Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 30, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Valuation - wages provided to the employees and statutory payments of EPF and ESI, etc., will fall within the ambit of the GST or not - without going into the merits of petitioner’s case, it is opined that a direction shall be issued to the 3rd respondent to afford a personal hearing to the petitioner and pass Assessment Order afresh in accordance with law on suitable terms. - Matter restored back subject to deposit of 50% of tax (GST) component - HC
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Cancellation of GST registration of petitioner - in order that the petitioner is required to comply with his statutory obligations of payment of taxes under the GST regime, it would be necessary for the departmental authorities to re-consider the prayer of the petitioner for revocation of his cancellation of GST registration keeping in view the orders passed by the Apex Court regarding extension of limitation. - HC
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Supply of leasing of the pre-owned motor vehicle - Rate of GST - The authority is of opinion that the supply of leasing of pre-owned vehicles cannot be treated as leasing or renting of goods like computers, furnitures, refrigerators or air conditioners etc. And the tax rates of new vehicles are to be applicable in the present mailer as per the specification of the vehicles i.e. engine capacity and size of the vehicles and mode of fuel etc. under chapter 87. - AAR
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Levy of GST - Supply or not - export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer - supply of pre-packaged and labelled rice upto 25 Kgs, to exporter on “bill to ship to” basis i.e., bill to exporter and ship to customs port - the transactions undertaken by the applicant falls within the purview of the scope of supply and attracts levy of tax as applicable - AAR
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Classification of goods - Sugarcane Juice - sugarcane juice is produced by way of crushing of sugarcane and hence not produced by farmer. Also process changes it's form and constitution alongwith changes are of such nature that if it is to be attain the secondary market for use and become raw material for production of sugar, molasses etc. - Since all the three Conditions of agricultural produce is not fulfilled by sugarcane juice and hence it is not considered to be agricultural produce. - taxable at a rate of 6% CGST & 6% SGST or 12% IGST - AAR
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Classification of supply - supply of spraying services undertaken by the Applicant - services of spraying of agrochemicals provided by the applicant to the farmers - the supply of spraying services undertaken by the Applicant is covered under Notification No. 12/2017-CT and hence, exempted from payment of tax - AAR
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Taxability under GST - pure service - activities of water distribution system/water supply services being undertaken by the applicant - the activity undertaken by the applicant cannot be considered as Pure Services - And there is no such exemption given under the provision of the Act for the said activity to the residential societies - AAR
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Scope of supply - Limited Liability Partnership providing security services - applicability of RCM or not - whether an LLP can be considered as Body corporate under the provisions of the GST Act, 2017 or not? - an LLP is a body corporate and so excluded from the entry no. 14 of the notification no. 13/2017 - The applicant is required to charge applicable tax on the security services supplied by him - AAR
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Classification of goods - thermal based fogging machines used for mosquito/health/ pest/ vector control - from the process of fogging it can be said that fogging machine are appliances with convert the state of matter from one to another i.e. liquid to gas and not just spray the liquid. From above, it can be concluded that fogging machine are to be classified as mechanical appliances. - Taxable @18% of GST - AAR
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Classification of goods and rates of GST - solar inverter - the combination of solar panel, inverter, solar battery and charge controller may qualify as “Solar Power Generating System, taxable @12% of GST - As the combination of solar inverter & battery do not make “Solar Power Generating System”, thus the said supply will be treated as mixed supply and rate of GST will be 18%. The rate of GST does not alter whether the supply has been made by the manufacturer or trader. - AAR
Income Tax
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Consequences of PAN becoming inoperative as per the newly substituted rule 114AAA - No refund (including interest) shall be granted and TDS / TCS will be deducted at higher rates - CBDT Circular
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Validity of reopening of assessment u/s 147 - reasons to believe - increase in share capital - There was no allegation that there is any failure on the part of the assessee, i.e., the petitioner to truly and fully disclose the material facts, and further the reopening is sought on the basis of verification of record, and as such, there was no fresh tangible material distinct from what was available at the time of assessment proceedings - The notice of reopening quashed and set aside. - HC
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Rejection of request for NIL TDS in terms of Section 197 - natural justice - the claim of the petitioner has been summarily and unilaterally rejected by the AO without assigning any reasons, the impugned communication and order are clearly non-speaking, cryptic, unreasoned and laconic and passed without application of mind - matter restored back - HC
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Income deemed to accrue or arise in India - Once the taxability fails in terms of the treaty provisions, there is no occasion to refer to the provisions of the Act, as in terms of section 90(2) the provisions of the Act or the DTAA, whichever is more beneficial to the assessee shall be applicable. Since the payment was only alleged to be Royalty by the Revenue, therefore, there is no need to examine its taxability under any other provision of the India-Malaysia DTAA, in the present case. - AT
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Reopening of assessment u/s 147 - Reasons for issuing notice u/s.148 - issue of notice by non-jurisdictional officer (Before transfer of Case) - at the time of initiating proceedings and issuance of notice u/s.148 dated 25.10.2016 was not vested with any jurisdiction over the case of the assessee, therefore, the aforesaid notice so issued by him de-hors valid assumption of jurisdiction will have no existence in the eyes of law and would be non-est. - AT
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Addition made u/s 2(22)(e) - amount received from the company shown as share application money to the company for which, allocation is pending - Assessing Officer has held that the transaction clearly falls within the ambit of the provisions of section 2(22)(e) of the Act and brought to tax to the extent of the accumulated surplus available with the company as deemed dividend in the hands of the assessee. CIT(A) has rightly confirmed the addition - AT
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Income taxable in India - Taxability of interest paid by the Indian branch office to the other overseas branches of the assessee - the fiction of hypothetical independence of the PE and head office/overseas branch cannot be extended to the computation of the profit of the head office/overseas branch, and the same is restricted only for computation of profit attributable to the PE. - AT
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Addition of cash deposit u/s 68 and invoking of section 115BBE - When the assessee suffering with serious diseases requiring emergency treatment at any time in super speciality hospital then it is incumbent upon the assessee to have sufficient financial resources ready in hands to meet any unforeseen serious situation. In such a position if a super senior citizen widow lady having no other means of income is keeping cash in hand then it would not be taken as doubtful conduct of assessee attracting the rigor of taxing provisions to such amount - Additions deleted - AT
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Computer Gift Expenses and other gift expenses - expenditure prohibited by MCI Guidelines - Once, the basis on which the addition made is not substantiated by the ld. AO in the assessment proceeding by any evidence contrary to the claim which is supported by bills and vouchers and that too of a manufacturing company where their books are subjected to audit. The ld. CIT(A) after evaluating the submission of the assessee considered the various aspect of the claim of the assessee and has given a reasoned finding that why the claim of the assessee is allowable. - Order of CIT(A) sustained - AT
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Denying deduction u/s 54 - Purchase of new house property within one year - Admittedly, in this case what the department is harping upon is merely the agreement dated 21-12-2016 when the building itself was not constructed and the assessee has only acquired his right to get a flat in the said building. When actually therefore, can it be said that the new property was purchased? It is only when the assessee received the possession through letter of possession on 24-12-2018. - AT
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Income earned by the sale of the property - taxability lies in the hands of assessee AOP or the members of the assessee AOP - - it was the members of the assessee AOP who were the “real owners” of the impugned property in question, and accordingly income is liable to be taxed in the hands of the respective members, in proportion to their holding. - AT
Customs
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Validity of review order - Period of limitation - It cannot be understood what prevented the Department from submitting before the Commissioner (Appeals) that the Order-in-Original was received by the Review Cell on the respective dates on which they have stated in the grounds of appeal. As there is no evidence to substantiate the contention of the Department that the Order-in-Original was received on such dates by the Review Cell and as there is no reason to dis-believe the findings of the Commissioner (Appeals) that there was no evidence as to the date on which Order-in-Original was received by the Reviewing Authority, the strong inference that can be drawn is that there is a delay in passing the review orders in these appeals. - AT
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Valuation of imported goods - inclusion of fee paid for transfer of technical knowhow - the view of the Commissioner (Appeals) that technical knowhow fee of EURO 40,000 need not be included in the assessable value of imported goods is legal and proper - AT
Indian Laws
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NPA - classifying their accounts as fraudulent - The principles of natural justice demand that the borrowers must be served a notice, given an opportunity to explain the conclusions of the forensic audit report, and be allowed to represent by the banks/ JLF before their account is classified as fraud under the Master Directions on Frauds. In addition, the decision classifying the borrower’s account as fraudulent must be made by a reasoned order - SC
IBC
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Initiation of CIRP - Financial Creditors or Operational creditors - Upon execution of agreement of COR, the Appellant as a Financier discounted the invoice and deposited the amounts into an escrow/nodal account maintained by KredX with an escrow/nodal agent, namely, Yes Bank Limited who further transferred the said amount to the account of the Seller and on receiving, the Seller transferred its right to receive the money under the invoices in favour of the Financiers/Appellants. - In this transaction, the money was never disbursed much less for the time value as a financial debt to the Corporate Debtor - Application u/s 7 rightly rejected - AT
Case Laws:
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GST
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2023 (3) TMI 1265
Valuation - wages provided to the employees and statutory payments of EPF and ESI, etc., will fall within the ambit of the GST or not - opportunity of hearing not provided to petitioner, who is an old aged lady of 75 years - violation of principles of natural justice - HELD THAT:- As per the communication received from the Joint Commissioner (ST) Vijayawada-II Division, leaving the tax period of May 2021 to September 2021, the assessment is confined under the present impugned order for the remaining period i.e., April 2021 and from October 2021 to March 2022. Accordingly, the impugned Assessment Order was passed fixing a total tax liability including interest and penalty at Rs.56,95,19,461/-. No doubt the 3rd respondent has extended some opportunity to the petitioner for personal hearing. However, the fact remains that the petitioner could not avail the said opportunity in view of her old age as she being aged 75 years and also due to her ill health. Having regard to a high tax amount plus interest and penalty proposed to be laid and nature of the contention raised by the petitioner, the 3rd respondent ought to have extended some more opportunity to the petitioner for personal hearing. Therefore, without going into the merits of petitioner s case, it is opined that a direction shall be issued to the 3rd respondent to afford a personal hearing to the petitioner and pass Assessment Order afresh in accordance with law on suitable terms. Without reference to the merits of the petitioner s case, the impugned Assessment Order dated 10.11.2022 passed by the 3rd respondent is set aside on the condition of petitioner depositing 50% of tax component of Rs.23,79,26,090/- as mentioned in the impugned order dated 10.11.2022 within six (6) weeks from the date of receipt of a copy of this order and upon such deposit, the 3rd respondent shall fix a date for personal hearing of the petitioner with regard to her objections to the proposed assessment and after hearing the petitioner, pass an appropriate Assessment Order in accordance with the governing law and rules expeditiously. This Writ Petition is disposed of.
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2023 (3) TMI 1264
Maintainability of petition - petitioner does not have an equally efficacious remedy of an appeal before the Goods and Services Tax Tribunal because the same has not been constituted as yet - denial of refund of integrated tax paid in respect of services provided to an entity located overseas - opportunity of hearing not provided - principles of natural justice - HELD THAT:- It is not disputed that the petitioner was not given an opportunity to meet the case that it was not entitled to refund as the services provided by it was as an intermediary. It is, thus, clear that the impugned order has been passed in violation of the principles of natural justice. It is considered apposite to set aside the impugned order and matter remanded to the Appellate Authority to decide the petitioner s appeal afresh, including the question as to whether the Appellate Authority has the jurisdiction to set up a new case against the assessee, which was not a subject matter of either the show cause notice or the enquiry before the Adjudicating Authority. The appeal filed by the petitioner is restored before the Appellate Authority. The Appellate Authority is directed to decide the petitioner s appeal afresh in accordance with law after affording the petitioner an opportunity to be heard.
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2023 (3) TMI 1263
Levy of IGST - service aspect of the transaction - composite supply - supply of services by the shipping line - HELD THAT:- The issue involved in this intra-Court appeal in view of the decision of the Hon ble Supreme Court in the case of Union of India Ors. vs. Mohit Minerals Pvt. Ltd. [[ 2022 (5) TMI 968 - SUPREME COURT] ], where it was held that The impugned levy imposed on the service aspect of the transaction is in violation of the principles of composite supply enshrined under Section 2(3) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the composite supply , comprising of supply of goods and supply of services of transportation, insurance etc. in a CIF contract, a separate levy on the Indian importer for the supply of services by the shipping line would be in violation of Section 8 of the CGST Act. In the case on hand, the observation of the Hon ble Supreme Court in sub-paragraph (v) of paragraph 148(i)(b) would be applicable. Appeal allowed.
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2023 (3) TMI 1262
Revocation of cancelled petitioner's Registration Number under TNGST Act - non-filing of GSTR-3B for a continuous period of six months under Section 29(2)(c) of the Act - HELD THAT:- Similar issue decided by Principal Bench of this Court in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT ], wherein, it is held that no useful purpose would be served by keeping the petitioners out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods and services. Since the issues are similar in nature, the writ petition is disposed of in terms of the Order in Suguna Cutpiece.
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2023 (3) TMI 1261
Principles of Natural Justice - Validity of impugned order - no pre-assessment notice/show cause notice was issued prior to passing of the impugned order - transitional credit allegedly wrongly availed along with interest at the rate of 24% - HELD THAT:- The petitioner has placed on file at pages 13 and 14 of compilation dated 15.12.2020 accompanying the typed set the screen shot of the dash board of the user/tax payer on the Goods and Services Tax website setting out the sequence of notices issued between 30.10.2018 and 14.05.2020 to the petitioner. Nowhere, do notice dated 20.09.2019 or Form DRC 01 dated 05.02.2020 figure. There is no defence to this position. In light of the documentary evidence that has been produced which is a print out of the virtual summary of notices issued to the petitioner and this being the admitted position, the impugned order is liable to be set aside - Petition allowed.
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2023 (3) TMI 1260
Cancellation of GST registration of petitioner - failure to file statutory returns - time limitation - Section 29 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Under Rule 23(1) of the GST Rules of 2017 it is provided that no application for revocation shall be filed unless such returns are furnished and any amount due as tax in terms of such returns has been paid along with any amount payable towards interest, penalty and late fee in respect of the said returns. The reasons for default on the part of the petitioner to submit its periodical returns as required under GST Act and the Rules, as pleaded in the present proceedings, are attributed to the financial losses suffered by the petitioner because of the COVID- 19 Pandemic situation - According to the petitioner, the appeal is filed beyond the period of limitation. However, no such order has been passed by the Appellate Authority in the appeal which is pending before the Appellate Authority. The purpose of limitation being prescribed in a statute is two fold, namely, to ensure compliance of the statutory provisions by the persons on whom the provisions of the statute are applicable and further to ensure that no third party rights which may have been created in the meantime are permitted to be nonPage suited/unsettled - No prejudice is caused to any other person, if the GST registration of the petitioner/assessee is revoked. No prejudice is caused to the revenue. In the present case since an appeal is already preferred and is pending before the Appellate Authority, it is deemed appropriate not to remand the matter back to the concerned authority, namely, respondent No. 5, namely, the Superintendent, Central Goods and Service Tax, Doomdooma, District- Tinsukia, Assam for revocation of the cancellation of GST Registration. The Appellate Authority is fairly empowered to pass adequate and appropriate orders for revocation of the cancellation of GST registration upon being satisfied on the facts and circumstances that may be presented before the Appellate Authority. A writ Court is empowered to condone the delay of any statutory or quasi judicial authority - Such power is inherent in a Writ Court - reliance can be placed in the case of Commissioner of Income Tax-12 Vs- Pheroza Framroze and Company [ 2017 (5) TMI 436 - SUPREME COURT ]. It is directed that the respondent No. 5, namely, the Superintendent, Central Goods and Service Tax, Doomdooma, District- Tinsukia, Assam will intimate the petitioner the total outstanding statutory dues standing in the name of the petitioner till the date on which his GST registration was cancelled. Upon such intimation, if any such outstanding statutory dues under GST is required to be paid the same shall be deposited by the petitioner without fail. Petition disposed off.
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2023 (3) TMI 1259
Cancellation of GST registration of petitioner - no personal notice served upon the petitioner prior to suspension and cancellation of the GST registration rather a notice was simply uploaded in the website of the department - non-consideration of Apex Court decision regarding time limitation in [ [ 2022 (1) TMI 385 - SC ORDER] ] - violation of principles of natural justice (audi alterem partem) - HELD THAT:- The order for cancellation of GST registration of the petitioner was issued on 11.11.2021 and against which the appeal under Section 107 was filed on 19.07.2022. It is apparent that the order for cancellation of GST registration was passed on 11.11.2021 and the order for revocation of cancellation was required to be filed within 30(thirty) days therefrom as per the provisions of the CGST Act, 2017. Both these periods fall within the period mentioned in the Apex Court s order dated 10.01.2022 [[ 2022 (1) TMI 385 - SC ORDER] ]. Accordingly, it was incumbent on the Appellate Authority to take note of the Apex Court s order regarding Cognizance for extension of limitation and thereafter pass appropriate orders. Upon perusal of the order of the Appellate Authority, it is seen that there is no reference to the Apex Court s orders. There is no finding that as to whether according to the department, the assessee was excluded from the benefit of the order passed by the Apex Court or whether the appellant was entitled to the benefit of the order passed by the Apex Court in Miscellaneous Application No. 21/2022 [[ 2022 (1) TMI 385 - SC ORDER] ]. As such, it is apparent that the authorities did not take into account the orders passed by the Apex Court regarding cognizance for extension of limitation and had accordingly failed to pass appropriate orders seeking revocation of cancellation of GST registration, in the appeal preferred by the petitioner against such order. There is another aspect required to be noticed. If the petitioner is not included within the GST regime, then any statutory dues that may be required to be deposited by the petitioner may not be deposited and which will not be in the interest of the revenue. Therefore, in order that the petitioner is required to comply with his statutory obligations of payment of taxes under the GST regime, it would be necessary for the departmental authorities to re-consider the prayer of the petitioner for revocation of his cancellation of GST registration keeping in view the orders passed by the Apex Court regarding extension of limitation. A writ Court is empowered to condone the delay of any statutory or quasi judicial authority. Such power is inherent in a Writ Court - reliance placed i the case of Commissioner of Income Tax-12 Vs- Pheroza Framroze and Company [[ 2017 (5) TMI 436 - SUPREME COURT] ]. The impugned order dated 11.11.2021 and the order of the Appellate Authority dated 16.01.2023 are hereby interfered with and set aside. The matter is remanded back to the departmental authority to re-consider his prayer for revocation of cancellation of GST registration. Petition disposed off.
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2023 (3) TMI 1258
Rectification of error - Exemption from GST - Services rendered through tender Contractors - Right to collect the fees/right to certain amenities. HELD THAT:- The rectification of errors sought are as follows: The transaction between the Corporation and the contractor as listed in Sl.No. 1 to 9 and 13, except at Sl.No. 5A-Chargcs for TV advt. in Bus Stand; 5C-14owcr shop in bus stand in open space, Sl.No. 7-Bunk Stalls, of the said question, in the factual matrix presented, it is held to be an activity/transaction in relation to the activity/transaction undertaken by the appellant engaged as Public authority and the same are covered under Notification No. 14/2017-C.T.(Rate) as amended. The transaction between the Corporation and the contractor as listed in Sl.No. 10 (Avenue receipts) and 11 (right to fishing in pond), the supply of said services which is basically conferring enjoyment of rights, would be liable to reverse charge by the Tenderer who is registered under the CGST Act /TNGST Act vide SI. No.5 A of Notification No. 13/2017-CT(Rate) dated 28-6-2017. The transaction between the Corporation and the contractor as listed in Sl.No. 12 (Running a fish market), for such an activity, the exemption under sl.no. 7 of Notification No. 12/2017-CT (Rate) is available as well as charging of tax on RCM basis under si. No. 5 of Notification No. 13/2017-CT(R) is available to the appellant subject to the fulfillment of the conditions envisaged therein.
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2023 (3) TMI 1257
Classification of supply - GST Rate and HSN code - supply of leasing of the pre-owned motor vehicle - monthly lease fees received from customers for leasing pre-owned Cars - applicability of serial no. 17 (viia) of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 read with Notification No. 08/2018-Central Tax (Rate) dated 25th January 2018 - Compensation cess applicable to the monthly lease fees received from customers for leasing of pre-owned Cars would be determined in accordance with serial no. 42A of Notification No. 01/2017- Compensation cess (Rate) dated 28th June 2017 or not. HELD THAT:- After perusing all the aspects of the matter al hand i.e. the factual details as well as the legal provision applicable in the present case it can be said that the supply of leasing of the pre-owned motor vehicle is for the furtherance of business. It is apt to mention here that the purchaser/owner of motor vehicles needs to follow the provisions of the Motor Vehicles Act, 1988 along with applicable rules. And in the present matter this supply of leasing of motor vehicles falls under the scope of supply as defined in the section 7 of the CGST Act, 2017. The leasing of the pre-owned vehicle is a taxable event and the rate of tax is to be determined in accordance with serial no. 17 (VI) of notification no. 11/2017-CT(R) dated 28.06.2017 as amended which states that the tax is to be charged at 'same rate of central tax as applicable on supply of like goods involving transfer of title in goods.' And the applicable compensation cess is also to be determined in accordance with notification no. 1/2017-compensation cess (Rate) dated 28.06.2017. Meaning thereby that the tax rate on the leasing of the pre-owned vehicle is to be determined as on like goods. And the availment of the input tax credit by the applicant is subject to the conditions prescribed under section 17(5) of the CGST Act, 2017 read with the relevant rules. In the light of the proper officer's comments on the issue at hand mentioned here, it can be said that the applicant has not submitted a clear picture on the issue of availment of ITC before the authority. The supply of leasing of the pre-owned vehicles is not covered under the notification no. 8/2018 -Central Tax (Rate) dated 25th January 2018 as this is related to the sale of old and used vehicles. This notification needs to be read with rule 35 of the CGST Rules, 2017. It shall not apply in the case of motor vehicles given on lease. In the case of transfer of right to use any goods i.e. leasing, the applicable rate of tax is same as of new vehicles under the GST Act and compensation cess also as on supply of similar goods. The authority is of opinion that the supply of leasing of pre-owned vehicles cannot be treated as leasing or renting of goods like computers, furnitures, refrigerators or air conditioners etc. And the tax rates of new vehicles are to be applicable in the present mailer as per the specification of the vehicles i.e. engine capacity and size of the vehicles and mode of fuel etc. under chapter 87. Thus, the applicable rate of tax on the supply made by the applicant is to determined in accordance with serial no. 17(vi) of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 as amended - applicable rate of tax is as Notification No. 01/2017-Compensation cess (Rate) dated 28th June 2017.
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2023 (3) TMI 1256
Levy of GST - Supply or not - export of pre-packaged and labelled rice upto 25 Kgs, to foreign buyer - supply of pre-packaged and labelled rice upto 25 Kgs, to exporter on bill to ship to basis i.e., bill to exporter and ship to customs port (Exporter ultimately exports the rice to foreign buyer) - supply of pre-packaged and labelled rice upto 25 Kgs, to the factory of exporter (Exporter will export the rice). HELD THAT:- The authorities observations after going through the contents of the matter is that the legislature intention is that the supply of the rice in packets of upto 25 Kg which are duly pre-packaged and labelled as per the Legal Metrology Act, 2009 (1 of 2010) and the rules made thereunder is an taxable event and It's not an exempted/nil rated supply. Besides Ministry of Finance, Govt, of India has clarified the applicability of GST on pre-packaged and labelled goods through FAQs which were uploaded online on 18th July, 2022 w.r.t the notification no. 6/2012-CT(Rate). Though FAQs are not binding on the statutory authorities but they have a persuasive value for any authority while interpreting the legal provisions. From the perusal of the said notification and subsequent clarification on it, it can be said that in the present matter if supplied goods are the pre-packaged and labelled and in the packages of less than or equal to 25 kg in quantity then the same are taxable. Further, the scope of supply under the GST Act, 2017 is an all encompassing event and only goods and services which have been categorically declared as non taxable/exempted/nil rated supplies under the Act are outside the purview of the section 7 of the CGST Act, 2017. Thus, the transactions undertaken by the applicant falls within the purview of the scope of supply and attracts levy of tax as applicable under the CGST/HGST/IGST Act, 2017.
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2023 (3) TMI 1255
Classification of goods - Sugarcane Juice - Rate of GST applicable on sale of Sugarcane Juice - Applicability of a notification which affects the rate of tax if any. HELD THAT:- Sugarcane juice cannot be classified as Agricultural produce because agricultural produce is defined under explanation (vii) under para 4 of the Notification No. 11/2017 Central Tax (Rate) dated 28.62017 as agricultural produce' means any produce out of cultivation of plants and rearing all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually one by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. In the present case sugarcane juice is produced by way of crushing of sugarcane and hence not produced by farmer. Also process changes it's form and constitution alongwith changes are of such nature that if it is to be attain the secondary market for use and become raw material for production of sugar, molasses etc. - Since all the three Conditions of agricultural produce is not fulfilled by sugarcane juice and hence it is not considered to be agricultural produce. Sugarcane is usually a type of grass/plant, sugarcane is not the result of flowering plant nor does it develop through seeding. So sugarcane can not be considered as fruit. Sugarcane fiber and stalks can not be eaten or digested, so it does not qualify as a vegetable either. In GST Tariff, goods under chapter 20 is preparation of vegetables, fruits, nuts or other parts of plants Sugarcane as neither fruit nor vegetable nor nuts but it is covered under other parts of plants. The Tariff item 2009 contains specific description of Fruit and Vegetable Juices Sugarcane is neither fruit nor vegetable nor nuts but it is covered under other parts of plants as such Rule 3(a) of General Rules for the Interpretation of Import Tariff will apply and the same merits classification under HSN 20098990 - Hence sugarcane juice is classified under chapter 20 and tariff item 20098990 which falls in Notification No. 1/2017 Central Tax (Rate) dated 28-06-2017 covered in schedule 2, Sr. No. 41 and taxable at a rate of 6% CGST 6% SGST or 12 % IGST.
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2023 (3) TMI 1254
Classification of services - rate of GST - applicant's tender of work contract under Chief Minister Jan Awas Yojna, is subjected to 9 % CGST and SGST each post 01.01.2022 or not - HELD THAT:- The applicant filed their application before the Rajasthan Authority for Advance Ruling (RAAR) on 03.07.2022 i.e. much later from the execution of contract under CMJAY from dated 25.01.2021. We observe that the applicant is well aware about the type of supply, its notification, circular, discharging his GST tax liability and submitting his GST returns in accordance to them wef execution of contract. Thus it is observed that Rajasthan Authority for Advance Ruling should pronounce the decision in light of law situation arise after application come in process. Thus, in this case applicant is providing service to Rajasthan Housing Board, the applicant will be liable to pay GST @18% in light of Notification No. 03/2022- Central Tax (Rate) | Dated: 13th July, 2022.
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2023 (3) TMI 1253
Construction and re-carpeting of C.C. Road - Applicability of Notification No. 11/2017 - Central Tax Rate dt. 28th June, 2017 amended with Notification No. 24/2017 - Central Tax (Rate) dt. 21.09.2017 and further amended vide notification no. 31/2017 - Central Tax (Rate) dt. 13.10.2017, and furthermore amended vide notification no. 15/2021 - Central Tax (Rate) dt. 18.11.2022 - GST rate applicable for the nature of work being awarded. HELD THAT:- The applicant is undertook the work of construction mainly Construction and Re-carpeting of C.C. Road from RIICO. Rajasthan State Industrial Development Investment Corporation is a body constituted under RIICO Industrial Areas (Prevention of Unauthorized Development and Encroachment) Act, 1999 as a special vehicle for undertaking of various government projects as envisaged by the Government of Rajasthan, but it's not Government itself - The Rajasthan State Industrial Development Investment Corporation (RIICO) is a corporation constituted under RIICO Industrial Areas (Prevention of Unauthorized Development and Encroachment) Act, 1999. The (RIICO) is constituted by the State Government and it is not falls under definition of state or central Government . It is clear that the words or a Governmental authority or a Government Entity has been omitted at serial number 3, in column (3), in the heading Description of Services in the said Notification No. 11/2017-Central Tax (Rate), dated the 28th June, 2017 vide aforesaid Notification No. 15/2021-Central Tax (Rate) dated 18.11.2021. It is observed that the applicant is registered with GST authorities and well aware about the type of supply, its notification, circular, discharging his GST tax liability and submitting his GST returns in accordance to them wef execution of contract - Notification No. 11/2017 - Central Tax Rate dt. 28th June, 2017 amended with Notification No. 24/2017 - Central Tax (Rate) dt. 21.09.2017 and further amended vide notification no. 31/2017 - Central Tax (Rate) dt. 13.10.2017, and furthermore amended vide notification no. 15/2021 - Central Tax (Rate) dt. 18.11.2022, has been further amended vide Notification No. 03/2022- Central Tax (Rate), Dated: 13th July, 2022, thus applicant should pay tax in accordance to latter amendment of Notification. The applicant will be liable to pay GST @18% in light of Notification No. 11/2017 - Central Tax Rate dt. 28th June, 2017 amended with Notification No. 03/2022- Central Tax (Rate) | Dated: 13th July, 2022.
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2023 (3) TMI 1252
Classification of supply - supply of spraying services undertaken by the Applicant - covered under Notification No. 12/2017-CT, exempt from GST or not - If tax is payable, then whether Applicant can avail input tax credit of inputs and input services used for undertaking supply of spraying services? HELD THAT:- The Authority is of view that the services of spraying of agrochemicals provided by the applicant to the farmers is an exempted supply under the Act as he provides the spraying service directly to the farmers and the consideration for such service is paid by farmers to the Applicant. The spraying service is provided at the agricultural land of the farmers during the pre-harvesting period only. The agrochemicals used while providing the spraying service do not alter the characteristics of the crops or the agricultural produce and the activity is undertaken only for crop protection and to make the crop produce suitable for consumption and marketable for the primary market. It is covered under the support services to agriculture as nil rated vide notification no. 11/2017-CT(R) dated 28 th June, 2017. Similarly, the said services rendered by the applicant can be classified under the services related to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or agriculture produce by way of (a) Agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing. And (c) Processes carried out at agricultural form including tending, pruning, cutting, harvesting, drawing, cleaning, trimming, sun-drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agriculture produce but make it only marketable for the primary market which are nil rated and notified at Sr. No. 54 of the notification no. 12/2017 -CT(R) dated 28th June, 2017. Thus, the supply of spraying services undertaken by the Applicant is covered under Notification No. 12/2017-CT and hence, exempted from payment of tax - question of availment of input tax credit do not arise, as supply is exempt.
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2023 (3) TMI 1251
Taxability under GST - activities of water distribution system/water supply services being undertaken by the applicant - activity of the supply of water to the residents of this society is a taxable event or not under the GST Act, 2017? - Applicant is private limited company. HELD THAT:- It is observed by the authority that as per the notification no. 12/2017 dated 28.06.2017, Pure Services (excluding works contract services) or other composite supplies involving supply of other goods provided to the local authority by way of any activity in relation to any function entrusted to municipality under article 243 W of the constitution of India are nil rated. Whereas the applicant is a Private Limited Company registered under the companies Act, 2013 and not entitled for the said exemption. In the issue at hand, the activity of water distribution system by the applicant to the residents of the Complex is covered under definition of business as enumerated above and it is a taxable supply. The scope of the supply under the GST Act is quite vast and encompasses all the supplies of goods and services which are not explicitly exempted by the government. The water distribution system is an independent business enterprise and here in the present case it is part of business activities of the applicant. It can also be said that it is a supply which is being done by the applicant for the furtherance of business - it can be construed that for any supply to be covered under the Pure Services that there should be no supply of goods, the recipient should be Central government/State government/Union territory/ Local Authority and services should be by way of any activity in relation to any function entrusted to a panchayat under article 243G of the constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. Thus, the activity undertaken by the applicant cannot be considered as Pure Services which has been mentioned at serial no. 3 in the Notification No. 12-CT(R) dated 28.06.2017 wherein the services are nil rated. No doubt, the supply of water supply/water distribution system by the Municipal Committee / Panchayat/Local Authority or by any Government agency is exempted under the provisions of the GST Act, 2017. It is also to be noted unless there is any express/explicit option is given in the exemption notification by the Government, the concessional or exempted rate of tax cannot be availed by any taxpayer. And there is no such exemption given under the provision of the Act for the said activity to the residential societies - the activities of water distribution system/water supply services being undertaken by the applicant in the present case is a taxable supply under the CGST/HGST Act, 2017. Applicable HSN/SAC Code is 996921 (Water distribution Services) - Rate of GST to be charged on these services is 18%.
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2023 (3) TMI 1250
Taxability under GST or not - pure services - Engagement of system integrator for implementation water revenue management system, creation and maintenance of database, spot billing/meter reading and bill distribution (MRBD) services for water supply sewerage connections under the jurisdiction of Municipal Corporation, Gurugram - SAC Code - rate of output tax liability on services - exemption under clause 3 of notification 12/2017 dated 28.06.2017. HELD THAT:- A water distribution system is a part of water supply network with components that carry potable water from a centralized treatment plant or tubewells to the consumers. It also includes the water supply for commercial, industrial and fire fighting requirements. The Government has notified the list of services or activities which are exempted under the GST Act 2017. Relevant entry no. 3 of Pure Services in the exemption notification dated 12/2017-CT(R) which got amended on 18.11.2021 w.e.f. 01.01.2022 is as: Pure Services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243 G of the Constitution or in relation to any function entrusted to a Municipality under Article 243 W of the Constitution - From this, it can be construed that for any supply to be covered under the Pure Services if there is no supply of goods and the recipient should be Central government/State government/Union territory/ Local Authority and services should be by way of any activity in relation to any function entrusted to a panchayat under article 243G of the constitution or in relation to any function entrusted to a Municipality under Article 243 W of the Constitution. The main function of water distribution services is of MCG and the same can be considered as pure services. But the services received by MCG from the applicant are not in the nature of Pure Services and not the support services as these are support services and not in relation to any function which is entrusted to the MCG. The goods (tangible and Intangible) and services provided by the applicant cannot be regarded as an integral part of the water distribution system itself. These are add on activities. The definition of the Scope of Supply and Business under the CGST Act, 2017 is quite extensive. The taxability of any supply of goods and services is covered under these definitions. There should be an express/explicit provision for the availment of any exemption under the CGST Act, 2017. Exemptions are not optional and the conditions/constrained prescribed under the provisions must be fulfilled. And in the present case, it is clearly observe that the said services provided by the applicant to the MCG are not part and parcel of the water supply system. The services provided by the applicant to MC, Gurugram is a taxable supply - applicable SAC Code is 998633, taxable at 18% - further, Service is not exempt under clause 3 of notification 12/2017 dated 28.06.2017.
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2023 (3) TMI 1249
Scope of supply - Limited Liability Partnership providing security services - whether an LLP can be considered as Body corporate under the provisions of the GST Act, 2017 or not? - applicability of forward charge mechanism or reverse charge mechanism - Applicability of notification no. 29/2018 dated 31.12.2018 - HELD THAT:- The scope of the applicability of the said notification is that the RCM is relevant only when the security services are provided to a registered person and only when the supplier of services is any person other than a body corporate. E.g. if a proprietary concern or a partnership firm provides security services to a registered person then RCM is applicable but if a private Ltd. Company provides such services the same will attract forward charge instead of RCM. An LLP is a viewed as an alternate corporate business model that involves the integration of the advantages of a limited liability company with the flexibility of a partnership. It allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement. From the LLP Act, 2008 the main features inter alia are that the LLP shall be a body corporate and a legal entity separate from its partners. Any two or more person, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filling the same with the registrar, form-a Limited Liability Partnership. It will have perpetual succession. Even if the partners opt to leave, the LLP persists. It can enter into the contracts and own property in its own capacity. It is a separate legal entity having to bear the full liability for its assets which makes it possible for partners' liability to be limited to their agreed contribution to the LLP. An LLP is an Body Corporate for the purpose of Companies Act, 2013 and the same would apply to the term body corporate for the purpose of the notification no. 13/2017-CGST(Rate) dated 28.06.2017 and as amended on 31.12.2018 vide notification no. 29/2018. In consequence the Reverse Charge Mechanism would not be applicable in the present case. Moreover, the legislative intention behind the application of RCM is on those supplies in which the Government/executive do not have control over the supplier or who are working in the unorganized sector. So, the RCM is made applicable for any person other than body corporate by the said notification. Thus, an LLP is a body corporate and so excluded from the entry no. 14 of the notification no. 13/2017 dated 28.06.2017 and notification no. 29/2018 dated 31.12.2018. The applicant is required to charge applicable tax on the security services supplied by him as per section 9(1) of the CGST/HGST Act, 2017 read with the relevant provision of IGST Act, 2017.
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2023 (3) TMI 1248
Classification of goods - thermal based fogging machines used for mosquito/health/ pest/ vector control - classified as mechanical sprayers under entry no. 195B of Schedule II of Notification no 1/2017 Central Tax (Rate) dated 28th June 2017 as amended from time to time or under entry no. 325 of schedule III- Mechanical appliances ? - tax rate chargeable to thermal based fogging machine. HELD THAT:- In general and technical terms a fogging machine is a mechanical appliance. As a fogging machine convert the liquid inside it in another state of matter before disbursing the same in the form of haze. These vapours are transported via the machine's nozzle and released into the atmosphere. The disinfectant or chemical liquid administered through a fogging machine spreads on both surfaces as well as in air itself. The micro-droplets of disinfectant or chemical solution remain on surfaces for a longer period. The thin tog penetrates smaller and hidden surfaces and even reaches into comers and difficult regions. So, from the process of fogging it can be said that fogging machine are appliances with convert the state of matter from one to another i.e. liquid to gas and not just spray the liquid. From above, it can be concluded that fogging machine are to be classified as mechanical appliances. The thermal based fogging machine are covered under the entry no. 325 of schedule III and taxable at 18%.
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2023 (3) TMI 1247
Classification of goods - solar inverter manufactured by the applicant fall under entry no. 234 of Schedule -I of the Notification 1/2017 - Central tax (rate) dated 28.06.2017 or not - Solar Batteries manufacture by the MNS and sold to the manufactures/trades who further use the same in Solar power plants shall qualify as parts of solar power plants and fall under entry no. 234 of Schedule-I of the Notification 1/2017 -Central tax (rate) dated 28.06.2017 or not - solar inverter along with solar battery and solar panel together in package, will fall under entry no. 234 of Schedule -I of the Notification 1/2017 - Central tax (rate) dated 28.06.2017 or not. HELD THAT:- The term Solar Power Generating System has not been defined under GST Act. Generally, the solar power generating systems are the systems which absorb sunlight and convert it into electricity which can be put to further use - Further it has also been mentioned that Solar Power Generating System has been defined under solar power-Grid connected ground mounted and solar rooftop metering regulation-2014 issued by State of Goa. As per this regulation Solar Power Generating System means a grid connected solar generating station including the evacuation system upto the grid inter connection point . A solar power plant produces electricity directly from sun by the interaction of sunlight with a solar panel made of semiconductor material. The power provided is direct current (DC) electricity. A solar power plant consists of an array of modules generating DC electricity, an inverter and sometimes battery storage back up. The applicable GST Rate for supply of equipment for a solar power generating system (composite supply) will be 12% (The value can be equivalent to 70 % of the plant cost). However, for installation and engineering services, EPC companies and installers will need to raise a separate works contract equivalent to 30 % of the overall bill with a GST rate of 18%.
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Income Tax
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2023 (3) TMI 1246
Show cause notice issued under Block Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - penalty proceeding initiated - non disclosure of investments - petitioner submit that he did not have any personal knowledge about the alleged investments and was ignorant of the bank account details and amounts could have been made by his late father and that he was taking steps to contact his father's chartered accountant - petitioner submit that if the Court is inclined to direct the petitioner to appear to answer the show cause notices, then the payment of the penalty may be deferred till the disposal of the appeal. HELD THAT:- As considering the fact that the petitioner has responded in great detail to the impugned notices, the interest of justice would be subserved if the Writ Petition is disposed of with the following directions:- i) The petitioner shall appear before the respondent concerned on 27.03.2023 at 10.30 am., and make his submissions. ii) The respondents shall thereafter pass appropriate orders on the same. Till such time the orders are pronounced, no coercive steps shall be initiated by the respondents. Writ Petition is disposed of.
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2023 (3) TMI 1245
Validity of reopening of assessment u/s 147 - reasons to believe - increase in share capital - HELD THAT:- It is difficult for this Court to come to a conclusion that there is a failure on the part of the assessee in disclosing true and correct facts, more particularly, when it is also not the case of the Department that there is a failure on the part of assessee in disclosing true and correct facts. Hence, when the reopening is sought beyond the period of four years, this basic element of failure on the part of the assessee is missing. Accordingly, it appears that the entire reopening which is sought by the authority is based upon a change of opinion and the law on the change of opinion is already well established, and as a result of this, a case is made out by the petitioner to call for an interference. As we have noticed that the entire reassessment is not on the basis of any fresh tangible material distinct from what was already available during the assessment proceedings, and as such, the petitioner has made out a case to fall within the proposition as laid in the case of Shanti Enterprise [ 2016 (9) TMI 1614 - GUJARAT HIGH COURT ] There was no allegation that there is any failure on the part of the assessee, i.e., the petitioner to truly and fully disclose the material facts, and further the reopening is sought on the basis of verification of record, and as such, there was no fresh tangible material distinct from what was available at the time of assessment proceedings and by making a reference to the notice by virtue of which the petitioner was called upon to furnish all the details as stated herein above, the assessment order is passed, and as such, this entire exercise which is sough to be undertaken by the authority is based upon change of opinion. Contention with regard to escapement of income being assessed, the respondent-authority has hardly made out any case for invoking the provisions of Section 56(1) or Section 68. Since the entire exercise is sought to be undertaken on the basis of change of opinion, simply because the Assessing Officer, while passing an order of assessment, has not dealt with specifically in an elaborate form, would not be a ground for opening of an assessment. In view of the aforesaid circumstances and the conjoint effect of the relevant discussion in consonance with the proposition of law, we are of the opinion that a case is made out by the petitioner to call for an interference. The impugned notice of reopening are hereby quashed and set aside.
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2023 (3) TMI 1244
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:- 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. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. Since the petitions deserve 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 in respect of the above petitions. All other questions on facts involved in the reasons weighed with Assessing Officer seeking to reopen the assessment are kept open in all cases.
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2023 (3) TMI 1243
Rejection of request for NIL TDS in terms of Section 197 - Denial of natural justice - Application submitted by the petitioner seeking NIL TDS has been rejected by the respondents by addressing a communication in this regard at Annexure-A - grievance of the petitioner that no separate order, much less any speaking order has been passed by the respondents and the attachment to the aforesaid communication only indicates that the claim of the petitioner has been summarily rejected and the same being violative of principles of natural justice, the petitioner is before this Court by way of the present petition. HELD THAT:- As rightly contended by petitioner, the material on record discloses that except the impugned communication at Annexure-A dated 28.02.2022 enclosing a copy of the attachment, which discloses that the claim of the petitioner has been summarily and unilaterally rejected by the AO without assigning any reasons, the impugned communication and order are clearly non-speaking, cryptic, unreasoned and laconic and passed without application of mind and in violation of principles of natural justice and consequently, the same deserves to be quashed and the matter be remitted back to the concerned respondent for reconsideration afresh in accordance with law. Petition is hereby allowed.The impugned order and the impugned communication/e-mail along with the accompanying screen shot is hereby set aside.
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2023 (3) TMI 1242
Validity of Reopening of assessment u/s 147 - issue of notice by non-jurisdictional officer - validity of the jurisdiction that was assumed by the AO for framing of assessment u/s 144/147 - ITO, Ward- 1(3), Bhilai Jurisdiction to issue notice - whether or not the ITO, Ward-1(3), Bhilai had validly initiated proceedings in the case of the assessee and issued notice u/s.148 dated 09.03.2018? - HELD THAT:- The very basis for transferring of the case of the assessee for the year under consideration i.e. A.Y.2013-14 by the ITO, Ward-1(3), Bhilai to the ITO, Ward-2(2), Bhilai was the fact that in light of Notification No.01/2014-15 dated 15.11.2014 of the JCIT, Range-2, Bhilai, the jurisdiction over the case of the assessee was with latter i.e. ITO, Ward- 2(2), Bhilai. On the basis of the aforesaid admitted fact, we are unable to fathom that now when the ITO, Ward-1(3), Bhilai had admitted vide his letter dated 10.04.2018 that pursuant to Notification No.01/2014-15 dated 15.11.2014 of the Joint Commissioner of Income Tax, Range-1, Bhilai, the jurisdiction over the case of the assessee remained with the ITO, Ward-2(2), Bhilai, then on what basis he had issued notice u/s.148 of the Act dated 09.03.2018. It is neither the case of the department nor a fact discernible from the records that at any point of time the jurisdiction over the case of the assessee was either transferred to; or had remained vested with the ITO, Ward-1(3), Bhilai. Now when the ITO, Ward-1(3), Bhilai did not have any jurisdiction over the case of the assessee as on 09.03.2018, i.e. the date of issuance of the notice u/s.148 of the Act, therefore, the inescapable view that can be drawn therefrom is that he had wrongly assumed jurisdiction and initiated proceedings u/s.147 of the Act in the case of the assessee under consideration. When the assessee has assailed the framing of the assessment u/ss.144/147 dated 07.12.2018 on the ground that the initiation of proceedings u/s.147 of the Act by the ITO, Ward-1(3), Bhilai is without authority of law and, therefore, wholly without jurisdiction, the aforesaid objection of the Ld. DR that the failure on the part of the assessee to call in question the jurisdiction of the A.O within the time limit prescribed under sub-section (3) of Section 124 cannot be accepted. Assessment framed on the basis of reasons to believe dated Nil a/w. notice u/s.148 issued by the ITO, Ward-1(3), Bhilai, i.e. a non-jurisdictional Officer, cannot be sustained and is liable to be quashed. Decided in favour of assessee.
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2023 (3) TMI 1241
Income deemed to accrue or arise in India - invocation of Article 28 of India-Malaysia DTAA - West Indies Cricket Board Inc has confirmed that they intend to contract with the TSA Cayman Island for sponsorship rights to West Indies Men s National Cricket Team in respect of the ICC Champions Trophy 2013 tournament and ICC T20 World Cup 2014 tournament - HELD THAT:- All the parties including West Indies Cricket Board Inc and the sponsor honoured all the agreements. No evidence contrary to the above has been brought on record. Thus, in our considered view, the aforesaid reason cannot be the basis to invoke Article 28 of the India-Malaysia DTAA. It is also pertinent to note that the AO-TDS in order to invoke the provisions of Article 28 of India-Malaysia DTAA has not placed sole reliance on this anomaly and rather also alleged that Malaysian entity was a mere conduit in the entire transaction. Thus, when TSA Malaysia has been found to be existing much prior to TSA Cayman Island and the assessee, and its revenue and setup have not been disputed by the Revenue, we are of the considered opinion that it would be wrong to allege that TSA Malaysia to be mere conduit and paper company existing merely to avail the benefit of India-Malaysia DTAA. The conclusion could have been different if the entire setup would have been in Cayman Island and the Malaysian entity would have been a mere name lender in this set of transactions with no role to play. However, such being not the facts, therefore, we find no infirmity in the order of the learned CIT(A) in quashing the invocation of Article 28 of India-Malaysia DTAA in the present case. Whether the payment made by the assessee to TSA Malaysia in respect of the advertising package/rights, which includes (a) Logo Rights, (b) Advertising Privileges, (c) Promotion Activities Rights, and (d) Rights to Complimentary Tickets constitutes Royalty for being taxed in India? - Rights of similar nature are involved and the definition of the term Royalty in India-Malaysia DTAA is worded similarly to the provisions of India-Canada DTAA, therefore, respectfully following the aforesaid decision of the Hon ble Delhi High Court, we are of the considered opinion that payment in respect of aforesaid rights does not fall in the category of royalty as defined under Article 12(3) of the India-Malaysia DTAA. Once the taxability fails in terms of the treaty provisions, there is no occasion to refer to the provisions of the Act, as in terms of section 90(2) the provisions of the Act or the DTAA, whichever is more beneficial to the assessee shall be applicable. Since the payment was only alleged to be Royalty by the Revenue, therefore, there is no need to examine its taxability under any other provision of the India-Malaysia DTAA, in the present case. Assessing Officer is directed to delete the addition on account of the advertising package/rights in respect of Sri Lanka Cricket and West Indies Cricket Board Inc.Grounds raised by the Revenue are dismissed.
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2023 (3) TMI 1240
Reopening of assessment u/s 147 - Reasons for issuing notice u/s.148 - issue of notice by non-jurisdictional officer - undisclosed cash deposits in saving bank account - HELD THAT:- As the ITO, Ward-1(1), Bhilai did not have any jurisdiction over the case of the assessee either at the time of recording the reasons to believe, i.e. on 09.05.2016; or at the time of issuance of notice u/s.148 of the Act dated 25.10.2016, therefore, the initiation of proceedings as well as issuance of notice u/s.148 of the Act, dated 25.10.2016 being devoid and bereft of any force of law cannot be sustained and is liable to be quashed. Now when the assessee has assailed the framing of the assessment u/ss.143(3)/147 on the ground that the initiation of proceedings u/s.147 of the Act by the ITO, Ward-1(1), Bhilai is without authority of law and, therefore, wholly without jurisdiction, then, the aforesaid objection of the Ld. DR that the failure of the assessee to call in question the jurisdiction of the A.O within the time limit prescribed under sub-section (3) of Section 124 cannot be accepted. On the basis of the aforesaid deliberations, assessment framed on the basis of reasons to believe recorded on 09.05.2016 a/w. notice u/s.148 of the Act dated 25.10.2016 issued by the A.O, i.e. ITO, Ward-1(1), Bhilai, a non-jurisdictional Officer, cannot be sustained and is liable to be quashed. ITO, Ward-1(1), Bhilai at the time of initiating proceedings and issuance of notice u/s.148 dated 25.10.2016 was not vested with any jurisdiction over the case of the assessee, therefore, the aforesaid notice so issued by him de-hors valid assumption of jurisdiction will have no existence in the eyes of law and would be non-est. Non-est notice u/s.148 dated 25.10.2016 issued by the ITO, Ward-1(1), Bhilai can by no stretch of imagination be validated pursuant to the transfer of the case of the assessee by him on 03.08.2017 to ITO Ward-2(1), Bhilai. Appeal of the assessee is allowed.
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2023 (3) TMI 1239
Admission of additional evidence by CIT-A - Addition of LTCG - CIT(A) admitted additional evidence in support of contention that the investments were not liquidated by the assessee during the year under consideration but the same were liquidated/withdrawn by the assessee in the succeeding assessment year - CIT(A) admitting fresh evidence in contravention to Rule 46A of I.T. Rules - Whether CIT(A) has erred in not remanding the case back to the AO for examining fresh evidence which is in the form of Bank Statement of assessee ? - HELD THAT:- Evidently, before admitting such additional evidence in support of the assessee s case, the ld. CIT(A) has not referred the matter back to the ld. Assessing Officer for his comments and has not sought remand report from the ld. AO before adjudicating the appeal in favour of the assessee. We observe that the due process as prescribed under Rule 46A of the Income Tax Rules has not been followed in the instant facts. Thus looking into the facts of the case, in the interest of justice, the matter is being restored to the file of ld. Assessing Officer for examining the case of the assessee afresh after examining the claim of the assessee in the light of the supporting documents to the effect as to which year the investments have been liquidated by the assessee i.e. whether or not the same sere liquidated by the assessee during the year under consideration. Appeal of the Revenue is allowed for statistical purposes.
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2023 (3) TMI 1238
Eligibility of exemption u/s 2(14)(iii) - addition made in respect of Capital Gains earned on rural agriculture land - assessee contended that the land qualifies as agricultural land and assessee is eligible to claim exemption section 2(14)(iii) as the said land is a rural agriculture land and relevant documents like the sale deed, purchase deed, 7/12 extract, copy of certificate from Soyala Gram Panchayat stating that the population is below 10000 and distance from Ahmadabad Municipal Corporation is more than 8 km were submitted before the AO for his consideration - HELD THAT:- In light of the facts of the instant case that the land had been shown as agricultural land in Revenue records, there was no application made for conversion of aforesaid agricultural land to non-agricultural land, the agriculture land under consideration was situated beyond 8 km from the municipal limits and further in light of the judicial precedents reproduced above, we are of the considered view that Ld. CIT(A) has not erred in facts and in law in holding that the assessee was eligible for claim of deduction u/s 2(14)(iii) of the Act on sale of aforesaid agricultural land. Disallowance of interest expense - AO observed that while these interest expenses were for the period March 2011 but the land in question was already sold on 10-01-2011. Therefore, these interest expenses are not related to the above land transaction - CIT(A) allowed the appeal of the assessee on the ground that the AO erred in facts in holding that the interest expenditure was paid after the date on which the aforesaid land was sold - HELD THAT:- CIT(A) on appreciation of the facts of the case has observed that the assessee has been able to establish the nexus between interest paid on borrowed fund and the sale of land and accordingly the assessee in the instant set of facts was justified in claiming interest expenditure as interest paid on the purchase of said land against sale of land at Soyala Gam. CIT(A) on going through the relevant records has also satisfied itself that no portion of interest expenses were incurred after the date of sale of the aforesaid property. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) so as to call for any interference. Appeal of the Department is dismissed.
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2023 (3) TMI 1237
Validity of reopening of assessment u/s 147 - return filed by the assessee was processed under section 143(1) of the Act only and no scrutiny assessment under section 143(3) of the Act was taken up - HELD THAT:- Assessment was reopened under section 147 of the Act within four years after processing of return of income under section 143(1) of the Act. It is pertinent to mention here that there is conceptual difference between section 143(1) of the Act and section 143(3) of the Act. During the course of assessment proceedings under section 143(3) AO select the return filed by the assessee for scrutiny and after scrutiny, the AO is concluding the original assessment order under section 143(3) of the Act. Admittedly, in the present case, scrutiny assessment under section 143(3) of the Act was not carried out. Thus, we are of the considered opinion that the AO has validly reopened the assessment under section 147 of the Act by issuing notice under section 148 of the Act. Ground raised by the assessee is dismissed. Capital gain on sale of land - Nature of land sold - whether land were agricultural land, and hence not liable to capital gain under section 2(14) ? - HELD THAT:- Assessee could not controvert the report of Tahsildar, wherein, he has categorically stated that no crops were grown on the pieces of land sites from the period from 2008 to 2013. Secondly, the assessee has not produced the details of crops grown on the above land during the financial years 2008-09 to 2010-11. Moreover, the assessee has not produced the details of irrigation facility on the land, details of pump sets, if any, details of electricity bills, etc., either before the Assessing Officer or before the ld. CIT(A) or even before the Tribunal. Moreover, in the website www.tnreginet.net, the status of the above land shows as residential . CIT(A) has rightly confirmed the addition made by the Assessing Officer and we find no reason to interfere with the order passed by the ld. CIT(A). Addition made u/s 2(22)(e) - amount received from the company shown as share application money to the company for which, allocation is pending - assessee is one of the Directors and he is having a substantial interest in the company granting loans to assessee - HELD THAT:- AO has observed that the money advanced by the assessee to the company for subscription of shares and money received as advances from the company are completely two different transactions - personal loans taken by the assessee and for meeting the construction expenses of house property built by the assessee indicates that the above two transactions have no nexus and the outstanding debit balance appearing in the name of the assessee represents the advance received by the assessee for various personal purposes from the company in which he holds substantial interest. Assessing Officer has held that the transaction clearly falls within the ambit of the provisions of section 2(22)(e) of the Act and brought to tax to the extent of the accumulated surplus available with the company as deemed dividend in the hands of the assessee. CIT(A) has rightly confirmed the addition made by the Assessing Officer under section 2(22)(e) - Ground raised by the assessee is dismissed. Addition made towards cash deposits in the bank - assessee could not explain satisfactorily with evidences the source for the cash deposits appearing in the assessee s bank account - HELD THAT:- Assessing Officer, the assessee has made entirely different submissions. The assessee has explained the sources of funds with different break-ups in different places, which are nothing but an afterthought. Thus, the addition confirmed by the ld. CIT(A) under section 68 of the Act stands sustained. Decided against assessee.
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2023 (3) TMI 1236
Income taxable in India - Taxability of interest paid by the Indian branch office to the other overseas branches of the assessee - profit attributable to the PE - CIT(A) by referring to the provisions of Explanation to section 9(1)(v) of the Act held that the Explanation has been added in the case of a person engaged in the business of banking and is therefore applicable in this case - HELD THAT:- Since the assessee has a PE in India, therefore, the interest has been claimed as a deduction while computing the business profits of the Indian branch office. Further, as per Article 7(2) of the Indo-Swiss DTAA, the profit attributed to the PE shall be determined which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is the PE. Thus, in view of the aforesaid decision in BNP Paribas [ 2023 (3) TMI 193 - ITAT MUMBAI ] the fiction of hypothetical independence of the PE and head office/overseas branch cannot be extended to the computation of the profit of the head office/overseas branch, and the same is restricted only for computation of profit attributable to the PE. Special Bench in Sumitomo Mitsui Banking Corporation [ 2012 (4) TMI 80 - ITAT MUMBAI ] accepted that the independent fiction and separate entity approach under Article 7 of the tax treaty is only for the purpose of determining the profit attributable to the PE and not for the purpose of determining the total profits of the enterprise as a whole. Therefore, we direct the AO to delete the addition on account of interest income received by the overseas branches of the assessee from the Mumbai branch office. As a result, grounds no.1 and 2 raised in assessee s appeal are allowed.
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2023 (3) TMI 1235
Addition u/s 69 - unexplained investment - Addition being the difference between the cost of construction arrived at by the DVO and the cost of construction declared by the assessee - assessee failed to substantiate the source of such income for investment in the hospital building - Applicability of the amended provision of section 115BBE - HELD THAT:- We find merit in the argument of assessee that the construction of the building started in financial year 2009-10 (May-2009) and completed in financial year 2016-17(August,2016) and therefore, the difference between the cost of construction as per the DVO and the Valuer s report should be spread over between financial year 2009-10 to financial year 2016-17 i.e. A.Y 2010-11 to A.Y 2017-18 proportionately. We, therefore, direct the AO to spread over the difference between the cost of construction arrived at by the DVO and the cost of construction arrived at after considering our observations in the subsequent paragraphs over the period from August, 2010-11 to A.Y 2017-18. A perusal of the report of the DVO shows that he has allowed only 10% towards reduction in cost of material purchased by the assessee. Since the assessee is a reputed doctor, it is quite possible that he has purchased the material from sources known to him and is expected to get some further discount. Considering the totality of the facts of the case, we direct the AO to consider the discount for the material purchased by the assessee at 20% as against 10% allowed by the DVO. Similarly, the cost of self-supervision charges has been allowed by the DVO at 5% only whereas the Coordinate Benches of the Tribunal are allowing such self-supervision charges varying from 12.5% to 15%. We direct the AO to allow self-supervision charges at 12.5% as against 5% allowed by the DVO. AO is directed to recompute the cost of construction after reducing the discount for purchase of material at 20%, allowing self-supervision charges at 12.5% and whatever value is arrived by the AO, the same shall be deducted from the value arrived at by the DVO and the difference so arrived at shall be spread over A.Y 2009-10 to A.Y 2017-18 and the AO shall calculate the income of the assessee on the basis of such spread over. Applicability of provisions of section 115BBE - Since the addition has been made u/s 69 of the I.T. Act, therefore, the learned CIT (A) is fully justified in upholding the order of the Assessing Officer on this issue. Therefore, the additions so made after the calculations shall be taxed u/s 115BBE for A.Y 2017-18. Grounds raised by the assessee are accordingly partly allowed in the terms indicated above.
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2023 (3) TMI 1234
Addition of cash deposit and invoking of section 115BBE - DR submitted the assessee did not filed return of income and what was the reason for keeping such huge cash at home was not properly explained therefore the addition is sustainable and Ld. CIT(A) was right in confirming the same - assessee submitted that the cash in hand and cash withdrawn from the banks was partly utilized and partly kept by the assessee for emergency purposes and when the demonetisation was announced then the assessee was compel to deposit cash in hand to her bank - HELD THAT:- When the assessee suffering with serious diseases requiring emergency treatment at any time in super speciality hospital then it is incumbent upon the assessee to have sufficient financial resources ready in hands to meet any unforeseen serious situation. In such a position if a super senior citizen widow lady having no other means of income is keeping cash in hand then it would not be taken as doubtful conduct of assessee attracting the rigor of taxing provisions to such amount. Obviously after declaration of demonetization the assessee was compel to redeposit the cash amount with her bank and such a situation AO was not correct in treating the cash deposit as assessee s income from undisclosed sources. Therefore authorities below were not justified in making addition in the hands of assessee. Accordingly ground no. 1 of assessee is allowed. Interest on FDR received by the assessee and widow pension - Amount was admittedly received by the assessee during FY 2016-17 pertaining to A.Y. 2017-18 and hence the Assessing Officer is entitled to take in to consideration these amounts. The factum of payment of interest on the loan taken by the assessee against FDR cannot be held as adjustable with the FDR interest received by the assessee. Therefore grounds no. 2 and 3 of assessee are dismissed. The AO is directed to recalculate tax liability of assessee, if any, accordingly.
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2023 (3) TMI 1233
Unexplained cash u/s 69A - addition of entire cash found during the course of search seizure in the office premises of the assessee - addition basically only on the basis of statement of Accountant of the assessee company recorded wherein he was unable to explain the discrepancy - submission of the assessee that an amount was kept by wife of the Director in the office premises out of the amount withdrawn by her from LLP where she is a partner - whether the Director of the assessee company was asked any question on this issue on the date of search or thereafter? HELD THAT:- The statement of the Director who was privy to such cash kept by his wife has a bearing on this vital issue. It is not known as to whether the Director was examined on the issue of cash kept by his wife which she has withdrawn from the partnership firm. Therefore, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the statement of Director of the assessee company recorded u/s 132(4), if any, and if he has stated during the course of search or thereafter that the cash was kept by his wife in the company, then the same is directed to be deleted. Grounds raised by the assessee are partly allowed for statistical purposes.
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2023 (3) TMI 1232
CIT-A deciding the appeal ex-parte to the assessee - Addition u/s 69A - HELD THAT:- CIT-A without referring to the paper book which was available before him has decided the issue against the assessee merely after observing the fact that the assessee did not cooperate during the proceedings. Admittedly, the learned CIT-A is empowered to decide the issue ex parte in the event of non-cooperation from the assessee but he cannot decide the issue without considering the materials available on record and that too in scientific manner. Accordingly, assessee deserves one more opportunity to present its contention before the learned CIT-A. Accordingly, set aside the issue to the file of the learned CIT-A for fresh adjudication - Ground of appeal of the assessee is partly allowed for the statistical purposes.
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2023 (3) TMI 1231
Revision u/s 263 by CIT - unsecured loans received - as per CIT deep rooted enquiries were required to be made, which had not been done by the AO - HELD THAT:- It is not the case of the Ld. PCIT, that the Assessing Officer had not made any enquiry while accepting the unsecured loans as genuine PCIT is, thereby, trying to substitute the plausible view taken by the AO with his own view. This course of action is not permissible under the revisionary provisions under section 263. The grievance of the Assessee is found to be justified and it is accepted as such. Looked at from any angel, the order under appeal is unsustainable in the eye of the law, and we hold so. The impugned order is, hence, reversed, whereas the assessment order is revived. Assessee appeal is allowed.
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2023 (3) TMI 1230
Revision u/s 263 - As per CIT transaction relating to capital gains in the scrip of M/s Tuni Textiles Ltd. not considered by AO - period of limitation - validity of reopening of assessment - AO did not examine it during the original assessment proceedings u/s 143(3) of the Act and further that the same was not subject matter of investigation under the reassessment proceedings u/s 147 - HELD THAT:- Reassessment order of the AO cannot be held to be erroneous on the ground that the AO did not examine the other income relating to the capital gains in the scrip of M/s Tuni Textiles Ltd. when the AO did not make any addition in respect of reason/subject-matter for which the reopening was done in the case of the assessee. The audit party has no right to interfere in the quasi-judicial proceedings to make an objection as to in what mode or manner, the AO should pass an assessment order and what examination ought to be carried out by him in the assessment proceedings. Moreover, the original assessment proceedings u/s 143(3) stood completed on 26.02.2014 itself. Even the transaction relating to shares of M/s Tuni Textiles Ltd. was not the subject-matter of the reassessment proceedings. Therefore, the revision order passed by the PCIT u/s 263 is otherwise time-barred. Even When in the reassessment proceedings, no addition has been made by the Assessing Officer in respect of the subject-matter/item of income for which the AO had formed reasons to believe of escapement of income and finally found that the income of the assessee has not escaped income in respect of that issue/item. As in view of the decisions of Jet Airways Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] it was not open to the AO to make addition in respect of other item of income. When the reassessment was made to examine a particular investment and the assessee duly explained the source of the said investment and the AO has accepted the said source then the order of the AO cannot be said to be erroneous and exercise of revision jurisdiction u/s 263 of the Act in respect of said order, cannot be held to be justified. Decided in favour of assessee.
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2023 (3) TMI 1229
Addition u/s 68 - deposit of cash in two bank accounts of the assessee, during demonetisation period and creditors amount related to unsecured loan - HELD THAT:- The assessee has placed the documents and the primary evidence related to stock report of inspection of stock by the Excise and Taxation department of Punjab. We find that the assessee has a sufficient stock to convert in sale. Accordingly, the source of cash was explained which are generated from the sale of goods. The ld. AO pointed out that the sales are made by cash. Counsel placed that the stock of assessee was never be disputed. The assessee already declared the cash as turnover paid the tax accordingly. The stock and purchase was never be disputed by the revenue. As relying on Om Overseas [ 2008 (3) TMI 44 - HIGH COURT PUNJAB AND HARYANA ] assessee s books of account were rejected by the AO and the addition was made without pointing out any specific defect in the books of account, impugned addition was rightly deleted - thus addition made by the ld. AO is liable to be quashed. In verification of the loan creditors the assessee has filed the document related to identity, transaction, the entire transaction was made through bank account which was produced before the bench. We set aside the order of the ld. CIT(A). The addition amount related to loan creditors u/s 68 of the Act is liable to be quashed. Appeal of assessee allowed.
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2023 (3) TMI 1228
Disallowance u/s 14A r.w.r. 8D - AR contended that for working out of disallowance u/s. 14A r.w.r 8D, AO has considered total average investments instead of average investments which have yielded dividend income - HELD THAT:- We find that in the case of Cargo Motors (P) Ltd. [ 2022 (10) TMI 571 - DELHI HIGH COURT ] have held that for the purpose of making disallowance of expenses u/s. 14A r.w.r. 8D only those investments are to be considered for computing average value of investments which have yielded exempt income during the relevant year. Before us, Revenue has not placed on record any contrary binding decision. We further find that there is no finding of the lower authorities on the investments which have yielded exempt income. Disallowance u/s. 14A needs to be reworked by the AO, in view of the decision of Cargo Motors (P) Ltd. (supra).This ground of assessee is allowed for statistical purposes.
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2023 (3) TMI 1227
Faceless assessment u/s 144C - Reference to dispute resolution panel - period of limitation - HELD THAT:- Alas, the final order passed by the Assessing Officer is beyond the period of limitation as provided u/s. 144C of the Income Tax Act, 1961 and hence, the same is liable to be declared as null and void.
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2023 (3) TMI 1226
Addition as income from other sources - assessee has claimed agricultural income - HELD THAT:- Assessee has produced a lease agreement between the assessee and one Shri Ravi Kumar - Though the lease agreement is dated 18.11.1995 in the past years assessee has not brought the same to the notice of the AO. Assessee has not produced any proof to show what was the agricultural activities carried on by the lessee to have provided the assessee. There is no evidence submitted by the assessee that he was in receipt of huge agricultural income of Rs.60,00,000/- from 19.72 acres (assessee share 50% of 39.44 acres). AO was justified in limiting the agricultural income to Rs. 1,00,000/- per acre. The order of the CIT(A) confirming the AO s order is upheld as valid and in accordance with law. Appeal filed by the assessee is dismissed.
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2023 (3) TMI 1225
Revision u/s 263 by CIT - case was selected for scrutiny under CASS - As per CIT AO did not verified points related to Incorrect claim of pre-construction interest u/s. 24(b),Mismatch in interest income offered to tax and . Mismatch in Turnover - HELD THAT:- No observation or findings on the issue for the reason for selection of scrutiny, which were required to be done by the AO. AO has raised questions and replies submitted by the assessee, however from the paper book posted before us, no details pertaining to interest from ING Vysya bank was filed before the AO was accepted and passed the assessment order. As noticed from reply submitted by the assessee before CIT that assessee had availed loan from ING Vysya Bank incurred during the FY 2005, 2006 and 2007 for construction purpose but no documents was submitted during the course of hearing before the AO and assessee has claimed it as expenditure for the interest incurred during the construction period of Rs.2,66,89,424/-, which is a 1/5th of Rs.13,34,47,122/- As noted that in respect of interest income, the assessee has filed only reconciliation statement but no external documents/evidences fled and we also noted that the CIT observed that there is a difference in the turnover declared but the assessee submitted that difference due to inclusive of VAT tax. As submitted reconciliation but no details regarding proof of payments of tax etc. were submitted during the course of proceedings. AO should have examined all these things with the supporting/external documents but he did not do so. We found substance on the submissions of the DR and also on the order of CIT, hence, the order passed by the AO is erroneous prejudicial to the interest of revenue. Appeal filed by the assessee is dismissed.
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2023 (3) TMI 1224
Penalty u/s 271(1)(C) - rent paid by the developer on behalf of the assessee for alternative accommodation during the development period - AO noticed that rent was paid by the developer on behalf of assessee for alternative accommodation for the development period and the said income was not considered by the assessee at the time of filing of return of income as he thought that the said amount directly paid by the third party by the developer and the ld. AO added the amount in the hands of assessee HELD THAT:- As considering the co-ordinate bench judgement in the case of Smt. Delilah Raj Mansukhani [ 2021 (3) TMI 252 - ITAT MUMBAI] as held that compensation received by the assessee towards displacement in terms of development agreement is not a revenue receipt and constitute capital receipt in the hands of assessee as the property has gone into re-development - we set aside the findings of the ld. CIT(A) on this issue and direct the AO to delete the addition - Accordingly, the ground is allowed. Penalty u/s 271(1)(c) we find that in the case of assessee, AO cannot impose penalty on the sum being rent paid by the developer on behalf of the assessee for alternative accommodation during the development period as the amount paid by the developer to the assessee could not be taxed in the hands of land owner/assessee in terms of the above order. Therefore, the initiation of penalty proceeding itself is bad in law. In such a situation impugned order passed by the ld. CIT(A) cannot be sustained, accordingly, we set aside the same and delete the penalty imposed by the AO. Appeal of the assessee is allowed.
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2023 (3) TMI 1223
Computer Gift Expenses and other gift expenses - Allowable business expenditure under section 37(1) or not? - expenditure prohibited by MCI Guidelines - expenses debited in the assessee s P L A/s under the head sales promotion expenses - assessee is mainly engaged in the business of pharmaceuticals goods and sells the same through the dealer distribution network and the stockiest at the ground level - as submitted none of the payee or beneficiaries are in the list of parties to whom the freebees in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 is provided or proved by the assessing officer - HELD THAT:- CIT(A) has not erred in law and on facts while considering the claim of the assessee. The bench further noted from the report of the AO before us also while commenting on expenditure has accepted that the fact that the assessee has submitted the name of the party to whom the gold coins were given. AO has given his comments on each expenditure but nowhere in the assessment order in the report before us that the benefit directly or indirectly given as freebees (freebies) to medical practitioners and their professional associations in violation of the regulations issued by Medical Council of India (the 'Council') which is a regulatory body constituted under the Medical Council Act, 1956. Once, the basis on which the addition made is not substantiated by the ld. AO in the assessment proceeding by any evidence contrary to the claim which is supported by bills and vouchers and that too of a manufacturing company where their books are subjected to audit. The ld. CIT(A) after evaluating the submission of the assessee considered the various aspect of the claim of the assessee and has given a reasoned finding that why the claim of the assessee is allowable. The revenue has not controverted finding of the ld. CIT(A) by filling contrary submission or evidence. Thus, we see not fault in the detailed finding of the ld. CIT(A) while allowing the claim of the assessee for an amount as the revenue has not established that there is violation of board circular as relied upon by the AO. Merely on presumption and assumption that circular will not be made applicable to the facts of the case when nothing contrary placed on record. In the light of these finding the ground no. 2 raised by the revenue fails and thus the same is dismissed. Addition u/s. 69C - reasoning given by AO while making the disallowance was that the assessee could not produce any ledger account, bills/vouchers of purchase of gifts and could not state that to whom the computer gifted - HELD THAT:- As per assessment order the assessee did not provide any ledger account, bills and vouchers of purchase of these gifts and details of persons to whom these gifts were given. Whereas assessee on this issue submitted that these expenses are claimed in profit and loss account and the provisions of section 69C is not applicable in the present case. The payment for these expenditure has been made by crossed account payee cheque and this fact is not disputed by the revenue. Thus, merely based on assumption and presumption no addition can be made. Even based on these facts ld. CIT(A) also considered the claim of the assessee accordingly. Thus, we see not fault in the detailed finding of the ld. CIT(A) while allowing the claim of the assessee for an amount and revenue has not placed on contrary evidence or facts expressly demonstrating that why the claim is disallowable.Appeal of the revenue stands dismissed.
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2023 (3) TMI 1222
Denying deduction u/s 54 - capital gains on sale of a residential property - As per AO property purchased is beyond one year preceding the year of sale, the assessee is not eligible for deduction - HELD THAT:- As new property shall be deemed to have been acquired only when it is ready, full consideration has been paid and the possession is received by the assessee by the assessee. Substantial necessities are crucial for determining the issue for claim of deduction u/s 54 of the Act. Admittedly, in this case what the department is harping upon is merely the agreement dated 21-12-2016 when the building itself was not constructed and the assessee has only acquired his right to get a flat in the said building. When actually therefore, can it be said that the new property was purchased? It is only when the assessee received the possession through letter of possession on 24-12-2018. This is when all the three ingredients as enumerated in the decision of Hon ble Jurisdictional High Court [ 1993 (11) TMI 7 - BOMBAY HIGH COURT] for claiming deduction u/s 54 had been complied with by the assessee. Thus, in view of the undisputed facts of the case and the decision rendered in the case of Smt. Beena K. Jain (supra) we hold that the assessee is eligible for claiming deduction u/s 54 of the Act. Consequently all the grounds of appeal of the assessee are allowed.
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2023 (3) TMI 1221
Rectification of mistake u/s 154 - non-adjudication upon the legal ground urged - HELD THAT:- We agree with the contentions of the Ld. AR. Accordingly, we hold that non-adjudication of the legal ground no. 2 is a mistake apparent from record as it goes to the root of the matter. Accordingly, we are constrained to recall the impugned order [ 2021 (9) TMI 640 - ITAT JODHPUR] passed by the Tribunal in the hands of the assessee. Misc. Application filed by the assessee is allowed.
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2023 (3) TMI 1220
TP Adjustment - Comparable selection - turnover filter - HELD THAT:- Admittedly, on turnover filter, we are consistently holding that companies having above Rs.200 Crores turnover from the specified segment cannot be considered as comparables to assessee whose turnover in the said segment is less than Rs.200 crores. In the present case, there is no dispute that the turnover of the above companies is above Rs.200 crores as against the turnover of assessee company from the said segment is Rs.64.71 crores. See M/S. ACI WORLDWIDE SOLUTIONS PRIVATE LIMITED [ 2022 (5) TMI 1491 - ITAT BANGALORE] We direct the AO/TPO to exclude 3 comparables in ITeS segment and 9 comparables in software development segment as the turnover are over Rs.200 crores. Ordered accordingly. Functional dissimilarity - Exclude the company M/s. Datamatics Business Solutions Ltd. from the list of comparables as this company is a KPO company and not comparable to assessee company. Manipal Digital Systems Pvt. Ltd. is directed to be excluded from the list of compar ables as functionally dissimilar. CES Limited be excluded from the list of comparables as it is providing both BPO and KPO services, cannot therefore be held as comparable. Charging of interest u/s 234A 234B - As submitted assessee filed return of income within the time stipulated in section 139(1) of the Act and as such there was no delay in filing the return of income - HELD THAT:- The levy of interest u/s 234A of the Act is bad in law. In our opinion, this requires to be verified at the end of the AO if the return has been filed within the due date prescribed u/s 139(1) of the Act, there cannot be any levy of interest u/s 234A of the Act. With regard to levy of interest u/s234B of the Act, which is consequential and mandatory in nature and to be computed accordingly.
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2023 (3) TMI 1219
TP adjustment - international transaction pertaining to fees received for marketing of fixed income products - difference in the price achieved by the marketer and the price quoted by the trader - As per DR benchmarking analysis undertaken by the assessee is not based on Profit Split Method as provided under the Rules - HELD THAT:- Lower authorities failed to appreciate that in the entire transaction, the sales/marketing function and its activities (such as trading) cannot be separated from the other functions, all of which together are necessary elements for the assessee to realise income on these transactions. Therefore, it is necessary to take into consideration the functions performed, assets employed and risks assumed by the trader-associated enterprises, while allocating the commission. The entire local spread , i.e. the markup earned by the marketer either over the price offered by the trader to sell or lower than the price quoted by the trader to buy the product, is entirely allocated to the marketer. Accordingly, find no merits in upholding the transfer pricing adjustment on this issue. Hence, the TPO/AO is directed to delete the transfer pricing adjustment in respect of international transaction of fees receipt for marketing of fixed income products. As a result, grounds No. 1 3 raised by the assessee are allowed. Income from securities as capital gain - exemption under Article 13(6) of the India Switzerland Tax Treaty - PE in India - attraction principle enshrinest in Article 7(1) of the DTAA with Switzerland, the income of assessee form trading in security as FII being similar to the investment activities carried by the branch of assessee in India, was also liable to be taxed as income - HELD THAT:- As in assessee s own case in the immediately preceding assessment year [ 2018 (8) TMI 2111 - ITAT MUMBAI] by following the judicial precedents in assessee s own case decided a similar issue in favour of the assessee as held that income of a FIl from sale and purchase of securities is liable to be taxed as 'Capital Gains'. The second facet of the dispute is the taxability of such income, which has been held to be non- taxable in India under Article 13(6) of the India-Switzerland Tax Treaty by the Tribunal in the aforestated precedents. The Tribunal, in Assessment Year 2009-10 [ 2016 (6) TMI 1462 - ITAT MUMBAI] held that banking branch of the assessee in India would not constitute a PE qua the aforesaid income. Thus, the aforesaid decisions of the Tribunal in assessee's own case, and which continue to hold the field as they have not been altered by any higher authority, fully cover the aforestated Grounds raised by the Revenue before us. It is evident from the record that the issue is recurring in nature and has been decided in favour of the assessee in preceding assessment years. Also evident from the assessment orders passed in the subsequent assessment years that decisions of the coordinate bench have been accepted by the Revenue and no further appeal has been filed.As a result, grounds raised by the Revenue are dismissed.
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2023 (3) TMI 1218
TP Adjustment - comparable selection - HELD THAT:- Infosys Ltd. functional profile of the company as in the annual report states that the company is rendering varied services under the umbrella of SWD services. It is also noticed that the company is having huge intangible assets being the brand value of the company. The assessee on the other hand is a captive service provider with no intangible asset as per the financials. Given the volume of revenue generated, different kinds of services within the SWD segment, brand value etc., of Infosys Ltd, it cannot be compared with a captive service provider like assessee. Therefore the grounds on which the company was excluded in earlier years are applicable to the year under consideration also and therefore respectfully following the decision of the coordinate bench we direct the AO/TPO to exclude Infosys Ltd as a comparable. L T Infotech is providing varied services under the umbrella of SWD services whereas the assessee is a captive service provider of routine software development. It is the submission of the ld AR that the L T is engaged in trading of goods and there is no segmental break-up for such services/ products. We also notice that the company has made several acquisitions during the year under consideration. There is no change to facts for the year under consideration also, we respectfully follow the decision of the co-ordinate bench and direct the AO/TPO to exclude L T Infotech Limited from the list of comparables. Interest on receivables - independent international transaction - TPO after allowing a credit period of 30 days computed the interest for 335 days to arrive at an adjustment - DRP directed the TPO to apply SBI short term rate and recompute the amount of adjustment - whether Outstanding receivables cannot be treated as a separate international transaction? - HELD THAT:- Issues of whether the interest on receivable is a separate international transaction and the rate of interest to be considered has been considered in the decision of the coordinate Bench of the Tribunal in the case of Swiss Re Global Solutions India Pvt. Ltd. [ 2020 (5) TMI 512 - ITAT BANGALORE] as held deferred receivables would constitute an independent international transaction and the same is required to be benchmarked independently Rate of interest - We find that this issue is no more res integra in view of the judgment of Cotton Naturals (I) (P.) Ltd [ 2015 (3) TMI 1031 - DELHI HIGH COURT] in which it has been held that it is the currency in which the loan is to be repaid which determines the rate of interest and hence the prime lending rate should not be considered for determining the interest rate. In assessee case the details with regard to Master Service Agreement, credit period allowed thereunder, invoicing details, the realization data, and such other particulars as may be relevant to adjudicate on this issue need to be examines. Therefore we remit the issue back to the AO/TPO for verification of the details. The AO/TPO is also directed to keep in mind the ratio laid down in the case of ON Semiconductor Technology India Private Limited ( 2022 (9) TMI 449 - ITAT BANGALORE ) by the coordinate bench while deciding issue. Needless to say that the assessee may be given a reasonable opportunity of being heard. This ground of the assessee is allowed for statistical purposes.
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2023 (3) TMI 1217
Income earned by the sale of the property - taxability lies in the hands of assessee AOP or the members of the assessee AOP - taxable in the hands of the members of the assessee OR in the hands of the Assessee - assessee, an association of persons (AOP) registered under the provisions of the Bombay Non-Trading Corporation Act, purchased a property in an auction carried out by the office of the Chief Commissioner of income tax, Gujarat, Ahmedabad - As submitted assessee was the real owner of the property and the assessee had complete control over the entire venture from the start to the end - HELD THAT:- CIT(Appeals) has not erred in facts and in law in holding that it was the members of the assessee AOP who were the real owners of the impugned property in question, and accordingly income is liable to be taxed in the hands of the respective members, in proportion to their holding. Whether sale of property was capital gains or adventure in the nature of trade and hence taxable as business income? - The entire purchase was funded by the members of the AOP. No interest-bearing loan was taken for the purpose of purchase of said property and construction thereon. No change in land user of the property was affected in order sell the aforementioned property. It is not the case of the Department that when initially the assessee AOP purchased the land and took possession thereof on 19-01-1994, the buyers were identifiable and thus the whole purpose of purchase and subsequent construction was for the purpose of selling the same and not earning any rental income. Accordingly said sale of property would be taxable as capital gains and not business income, and we find no infirmity in the order of ld. CIT(A). Year of taxability of the aforementioned property - We find no infirmity in the order of Ld. CIT(Appeals) wherein the held that the year of taxability of the impugned property sold was financial year 2007-08 relevant to assessment year 2008-09.
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Customs
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2023 (3) TMI 1216
Validity of review order - Period of limitation - date of receipt of order to be review - appeals dismissed on the grounds of limitation holding that the review order as required under Sub Section (2) of Section 129D of Customs Act, 1962 has been passed beyond the period of three months as envisaged in Sub Section (3) of Section 129D of Customs Act, 1962 - three months ought to have been computed from the date of receiving the Order-in-Original by the Reviewing Authority or not - HELD THAT:- The strong inference that can be drawn is that there was no evidence available to establish as to the date on which the Order-in-Original was received by the Reviewing Cell and apparently there is a delay in passing the review order. The Commissioner (Appeals) has taken all effort to call for the files to check the date of receiving the order by the Reviewing Authority so as to avoid dismissing the appeals as time barred. His efforts did not see any result and had to dismiss the appeals as time barred. In all the three review orders, the date of receiving the Order-in-Original by the Reviewing Cell is not mentioned. When Sub Section (3) of Section 129 D prescribes a time frame of three months from the date of receiving the orders passed by adjudicating authority, it is necessary and would be convenient to mention it in the review order. It cannot be understood what prevented the Department from submitting before the Commissioner (Appeals) that the Order-in-Original was received by the Review Cell on the respective dates on which they have stated in the grounds of appeal. As there is no evidence to substantiate the contention of the Department that the Order-in-Original was received on such dates by the Review Cell and as there is no reason to dis-believe the findings of the Commissioner (Appeals) that there was no evidence as to the date on which Order-in-Original was received by the Reviewing Authority, the strong inference that can be drawn is that there is a delay in passing the review orders in these appeals. The contention of the Department that the orders were received by the Reviewing Authority only on 10.02.2010/16.04.2010/14.07.2010, cannot be accepted - there are no grounds to interfere with the observation and findings of the Commissioner (Appeals). The appeals filed by the Department are dismissed.
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2023 (3) TMI 1215
Valuation of imported goods - inclusion of fee of EURO 40,000 for transfer of technical knowhow in the assessable value on import of new capital goods - whether the order passed by the Deputy Commissioner, Special Valuation Branch directing to modify the order so as not to include the technical knowhow fee to the assessable value of imported goods is legal and proper? HELD THAT:- The collaboration agreement has been perused and it is found that the transfer of knowhow and related technical assistance was not a condition for sale of the capital goods. The Hon ble Apex Court in the case of J.K. Corporation Ltd. [ 2007 (2) TMI 1 - SUPREME COURT ] held that Any amount paid for post-importation service or activity, would not, therefore, come within the purview of determination of assessable value of the imported goods so as to enable the authorities to levy customs duty or otherwise. The Rules have been framed for the purpose of carrying out the provisions of the Act. The wordings of Sections 14 and 14(1A) are clear and explicit. The Rules and the Act, therefore, must be construed, having regard to the basic principles of interpretation in mind. Thus, the view of the Commissioner (Appeals) that technical knowhow fee of EURO 40,000 need not be included in the assessable value of imported goods is legal and proper - appeal dismissed - decided against Revenue.
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Securities / SEBI
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2023 (3) TMI 1214
Offences by Companies - Prohibition on acceptance of deposits from public - Public issue of debentures without filing any offer document - Responsibility of directors - accused persons also failed to file the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India and violated the provisions of Section 73 of the Companies Act, 1956, and have also not complied with the aforesaid provisions for public issue of shares and thereby violated provisions of Sections 56, 60 and 70 read with Sections 56, 60 read with Sections 2(36), 73 of the companies Act, 1956 - HELD THAT:- The order of the SEBI passed in April 2016 at page 27 held that the petitioner among some of the other directors had joined the board pursuant to the allotment. So it is apparent that the petitioner is not connected with the allotment of NCDs. The tenure of the petitioner was from August to November, 2013.Section 27 of the SEBI Regulation relates to procedure for action in case of violation of regulations and inspecting board therein. The petitioner was a director from August, 2013 (Four months). And documents showing he had submitted his resignation is on record.As per Section 168 of the companies Act, it is the duty of the company who SHALL inform the ROC about the said resignation and process the same. The petitioner MAY also inform the ROC. Thus the resignation of the petitioner is in accordance with the provision of Section 168 of the Companies Act. For continuing liability which continues till the present.There is thus no such material on record against the Petitioner No. 1 to proceed towards trial and in the interest of Justice the proceedings against the petitioner is liable to be quashed.
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Insolvency & Bankruptcy
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2023 (3) TMI 1213
Initiation of CIRP - Financial Creditors or Operational creditors - receivables sold or discounted on a non-recourse basis - financial debt or not. Whether the Appellants in the second appeal (Financiers) are the Financial Creditors as against the Corporate Debtor or have stepped in to shoes of the Seller as an Operational Creditors and as such application filed by the Appellants in the second appeal under Section 7 of the Code has rightly been held to be not maintainable and were rightly relegated to avail their remedy of filing the application under Section 9 of the Code? HELD THAT:- The Agreement (COR) was entered into between the Seller, Financier and the Corporate Debtor (As customer). As per the agreement, the Seller had agreed for discounting of invoice of the customer (CD) for the creation of the right and interest in the invoice receivables in favour of the Financier (Appellant). Upon execution of agreement of COR, the Appellant as a Financier discounted the invoice and deposited the amounts into an escrow/nodal account maintained by KredX with an escrow/nodal agent, namely, Yes Bank Limited who further transferred the said amount to the account of the Seller and on receiving, the Seller transferred its right to receive the money under the invoices in favour of the Financiers/Appellants. In this transaction, the money was never disbursed much less for the time value as a financial debt to the Corporate Debtor and by virtue of discounting the invoice of the Seller of an amount of Rs.3,42,03,903/- for amount of Rs.1,75,23,133/- the Financiers/Appellants entered into shoes of the Seller and had become Operational Creditors in terms of Section 5(20) as well as 21(5) and Section 5(7) and 5(8)(e) of the Code is not at all applicable. There is no error in the order of the Adjudicating Authority who has though rejected the application filed under Section 7 of the Code but relegated the Appellants (Financiers) to avail their remedy under Section 9 of the Code in accordance with law. Appeal dismissed.
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Service Tax
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2023 (3) TMI 1212
Refund of service tax - Construction of Complex Service - mutuality of interest - construction of complex service provided by appellant SHRINANDNAGAR V CO OPERATIVE HOUSING SOCIETY LIMITED to its members of the society - relationship of service provider and service recipient between cooperative societies and its members - HELD THAT:- This tribunal in the order dated 30.07.2009 [ 2009 (7) TMI 135 - CESTAT, AHMEDABAD ] decided the matter on merit in the appellant s favour holding that the appellant is eligible for refund however, it was remanded only for the examining the aspect of unjust enrichment, where it was held that in the absence of a contractor hired by Society and nature of the transaction between the parties and in the light of definition of service and its liability for service tax, the transaction in this case cannot be considered taxable. With the above orders of the tribunal as well as the High Court, the issue on merit that whether the service of construction of complex provided by the appellant s cooperative housing society to its members is eligible to service tax or otherwise has been settled in favour of the appellant. The impugned order is not sustainable - Appeal is allowed.
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2023 (3) TMI 1211
Levy of Service tax - business auxiliary service - amount received by the appellant for using Central Reservation System (CRS) - amount received towards money transfer transactions would be exigible to service tax or not? - period involved is from October 2009 to March 2015. HELD THAT:- This issue has been decided by a Larger Bench of the Tribunal in favour of the appellant in KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2021 (3) TMI 773 - CESTAT NEW DELHI] where it was held that It, therefore, clearly transpires from the aforesaid decisions that incentives paid for achieving targets cannot termed as consideration and, therefore, are not leviable to service tax under Section 67 of the Finance Act. The view expressed by the Larger Bench in Kafila Hospitality was subsequently followed by a Division Bench of the Tribunal in M/S. ASVEEN AIR TRAVELS (P) LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2022 (4) TMI 1035 - CESTAT CHENNAI] . It has, therefore, to be held that the Commissioner (Appeals) committed an error in confirming the demand of service tax on the amount received by the appellant from the companies. The order dated December 26, 2017 passed by the Commissioner (Appeals) in so far as it confirms the demand of service tax in respect of the amount received by the appellant from the companies providing CRS, is set aside - Appeal allowed.
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Central Excise
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2023 (3) TMI 1210
Constitutional Validity of Rule 8(3A) of Central Excise Rules - discharge of duty without utilizing Cenvat Credit - HELD THAT:- The issue is no more res integra and is squarely covered by the judgement of the Hon ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS [ 2017 (8) TMI 1515 - CALCUTTA HIGH COURT] , wherein it is categorically held that when Rule 8 (3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon ble Court further declared Rule 8(3A) as invalid which is not stayed by the Hon ble Supreme Court. Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] has declared the words without utilizing Cenvat Credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant - the said judgment has been followed by the Hon ble Calcutta High Court in the case of Goyal MG Gases Pvt.Ltd. v. UOI cited (supra) which is not stayed by the Hon ble Supreme Court. The Hon ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee. The demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained - the demand of duty and the penalties of Rs.6,00,000/- and Rs.1,00,000/- set aside - appeal allowed.
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2023 (3) TMI 1209
Irregular availment of CENVAT Credit - input - steel items such as TMT bars, Chequered Plate, M.S. Angles, Channels, Plates, Joists, Beams, HR Plate, Sheet and Coils, G.C. Sheet etc. - period from November 2006 to March 2008 - HELD THAT:- The issue is no more res integra since the period of dispute is from November 2006 to March 2008 and the amendment to the definition of input was made on 07.07.2009 and which was made to be not retrospective. It is the case of the Appellant that the disputed items of iron and steel, cement, TMT Bar, MS Flat, Plate, MS Channel, MS Angle, MS Joist, MS Beam, HR Plate Bar Rods, HR Plate Coil, Mill Plate, GC Sheet, Flange Beam, GP Sheet, GP Coil, HR Sheet, HR Coil etc. were used in the factory in the manufacture of final capital goods and have been used for Kiln Support, Base, Ground Hoppers, Intermediate Bunkers, Conveyor support, Crusher support, screen support and Cooler platform and thus are eligible as inputs and are squarely covered by the definition of input . Reliance has been made on the decision of the Tribunal in the case of M/S. SINGHAL ENTERPRISES PRIVATE LIMITED VERSUS THE COMMISSIONER CUSTOMS CENTRAL EXCISE, RAIPUR [ 2016 (9) TMI 682 - CESTAT NEW DELHI] where it was held that applying the User Test to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of Capital Goods as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat credit. Support found from the decision of the Hon ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II VERSUS SLR STEELS LTD. [ 2012 (9) TMI 169 - KARNATAKA HIGH COURT] where it was held that appellate authority committed a serious error firstly in holding that the storage tank is an immovable property and secondly, on the ground that it cannot be bought and sold in the market, the criteria which is totally unwarranted and assessee is entitled to the benefit of cenvat credit. The impugned order cannot be sustained and is therefore set aside - Appeal allowed - decided in favour of appellant.
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2023 (3) TMI 1208
Refund of Excise Duty paid - Revenue issued SCN seeking to know as to why the refund claim should not be rejected since they are required to pay the Excise Duty on used and scrapped refractories and the payment done by them is correct - applicability of Principles of unjust enrichment. HELD THAT:- From the OIA passed by the Commissioner (Appeals), it is seen that he has not even addressed this issue raised by the Department in their Grounds of Appeal . There are no findings as to why or why not the unjust enrichment clause is invokable in the present case. He has gone into the classification and excisibilty of used refractories which was not a Ground before him. Further, this issue was already decided by his predecessor on which no Appeal was filed by the Department. It is seen that the Tribunal in the case of CCE, Mumbai-V, Vs. Pam Pharmaceuticals and Allied Machinery Company Pvt. Ltd.- 2017-TIOL- 1595-CESTAT-MUM has held that Law is well settled that the Appellate Authority is not expected to create jurisdiction for himself to decide the controversy which was not before him. Therefore to the extent learned Commissioner s view is contrary to the direction of the Tribunal, that calls for set aside. The Commissioner (Appeals) has traversed beyond the Grounds taken by the Department. The OIA is dismissed on the ground of traversing beyond the grounds taken by the Department. As the Appeal is allowed on the ground of Commissioner (Appeals) traversing beyond the Grounds of Appeal before him, the question as to whether the Department could have taken the ground of unjust enrichment at the Appeal stage, not perused - appeal allowed.
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2023 (3) TMI 1207
Input Tax Credit - input - Molasses - clearance of Extra Neutral Alcohol (potable and non-excisable) - main allegation of the department is that molasses is used for manufacture of ENA which is non-excisable - HELD THAT:- The appellant did not avail CENVAT Credit of the duty paid on molasses immediately on receiving the molasses in the factory. Though they manufactured non-excisable ENA and also dutiable products viz, acetaldehyde and acetic acid, they have availed credit only on that part of molasses which go into manufacture of dutiable product. Department has no allegation that they have availed credit on the entire quantity of molasses. The Credit that is eligible in respect of dutiable products will be known only when the appellant knows what quantity of alcohol denatured and how much molasses is used in such excisable product captively consumed in further manufacture of dutiable products cleared from the factory. The main allegation is that as ENA is derived at the first stage which is non-excisable and therefore the credit availed is not in order. In the case of M/s. Shri Ambika Sugar Ltd. [ 2014 (11) TMI 919 - CESTAT CHENNAI] similar view was taken by the Hon ble Apex Court as reported in COMMISSIONER VERSUS SHREE AMBIKA SUGARS LTD. [ 2015 (12) TMI 1887 - SC ORDER] . In Godavari Sugar Mills Ltd. Vs Commissioner of Central Excise, Belagaum [ 2006 (11) TMI 497 - CESTAT, BANGALORE ] it was held that it is sufficient if CENVAT Credit attributable to inputs in exempted product is reversed or paid. In case on hand, though the appellants have resorted to different method, it is clear that the appellants have not availed CENVAT Credit on inputs in respect of exempted products or non-excisable ENA. Following the proposition laid in the above decisions, it is held that the demand cannot sustain. The impugned order is set aside. Appeal allowed.
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CST, VAT & Sales Tax
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2023 (3) TMI 1206
Validity of assessment proceedings - seeking certain modifications to the turnover returned by the petitioner - HELD THAT:- There has been substantial elapse of time from the inception of the original proceedings in October, 2014 till 2020 when the present impugned orders have been passed. Hence the following directions are issued: (i) The petitioner will remit the taxes on the turnover that was omitted to be offered along with interest for the delay within two weeks from the date of receipt of this order. (ii) Upon condition that the amount as above is so remitted, the objections of the petitioner filed on 22.12.2014 shall be taken into account as though they constitute an application for rectification under Section 84 of the Act, and disposed within a period of four weeks thereafter. These writ petitions stand disposed.
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Indian Laws
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2023 (3) TMI 1205
NPA - classifying their accounts as fraudulent - Violation of principles of natural justice (particularly the rule of audi alteram partem) - validity of Master Directions on Frauds Issued by the Reserve Bank of India RBI - directions were challenged before different High Courts primarily on the ground that no opportunity of being heard is envisaged to borrowers before classifying their accounts as fraudulent - default in repayment of credit facilities. HELD THAT:- The rule of audi alteram partem ought to be read in Clauses 8.9.4 and 8.9.5 of the Master Directions on Fraud. Consistent with the principles of natural justice, the lender banks should provide an opportunity to a borrower by furnishing a copy of the audit reports and allow the borrower a reasonable opportunity to submit a representation before classifying the account as fraud. A reasoned order has to be issued on the objections addressed by the borrower. On perusal of the facts, it is indubitable that the lender banks did not provide an opportunity of hearing to the borrowers before classifying their accounts as fraud. Therefore, the impugned decision to classify the borrower account as fraud is vitiated by the failure to observe the rule of audi alteram partem. In the present batch of appeals, this Court passed an ad-interim order restraining the lender banks from taking any precipitate action against the borrowers for the time being. The conclusions are summarized below: i. No opportunity of being heard is required before an FIR is lodged and registered; ii. Classification of an account as fraud not only results in reporting the crime to investigating agencies, but also has other penal and civil consequences against the borrowers; iii. Debarring the borrowers from accessing institutional finance under Clause 8.12.1 of the Master Directions on Frauds results in serious civil consequences for the borrower; iv. Such a debarment under Clause 8.12.1 of the Master Directions on Frauds is akin to blacklisting the borrowers for being untrustworthy and unworthy of credit by banks. This Court has consistently held that an opportunity of hearing ought to be provided before a person is blacklisted; v. The application of audi alteram partem cannot be impliedly excluded under the Master Directions on Frauds. In view of the time frame contemplated under the Master Directions on Frauds as well as the nature of the procedure adopted, it is reasonably practicable for the lender banks to provide an opportunity of a hearing to the borrowers before classifying their account as fraud; vi. The principles of natural justice demand that the borrowers must be served a notice, given an opportunity to explain the conclusions of the forensic audit report, and be allowed to represent by the banks/ JLF before their account is classified as fraud under the Master Directions on Frauds. In addition, the decision classifying the borrower s account as fraudulent must be made by a reasoned order; and vii. Since the Master Directions on Frauds do not expressly provide an opportunity of hearing to the borrowers before classifying their account as fraud, audi alteram partem has to be read into the provisions of the directions to save them from the vice of arbitrariness. Appeal disposed off.
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