a mere issuance of show cause notice does not infringe the right of the present appellant and therefore, the question of interfering with the show cause notice does not arise. Appeal disposed off.
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2021 (3) TMI 1075
Request for waiver of interest on the interest free sales tax deferral amount availed by the appellant - Due date for repayment - Relevant date for calculation of such interest, is any - Section 24(3) of TNGST Act - HELD THAT:- The interest would be payable from the due date for repayment of the loan and not from the date, on which, the IFST deferral loan was availed. What is the date, on which, the repayment is due? - HELD THAT:- The Sales Tax Department did not appear before the Board on several dates when the case was heard. Be that as it may, the due date for repayment could have never occurred, in the facts and circumstances, between 01.8.2003 when the appellant was referred to the BIFR and 31.5.2006, the appellant was declared as a sick industrial company till its net worth turned positive and it was discharged from the Board on 05.2.2013 - the date, on which, the repayment became due for the appellant's case shall be fixed on 06.2.2013. Admittedly, the appellant cleared the entire sales tax on 25.4.2015. Hence, for the period from 06.2.2013 to 25.4.2015, the appellant is liable to pay interest. The benefit of G.O.Ms.No.1076 Industries (MIGI) dated 04.10.1988 cannot be straightaway made applicable to the appellant because it is a discretion vested with the Government and several factors are to be considered before discretion is exercised - Hence, for the present, we do not intend to make any observation with regard to the applicability of G.O.Ms.No.1076 Industries (MIGI) dated 04.10.1988 to the appellant's case. But, it is left open to the appellant to approach the Government, if so advised. The appeal is allowed in part.
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2021 (3) TMI 1074
Levy of penalty - Wilful suppression of facts or not - entire amount paid without any objections - HELD THAT:- The Tribunal was not right in concluding that there was no willful suppression. Applying the law laid down by the Hon'ble Supreme Court in the case of Mak Data P. Ltd. [ 2013 (11) TMI 14 - SUPREME COURT ] would fortify the conclusion arrived - when the Assessing Officer levied penalty 1 times of the tax demanded, the assessee claimed that it was their first year of business. However, that cannot be a sole reason. However, if the assessee is able to show some bona fide reasons, which prevented them from disclosing the full turn over, then the Assessing Officer would be entitled to examine the same for its correctness. The Assessing Officer can be directed to look into the aspect as to whether the penalty can be imposed or not. He shall do so by taking note of the conduct of the respondent prior to the issuance of the pre-assessment notice and during the assessment proceedings. The finding of the Tribunal confirming the imposition of penalty at 1.5 times alone is set aside and the matter is remanded back to the Assessing Officer for a fresh consideration - tax case revision filed by the Revenue is allowed.
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2021 (3) TMI 1071
Reduction in the quantum of penalty - non-consideration of proper perspective the provisions of Pondicherry General Sales Tax Act, 1967 before reducing the penalty - penalty for the suppression of the turnover - dishonest act of tax evasion - whether reducing the penalty amount will result in encouragement of tax evasion and the tax payers will indulge in similar act of evasion on the pretext that he can be able to avoid penalty burden? HELD THAT:- Exercise of discretion should be supported by valid reasons and if it is no so supported, then exercise of discretion has to be held to be arbitrary - there is no reason assigned by the Tribunal to reduce the penalty. The order passed by the Appellate Tribunal reducing the quantum of penalty is not justified and not sustainable - Tax Case Revisions are allowed.
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