Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 29, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Confiscation of goods alongwith the conveyance - levy of penalty - It amounted to breach of principles of natural justice resulting into denial of reasonable opportunity to the petitioner to defend in the proceedings - proceedings are remanded to the competent authority of the respondents, which shall decide the subject matter afresh after giving opportunity to the petitioner to defend his case. - HC
Income Tax
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Block assessment u/s 158BC/158BE - Period of limitation - If the submission on behalf of the respective assessees that the date of the last authorization is to be considered for the purpose of starting point of limitation of two years, in that case, the entire object and purpose of Explanation 2 to Section 158BE would be frustrated. - the view taken by the High Court that the date of the Panchnama last drawn would be the relevant date for considering the period of limitation of two years and not the last date of authorization, we are in complete agreement with the view taken by the High Court. - SC
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Reopening of assessment u/s 147 - Validity of order u/s 148A - all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. - HC
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Addition u/s 68 r.w.s. 115BBE - AO is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. AO without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine, without even rejecting the books of account which is in our opinion is erroneous - AT
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TDS u/s 192 - payment of remuneration - No deduction at source is contemplated u/s 192 in cases where a payment towards salary has accrued but is not made - AO was not justified in making addition u/s 40(a)(ia) - AT
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Erroneous order of CIT(A) - we find that the impugned order has been passed by the CIT(A) mechanically without application of mind which has forced the assessee to file this second appeal and suffered financial loss on account of appeal fee of Rs. 10,000/- and the litigation expenditure including the counsel fees etc., as well as mental agony and suffering therefore, this Bench takes a serious view of the matter regarding the callous approach of the CIT(A) while passing the impugned order. - AT
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Addition u/s 40(a)(ia) - Non deduction of TDS - Since the assessee’s claim that expenses were not debited to P&L account is correct, ld. CIT (A) held that there is no question of disallowance of expenses - no TDS is required to be deducted on payments made to HUDA for EDC - AT
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Revision u/s 263 - AO has discharged his dual role as an investigator as well as adjudicator. As noted he has examined the relevant facts of unsold flats as well as decision not to determine ALV is in line with the CBDT Circular dated 15.02.2018 and therefore his decision cannot be held to be erroneous as well as prejudicial to the revenue. - AT
Customs
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Eligibility for SAD exemption - It is admitted by the importer that no permission obtained under FCO, since the product 'rock phosphate' imported does not require such permission being not within the specification for rock phosphate to be qualified as 'fertiliser' under FCO. - It is well settled principle of law that in case of exemptions, law should be strictly interpreted and liberal interpretation detrimental to revenue is not advocated. - The order of the Customes Department declining to grant SAD exemption is upheld - HC
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Smuggling - burden to prove - When any statement is recorded under Section 108, it has been clarified by the High Court that when a person who has earlier given the statement before the Gazetted Officer should reiterate the same before the Adjudicating Authority in terms of Section 138B(1). Then only the Adjudicating Authority should admit the same as an evidence. - Once the Appellant is able to provide such documentary evidence, the burden of proving that the goods are of a foreign origin falls on the Department, which has not been done by them in the present case. - AT
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Benefit of exemption from duty - 12V SMPS consisting of Main PCB, lightening protector, DC/AC cables, fuse/fuse holders and others - SMPS is not a part of IFWT. The goods imported cannot be considered as accessory as these parts are not used to increase the effectiveness or convenience of IFWT. It is thus held that the goods imported are neither parts nor accessories of IFWT and therefore cannot avail the benefit of notification. - AT
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Revocation of Customs broker licence - dismissal of request for cross-examination - regulation 22(7) and 20(1) of Customs House Agents Licensing Regulations (CHALR), 2004 - such cavalier dismissal of request for cross-examination affects the credibility of the disagreement memo - matter restored back - AT
Service Tax
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Levy of Service Tax - reverse charge mechanism - to say that the software was available in India, with the appellant and hence the provision of service was from India only, as observed by the Adjudicating Authority, runs counter to the demand of Service Tax under reverse charge mechanism within the meaning of Section 66A ibid. read with Rule 3 (ii) of the Taxation of Services Rules ibid. - the appellant could not have been fastened with the Service Tax liability under management, maintenance or repair service - AT
Central Excise
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Recovery of CENVAT Credit - It is a case of double payment of duty on same inputs. The payment of duty twice is not disputed, thus, it would be unfair and against the scheme of CENVAT to deny credit of said duty. - HC
Case Laws:
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GST
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2023 (3) TMI 1202
Seeking Bail - Constitutional Validity of Section 132(1)(b) and (c) of the CGST Act - declaring when to exercise the power under Section 69 of the CGST Act - seeking declaration that the arrest of the Petitioner is illegal - HELD THAT:- The Division Bench passed this order relying on the order passed in the case of Akshay Chhabra V/s. Union of India Ors. [ 2023 (3) TMI 488 - BOMBAY HIGH COURT ] and Sunil Kumar Jha V/s. Union of India Ors. [ 2021 (3) TMI 541 - BOMBAY HIGH COURT ], where it was held that the main prayer was for protection from arrest. Therefore, in light of the decision of the NAGPUR CABLE OPERATORS' ASSOCIATION VERSUS COMMISSIONER OF POLICE, NAGPUR AND ORS. [ 1995 (8) TMI 342 - BOMBAY HIGH COURT] decision, the petitions ought to have been filed as criminal writ petitions. The learned Counsel for the Petitioner states that similar course of action as indicated in the case of Akshay Chhabra, be followed and the Petitioner be allowed to approach the concerned Court in respect of prayer of bail and be continued for some time and, as regard the challenge to the constitutional validity of the Indirect Tax enactment is concerned, the same is not being pressed in the Petition. In the light of the course of action adopted in the case of Akshay Chhabra, the Writ Petition is disposed off directing that the bail granted in this Petition to continue for a period of six weeks to enable the Petitioner to approach the competent court - petition disposed off.
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2023 (3) TMI 1201
Confiscation of goods alongwith the conveyance - levy of penalty - under section 130 of the Act came to be passed without affording any opportunity to the petitioner - violation of principles of natural justice (audi alterem partem) - HELD THAT:- It appears that the notice was issued on 5.10.2019 by respondent No.2-the State Tax Officer asking the petitioner to remain present before him on 15.10.2019. It is the case of the petitioner that the petitioner had informed the respondent No.2 about the order dated 14.10.2019 passed by this court whereby the notice was issued and was made returnable. It is not in dispute that on the same day, however, that is on 15.10.2019, the respondent No.2 proceeded to pass order of confiscation of goods and conveyance and demanded tax, fine and penalty under section 130 of the Act. The petitioner pointed out that he had already deposited the amount of tax and penalty. Thus, it transpires that the petitioner was called to remain present before respondent No.2 on 15.10.2019. The petitioner appeared and submitted about the pendency of the petition, however, respondent No.2 authority passed order dated 15.10.2019 under section 130 of the Act, which was on the same date. Whereby all proposals in GST MOV 10 were confirmed regarding levy of tax, fine etc. Thus, what becomes clear is that order dated 15.10.2019 under section 130 of the Act came to be passed without affording any opportunity to the petitioner. As noticed, the petitioner was called to remain present and on the same date the order came to be passed. It amounted to breach of principles of natural justice resulting into denial of reasonable opportunity to the petitioner to defend in the proceedings - proceedings are remanded to the competent authority of the respondents, which shall decide the subject matter afresh after giving opportunity to the petitioner to defend his case. Application allowed.
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Income Tax
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2023 (3) TMI 1204
Estimation of income - Bogus purchases - CIT-A sustained the addition to the extent of 20% of the additions made by the AO - HELD THAT:- Disallowance made by the ld. CIT(A) is merely ad hoc in nature. Sales/gross receipts are not disputed at any stage and for achieving the same assessee needs to incur expenditure. It is also brought to our notice that for assessment year 2008-09 in assessee s own case [ 2015 (11) TMI 1887 - ITAT KOLKATA] similar type of disallowances of the purchases and expenses were made and this Tribunal after considering the facts of the case, regularly books of account maintained by the assessee, deleted the said disallowances We find that the assessee has shown a better net profit rate during the year which is 3.03% as compared to the net profit rate of 0.5% in the immediately preceding financial year which was also subjected to scrutiny proceedings and duly assessed u/s 143(3) of the Act. Also the subsequent assessment year was also subjected to scrutiny assessment and the Assessing Officer in the assessment order u/s 143(3) has examined the books of account of the assessee and accepted the net profit percentage of 2.39%. AO was not justified in making the addition towards bogus purchase and towards bogus expenditure. We hold that ld. CIT(A) erred in sustaining the addition by making ad hoc disallowance without specifying any defect in the books of accounts and records maintained by the assessee. We thus set aside the findings of the ld. CIT(A) sustaining ad hoc disallowance and delete the total additions made by the AO. Thus, grounds of appeal raised by the assessee are allowed and that of the Revenue are dismissed.
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2023 (3) TMI 1203
TP Adjustment - ALP adjustment towards Corporate Guarantee - TPO in the instant case has adopted the corporate guarantee commission rate of 1.80% on account of the corporate guarantee provided by the assessee to its AE and accordingly suggested upward adjustment - HELD THAT:- Respectfully following the decision of the Tribunal in assessee s own case in the preceding A.Ys and in absence of any distinguishable features brought to our notice against the order of the Tribunal in assessee s own case [ 2022 (4) TMI 1514 - ITAT HYDERABAD] we direct the Assessing Officer/TPO to adopt the corporate guarantee commission rate of .5% qua the extent of amount of assessee s corporate guarantee actually utilized. The grounds raised by the assessee on this issue are accordingly allowed for statistical purposes. Addition on account of interest on outstanding receivables - As submitted that since the AO in the final order has not followed the directions of the DRP, therefore, he has no objection if the matter is restored to the file of the AO with a direction to compute the interest on receivables after netting off payables - HELD THAT:- Since the AO in the instant case has not followed the direction of the ld.DRP, therefore, the grounds on this issue are restored to the file of the Assessing Officer with a direction to follow the directions of the DRP and make appropriate addition. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- DRP upheld the action of the AO in the draft assessment order holding that the disallowance under section 14A r.w.Rule 8D is mandatory in nature irrespective of earning or not earning any exempt income. Assessee submitted that he has not earned any exempt income during the year. All these investments are made outside India in assessee s subsidiary companies, the income of which when received is taxable in India. A perusal of the order of the AO DRP shows that the same is very cryptic on this issue. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to adjudicate the issue afresh. Addition towards duty drawback - HELD THAT:- Since the assessee had not provided the necessary details with supporting evidence, the AO in the instant case made the addition. Since it is the contention of the learned Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate that the duty drawback has already been offered to tax as business income, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to grant one last opportunity to the assessee to substantiate its case and decide the issue as per fact and law. Ground raised by the assessee on this issue are accordingly allowed for statistical purposes.
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2023 (3) TMI 1200
Block assessment u/s 158BC/158BE - Period of limitation - time limitation for commencement of block assessment - scope of relevant date - whether the period of limitation of two years for the block assessment u/s 158BC/158BE would commence from the date of the Panchnama last drawn or the date of the last authorization? - HELD THAT:- As observed and held by this Court in the case of VLS Finance Limited [ 2016 (4) TMI 1133 - SUPREME COURT] the relevant date would be the date on which the Panchnama is drawn and not the date on which the authorization/s is/are are issued. It cannot be disputed that the block assessment proceedings are initiated on the basis of the entire material collected during the search/s and on the basis of the respective Panchnama/s drawn. Therefore, the date of the Panchnama last drawn can be said to be the relevant date and can be said to be the starting point of limitation of two years for completing the block assessment proceedings. If the submission on behalf of the respective assessees that the date of the last authorization is to be considered for the purpose of starting point of limitation of two years, in that case, the entire object and purpose of Explanation 2 to Section 158BE would be frustrated. If the said submission is accepted, in that case, the question which is required to be considered is what would happen to those material collected during the search after the last Panchnama. It cannot be disputed that there may be number of searches. Thus, the view taken by the High Court that the date of the Panchnama last drawn would be the relevant date for considering the period of limitation of two years and not the last date of authorization, we are in complete agreement with the view taken by the High Court. Appeal dismissed.
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2023 (3) TMI 1199
Reopening of assessment u/s 147 - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT:- The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. The impugned notice in this petition u/s 148 of the Act relatable to Assessment year 2014- 15 is beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. Since the petition deserves to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into.All other questions on facts and of law involved in the reasons weighed with Assessing Officer seeking to reopen the assessment are kept open. As a result, notice dated 30.6.2021 issued by the respondent- Assessing Officer under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment in respect of Assessment Year 2014-15, Order dated 21.7.2022 passed by the Respondent under Section 148A(d) of the Act, and all consequential actions, as may have been taken, are hereby quashed and set aside.
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2023 (3) TMI 1198
Reopening of assessment u/s 147 - Validity of order u/s 148A - scope of new enactment of Section 148A - Notice beyond the permissible time limit - Period of limitation to issue notice issued u/s 148A(b) - time limit extended by Notifications of the Central Board of Direct Taxes - notices issued u/s 148 referable to the old regime - HELD THAT:- As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time. In Keenara Industries Pvt. Ltd. [ 2023 (3) TMI 104 - GUJARAT HIGH COURT] this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions. The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. In view of the above, the impugned notice in this petition under section 148 of the Act relatable to Assessment year 2014-15 is beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. Since the petition deserves to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into.
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2023 (3) TMI 1197
Disallowance u/s 14A - Whether or not the calculation of disallowable expenses made by the respondent/assessee, on its own, u/s 14A as correct? - assessee had earned dividend income which was excluded from total income in terms of Section 10(34) - Tribunal has accepted the method of calculation put forth by assessee, and observed that the method adopted in the AY in issue, was also followed, as well as accepted by the appellant/revenue, in other assessment years - HELD THAT:- Tribunal invoked the rule of consistency as enunciated by the Supreme Court in Radha Soami Satsang v Commissioner of Income Tax [ 1991 (11) TMI 2 - SUPREME COURT] and, thus, dismissed the appeal of the revenue. Assessee had also filed cross-appeal against the order of CIT (Appeals) to the extent that he had upheld the disallowance of amount equivalent to Rs 1.97 crores on account of administrative personal expenses. Tribunal via impugned order dismissed the appeal of the respondent/assessee. As pertinent to note that the appellant/revenue took recourse to provisions of Rule 8D of the Income Tax Rules, 1962 to support its plea that the disallowance had to be calculated through different methodology. Tribunal held that the said rule was applicable only from AY 2008-09. Revenue, does not dispute this aspect of the matter, in view of the judgment rendered by the Supreme Court in Commissioner of Income Tax 5 Mumbai Vs. Essar Teleholdings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT] We are not inclined to interfere with the impugned order, as according to us, no substantial question of law arises for consideration.
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2023 (3) TMI 1196
Addition u/s 68 r.w.s. 115BBE - unexplained cash deposited in bank - Non rejection of books of accounts by revenue - HELD THAT:- In the present case, the department has not rejected the books of accounts of the Assessee accepted in VAT. The regular books of accounts were maintained in the normal course of business in which no flaw, fallacy or deficiency was pointed out by the AO. It is well settled law that once the assessing officer accepts the books of accounts and the entries in the books of accounts are matched, there is no case for making the addition as unexplained. AO and the ld CIT(A) have concluded the findings on the basis of conjectures and surmises. AO has to establish the link between the evidence collected by him and the addition to be made. The entire case has to be dependent on the Rule of evidence, the assessee in this case explained the source of bank deposits are from cash sales. AO proceeded to disbelieve the explanation of the assessee on the presumption basis without bringing the corroborative material on record. AO is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. AO without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine, without even rejecting the books of account which is in our opinion is erroneous - Decided in favour of assessee.
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2023 (3) TMI 1195
TDS u/s 192 - payment of remuneration - non deduction of TDS of salary payment - addition being 30% u/s 40 (a)(ia) - salary provision made during the year but not paid during the year under consideration - HELD THAT:- Hon ble Delhi High Court in the case of CIT vs. Taj Quebecor Printing Ltd. [ 2006 (1) TMI 56 - DELHI HIGH COURT ] has held that the person making the salary payment is required to make a deduction towards tax at source only at the time of making such payment. The accrual of the payment and the actual act of making the payment must both exist in order that a deduction at source may be made. No deduction at source is contemplated under Section 192 in cases where a payment towards salary has accrued but is not made - AO was not justified in making addition u/s 40(a)(ia) - The ground of assessee is allowed.
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2023 (3) TMI 1194
Validity of order u/s 206C(1C)/206C(6A) - Period of limitation - whether order barred by limitation as it was passed beyond the reasonable period of time? - non collection of taxes at source (TCS) on receipt of payments made by lessees, licensees or the right holders in form of royalties and related compensatory and other amounts - whether in the absence of any specific time period specified in the Act can an order be passed u/s 206 of the Act at any time or there should be a reasonable limitation of time? - HELD THAT:- In the case on hand admittedly the order u/s 206C(1C)/206C(6A) assessment year 2009-10 was passed on 29.03.2016 which is admittedly beyond the period of four years from the end of the assessment year 2009-10. Order passed by the ITO(TDS), Moradabad u/s 206C(1C)/206C(6A) dated 29.03.2016 is barred by limitation and the same is quashed. Decided in favour of assessee.
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2023 (3) TMI 1193
Erroneous order of CIT(A) - Processing of return of income by the CPC u/s 143(1) - Addition of income being interest on PPF and interest on REC tax free bonds - Scope of double taxation as assessee has specifically claimed these two items being interest on PPF account and interest on REC bonds as exempt income u/s 10 - HELD THAT:- CIT(A) without considering the main grievance of the assessee regarding double taxation of the income already declared by the assessee in the return of income as well as taxation of the exempt income has confirmed the adjustment / additions made by the CPC by ignoring the bare facts available on record in the return of income, submissions of the assessee as well as the facts reported in the tax audit report. It is not the case that the assessee has claimed the rental income and interest income on saving bank and FD as well as dividend income are not liable to be taxed but the assessee has pleaded before the CIT(A) that these incomes are already declared by the assessee and due tax was paid while filing the return of income. This fact has been completely ignored by the CIT(A) while passing the impugned order. The two item of income being interest on PPF and interest on REC bonds which are exempt incomes under section 10 of the Income Tax Act are also overlooked by the CIT(A) while passing the impugned order. It appears that the CIT(A) has simply confirmed the adjustments made by the CPC by referring to the guidance note on the tax audit under section 44AB and ignoring relevant and crucial fact that the rental income as well as income from other source has already been declared by the assessee in the return of income and adjustment to that extent has resulted double taxation of the income already declared by the assessee and further the exempt income has been taxed by the CPC which is absolutely against the provisions of the Income Tax Act. Hence, we find that the impugned order has been passed by the CIT(A) mechanically without application of mind which has forced the assessee to file this second appeal and suffered financial loss on account of appeal fee of Rs. 10,000/- and the litigation expenditure including the counsel fees etc., as well as mental agony and suffering therefore, this Bench takes a serious view of the matter regarding the callous approach of the CIT(A) while passing the impugned order. Accordingly, the additions / adjustments made by the CPC are deleted. Appeal of the assessee is allowed.
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2023 (3) TMI 1192
Disallowance of expenditure/business loss - no income has been earned during the year - HELD THAT:- In assessee s own group concern case in Hike Private Limited [ 2022 (9) TMI 1434 - ITAT DELHI] ITAT had noted the proposition that earning of income is not necessary for allowing of expenditure. Assessee has started earning revenue from the next year which has been duly submitted before us in the form of paper book. We are of the opinion that the authorities below have erred in disallowing the assessee s business loss and the same needs to be allowed. Addition u/s 40(a)(ia) - payment was statutory charges made to HUDA for granting license by Directorate of Town and Country Planning, Haryana - HELD THAT:- We refer to Hon ble jurisdictional High Court decision in the case of BPTP Ltd. [ 2020 (1) TMI 56 - DELHI HIGH COURT] wherein it is held that EDC are in the nature of statutory fees. We note that ld. CIT (A) has already granted relief to the assessee on the ground that section 40(a)(ia) applies to expenses claimed in P L account. Since the assessee s claim that expenses were not debited to P L account is correct, ld. CIT (A) held that there is no question of disallowance of expenses. We find that other case laws in this regard relied upon by the assessee also support the proposition that no TDS is required to be deducted on payments made to HUDA for EDC. - Decided against revenue.
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2023 (3) TMI 1191
TP adjustment - specified domestic pricing u/s 92BA(iii) r.w.s. 80IA (8) - assessee is engaged in the business of generation, transmission and distribution of electricity - TP Range Computed for Purchase Cost from All Maharashtra Units excluding ASCI list (only Internal CUP, TPO and MSEDCL - TPO has determined the tariff rate as determined by Maharashtra Electricity Regulatory Commission at 4.60 per unit and DRP had directed to determined the ALP at Rs. 3.71 per unit. - HELD THAT:- As accepted by the DRP, whether the price shown by the assessee for purchase is at arm s length price or not. The fundamental principle is to determine the arm s length price under the transfer pricing provision is to benchmark and to see whether the cost of purchase of electricity with the AE is comparable with the uncontrolled transactions having similar functions and providing similar goods and services, especially if one adopts external CUP method, and also to have broad comparable data to see the percentile range under the Rules. Thus, if we analyze from the above computation of comparables as taken by the TPO and DRP, it can be seen that the median range is well within the price shown by the assessee and therefore, we hold that same are at arm s length price and no further TP adjustment was required to be done. There is a slight fallacy in the order of the DRP while constructing the data set of comparables. DRP has added extra landing cost of Rs. 0.57 per unit to the MERC approved rate of all comparables in case of MSEDCL Order for AY 2017-18. DRP has assumed the difference between the MERC approved cost in case of MSPGCL of Rs. 3.51 per unit and the per unit rate of Rs. 4.08 as per the reply received from MSPGCL in response to the notice u/s. 133(6), being Rs. 0.57 (Rs. 4.08 Rs. 3.51) as the landing cost and uniformly applied the same to the cost per unit of all comparables considered as per the MERC order in case of MSEDCL. The average cost per unit of power purchased from MSPGCL of Rs. 3.51 per unit has been considered by the DRP on the basis of MERC order of MSEDCL which includes the cost of thermal, hydro and gas power, whereas MSPGCL in response to the Notice u/s. 133(6) has provided the average cost per unit in case of thermal power only, since the same is comparable transaction with respect to the transfer of thermal power from Rinfra G to Rinfra D. Thus, the difference as reconciled above is not on account of landing cost and therefore, Rs. 0.57 per unit added to the cost per unit of all comparables was wrongly considered by the DRP As on the basis of DRP order also, if the revised TP range is computed, then the middle range is between 3.14 to 4.08, and therefore, the ALP rate of assessee Rs. 3.24 is at ALP. Thus, from all the angles if determination of ALP is taken within as per the working of revenue authorities in a proper perspective, there is no case of any transfer pricing adjustment. Accordingly, the TP adjustment made is hereby deleted. Disallowance made u/s 14A r.w.r. 8D - HELD THAT:- ITAT in assessee s own case for AY 2015-16 [ 2021 (5) TMI 351 - ITAT MUMBAI] after following the various decisions held that disallowance u/s 14A worked out as per rule 8D should be after considering only those investments on which exempt income has been received during the year. Therefore, following the precedence of the earlier order, the disallowance is only restricted for considering the purpose of rule 8D(ii) only on those investments on which exempt income has been received during the year. Accordingly, the disallowance made by the AO and confirmed by the DRP in both the assessment years is hereby deleted. Expenditure on replacement of meters - HELD THAT:- The replacement of meter does not increase the Assessee s generation or distribution capacity. In fact assessee replacing old meters by new meters which resulted in better readings of the electricity/ current consumption and do not in any way enhance the capital assets or the quantity of power supply. Accordingly, the same is rightly claimed as revenue expenditure. Moreover, this issue has been covered by the decision of Hon ble Bombay High Court in assessee s own case [ 2012 (10) TMI 1144 - ITAT MUMBAI] , [ 2014 (11) TMI 1236 - ITAT MUMBAI] for AY 2006-07 to AY 2009-10 and also by ITAT Mumbai [ 2012 (10) TMI 1144 - ITAT MUMBAI] , [ 2014 (11) TMI 1236 - ITAT MUMBAI] , [ 2017 (6) TMI 1181 - ITAT MUMBAI] , [ 2017 (12) TMI 1121 - ITAT MUMBAI] , [ 2018 (12) TMI 1882 - ITAT MUMBAI] , [ 2019 (11) TMI 1357 - ITAT MUMBAI] , [ 2021 (5) TMI 351 - ITAT MUMBAI] deceptively for AY 2002-03 to AY 2015-16. Accordingly, the disallowance of expenditure made by the AO in both the assessment years is hereby deleted. Allocation of head office expenses for computing deduction u/s 80IA - Assessee submitted that the head office expenses should not be allocated while computing the profits of the eligible 80IA undertaking - AO has allocated commonly incurred head office expenses to all undertakings on the basis of turnover resulting in reduced profits of eligible 80IA undertaking stating that the head office expenses have been incurred for running and administration of all the units/activities of the assessee company including the activities of the eligible units - HELD THAT:- We find that that this issue is now covered by the decision of Hon ble Bombay High Court in assessee s own case for [ 2012 (10) TMI 1144 - ITAT MUMBAI] , [ 2014 (11) TMI 1236 - ITAT MUMBAI] AY 2006-07 to AY 2009-10 and also by ITAT Mumbai for [ 2012 (10) TMI 1144 - ITAT MUMBAI] , [ 2014 (11) TMI 1236 - ITAT MUMBAI] , [ 2017 (6) TMI 1181 - ITAT MUMBAI] , [ 2017 (12) TMI 1121 - ITAT MUMBAI] , [ 2018 (12) TMI 1882 - ITAT MUMBAI] , [ 2019 (11) TMI 1357 - ITAT MUMBAI] , [ 2021 (5) TMI 351 - ITAT MUMBAI] deceptively AY 2002-03 to AY 2015-16. Thus, we direct the AO to allow the deduction u/s 80IA against gross total income. Accordingly, this ground raise is both the assessment years are allowed. Short Grant of TDS credit - HELD THAT:- As we find that the AO has not granted credit for TDS as the same did not reflect in Form 26AS of the assessee. As stated the TDS credit pertains to entities merged with the assessee in whose Form 26AS credit for TDS was reflected. Assessee had submitted the Form 26AS of the respective companies and the merger order which was not considered by the AO. Before the DRP, assessee had sought rectification of the final assessment order u/s. 143(3) in which credit for TDS was not granted, however no rectification order u/s. 154 has been passed till date - we direct the AO after examining; allow this issue in accordance with law in both the assessment years. Accordingly, this ground is allowed. Disallowance u/s 14A while computing book profit u/s 115JB - HELD THAT:- We find that this issue is covered by the decision of ITAT in assessee s own case for AY 2013-14 to AY 2015-16 [ 2019 (11) TMI 1357 - ITAT MUMBAI] , [ 2021 (5) TMI 351 - ITAT MUMBAI] wherein it was held that no disallowance u/s. 14A is required to be made for computing book profits u/s. 115JB. Depreciation allowed on replacement of meters added to the books profit u/s 115JB - HELD THAT:- We find that the AO has failed to appreciate the depreciation allowed by him in the assessment had not been debited to profit and loss account and therefore could not be added back under clause (g) for computing book profit u/s 115JB of the Act. Therefore, the assessee has rightly claimed expenditure incurred on replacement of meters as revenue expenditure in the computation of income. Accordingly, this ground is allowed. Deduction u/s 80G - HELD THAT:- Since DRP has given direction the AO to verify the claim and grant deduction u/s 80G, the deduction u/s 80G is to be allowed against the gross total income subject to the limits provided in the section, we do not find any infirmity in such direction. Accordingly, this ground is allowed for statistical purposes. Computation of book profit u/s 115JB which is loss as per profit and loss account as raised in AY 2018-19 - DRP has accepted the Assessee s claim and directed the AO to rectify the error by passing a rectification order in the matter, however, no rectification order u/s. 154 has been passed till dat - HELD THAT:- Since DRP has given direction the AO to rectify the error by passing a rectification order in the matter, therefore we reiterate the same and direct the AO to rectify the error by passing a rectification order in the matter which has not been passed till dated. Accordingly, this ground is allowed for statistical purposes.
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2023 (3) TMI 1190
Late deposit of employee s contribution to ESI and PF - HELD THAT:- As assessee has fairly admitted that the issue is covered by the decision in Chekmate Services Pvt. Ltd.. [ 2022 (10) TMI 617 - SUPREME COURT ] wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF cannot be claimed even though deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961. Decided against assessee. Disallowance of puja expenses - assessee has explained that the aforesaid expenses on account of puja were incurred for boosting morale of the employees and keeping the employees in good humour so that maximum work output can be achieved - HELD THAT:- Considering the above submissions that the aforesaid small expenses are relating to the business of the assessee, the aforesaid disallowance made by the Assessing Officer is ordered to be deleted. Ground No.3 of the assessee is allowed. Disallowance of 10% of travelling and conveyance expenses - HELD THAT:- AO has made adhoc disallowance on percentage basis out of the claim of small amount on account of travel expenses. It is not a case of huge travelling and conveyance expenses, wherein, the AO may suspect element of personal expenses. In view of this, we do not find any justification on the part of the Assessing Officer in making the impugned disallowance and the same is ordered to be deleted. Ground No.4 is allowed. Disallowance u/s 14A r.w.r. 8D - assessee has submitted that no exempt income was earned by the assessee during the assessment year under consideration and there is no expenses were made by the assessee in making the investment in question - HELD THAT:- As decided in various cases like Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT ], Shivam Motors (P.) Ltd. [ 2014 (5) TMI 592 - ALLAHABAD HIGH COURT ] the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A - A/R, has relied upon the recent decision of Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT ] wherein, it has been held that the aforesaid explanation inserted to Section 14A of the Act is applicable prospectively. We allow ground no.5 of the assessee. Non-deduction of TDS u/s 40(a)(ia) on security charges - HELD THAT:- Since the assessee did not give any satisfactory explanation for non-deduction of TDS. Therefore, AO was justified in making the impugned disallowance. Contention of the AR that the disallowance be restricted to 30% of the expenditure in view of amended provision of section 40(a)(ia) of the Act is concerned,the issue is covered by the decision of Shree Choudhary Transport Company vs. Income Tax Officer [ 2020 (8) TMI 23 - SUPREME COURT ] as held that the amendment made by the Finance (No.2) Act, 2014, could not be stretched anterior after the date of its substitution so as to reach the assessment year 2005-06. That the amendment by the Finance Act, 2014 was specifically made applicable w.e.f. 01/04/2015 and clearly represents the will of the legislature so as to what is to be deducted or what percentage of deduction is not to be allowed for a particular eventuality, for assessment year 2015-16. In the case of Commissioner of Income-tax, Kolkata v. Calcutta Export Company [2018] [ 2018 (5) TMI 356 - SUPREME COURT ] dealing with curative amendment brought by the Finance Act, 2010, relating more to the procedural aspects concerning deposit by TDS, cannot be applied to the amendment of the substantive provisions by Finance Act (No. 2) Act, 2014. In view of this, Ground No.6 of the assessee is accordingly dismissed. Disallowance on estimation basis of 50% of miscellaneous expenses - HELD THAT:- Considering the nature of expenses and smallness of amount, in our view, disallowance of 50% of the misc . expenses is not justified and the same is accordingly ordered to be restricted to 10% of the misc. expenses. This ground is accordingly partly allowed.
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2023 (3) TMI 1189
Addition on comparative loss with profit of last years - undisclosed profit - profit was lower and the ld. AO made the addition on the estimated basis by applying average of last three years book profit/turnover ratio - Non rejecting the books of accounts u/s 145(3) - HELD THAT:- AO made the addition on the estimated basis without having rejected the books of accounts filed by the assessee at the time of hearing before him as the accounts maintained by the assessee were duly audited u/s 44AB of the Act and all purchases and sales were recorded in the books of accounts too and when books of accounts were not rejected as decided in the case of Swadeshi Commercial Co. Ltd. [ 2008 (12) TMI 823 - CALCUTTA HIGH COURT] held that gross profit cannot be estimated. In the instant case, AO has not pointed out or any discrepancy in the books of accounts filed by the assessee and the AO has no evidence to come to a conclusion that the assessee has undisclosed profit. The entire addition was made surmises and conjectures - assessee has explained the issue with facts and figures, under these facts and circumstances, the addition made by the assessing officer as sustained by the CIT(A) is bad in law. In view of the discussions made above, we delete the addition made by the ld. AO and set aside the order passed by the ld. CIT(A) by allowing the appeal filed by the assessee.
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2023 (3) TMI 1188
Revision u/s 263 - Income from house property - deemed rent on un-sold flats - as per CIT assessment order as erroneous as well as prejudicial to the revenue and directing the AO to make fresh assessment by taxing the annual value of the property forming part of the closing stock, under the head Income from House Property - annual value shall be computed as per the provision of section 23(1)(a) of the Act and deduction if any admissible u/s 24 of the Act shall be allowed while computing the income from house property - HELD THAT:- AO had carried out investigation into the flats including that of unsold flats which was held as stock in trade by the assessee. Moreover it is noted that the assessee was not into the business of letting out the property for rent and its business was Real Estate Development as well as re-development. And we also note that the AO had framed the assessment order on 24.04.2019, and so it can be seen that the AO s decision on this issue, not to tax the deemed rent on un-sold flats was after the Parliament has inserted sub-section (5) in Section 23 of the Act vide Finance Act 2017, w.e.f 01.04.2018, ie., from AY. 2018-19. Since CBDT Circular/Instruction are binding on AO and Income Tax Authorities, the AO can be presumed to have taken note of CBDT classification dated 15.02.2018, while framing assessment order on 24.04.2019. Therefore, AO has rightly followed the CBDT Circular (supra) and did not determine the notional income from unsold flats held by assessee as stock-in-trade. AO has discharged his dual role as an investigator as well as adjudicator. As noted he has examined the relevant facts of unsold flats as well as decision not to determine ALV is in line with the CBDT Circular dated 15.02.2018 and therefore his decision cannot be held to be erroneous as well as prejudicial to the revenue. Therefore, we find the Ld. PCIT has erred in invoking revisional jurisdiction u/s 263 of the Act, only for imposing his view, which is not permissible; and so we are inclined to quash the impugned order of Ld. PCIT. Decided in favour of assessee.
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2023 (3) TMI 1187
Income deemed to accrue or arise in India - Fee For Technical Service (FTS) under Article 12(4)(b) of India-Singapore Double Taxation Avoidance Agreement (DTAA) - amount received towards provision of management support services to the Indian subsidiary - HELD THAT:- As in assessee s own case [ 2021 (10) TMI 443 - ITAT DELHI ] we hold that the amount received by the assessee cannot be regarded as FTS under Article 122(4)(b) of the Act. Accordingly, addition made is deleted. Grounds are allowed. Addition of Management Support Charges - whether the services rendered by the assessee under Management Support Service Agreement are ancillary and subsidiary to the license granted for user of brand name, charges received from which are in the nature of royalty? - HELD THAT:- After threadbare analysis of Management Support Services Agreement and the fee received under various heads in pursuance to such agreement, the Co-ordinate Bench in assessee s own case in assessment year 2012-13 [ 2021 (10) TMI 443 - ITAT DELHI ] has given a categorical finding that it does not come under Article 12(4) of India-Singapore DTAA. As per in the binding judicial precedents rendered in assessee s own case as well as in case of group company, viz, Sheraton International Inc. [ 2009 (1) TMI 27 - DELHI HIGH COURT ] we have no hesitation in holding that the fee received by the assessee under the Centralized Services Agreement cannot be treated as FIS either under Article 12(4)(a) or 12(4)(b) of the India US Tax Treaty. As a natural corollary, it can only be treated as business income of the assessee. Hence, in absence of a PE in India, it will not be taxable - Assessee appeal allowed.
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2023 (3) TMI 1186
Validity of assessment order passed u/s 143(3) r.w.s. 144C(3) - necessity of variation in the income returned by the assessee - period of limitation - whether AO could have proceeded u/s 144C(1) r.w.s.144C(3) in a case where there is no variation in the income returned which is prejudicial to the assessee - HELD THAT:- In the facts of the present appeal, admittedly, there is no variation in the income or loss returned which is prejudicial to the interest of the assessee. Therefore, in our considered opinion, the provisions of Section 144C(1) of the Act is not applicable to assessee s case. As following the decision of the coordinate bench in assessee s case [ 2022 (9) TMI 1236 - ITAT DELHI ] firstly; we hold that the assessment order is invalid due to wrongful assumption of jurisdiction under section 144C(1) of the Act and secondly; because it is barred by limitation. Accordingly, the impugned assessment order is quashed and the order of Commissioner (Appeals) is set aside. Additional grounds are allowed.
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2023 (3) TMI 1185
TP Adjustment - selection of MAM - TNMM or CUP - HELD THAT:- We concur with DRP to hold that comparable transactions with AEs cannot be adopted for benchmarking international transaction using CUP Method as the same do not qualify as uncontrolled transactions. No infirmity in rejecting CUP Method and adoption of TNMM as the most appropriate method for benchmarking international transaction in the facts of the present case. To this extent Ground 1.1 raised in the Appeal is treated as partly allowed. Comparable selection - exclusion of the First Comparable (i.e. Asia Business Exhibition Conferences Ltd.).on account of high turnover - HELD THAT:- In the present case, no turnover filter has been applied by the TPO or the Appellant while selecting the comparables and therefore, the judgment of Acusis Software India (P) Ltd. [ 2018 (8) TMI 1885 - KARNATAKA HIGH COURT ] does not apply to the facts of the present case. We also note that it is not the case of the Appellant that First Comparable is functionally dissimilar to the Appellant. We do not find any merit in the contentions raised on behalf of Appellant for exclusion of the First Comparable (i.e. Asia Business Exhibition Conferences Ltd.). Accordingly, Ground No. 1.2(b) raised by the Appellant is rejected. Exclusion of Second Comparable [Messe Duesseldorf India Pvt. Ltd.] - There is nothing placed on record by the Appellant to controvert the concurrent factual findings returned by the TPO and the DRP to the effect that proper information/material about Second Comparable was available. Therefore, we do not find any reason to interfere with the exclusion of Second Comparable from the list of comparables. Computing ALP of the international transaction the TPO had applied PLI at entity level and not with reference to international transaction - In view of the above judgment of the Hon‟ble Bombay High Court in the case of Ratilal Becharlal Sons [ 2015 (11) TMI 1524 - BOMBAY HIGH COURT] and the observations of DRP, we direct the Assessing Officer to compute transfer pricing adjustment in respect of international transactions with AE. Accordingly, Ground No. 1.3 raised by the Appellant is allowed.
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2023 (3) TMI 1184
Assessment u/s 153A - Second round of appeal before ITAT - unexplained source of source of Share Capital and Share Premium u/s 68 - proof of adverse material found during the course of search or post search inquiries to establish that the assessee has received any bogus share capital or share premium - HELD THAT:- ITAT in its order in the first round had come to a conclusion that there was no material found by the AO in the first round which can be said to be cogent enough to fasten the liability of bogus share capital or share premium upon the assessee. Furthermore, subsequent to the first round of proceedings before the AO and CIT(A), there was a search and seizure activity. The provisions of the Act clearly provide that in such eventuality, all the assessment proceedings shall abate and fresh assessment will be done by the AO u/s 153A of the Act. As already noted by the ITAT, no adverse material was found during the course of search or post search that the assessee had received any bogus share capital or share premium. ITAT had only given Revenue a chance to go through the material and to link them with the assessee. AO has not found any adverse material pursuant to the directions of the ITAT and ld. CIT (A) is correct in holding that pursuant to the remand of the ITAT, AO has not done anything but copy and paste its earlier order. No infirmity in the order of the ld. CIT (A) in complying with earlier ITAT direction that if nothing adverse is found subsequent to the remand the addition shall stand deleted. Accordingly, we uphold the same.Appeal of the Revenue stands dismissed.
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2023 (3) TMI 1183
Income taxable in India - period of stay in India - Submission of additional evidence by assessee - as submitted employees of the assessee did not stay in India for a period exceeding 90 days, so as, to construe that assessee s income is taxable under Article 15 of the India - USA Double Taxation Avoidance Agreement (DTAA) - AO refused to accept assessee s claim on the ground that the assessee was unable to establish through proper documentary evidences that the employees of the assessee did not stay in India for more than 90 days, thus brought to tax the amount claimed as non-taxable under Article 15 of the Tax Treaty. HELD THAT:- As before learned DRP the assessee by way of additional evidence furnished number of documentary evidences including passport of the concerned employees to demonstrate that the period of stay in India was less than 90 days. However, learned DRP has failed to consider the documentary evidences furnished by the assessee and simply disposed of the objections - This in our view is in gross violation of principles of natural justice. We are inclined to restore the issue to learned DRP for deciding assessee s objections afresh after examining the documentary evidences furnished by the assessee. Grounds are allowed for statistical purposes.
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Customs
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2023 (3) TMI 1182
Seeking provisional release of seized goods - import of assorted fresh Kiwi fruits - perishable goods - unfit for human consumption or otherwise - HELD THAT:- While the court has gone through the averments and contentions raised in the affidavit, they primarily relate to repeat use of the Phytosanitary Certificate for more than one consignment. It is not the stand of the authorities for seizure of the goods that the goods are unfit for human consumption. It was accepted by the respondent authorities also that it is not the ground that the goods are not worth of human consumption. Under the statutory provisions, the seizure of the goods would follow the inquiry and investigation to be further followed by adjudication process which may or may not ultimately lead to confiscation of imported goods as contemplated in section 111 of the Act. The stage of inquiry has yet not been started. It is reflected that though goods were seized on 20.11.2022, so far the petitioner is not issued show cause notice. In any case, the adjudicatory proceedings have not started - The court finds that when the goods are perishable in nature, the authorities should act with greater swiftness to proceed with the adjudicatory mechanism and take a final decision. In the facts and circumstances of the case, when the petitioner has agreed to abide by the conditions which may be imposed in light of the decision of this court in M/S. A AND A SHIPPING SERVICES VERSUS UNION OF INDIA [ 2022 (12) TMI 778 - GUJARAT HIGH COURT] , which could be applied to guide the final order to be passed, this court is inclined to grant the prayer by allowing the provisional release of the goods. As far as the conditions on which the goods may be released to the petitioner, the court leaves the said aspect to the competent authority concerned who shall prescribe the conditions on the lines of the conditions prescribed by this court in M/s. A and A Shipping Services exercising sound discretion in that regard and upon compliance of such conditions shall provisional release the goods. The authorities shall permit the release of the goods on stipulated directions - petition disposed off.
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2023 (3) TMI 1181
Seeking grant of bail - imported goods were allowed for movement without payment of customs duty from one warehouse to another warehouse on the basis of the bond executed by the importer - applicant submitted that all the allegations raised by learned counsel for the Custom Department, are against Mohd. Jahas and he is main accused for importing the goods and he has been granted bail by co-ordinate Bench by detail order. HELD THAT:- Considering the entire facts and circumstances of the case, submissions of learned counsel for the parties and keeping in view the nature of offence, evidence, complicity of accused and the fact that the case of the applicant is similar to that of co-accused, who have been granted bail and without expressing any opinion on the merits of the case and the law laid down by the Apex Court in Satendra Kumar Antil Vs. C.B.I. Another, [ 2022 (8) TMI 152 - SUPREME COURT ], the Court is of the view that the applicant has made out a case for bail. The bail application is allowed, subject to conditions imposed.
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2023 (3) TMI 1180
Eligibility for SAD exemption - Classification of imported goods - import of Rock Phosphate from Egypt for manufacturing copper under the description Natural Calcium Phosphate - to be classified under the tariff head 25101010 or under the classification of Minerals or Chemical Fertilizer Phosphotic falling under Tariff head 3103? - HELD THAT:- By exempting Special Additional Duty on fertiliser or raw material used for manufacturing fertilizers, the end user namely the farmers will be getting the benefit of the said exemption. Whereas if fallacious interpretation for the term 'fertilizer' unconnected to the context is given, then may lead to miscarriage of the object for which the concession granted. The importer admits that the goods imported required in the process of manufacturing copper. They admit that they are not involved in manufacturing fertilizer nor holder of any license to manufacture fertilizers. At the time of import, they declared that the goods is covered under Tariff 25101010 and the name of the product is natural calcium Phosphate . It is admitted by the importer that no permission obtained under FCO, since the product 'rock phosphate' imported does not require such permission being not within the specification for rock phosphate to be qualified as 'fertiliser' under FCO. It is well settled principle of law that in case of exemptions, law should be strictly interpreted and liberal interpretation detrimental to revenue is not advocated. In the present case, the impugned order due to the infirmities noted has caused injury to the revenue hence to be redressed. The order of the Customes Department declining to grant SAD exemption is upheld - Appeal allowed.
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2023 (3) TMI 1179
Smuggling - 7,000 Kgs of Black Pepper - foreign origin goods or not - burden to prove - confiscation alongwith penalty - HELD THAT:- Admittedly, the Consignment of 7,000 kgs of Black Pepper were being transported under proper GST Invoices, E-Way Bills and under proper Consignment Notes. The seizure also was affected, not in any border area, but after traveling for three to four days from the place of origin i.e. Mizoram. The Appellant has demonstrated that all the transactions were carried through proper banking channels. The Seizure Report has provided the two witnesses. From the signatures, it looks as if they were not well educated, there is no detail of their address. The Recorded Statements on their own fail to corroborate the Department s case. When any statement is recorded under Section 108, it has been clarified by the High Court that when a person who has earlier given the statement before the Gazetted Officer should reiterate the same before the Adjudicating Authority in terms of Section 138B(1). Then only the Adjudicating Authority should admit the same as an evidence. After admitting as an evidence, he should allow these persons to be crossed-examined by the other party. In the present case, the statement itself was not recorded under Section 108. In the present case, as the statements have not been recorded in the terms of Section 108 nor the procedure specified under Section 138B(1) have been followed - The documentary evidence shown like GST Invoice, E-way Bill and Consignment Notes were available right at the time of Seizure and Department has not brought in any evidence to the effect that these are not legal documents. Once the Appellant is able to provide such documentary evidence, the burden of proving that the goods are of a foreign origin falls on the Department, which has not been done by them in the present case. The confiscation of 7000 kgs of Black Pepper is set aside along with penalties imposed on the Appellants - Appeal allowed.
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2023 (3) TMI 1178
Benefit of exemption from duty - Classification of imported goods - 12V SMPS consisting of Main PCB, lightening protector, DC/AC cables, fuse/fuse holders and others - Customs Notification No.21/2005-Cus. dt. 1.3.2005 and Notification No.6/2006-CE dt. 1.3.2006 - goods sold on High Sea Sale basis - to be classified under CTH 85299090 or under CTH 85049090? Whether SMPS is an integral part of IFWT so as to make the parts of SMPS to be part of IFWT? - HELD THAT:- SMPS is intended to be used in Float-cum-charge mode as a regulated DC power source. It is simply an electrical power supply that incorporates a switching regulator to convert the electrical energy more efficiently. Though the UPS used for computers also do the same function, UPS has back up facility which is lacking in the case of SMPS. From the specifications, function and use, it cannot be said that SMPS are vital and integral part of IFWT. It is an option. After perusing the description of 12V SMPS as given in G.R as well as the images in service manual, there are no ground found to hold that IFWT cannot function without 12V SMPS. It is in the nature of energy supplying device which would regulate voltage flow of electricity. IFWT can function even if 12V SMPS is not connected to it. This means IFWT can function if directly plugged to an energy source. Thus there exists no doubt to hold that SMPS is not an integral part of IFWT. The goods imported cannot be considered as part of IFWT. The notification exempts parts, components and accessories of mobile handsets including cellular phones from customs duties when imported. In the case of STATE OF PUNJAB OTHERS VERSUS NOKIA INDIA PVT. LTD. [ 2014 (12) TMI 836 - SUPREME COURT] , the Hon ble Apex Court was considering the issue under the Punjab Value Added Tax Act, 2005 where in the assessee, Nokia India Pvt. Ltd., had sold the cell phone along with battery charger as composite package and discharged lesser duty @4% on the charger. The appeal by the state that assessee has to pay tax @12.5% on the battery charger was allowed. In the said case, the Hon ble Apex Court did not consider as to the interpretation of accessory in terms of Notification No.21/2005-Cus. - Again, in the case of MEHRA BROS. VERSUS JOINT COMMERCIAL OFFICER [ 1990 (11) TMI 144 - SUPREME COURT] , the Hon ble Court was considering the issue of tax ability of seat covers under the Tamil Nadu General Sales Tax Act, 1959 - These decisions are distinguishable on facts. The decision of the Hon'ble Apex Court in the case of State of Punjab Vs Nokia India has been relied to counter the view taken by the Tribunal earlier with respect to the batteries. The issue in the case was in regard to a complete product in the nature of mobile phone charger. In the present case, the goods imported are parts of SMPS. It is already held that SMPS is not a part of IFWT. The goods imported cannot be considered as accessory as these parts are not used to increase the effectiveness or convenience of IFWT. It is thus held that the goods imported are neither parts nor accessories of IFWT and therefore cannot avail the benefit of notification. It is made clear that the issue of classification not addressed. The assessee s appeal is dismissed.
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2023 (3) TMI 1177
Revocation of Customs broker licence - dismissal of request for cross-examination - regulation 22(7) and 20(1) of Customs House Agents Licensing Regulations (CHALR), 2004 - HELD THAT:- It certainly fails in appeal to logic and reason that a licence, issued under the Customs House Agents Licensing Regulations, 2004 that has been revoked by competent authority accompanied by forfeiture of security deposit, can, in the same metaphorical breath, be revived by the same authority for being subjected to revocation and forfeiture of deposit once again. Nor can it don the saving grace of rational purpose in such sequential detriment unless, at best, it had occurred to the licensing authority that one of the two erasures lacked sufficient foundation to sustain or, at worst, that customs brokers are fair game for whimsical scattering of retribution. The patent nonapplication of mind in, thus, merging two separate, and independent, proceedings for reasons not adduced, and incomprehensible, should not pass unnoticed. In the circumstances in which the appellant approached the Tribunal on the former occasion, viz., unanticipated revocation despite favourable findings in inquiry report, with no premonition of the justification likely to be appropriated for extinguishment of licence, neither would it have been necessary to visit the statements of the persons till responding to disagreement memo nor to impugn those statements in appeal before the Tribunal then. Hence, such cavalier dismissal of request for cross-examination affects the credibility of the disagreement memo - In combining both the proceedings and, that too, of one which had been remanded by the Tribunal, specifically directing that the deficit, in the not so usual circumstances of supplanting of inquiry findings, be bridged, with another that was on entirely different facts and imputation of breach of obligations, the licencing authority has desecrated the sanctity of higher judicial authority, and compromised the impugned order thereby, warranting status quo ante for revisit of each, separately, for shedding the taint of extraneous influence and prejudiced disposal. Matter remanded back to the licensing authority for fresh decisions - appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2023 (3) TMI 1176
Stay on invocation and encashing of the bank guarantee by the petitioner - HELD THAT:- This Court has not considered the merits, which have arisen in the present dispute, and is only passing a direction in furtherance of the directions already passed by this Court on 14.03.2022 in the aforesaid CM Main. Despite the fact that there was an order already passed by this Court on 14.03.2022, it is informed that 19 hearings have already taken place, without the learned NCLT disposing of the said application filed on behalf of the petitioner. It is directed that the NCLT takes up the matter on 28.03.2023, when the petition is stated to be listed before the learned Tribunal and dispose of the same in accordance with law, not later than 25.04.2023 - Petition disposed off.
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2023 (3) TMI 1175
Effect of the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - should be limited to the same project i.e Winter Hills only or not - seeking appropriate direction to the Ld. IRP/ Respondent to effect the moratorium limited to the real estate project Winter Hills only and not to enlarge the effect of the moratorium against the other assets of the Corporate Debtor or against the entire company of the Corporate Debtor - as per applicant role of IRP/ Respondent should be confined only with respect to project Winter Hills-77 instead of whole company of the Corporate Debtor. HELD THAT:- The intent of Section 7 of the I Code, 2016 is pretty clear and the role of Adjudicating Authority has been clearly defined to examine the existence of debt and subsequent default on payment on due date by the Corporate Debtor and also meeting the threshold criteria. Admittedly, in the present case no error was found in the order of the Appellate Tribunal contained in order dated 04.02.2020, thereby there was no case of the Appellant therein to set aside the order dated 20.08.2019 - This Appellate Tribunal, taking the support of the ratio as laid down by the Hon ble Supreme Court of India in the case of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ], regarding economic experimentation, took on challenge for finding new dynamic solution and laid down for the first time the concept of Reverse CIRP along with other aspect related to the case in Para Nos. 13, 15, 20, 21, 25, 26, 29, 30 31 of (04.02.2020) as discussed in preceding paragraphs. Similarly, Section 14 of the I B Code, 2016, is explicit and without any ambiguity which prescribes that once CIRP has been admitted, the entire Corporate Debtor is placed under management of the IRP who shall conduct day to day affairs of the Corporate Debtor and moratorium automatically find its place. The balance has been placed on the rights and obligations of various stakeholder during this calm period as per Section 14 of the I B Code, 2016 and this has been primarily done to protect the assets of the Corporate Debtor so that by suitable Resolution Plan of Resolution Applicant the Corporate Debtor can be continued on going concern basis and not push the Corporate Debtor towards Insolvency/ Liquidation. The intent of order of this Appellate Tribunal dated 04.02.2020, therefore, seems to restrict the scope of the Reverse CIRP to only project Winter Hills-77, whose two allottees, namely, Rachna Singh and Ajay Singh, filed an application asking for the CIRP of the Corporate Debtor and who not only got the possession of their flats but also received sale deeds and were able to get these registered in their favour. Thus, technically the grievances of the Original Applicants/ Movers of Section 7 application have been satisfied. This Appellate Tribunal consciously notes that Section 14 of the I B Code, 2016 recognise moratorium of the Corporate Debtor implying that under such moratorium all assets and liabilities are covered by provision of moratorium and protected from any detrimental action against the Corporate Debtor by way of any fresh/continuation of any suit or litigation etc., to protect the Corporate Debtor in the difficult times and give temporary respite to overcome difficulties and revive itself by other means including by the Successful Resolution Plan of third party - It is pertinent to note that the concept of Reverse CIRP was also allowed to the specific project and without touching or commenting on other projects and assets of the Corporate Debtor and without any specific direction/observation regarding continuation of moratorium on other projects for the Corporate Debtor. Thus, it becomes evident that the order is confined to only Winter Hills-77 and not to other projects of the Corporate Debtor and consequently and logically the moratorium in the present case can deemed to have been confined to only project Winter Hills-77 and not to other projects of Corporate Debtor. This clarification is being given looking to peculiar and extraordinary circumstance of the case and detailed rational along with elaborate directions contained in its order dated 04.02.2020. This Appellate Tribunal also takes into account an important fact that in its earlier order dated 04.02.2020, for the first time, the concept of Reverse CIRP was introduced and as such this is evolving process needing such clarification. This Appellate Tribunal will like to amplify that above clarification is on specific request of the Appellant in present appeal and cannot be treated as general guidance or interpretation regarding moratorium on the Corporate Debtor - moratorium on Corporate Debtor as a whole is a normal, basic and fundamental law as laid down in Section 14 of the I B Code, 2016 and need to be read accordingly. Application disposed off.
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Service Tax
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2023 (3) TMI 1174
Recovery of Service Tax and penalty - execution of works-contract in various Government Departments of the State - It is the claim of the petitioner that for the works executed, VAT as applicable was already deducted by the authorities from the payments received - time limitation - HELD THAT:- Section 85 of the Finance Act prescribes provision for appeal against any order passed under Sections 71, 72 and 73. Under Section 85(3) an appeal shall be presented within three months from the date of receipt of the decision or order of the Central Excise Officer provided if the concerned Officer is satisfied that sufficient cause prevented the appeal from being filed within the statutory period of three months, the same may be extended by a further period of six months. It is also noticed that under Section 84, there is a provision for revision of the orders by the Collector of Central Excise. Section 84(2) prescribes that no order which is prejudicial to the assessee shall be passed under this section unless the assessee has been given an opportunity of being heard - Sections 84 and 85 of the Finance Act, 1994 provides for statutory remedy against orders passed against the assessee. Time Limitation - HELD THAT:- The benefit of extension of the limitation period from 15.03.2020 to 28.02.2022 will accrue to all persons concerned - this Court is of the considered view that the appellate authority is empowered to decide the claims of the petitioner vis- -vis the impugned order dated 2306.2022 passed by the Assistant Commissioner, Tezpur, CGST. Prima facie, it appears that the petitioner may be entitled to the benefit of the order of the apex Court dated 10.01.2022 whereby period of limitation was extended from 15.03.2020 to 28.02.2022 as well as subsequent Notifications issued by the Department pursuant to the order of the apex Court. As such, in view of the remedy of the statutory appeal available to the petitioner, the petitioner is permitted to approach the appellate authority assailing the impugned order dated 23.06.2020 - Petition disposed off.
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2023 (3) TMI 1173
Classification of services - arrangement of job work by the appellant for M/s. Gharda Chemicals Limited in their factory - HELD THAT:- There is only difference of period in the present case and the case which was decided by this Tribunal in GUJARAT INSECTICIDES LTD VERSUS C.C.E. S.T. -SURAT-II [ 2023 (2) TMI 781 - CESTAT AHMEDABAD ]. Therefore, except for the period, all the facts are same and therefore as per the judicial discipline wherein this Tribunal has held that the activity of the appellant is indeed manufacture of excisable goods in terms of section 2(f) of CEA, 1944. As per the definition of business auxiliary service manufacture of excisable goods in terms of section 2(f) of the Central Excise Act, 1944 is clearly excluded from the definition of business auxiliary service. For this reason also, the demand of service tax is not sustainable. In view of the decision in the appellant s own case, the issue is no longer res-integra - appeal allowed - decided in favour of appellant.
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2023 (3) TMI 1172
Levy of Service Tax - reverse charge mechanism - management, maintenance or repair service or not - appellant s Head Office was at U.S.A., from whom they purchase the software, enter into an agreement/contract with Indian customers for maintenance and enhancement of the software sold by them and that the appellant had incurred expenditure in foreign currency towards the purchase - Revenue neutrality - Extended period of limitation. HELD THAT:- Admittedly, the provider of service is a foreign entity who would only upload the programme on to the website, provide the internet website address and a password for the same - Section 66A is the charging section under reverse charge mechanism on the services provided or to be provided by a person who is not having a permanent address or usual place of business or residence in a country other than India; and received by a person having business or place of residence, in India - Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, as the name itself indicates, shall apply for services provided from outside India and received in India, when Section 66A ibid is applicable. There is no difficulty for this proposition as the very Rule 3 ibid. starts with subject to Section 66A of the Act . A conjoint reading of the above provisions points only to the fact that they shall apply when services are provided from outside India , and not if the services are provided by a person in India, to any other person in India. This follows, therefore, that both the statutory provisions would apply only when the location of the service provider is outside India and the recipient is located in India. Further, the Adjudicating Authority has negated the claim of the appellant that it is the second proviso to Rule 3(ii) of the Taxation of Services Rules ibid. that would apply, by holding that the software which was supplied by the foreign company was very much available in India upon its receipt by the appellant, which was only thereafter forwarded within India to the customers - It is in the second proviso that we see the reference, inter alia, to the service provided in relation to any goods. There is no dispute here that the software is treated as goods and the alleged service albeit provided through internet, but performed in India. Therefore, to say that the software was available in India, with the appellant and hence the provision of service was from India only, as observed by the Adjudicating Authority, runs counter to the demand of Service Tax under reverse charge mechanism within the meaning of Section 66A ibid. read with Rule 3 (ii) of the Taxation of Services Rules ibid. The appellant could not have been fastened with the Service Tax liability under management, maintenance or repair service for the reason that there is no document placed on record to negate the appellant s claim that they have not rendered any service in India and the Revenue has also not been able to place anything on record in their support to establish that the appellant had rendered nothing but management, maintenance or repair service. The issue insofar as it relates to invoking of extended period of limitation, not decided as the same is academic. Appeal allowed - decided in favour of appellant.
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Central Excise
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2023 (3) TMI 1171
Refund and rebate of tax suffered on inputs used for export of goods - petitioner s application for refund was rejected solely on the ground that the Central Government did not have any jurisdiction to consider an issue regarding rejection of a refund under Rule 5 of the CC Rules - Rule 18 of the CE Rules - HELD THAT:- In a latter decision delivered by the Gujarat High Court in RAJ PETRO SPECIALITIES VERSUS UNION OF INDIA [ 2013 (6) TMI 814 - GUJARAT HIGH COURT ] , the Division Bench of the Gujarat High Court had referred to the decision of the Bombay High Court in UM Cables Limited v. Union of India [ 2013 (5) TMI 459 - BOMBAY HIGH COURT ] and set aside the order of the Revisional Authority rejecting the rebate claims filed by the petitioners for non-submission of the original and duplicate ARE-1 and held that the petitioner would be entitled to rebate of duty on excisable goods, which were in fact imported on payment of excise duty from their respective factories. It is the petitioner s case that all relevant material to establish that the excise paid inputs were used for export of goods and the material for corelating the same are available on record, however, the same has not been examined. The appeal preferred by the petitioner was dismissed solely relying upon the judgment passed by the Madhya Pradesh High Court in M/s CIL Textiles Pvt. Ltd. [ 2013 (12) TMI 1739 - MADHYA PRADESH HIGH COURT ] without considering other aspects - it is considered apposite to set aside the impugned orders - matter remanded to the Appellate Authority to consider afresh - petition disposed off.
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2023 (3) TMI 1170
Recovery of CENVAT Credit - availing double CENVAT credit - Once paid on import / based on BE and second paid by Job-Worker on the same inputs - CVD on imported raw materials directly sent to the job worker in terms of Notification No. 214/86-CE dated 25.3.1986 - interpretation of Rule 3 of CENVAT Credit Rules, 2004 - HELD THAT:- On a conjoint reading of Rule 3(1) and Rule 4(5)(a) of the CENVAT Credit Rules, 2004, it is clear that an assessee can avail CENVAT credit of CVD paid on inputs duly imported by him, and, also can take credit of duty paid on inputs/capital goods even though inputs are used by the job worker for executing a job work. In case, the job worker opts to pay excise duty despite having exemption (Notification No. 214/86), the supplier can also take credit of duty paid by the job worker. In the case in hand, it is not in dispute that the job worker was liable to pay duty, if he did not avail the benefit of Notification No. 214/86, as the intermediate product manufactured by them was dutiable and availment of Notification No.214/86 is not mandatory. Thus, the respondent had correctly taken the credit of the duty paid by the job worker and they are also entitled to CENVAT credit of CVD paid on such inputs. It is a case of double payment of duty on same inputs. The payment of duty twice is not disputed, thus, it would be unfair and against the scheme of CENVAT to deny credit of said duty. This aspect has already been considered by the High Court of Gujarat in COMMR. OF C. EX., AHMEDABAD-I VERSUS ROHAN DYES INTERMEDIATED LTD. [ 2013 (4) TMI 277 - GUJARAT HIGH COURT ] where it was held that the CENVAT credit is admissible to principal manufacture of the duty paid by the job worker, even if the credit was availed earlier on receiving the inputs, specifically when it is not disputed that the job worker had not taken any credit in respect of inputs imported by the respondent. There are no substantial question of law arises out of the present appeal - appeal dismissed.
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