Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 31, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Transfer of unutilized Input tax credit to new registration - unable to submit Form GST ITC- 02A online - The impugned action whereby, the respondents have failed to acknowledge and transfer the input tax credit accruing to the petitioner pursuant to the registration of its new business unit in accordance with Rule 41A of the GST Rules, is grossly illegal, arbitrary and unjust - the respondents are directed to regularise the input tax credit in favour of the petitioner as per entitlement - HC
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Condonation of delay in filing appeal - Keeping in view the concern and context reflected in the Judgments, amendments to the statute and executive instruction/clarification, it is apt to say that the petitioner having filed appeal on 13.11.2020 before the Appellate Authority upon receipt of the Order in Form GST DRC-07 in terms of Rule 142(5) of the OGST Rules in connection with Section 74 of the OGST Act on 06.03.2020, the delay caused should have been condoned by the Appellate Authority. - HC
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Classification of services - works contract services to TANGEDCO - The words of the entry is clear and excludes the works supplied to Government entity, in respect of a Civil Structure or any other original works meant predominantly for commerce, industry or any other business or profession - there are no reason to disagree with the findings of the LA that the supply cannot be considered as that meant predominantly for use other than commerce, industry, or any other business or professional purposes. - Liable to GST @18% - Order of AAR confirmed - AAAR
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Classification of goods - boarding, lodging facilities and such other services - The scope, language and the terms of the agreement establishes that the applicant is to extend the bouquet of services required from them as 'Hospitality Services' together and in conjunction with each other and therefore is a naturally bundled 'composite supply' of service, with 'Provision of accommodation' as the principal service. - AAAR
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Classification of goods - rate of tax - Marine Engines - if the marine engines supplied for use as part of vessel falling under tariff heading 8902, which are used by the fishermen, then such engines as part of such vessels will only attract GST at the rate of 5% as per the above entry. - Supply of materials and labour while rendering warranty services during the warranty period, free of cost, does not attract GST separately - AAR
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Maintainability of Advance Ruling application - In the instant case the applicant has sought ruling before us on behalf of their customers and the act of registration is not undertaken or to be undertaken by the applicant - this question is not admissible as per Section 97 read with Section 95 of the Act and therefore not admitted. - AAR
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Maintainability of Advance Ruling application - Recipient of supply - if a recipient obtains a ruling on the value to be adopted of his inward supply of goods or services, the supplier of such goods or services is not bound by that ruling and he is free to assess the supply according to his own determination, in which case, the ruling loses its relevance and applicability even. - Thus, only a supplier and not the recipient is eligible to seek an advance ruling and therefore the subject application cannot be admitted - AAR
Income Tax
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Validity of Reopening of assessment u/s 147 - HC dismissed the writ petition giving reasons for the disinclination to entertain the writ petitions - - When the Constitution confers on the High Courts the power to give relief it becomes the duty of the Courts to give such relief in appropriate cases and the Courts would be failing to perform their duty if relief is refused without adequate reasons. - Matter restored before the HC - SC
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Capital gains u/s 45 - FMV determination - admittedly, the property in question was sold by the Petitioner below the circle rate (stamp value rate) contrary to Section 50C of the Act. Consequently, this Court is of the view that the AO has the jurisdiction to examine in detail the transaction in question. - HC
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Exemption u/s 11 - Charitable activity u/s 2(15) - assessee was giving on rent Kalyana Mandapa for fees - Assessee has not been maintaining books of account separately for the business of letting out of kalyana mandapa. Therefore, even assuming the business is incidental to the attainment of the objects of the trust in absence of separate books of account, the benefit of section 11 of the I.T.Act cannot be granted. - AT
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Validity of assessment - Non issuing of notice u/s 143(2) - Applicability of provisions of section 292BB - Before the Tribunal the AR could not submit any proof for having raised the objections before the completion of the assessment. From the evidences perused there is nothing to prove that the objection were raised before AO for non issue of notice u/s.143(2) to take shelter under proviso to 292BB and that there is no contrary evidence submitted to support the claim that the notice u/s.143(2) was not served on the assessee. - AT
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Best Judgement assessment u/s 144 - Estimation of income - The Assessing Officer issued notices under section 143(2) as well as various notices issued under sections 142(1) alongwith the questionnaire to the assessee however, the assessee has not responded to the notice issued by the AO and consequently the assessment was framed under section 144 on the basis of the material available on record. - Matter restored back for computation of gross receipts/turnover of the assessee and estimation of income by giving one more opportunity to the assessee to furnish the relevant details - AT
Customs
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Revocation of Customs Broker License - filing of benami Bills of Entry - The appellant, in this case, has filed benami Bills of Entry - The irresistible conclusion is that the appellant has built its business based on facilitating fraudulent transactions for its clients and wants its Customs Broker Licence restored so that it can continue in such business - In this case, the appellant knowingly, actively, facilitated benami imports and hence is accountable for its actions. - revocation of the licence sustained - AT
State GST
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Important advisory for e-Invoice for Taxpayers having annual turnover exceeding ₹ 20 Crores - SGST
Service Tax
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Refund of unutilised CENVAT credit paid - intermediary - There is no allegation that the appellant was involved in any way, either in purchase or sale of goods or even in the collection of sale proceeds from the customers of the company. By this alone, it can be safely concluded that the appellant is not acting as an agent or a middleman for anyone, and hence, is not covered by the mischief of the definition of ‘intermediary’ and consequently, Rule 9 of POP. Hence, the same cannot be held that there is no export of services under Rule 6A ibid. - AT
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Classification of services - support services of business or commerce or not - Such public private partnerships are at times described as collaboration, joint venture, consortium or joint undertaking. Regardless of the name or the legal form in which the same are conducted, they are essentially in the nature of partnership with each co-venturer contributing some of the resources for the furtherance of the joint business activity. - Demand set aside - AT
Central Excise
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Refund of accumulated balance of credit on education cess and secondary and higher education cess - credit could not be utilised prior to GST regime - It is, therefore, seen that there are conflicting decisions of the Karnataka High Court and the Punjab and Haryana High Court on the one hand and the Rajasthan High Court on the other hand. The decision of the Karnataka High Court in Slovak India was affirmed by the Supreme Court. It would, therefore, be appropriate to follow the view taken by the Karnataka High Court and the Punjab and Haryana High Court. - Refund allowed - AT
VAT
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Classification of goods - sale of Printer under VAT Act as a Computer peripheral - taxable at 4% or as unclassified items under Schedule @ 12.5%? - although their Printers are multifunctional in nature their components are mainly used for the purpose of printing and their main character is that of a Printer - Tribunal committed factual and legal error in treating the multifunctional printers sold by the revisionist as falling in the Residuary category - HC
Case Laws:
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GST
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2022 (3) TMI 1306
Levy of GST - royalty payment made by the petitioner - Section 73 of Uttar Pradesh Goods and Services Tax Act, 2017 - delay in filing the writ petition has been explained on account of the circumstances arising from the spread of third wave of pandemic COVID-19 - HELD THAT:- Reserving the right to object to delay, to the State-respondents, let counter affidavit be filed by the respondents, within a period of six weeks. Petitioner shall have two weeks' time thereafter to file rejoinder affidavit. List on 26 July, 2022.
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2022 (3) TMI 1305
Maintainability of petition - appropriate forum - Availment of excess input tax credit - It is argued by the Petitioner that the mismatch is on account of typographical error committed by the official of the proprietorship concerned - opportunity to rectify the error provided or not - HELD THAT:- The proper forum for the Petitioner would be to approach the Appellate Authority rather than invoke writ jurisdiction under Article 226 of the Constitution before this Court. Accordingly, the Petitioner is permitted to file Appeal under Section 107 of the OGST Act with a application for condonation of delay and if filed within a period of four weeks from today, the question of limitation shall not be pressed by the revenue keeping in view that the Petitioner was prosecuting its case in this Court and also the order(s) of the Hon ble Supreme Court. Petition disposed off.
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2022 (3) TMI 1304
Transfer of unutilized Input tax credit to new registration - unable to submit Form GST ITC- 02A online - grievance in this writ petition is that the Form GST ITC-02A was not available on the GSTN Portal for the entire period of 30 days from the registration of its separate business verticals - HELD THAT:- The fact regarding the petitioner having raised the issue with the GST Helpdesk within the period of 30 days, is manifested from the response mail dated 21.05.2019 sent by GST Helpdesk to the petitioner pursuant to raising of this grievance vide ticket No.201905145915528. The petitioner submitted the manual Form GST ITC-02A to the Deputy Commissioner, CTO Ward, A-Circle Udaipur within the outer limit of 30 days as is evident from the letter dated 14.05.2019 (Annexure-2). The impugned action whereby, the respondents have failed to acknowledge and transfer the input tax credit to the tune of ₹ 2,58,03,590/- accruing to the petitioner pursuant to the registration of its new business unit in accordance with Rule 41A of the GST Rules, is grossly illegal, arbitrary and unjust - the respondents are directed to regularise the input tax credit in favour of the petitioner as per entitlement - petition allowed.
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2022 (3) TMI 1303
Condonation of delay in filing appeal - Lock-down due to COVID - sufficient cause for delay or not - appeal filed within three months from the date of communication of impugned decision or not - HELD THAT:- In the instant case admittedly having received the Order passed under Section 74 on 06.03.2020, the petitioner was required to file the appeal on or before 05.06.2020, i.e., three months from the date of communication, but the appeal was presented on 13.11.2020, i.e., beyond the condonable period - it is apparent that the period of three months from the date of communication of order sought to be appealed against got lapsed during period when the effect of COVID-19 virus was at its peak. Noteworthy here to refresh that the lock-down was imposed on 24.03.2020 and there was impediment for the petitioner to file the appeal on or before 05.06.2020. Keeping in view the concern and context reflected in the Judgments, amendments to the statute and executive instruction/clarification, it is apt to say that the petitioner having filed appeal on 13.11.2020 before the Appellate Authority upon receipt of the Order in Form GST DRC-07 in terms of Rule 142(5) of the OGST Rules in connection with Section 74 of the OGST Act on 06.03.2020, the delay caused should have been condoned by the Appellate Authority. Petition allowed.
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2022 (3) TMI 1302
Classification of services - works contract services to TANGEDCO - carrying out retrofitting work for strengthening the NPKRR Maaligai against seismic and wind effect and modification of elevation in TNEB headquarters building at Chennai - applicability of Sl.No.3 item (vi) of the Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- It is evident that the entry is available when the Composite supply of Works contract are made to Government entity by way of fitting out, renovation or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession and when such supply is made to a Government entity , they should have been procured in relation to a work entrusted to it by the Central/State Government or the Local Authority as the case maybe . In the case at hand, the works are undertaken by the appellant to the Headquarters of TANGEDCO Ltd, a commercial company in as much as TANGEDCO is involved in Generation and Distribution of Electricity against fixed Tariff. The words of the entry is clear and excludes the works supplied to Government entity, in respect of a Civil Structure or any other original works meant predominantly for commerce, industry or any other business or profession - there are no reason to disagree with the findings of the LA that the supply cannot be considered as that meant predominantly for use other than commerce, industry, or any other business or professional purposes. In the case at hand, it has been held by the LA that TANGEDCO is a Government Entity and therefore there is no difference in the clarification issued by the State Government and the stand held by the LA and the claim that the State Government cannot speak in two voice is void. Based on the clarification received from the Government to the status that TANGEDCO is a Government Entity, the Finance Director has addressed, the Chief Engineers others to take action to absorb the benefits of GST concessions to Government entity , which is their own interpretations and not clarification of the State Government and therefore, this contention fails. In the case at hand, the condition imposed for availing the concessional rate at the said entry is unambiguous in as much as it says that the services should have been procured by the Government entity, in relation to a work entrusted to it and the strengthening of the Headquarters building of TANGEDCO is definitely not an activity in relation to Generation and Distribution of Electricity , the work entrusted to it. Therefore, the contentions of the appellant in this regard are rejected. The appeal is disposed off.
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2022 (3) TMI 1301
Classification of goods - applicable GST SAC code - rate of GST - boarding, lodging facilities and such other services - composite supply or a mixed supply? - principal supply or not - baturaaly bundled services - exemption vide N/N. 12/2017- CT (Rate) dated 28.06.2017 - HELD THAT:- It is not in dispute that AMSL run the program under the DDU-GKY project, wherein the Boarding and Lodging facilities are to be extended by them to the students enrolled in the program. AMSL has engaged the applicant to provide the 'Hospitality services' and entered into an agreement with the applicant. It is evident from the said agreement between the applicant and AMSL that the supply is made by them in the capacity of an 'independent contractor' and therefore the supply is not a 'business service of intermediaries'. In the case at hand, the applicant undertakes the activities of providing 'Hospitality Services' specifically classifiable under SAC 99632, in his individual capacity and therefore, the activity cannot be categorized as 'Other business support services not elsewhere classified.' In the case at hand, the applicant has entered into lease agreements with third party service providers and in one such agreement entered into with AMET University( Academy of Maritime Education and Training) available on record, it is seen that the applicant has entered into the contract for lease of the property owned by AMET for the purpose of 'running Hostels and providing accommodation for the students/Candidates, and/or general office purposes and lawful uses ancillary to any of the foregoing principle uses'. Thus, it is clear that the applicant, enters into agreement with third parties, in their own capacity, to enable themselves to provide the 'Hospitality service', which establishes that the activities of the applicant are independent in nature - Also, from the scope, language and the terms and conditions of the agreement of the applicant with AMSL, it is evident that the applicant is entrusted to provide the 'Hospitality Services' in the capacity of an Independent contractor only and not as an agent of AMSL. The scope, language and the terms of the agreement establishes that the applicant is to extend the bouquet of services required from them as 'Hospitality Services' together and in conjunction with each other and therefore is a naturally bundled 'composite supply' of service, with 'Provision of accommodation' as the principal service. Whether the service is exempted under S.No. 14 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017? - HELD THAT:- In the case at hand as has been observed, the per day equivalent consideration for the composite supply of Hospitality services when extended in Chennai Region is ₹ 300/- and for regions out of Chennai the per day equivalent consideration is ₹ 250/- which are below one thousand rupees stipulated for per day. Therefore, the applicant is eligible for the said exemption entry.
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2022 (3) TMI 1300
Classification of goods - rate of GST - women wellness products - Cramp comfort - to be classified under Chapter Heading 3004 attracting 12% GST under serial no. 63 or Chapter Heading 3005 attracting 12% GST - Applicability of serial no. 64 in Schedule II of Notification 01/2017 - Central Tax (Rate) dated 28 June 2017 and under Serial No: 63 or 64 of Schedule II of Notification G.O. (Ms) No. 62 (NO.II(2)/CTR/532(D-4)/2017) TNGST (Rate), dated 29.06.2017 - HELD THAT:- The applicant in August 2020, launched Cramp Comfort , which is a heat patch used by women during period pain. They claim that the product has prophylactic uses and is used as an alternative therapy to manage their menstrual discomfort/ secondary dysmenorrhea. In the instant case, the applicant s product Cramp Comfort works by self-heating and for pain relief during the menstrual cycle for women. The product just relieves the pain in the abdomen caused due to menstrual cycle. From the submissions of the applicant, it is seen that the active ingredients used in the product are Water absorber, Iron Powder, Activated charcoal, Vermiculite, Sodium chloride in specified doses, though the dosages of the components are not certified by any controlling agencies. The applicant has contended that product is for dysmenorrhea as a therapeutic use and the word Medicament should not have restricted meaning but include products for Therapeutic/Prophylactic use. There are many products which are naturally occurring and have therapeutic or prophylactic properties, when used in proper proportions and for particular time periods. The products like neem, turmeric, garlic etc.. all have medicinal value but the same is not considered as medicaments, when they are used as such, without subjecting to any chemical modification. Therefore, merely because a product possesses certain natural therapeutic/prophylactic properties, it cannot be said to fall under the classification of medicaments. In the case at hand, it is not established that the product has been classified as a device specified by the Central Government in any notification and therefore reliance on Section 3(b)(iv), to claim that the product is a Medicament do not help them. It is further seen that the applicant claims the product to be a drug as per Section 3(b) (i), considering the material part of the said section to be substances intended to be used for or in the treatment . It is their claim that the predominant use of the product is to alleviate the pain in the abdomen caused due to Dysmenorrhea and therefore to be considered as a drug - it is evident that the substances intended to be used for treatment of a disorder is a drug as per this provision. In the case at hand, the treatment for secondary dysmenorrhea are non-steroidal anti inflammatory drugs(NSAIDs) and the product helps only in reducing the pain and has not been established to be a recommended treatment for the disorder. It is seen that the product though not notified as a medical device as required Under Section 3(b)(iv) of Drugs and Cosmetics Act 1940, is still marketed as Self-heating Pain relief Patch and can be worn anywhere for alleviating the pain. Therefore, the product merits classification under CTH 3005 as the Customs Tariff is aligned with the HSN. Further, on perusal of the invoices furnished by the applicant, the applicant s product is currently classified under HSN 3005 which is evident from the invoice raised in November 2021. The product Comfort patch is to be classified under HSN 3005 and the applicable CGST is @6% as per serial Number 64 in schedule II of Notification 01/2017 -Central Tax (Rate) dated: 28.06.2017 and applicable SGST is @ 6% as per Serial No. 64 of Schedule II of Notification G.O. (Ms) No.62 (No. II(2)/ctr/532(D-4)/2017) TNGST (Rate), dated: 29.06.2017.
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2022 (3) TMI 1299
Classification of goods - rate of tax - Marine Engines coming under HSN Code 8407 or not - spare parts exclusively used as part of fishing vessel classified under heading 8902 or not - collection made towards supply of materials and labour charges towards repair of fishing vessel - puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene - marine engine coming under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operations or not. Rate of tax on Marine engines coming under HSN code 8407 and its spare parts exclusively used as part of fishing vessel of heading 8902 - HELD THAT:- From the tariff 89 headings, it is clear that the rate is applicable based on the end use of these engines i.e., if they become part of fishing vessels or other vessels including warships and life boats other than rowing boats. Thus the rate of tax at 5% is based on the end use these engines are put to and is available only for the vessels - From the invoice submitted, it is seen that the OBM has been supplied to an individual and the HSN adopted is 8407. As per entry at Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, parts of goods of headings 8901,8902,8904,8906,8907 falling under any chapter of the customs Tariff attracts GST @5%. Therefore if the marine engines supplied for use as part of vessel falling under tariff heading 8902, which are used by the fishermen, then such engines as part of such vessels will only attract GST at the rate of 5% as per the above entry. Rate of tax on spare parts exclusively used as part of fishing vessel of heading 8902 - HELD THAT:- Entry Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 applies only to parts of goods of heading falling under any chapter when it is a part of goods falling under heading 8902. As the applicant has not produced documents establishing details of spare sales, this authority is constrained to ascertain whether the spares supplied are parts of goods of vessels falling under chapter 8902. In this scenario, for want of documentary substantiation, no ruling is offered with respect to spares. Whether GST is leviable on supply of materials and labour charges incurred during the warranty period, free of cost? - HELD THAT:- As parts are provided to the customer without a consideration under warranty, no GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore the replacement of the goods and service rendered during the warranty period without consideration does not attract GST separately. The warranty card issued by the applicant has a condition that during the time of repair, transportation expenses and all other expenses have to be borne by the boat owner. If such cost are incurred by the applicant on behalf of the boat owner and is combined, with warranty charges, taxes are applicable. Hence in cases where warranty services are rendered exclusively without combining any other service charges or incidental expenses incurred while rendering the warranty services, only will not attract GST. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessels of heading 8902, after the warranty period - HELD THAT:- The spares and labour charges are treated as separate transactions and have been taxed at the appropriate rates. To decide on the nature of activity supplied, if composite or not, the terms of such activity should be known. That is, it should be made clear if the activity of rendering repair or maintenance services of fishing vessels/boats etc involves supply of both goods/spare parts and services in conjunction and are naturally bundled with each other in the ordinary course of business to be treated as composite supply. This fact can be ascertained only from the contract entered into for rendering such service - The applicant has neither produced any copy of the contract nor agreement for supply of repair or maintenance service of fishing vessels. From the invoices submitted, it is observed that spares and labour charges have been taxed individually and the nature of supply, whether the predominant supply is service or replacement of spares cannot be established. As the contract/agreement which would throw light on the, nature of supply, predominant supply etc is not furnished and the invoices are unable to establish the nature of such repair work done after the warranty period, this authority is constrained to ascertain the nature of the supply of repair or maintenance services rendered by the applicant as to whether it is a composite supply or it provides for the supply of spare parts and services (labour) as distinct and separately identifiable supplies. Hence no ruling cannot be extended in this regard. Rate of tax on puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene - HELD THAT:- To avail the concessional rate of 5% under entry no. 252 cited supra, goods supplied should be part of goods falling under Chapters 8901, 8902, 8904, 8905, 8906, 8907. The subject Puff insulated ice box is only used independently to keep the fish fresh and it does not become a part of the vessels as provided in the notification. Such boxes cannot be considered as part of the vessels and are in no way connected to the vessels. Their main purpose is to keep the fish fresh and prevent decay and has nothing to do with the vessels or operation of such vessels. Hence the product cannot be considered as a part of fishing vessel falling under Customs Tariff Heading 8902 and hence is not eligible for the concessional rate of GST as per entry at SI.No.252 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017. Rate of tax on marine engines to Defence department for patrol and flood relief and rescue operations - HELD THAT:- Applicant had not filed any documentary evidences along with the application to substantiate that the engines they supply are being used in boats used by defence departments. The applicant has not furnished any purchase orders for supply of engines at present or for proposed supplies. In this scenario, this authority is constrained to pass any ruling on the question raised about eligibility to avail rate of 5% as prescribed at Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017.
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2022 (3) TMI 1298
Maintainability of Advance Ruling application - Registration of GST - Registration for multiple companies from same address - requirement to follow GST rules related to Principle Place of Business - HELD THAT :- An applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. In the case at hand, entities sharing the work space are to be registered under GST Act and they have to furnish details of principal place of business along with documentary proof for the same. Hence the activity of registration is undertaken or proposed to be undertaken by the entities sharing the space and not the applicant, who lets out the shared space. The applicant in the instant case has admitted before the authority that the ruling is sought on behalf of their customers who are seeking registration and are facing issues on registration as the principal place of business accommodates multiple units requiring separate registrations. In the instant case the applicant has sought ruling before us on behalf of their customers and the act of registration is not undertaken or to be undertaken by the applicant - this question is not admissible as per Section 97 read with Section 95 of the Act and therefore not admitted. The application is rejected as not admitted as per Section 98(2) read with Section 95(a)/103(1) of the CGST/TNGST Act 2017.
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2022 (3) TMI 1297
Maintainability of Advance Ruling application - Recipient of supply - Valuation - taxable value of supply of construction services provided by the developer to the applicant - time of supply - applicability of N/N. 4/2018 - HELD THAT:- In the case on hand the applicant herself admits in the question raised by her that the services are provided by the developer to the applicant. The applicant is the recipient of the construction service of the flat for which an agreement was also entered on 10.4.2019 between the applicant and the developer for providing the services of the construction service. The cost of the construction service is determined by the developer and recovered from the applicant for handing over the flats to the applicant. In the subject case, we find that the applicant is a recipient of services and has raised the questions as a recipient of services. Whether or not the activities undertaken by the applicant pertain to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant and that the application is admissible under the ambit of this authority? - HELD THAT:- Section 95 of the CGST Act 2017 allows this authority to decide the matters in respect of supply of goods or services or both undertaken or proposed to be undertaken by the applicant. We find that the applicant has not undertaken the supply in the subject case. Rather the applicant is a recipient of impugned services in the subject case. The impugned transactions are not in relation to the supply of goods and services or both undertaken or proposed to be undertaken by the applicant This authority is governed by the statutory provisions of Chapter XVII of the GST Act. Section 98 of the Act, prescribes the procedure to be followed on receipt of the application and it clearly states that prima-fade, on receipt of the application, the authority should examine its admissibility after extending an opportunity of hearing to the applicant - if a recipient obtains a ruling on the value to be adopted of his inward supply of goods or services, the supplier of such goods or services is not bound by that ruling and he is free to assess the supply according to his own determination, in which case, the ruling loses its relevance and applicability even. Any law provision has to be interpreted in a constructive and harmonious way keeping in mind the object of the purpose of the provision. All parts of it should be read in aid of and not in derogation of that purpose. Any interpretation, if it defeats the very purpose of the objective and purpose of the law provision, is not only incorrect but also improper and bad in law. Thus, only a supplier and not the recipient is eligible to seek an advance ruling and therefore the subject application cannot be admitted as per the provisions of Section 95 of the CGST Act - application rejected as not admissible.
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Income Tax
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2022 (3) TMI 1309
Capital gain computation - Disallowing the deduction claimed as expenses while determined the capital gain - computation of income filed by the assessee that assessee has shown to have earned the compensation on acquisition of land for construction of NH-76 - assessee is a sick company under Sick Industrial Companies (Special Provisions) Act, 1985 - payment made directly to banks and financial institutions in pursuance of judicial order is still towards discharge of principle amount of loan and interest thereon - HELD THAT:- Assessee is a sick company under Sick Industrial Companies (Special Provisions) Act, 1985. We observe from the record that no doubt the land belongs to the company was transferred and assessee has received sale proceeds out of the above said sale proceeds and assessee has transferred being principal loan amount towards repayment to financial institutions from the compensation received from the NHAI based on the direction of Hon'ble High Court of Rajasthan. Observation of the Hon'ble Rajasthan High Court it is clear that there is a pre-existing overriding title and interest in the property of the company in favour of its secured creditors comprising of Financial Institutions and Banks on paripassu basis by virtue of joint equitable mortgage credit on 1st June 1994. Since assessee has defaulted and not able to service any of the loan to the financial institutions, by virtue of failure, the assets belong to the assessee with the overriding title and interest in the property is already passed to the secured creditors. Based on the direction of the Hon'ble Rajasthan High Court the financial institutions are directly secured the property and collected the sale proceeds. The sale proceeds were distributed among the financial institutions without there being any involvement of the assessee. Since the property transferred was with pre-existing lien with the overriding title and technically assessee is not the owner of the property which was duly transferred. Therefore, the assessee cannot be asked to pay the tax on the same. Accordingly, we are not in agreement with the finding of the Ld.CIT(A). See SITALDAS TIRATHDAS [ 1960 (11) TMI 17 - SUPREME COURT] - Decided in favour of assessee.
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2022 (3) TMI 1308
Reopening of assessment u/s 147 - Validity of reasons to believe - bogus purchases - HELD THAT:- As gone one through the reasons recorded by the Assessing Officer and noted reasons were recorded by the Assessing Officer as per the provision of section 147 and the reasons so recorded by the Assessing Officer are valid in the eye of law, therefore we dismiss the ground raised by assessee on technical issue of reopening under section 147. As relying on SHRI PANKAJ KANWARLAL JAIN HUF VERSUS THE INCOME TAX OFFICER, WARD-2 (3) (8) , SURAT [ 2019 (8) TMI 1769 - ITAT SURAT] when assessing officer received information from the investigation wing that two well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Bogus purchases - It is settled law that under Income-tax, the tax authorities are not entitled to tax the entire transaction, but only the income component of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, we are of the view that disallowances @ 6% of impugned purchases/disputed purchases would be sufficient to meet the possibility of revenue leakage. In the result the ground No. 2 of appeal raised by the assessee is partly allowed and the grounds of appeal raised by revenue are dismissed.
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2022 (3) TMI 1307
Reopening of assessment u/s 147 - Time limit for notice to be issued u/s 149 - escaped income from an asset outside India - time limit u/s 149 within which notice for reassessment can be issued in respect of income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment - HELD THAT:- Section 149(1)(c) provides that no notice for reassessment can be issued if more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment . Therefore, as long as sixteen years from the end of the relevant assessment year have not expired, the reassessment notice is in a case involving income from assets located outside India. As for the retrospective application of this provision, Explanation to Section 149 unambiguously provides that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012 . The amendment in Section 149(1), introduced with effect from 1st July 2012, is thus expressly stated to be retrospective in nature, and there is, in our humble understanding, there is no bar on the validity of the retrospectivity of the taxing statute as long as it is clearly specified to be so. there is no bar on the retrospectivity of a statute, though, in the absence of any express intention to that effect, it is presumed to be only prospective. The validity of a statute being retrospective in effect cannot, as such, be questioned in principle. In any event, it is not open to a forum like this Appellate Tribunal-much less a Commissioner (Appeals), to contest validity of a retrospective amendment in law. Once the statute clearly provides that the amended section 153(1) and (3), as amended by the Finance Act 2012, shall also be applicable to any assessment year beginning on or before 1st day of April 2012, it cannot be open to us to hold otherwise. To suggest that this amendment was intended to be prospective in effect would mean that the legislature, which undisputedly has the powers to make amendments with retrospective effect, intended to introduce section 149(1)(c) to take full effect from 1st April 2022 - an incongruity by any standard. The interpretation adopted by the learned Commissioner (Appeals) is thus clearly contrary to the specific words of the statute and unambiguous intent of the legislature. We, therefore, vacate the relief, quashing the reassessment proceedings as time-barred, granted by the learned Commissioner (Appeals) and restore the stand of the Assessing Officer on this point. Our humble understanding is that so far as escaped income from an asset outside India is concerned, any completed assessment can be reopened as long as sixteen years have not elapsed from the end of the relevant assessment year. Admittedly, that is not the position in the present case, as the relevant assessment year was completed on 31st March 2000, and the assessment was reopened on 27th March 2015. The plea of the Assessing Officer is thus indeed well taken. Thus as there is no adjudication on merits by the learned Commissioner (Appeals), we did not consider it appropriate to deal with the same. In view of the fact that the respondent is a very senior citizen in his eighties, that the assessee s arguments on merits have not been dealt with at all on merits, that the assessee has a prima facie arguable case on merits, and to ensure the matter reaches finality within a reasonable time frame, we deem it fit and proper to direct, as a result of vacating the relief on the ground of reassessment having been quashed, the Commissioner (Appeals) to dispose of the matter on merits at the earliest and in no event later than 180 days from the date of service of this order.
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2022 (3) TMI 1296
Validity of Reopening of assessment u/s 147 - HC dismissed the writ petition giving reasons for the disinclination to entertain the writ petitions - HELD THAT:- From the writ petitions produced on record, it appears that the reopening of the assessment under Section 148 of the Income Tax Act has been challenged on a number of grounds. None of the grounds raised in the writ petitions has been dealt with and/or considered by the High Court on merits. There is no discussion at all on any of the grounds raised in the writ petitions. The Division Bench of the High Court has dismissed the writ petitions in a most casual manner which is unsustainable. Except stating that we are not inclined to entertain writ petition , nothing further has been stated by the High Court giving reasons for the disinclination to entertain the writ petitions. The manner in which the High Court has dealt with and disposed of the writ petitions without passing any reasoned order is not appreciated by this Court. When a number of issues/grounds were raised in the writ petitions, it was the duty cast upon the court to deal with the same and thereafter, to pass a reasoned order. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the Courts to give such relief in appropriate cases and the Courts would be failing to perform their duty if relief is refused without adequate reasons. While emphasising the necessity to pass a reasoned order, in the case of Central Board of Trustees Vs. Indore Composite Private Limited, [ 2018 (7) TMI 2206 - SUPREME COURT] observed and held by this Court that the courts need to pass a reasoned order in every case which must contain the narration of the bare facts of the case of the parties to the lis, the issues arising in the case, the submissions urged by the parties, the legal principles applicable to the issues involved and the reasons in support of the findings on all the issues arising in the case and urged by the learned counsel for the parties in support of its conclusion. Since we cannot countenance the manner in which the orders have been passed by the High Court which has compelled us to remand the matter to the High Court for deciding the writ petitions afresh on merits, we do so in light of the aforesaid observations. We allow the present appeals and set aside the impugned orders passed by the High Court and remand the matters to the Division Bench of the High Court for deciding the writ petitions afresh in accordance with law, keeping in view our observations made supra
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2022 (3) TMI 1295
Penalty under section 270A - Penalty for under-reporting and misreporting of income - HELD THAT:- There is not even a whisper as to which limb of Section 270A of the Act is attracted and how the ingredient of sub-section (9) of Section 270A is satisfied. In the absence of such particulars, the mere reference to the word misreporting by the Respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary. This Court is of the opinion that the entire edifice of the assessment order framed by Respondent No.1 was actually voluntary computation of income filed by the Petitioner to buy peace and avoid litigation, which fact has been duly noted and accepted in the assessment order as well and consequently, there is no question of any misreporting. This Court is further of the view that the impugned action of Respondent No.1 is contrary to the avowed Legislative intent of Section 270AA of the Act to encourage/incentivize a taxpayer to (i) fast-track settlement of issue, (ii) recover tax demand; and (iii) reduce protracted litigation.
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2022 (3) TMI 1294
Capital gains u/s 45 - FMV determination - explanation as to why the improvement cost in excess of what has been reported in the valuation report of DVO should not be disallowed from the cost of acquisition of the above-mentioned property for calculation of capital gains under Section 45 - HELD THAT:- Upon perusal of the paper book, this Court finds it strange that though the property in question was mortgaged in favour of Yes Bank, yet the property in question was sold to a company in which the wife of the person in management of the Yes Bank was a Director. Further, admittedly, the property in question was sold by the Petitioner below the circle rate (stamp value rate) contrary to Section 50C of the Act. Consequently, this Court is of the view that the AO has the jurisdiction to examine in detail the transaction in question. In view of the aforesaid, this Court is of the opinion that the present writ petition is bereft of any merit. Accordingly, the writ petition and applications are dismissed.
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2022 (3) TMI 1293
Reopening of assessment u/s 148 - Validity of reopening of assessment u/s 147 - re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - Notice as barred by limitation - enforcement of the Enabling Act and the Finance Act, 2021 - scope of provisions of Section 148 read with Section 148A as substituted by Finance Act, 2021 - HELD THAT:- As relying on MANOJ JAIN VERSUS UNION OF INDIA AND ORS. [ 2022 (1) TMI 741 - CALCUTTA HIGH COURT] and BAGARIA PROPERTIES AND INVESTMENT PVT. LTD. ANR. VERSUS U.O.I ORS. [ 2022 (1) TMI 742 - CALCUTTA HIGH COURT] is disposed of by allowing the same. Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void. Accordingly, impugned notice under Section 148 of the Income Tax Act is quashed with liberty to the Assessing Officers concerned to initiate fresh reassessment proceedings in accordance with the relevant provisions of the Act as amended by Finance Act, 2021 and after making compliance of the formalities as required by the law. This writ petition is being entertained subject to payment of cost of ₹ 5000/- to the High Court Legal Services Committee since the impugned notice under Section 148 of the Income Tax Act, 1961, has been issued on 20th April, 2021 as appears from record and this writ petition has been filed in March, 2022, that is, almost after ten months from receipt of the impugned notice, without any explanation for such delay in filing this writ petition.
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2022 (3) TMI 1292
Application u/s 197 - profits to the Permanent Establishment (PE) of the petitioner therein in India, at the rate of 26% - HELD THAT:- In case the petitioners were to move an application u/s 197 of the Act for FY 2022-2023, and if the contentions raised in the writ petitions form part of the said application, including what is noted hereinabove by us with regard to the attribution of profits to the PE, the same will be dealt with by the AO, as per law. At this stage, Mr Jolly says that the petitioners will move an application for the F.Y.2022-2023, within four weeks of receipt of a copy of this order. In case, such an application is moved, the AO will dispose of the same within four weeks of the receipt of the application.
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2022 (3) TMI 1291
Late filing fee under section 234E - Intimation u/s 200A and the implications of the amendment brought in to the Act - HELD THAT:- In the decision in M/s.Sarala Memorial Hospital v. Union of India [ 2018 (12) TMI 1818 - KERALA HIGH COURT] held that the amendment would take effect only from 1 st June, 2015 and is thus prospective in nature. The aforesaid judgment has become final and is binding upon the authorities. Thus the jurisdiction to levy late fee under section 234E arises only from 01-06.2015 and not earlier. As regards the contention on the delay, though the said contention was impressive on first blush, it can be seen that the nature of challenge raised by the petitioner is based upon the lack of jurisdiction of the respondents to impose late fee. Since in matters where total lack of jurisdiction is alleged, delay cannot be relied upon as a ground to deny the relief, this Court is of the view that the objections of the respondents are without any basis. The decisions cited are distinguishable on the facts of those cases itself. In the decision in Digambar's case [ 1995 (5) TMI 262 - SUPREME COURT] the delay of 20 years in approaching the High Court for grant of compensation for alleged utilization of the land was held as a decisive factor to disentitle the petitioner therein. Similarly in G.C.Gupta's case [ 1987 (5) TMI 383 - SUPREME COURT] the issue related to seniority and petitioners challenged the orders of confirmation and determination of inter se seniority only after 15 years. In the decision in Bhailal Bhai's case [ 1964 (1) TMI 33 - SUPREME COURT] the question related to refund of tax claimed belatedly. None of those cases related to a total lack of jurisdiction or authority.
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2022 (3) TMI 1290
Reopening of assessment u/s 147 - Reopening notice within four years - eligibility of reason to believe - HELD THAT:- Section 148 notices have been issued within four years from the end of the relevant Assessment Years. Also no scrutiny assessment has been taken place in the present cases. Consequently, the test to be applied for re-assessment in the present cases is whether there is reason to believe that income chargeable to tax has escaped assessment. In Raymond Woollen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT] the Supreme Court has held that the expression reason to believe means that there is some prima facie material on the basis of which the Department can reopen the case. The sufficiency or correctness of the material is not a thing to be considered at the stage of issue of notice under Section 148 of the Act. This Court is of the view that the aforesaid test stipulated in Raymond Woollen Mills Ltd. (supra) is satisfied in the present case. However, the contentions and submissions raised by the petitioner are relevant and must be examined by the Assessing Officer while passing the reassessment order. It will also be open to the assessee to show in the re-assessment proceedings that the assumption of facts made in the notice is erroneous.
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2022 (3) TMI 1289
TDS u/s 194I - TDS against payment of transmission charges made to OPTCL as the equipment held by the OPTCL have not been given on rent, lease etc. to the assessee - Whether ITAT is justified in holding that payment made by the assessee Company is only towards purchase price of electricity from the GRIDOC and not from OPTCL for which no TDS liability is attracted in terms of section 194I? - HELD THAT:- The Court is not persuaded that any error has been committed by the ITAT in coming to the above conclusion. In absence of there being any payment of rent or even deemed rent by the Respondents to OPTCL there was no obligation under Section 194-I of the IT Act to deduct TDS from the wheeling charges paid to OPTCL. - Decided in favour of assessee.
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2022 (3) TMI 1288
Applicability of provisions of Sec.10(23C)(vi) introduced only w.e.f. 1. 4.1999 - HELD THAT:- As prior to its re-enactment as Section 10 (23C) (vi) of the Act, the very same provision existed in the statute book as Section 10 (22) of the Act. In other words, what was in fact referred to both by the Assessing Officer (AO) and the CIT (A) as far as the present case is concerned, was Section 10 (22) of the Act and not Section 10 (23C) (vi) of the Act. The latter provision was mentioned as Section 10(22)/10(23C) (vi) only to indicate that the same provision has been reenacted as Section 10 (23C) (vi) of the Act with effect from 1st April, 1999. This is not to say that reliance is placed on the re-enacted provisions. Consequently, as far as Question No.(ii) is concerned, the Court finds nothing erroneous in the order of either the CIT (A) or the ITAT. The issue is decided in favour of the Assessee and against the Department. Approval to the Institution u/s 10(23C)(vi) - whether the income earned by the Trust was exclusively from educational activities? - HELD THAT:- Present case does not involve grant of approval by the CCIT, the general proposition in law that the word solely appearing in Section 10(23C)(vi) of the Act emphasizes that the income of the Institution has to be from activities which are solely educational and not commercial activities, if the income has to be exempted from tax. This Court was reiterating the settled legal position in this regard as explained in Aditanar Educational Institution v. Additional Commissioner of Income Tax [ 1997 (2) TMI 3 - SUPREME COURT] followed in American Hotel and Lodging Association Educational Institute v. Central Board of Direct Taxes,[ 2008 (5) TMI 17 - SUPREME COURT] . The decision of the High Court of Punjab and Haryana in Pinegrove International Charitable Trust v. Union of India, [ 2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] and of this Court in The Commissioner of Income Tax v. Silicon Institute of Technology [ 2014 (11) TMI 588 - ORISSA HIGH COURT] are all to the same effect. While the legal position is clear, each of these cases turned on the peculiar facts on whether the income earned by the institution involved in those cases was from activities which were solely and exclusively educational . In the present case, the concurrent findings of the CIT (A) and the ITAT that the income earned by the Assessee was from solely educational activity and not commercial activity appears to be based on a proper analysis of all the materials available on record and, therefore, the Court is unable to agree with the contention of the Revenue that either order requires interference. Questions Nos. (i) and (iii) are answered accordingly in favour of the Assessee and against the Revenue.
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2022 (3) TMI 1287
Enhanced book profit towards profit u/s 10A by way of exclusion of receipt and expenses of the unit - AO also made disallowances of indexation benefit against long term capital gain on the sale of shares - company in question was in liquidation and was not in a position to pay its outstanding dues including its taxes - CIT (A) allowed the appeal of the assessee by holding that the proviso to Section 73A is not applicable to assessee company in respect of indexation benefit against long term capital gains and deleted the addition by holding that no deduction was claimed u/s 10A - HELD THAT:- A perusal of the aforesaid order of Apex Court in Civil Appeal[ 2020 (7) TMI 760 - SC ORDER] makes it clear that the respondent company Moser Baer India Ltd. is not financially viable and is in liquidation before NCLT. The order also makes it clear that even if the Revenue were to succeed, the Official Liquidator would not be in a position to pay the tax amount involved in these appeals. Thus, even if the appellant-department succeeds in the present appeal, there would be no fructifying effect as the respondent company, which is under liquidation, would not be able to discharge its debts and tax liability through the liquidator. The courts are already overburdened. Thus, while dealing with such matters, it has to be seen whether keeping such matters alive would serve any purpose. If such matters continue to remain on board, they would rather block other deserving matters. There is no purpose of flogging a dead horse. We are of the view that there is no purpose in keeping this matter alive. Hence, in view of peculiar facts and circumstances, the report filed by the department and the order passed by the Apex Court we dispose of the present appeal, leaving the question of law open to be decided in an appropriate case.
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2022 (3) TMI 1286
Grant of approval under section 80G - CIT (Exemptions) had rejected the application for grant of approval u/s 80G(5) observing that the applicant has not provided any material to fulfill the requirements as enumerated in the provisions of Rule 11AA of the Income Tax Rules, thus, there is no material available on record so as to form any satisfaction regarding the genuineness of the activities carried out - HELD THAT:- CIT (E) has passed the order, rejecting the application of the assessee for approval under section 80G of the Act, in the absence of the assessee - we feel that one more opportunity should be given to the assessee to explain its case before the ld. CIT (Exemptions). We are of the view, from the facts of the case, that the assessee has not been given proper and sufficient opportunity before disposing of the application for approval, by the ld. CIT (Exemptions). We, therefore, in the interest of justice, set aside the order of the ld. CIT (Exemptions) and restore the matter to his file with the direction to consider and decide afresh, the application of the assessee for approval under section 80G of the Act, preferably within two months from the date of receipt of this order, on affording reasonable opportunity of hearing to the assessee. The assessee is also directed to be present on the date of hearing and provide the material / clarification as asked for by the ld. CIT (Exemptions). Appeal of the assessee is treated as allowed for statistical purposes.
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2022 (3) TMI 1285
Disallowance of warranty expenses which was made on the basis of past experience and on a scientific basis - HELD THAT: -The Tribunal in the orders for assessment years 1996-1997 to 2007-2008 after considering the method of providing for warranty liability by way of provision, held that provision made was based on past history and was on scientific method of estimating the liabilities on account of warranty claim. In view of the co-ordinate Bench order of the Tribunal in assessee s own case, which is identical to the facts of the instant case, we direct the A.O. to allow the provision for warranty as an allowable deduction. Therefore, ground 2 is allowed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Disallowance u/s 14A r.w.s. 8D(2)(ii) as gone through the financial find that the assessee has total investment as on 31.03.2008 at ₹ 70.45 crore. The assessee s interest free fund, namely, share capital and reserves and surplus is far exceeding the above investment. Therefore, going by the dictum laid down by the Hon ble jurisdictional High Court in the case of CIT v. Micro Labs Limited [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] , no disallowance of interest u/s 14A r.w.r. 8D(2)(ii) is called for and we delete the same. Disallowance u/s 14A r.w.r. 8D(2)(iii) - AR took us to the various types of expenses incurred by the assessee and submitted that most of the expenses are not related to the earning of exempt income. It was submitted that the issue may be restored to the files of the A.O. to re-determine the disallowance by excluding the value of investment which did not yield exempt income while computing average value of investments, as per order of ACIT v. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] - DR did not have objection to the above submission of the learned AR. Therefore, we set aside the order passed by the CIT(A), as regards the disallowance u/s 14A r.w.rule 8D(2)(iii) of the I.T.Rules and restore the matter to the files of the A.O. Deduction u/s 10A - deduct telecommunication expenses incurred in foreign currency from total turnover and from export turnover - HELD THAT:- Hon ble Apex Court in the case of HCL Technologies Ltd.[ 2018 (5) TMI 357 - SUPREME COURT] has held that when expenditure is reduced from export turnover, the same should be reduced also from the total turnover while computing deduction u/s 10A - we hold that the CIT(A) is justified in directing the A.O. to reduce expenditure reduced from export turnover also from total turnover, while computing deduction u/s 10A of the I.T.Act. It is ordered accordingly. Commission payment disallowed u/s 40(a)(ia) as cash discount - HELD THAT:- The limited submission of the learned Standing Counsel is to remit the issue to A.O. According to the learned Standing Counsel, the CIT(A) has admitted additional evidence without giving the A.O. an opportunity to examine the same. We find that no additional evidence was produced by the assessee before the CIT(A). The details of the cash discount and foreign commission were already on record before the A.O. The cash discount and foreign commission in total was ₹ 4.30 crore and break-up of the same was provided (the break-up of cash discount of ₹ 3,24,37,251 and foreign commission of ₹ 1,05,56,342). Providing the break-up of figure which already on record, does not amount to production of additional evidence. Moreover, no useful purpose would be served at this point of time to remand the matter (since we are concerned with A.Y. 2008-2009) to A.O., to examine the break-up of figure which is already available before him at the time of assessment Customs duty included in the closing stock u/s 43B - HELD THAT:- As relying on ASEA BROWN BOVERI LIMITED. [ 2007 (4) TMI 284 - ITAT BOMBAY-E] AO is directed to allow the deduction u/s 43B with respect to payments made towards entire custom duty paid in respect of goods lying in closing stock. This ground, therefore, succeeds.
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2022 (3) TMI 1284
Exemption u/s 11 - Charitable activity u/s 2(15) - assessee was giving on rent Kalyana Mandapa for fees - whether trust was mainly for charitable purposes for providing facilities and amenities for the education of the poor, medical facilities etc? - as per revenue assessee was not maintaining any separate books of accounts for the business of running of kalyana mandapa, and therefore, even if the business is incidental to the attainment of the object of the Trust, the benefit u/s 11 of the Act cannot be granted - HELD THAT:- In the instant case, the assessee is primarily carrying on the activity of letting out of kalyana mandapa, which is nothing but objects of general public utility and the letting out is being done on a commercial basis by charging exorbitant amount. The amended proviso to section 2(15) of the I.T.Act has application to the facts of the instant case. Section 13(8) of the Act, inserted with effect from 01.04.2009 states that Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year. Assessee has not been maintaining books of account separately for the business of letting out of kalyana mandapa. Therefore, even assuming the business is incidental to the attainment of the objects of the trust in absence of separate books of account, the benefit of section 11 of the I.T.Act cannot be granted. - Decided against assessee.
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2022 (3) TMI 1283
Claim of deduction u/s 80P(2)(a)(i) - appellant/assessee is co-operative society, engaged in the business of providing credit facilities to its members - AO has disallowed the claim of deduction u/s 80P(2)(a)(i) treating the assessee co-operative society as a co-operative bank - HELD THAT:- It is an admitted fact that the ld. CIT(A) has passed an ex-parte order qua the assessee. CIT(A) has mentioned several dates on which the case was fixed for hearing, where the assessee failed to appear before the CIT(A). As seen that the ld. CIT(A) has mentioned the dates of fixation of hearing but he has not mentioned the date of service of notice on the assessee. In the absence of the factum of service of notice, the contentions raised by the assessee has substance and in our view, the request of the assessee is justified that he ought to have been heard by the ld. CIT(A) before any adverse inference was drawn by not only issuing notice but by way of bringing the acknowledgment of service of notice on record. We are of the considered opinion that the appeal should be set aside to the file of the CIT(A) as there is violation of principles of natural justice. The assessee is directed to appear before the ld. CIT(A), take notice and thereafter co-operate in disposal of the appeal - Appeal of the assessee is allowed for statistical purposes.
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2022 (3) TMI 1282
Revision u/s 263 - Eligibility for deduction u/s 80-IC - assessee was engaged in computer programming and Data processing - HELD THAT:- Revisional Authority has interpreted the provisions of description of activity as mentioned in Sl. No. 13 of Part C of Schedule XIV of the Act in a manner as it was approached for interpretation of the scope of this provision in context to the nature of business activity. Which is not the purpose of vesting revisional powers under the Act. A favourable interpretation given by the ld. Assessing Officer in favour of the assessee based upon consideration of the response of assessee cannot justify use of revisional powers and justify another interpretation. It is settled position of law that for the purpose of exercising jurisdiction u./s. 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interest of the revenue has to be preceded by some minimal enquiry. If the Revisional authority is of the view that the AO did not undertake any enquiry, it becomes incumbent on the Revisional Authority to conduct such enquiry. If the Revisional Authority does not conduct such basic exercise then the he is not justified in setting aside the order u/s. 263. However, it appears from the record that when the show cause notice u/s 263 of the Act was issued the Ld. Revisional Authority had then merely raised query seeking explanation from assessee to satisfy how the business of computer programming, data processing entitles benefit of deduction u/s 80- IC of the Act. In the case in hand the Ld Revisional Authority has done no homework on any aspect for which further enquiry was expected from the ld. AO but restricted to interpretation of relevant entry of nature of business activity and held that enquiry done by Ld. AO in complete scrutiny proceedings were not satisfactory. In fact specifically with regard to observations made in para 2.7, as reproduced above, it can be observed that in notice dated 8/7/16 the Ld. AO had specifically put a query no (xvii) Furnish details of amounts paid to related persons covered u/s 40A(2)(b) and furnish a comparative chart of the same shown in the Balance Sheet and in Audit Report. This certainly included admissibility of such expenses as per the provisions of the Act. To which the assessee in letter dated 5/8/16 had given details of payments which were considered by ld. AO while passing assessment order. Ld. Revisional authority has not enquired and discussed a word as to how any of these expenses were not admissible and concluded that the enquiry conducted by Ld. AO was not satisfactory. - Decided in favour of assessee.
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2022 (3) TMI 1281
Addition u/s 68 - Unexplained cash credit - onus to prove -HELD THAT:- It is not just entry of cash credit in the books of accounts that would create liability of explanation from the assessee, but there should be an actual flow of funds. Once the flow of funds is established then the question of explanation from the assessee actually arises. Where the books of accounts on its own establish that the entry was fictitious and sham for window dressing , then as such the initial burden on the revenue is not discharged to shift onus on the assessee to explain further identity, capacity and genuineness of the source. It can be seen in present case that the Ld. AO had observed from the books of accounts that the entry was fictitious and was reversed immediately in next FY on 1/4/2014, without any actual cash flow. But Ld AO was carried away by morality of accounting practices by holding that there is no concept like notional entries in the preparation of books of accounts and to which more pragmatic view was taken by the Ld FAA by accepting the plea of assessee and observing in para 11 of its order that the entire story is one of series of entries passed with a view of shoring up its current ratio for showing the same to the bank for better interest on loans raised onus on the assessee was discharged with the explanation that there was no actual flow of funds and that explanation being factual could not have been rebutted on deemed fiction. Thus Ld. FAA was correct in following the ratio laid in Jatia Investment Co. Ltd. [ 1992 (8) TMI 16 - CALCUTTA HIGH COURT] that fictitious entry not backed up by funds may not be taxable as Cash Credit . FAA has also taken into consideration the fact that the entries were not from strangers but from the partners by way of introduction of capital so the correct course would have been to bring the capital introduced to tax in the hands of the partners as their unexplained income. - Decided against revenue.
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2022 (3) TMI 1280
Validity of assessment - Non issuing of notice u/s 143(2) - Applicability of provisions of section 292BB - HELD THAT:- From the perusal of the materials we notice that there is a system generated audit trail evidencing that that the notice u/s.143(2) is generated fixing the date of hearing on 12/09/2014. The assessee during the course of hearing had admitted the error of omission and agreed to the addition to the income of the assessee and also has paid tax on the same. The argument of the Ld DR that there is no noting or mention in the assessment about any objections raised by the assessee about non issue of notice u/s. 143(2) and that in the order sheet signed by the representative agreeing to the addition made, there is no objections raised, merits consideration. Before the Tribunal the AR could not submit any proof for having raised the objections before the completion of the assessment. From the evidences perused there is nothing to prove that the objection were raised before AO for non issue of notice u/s.143(2) to take shelter under proviso to 292BB and that there is no contrary evidence submitted to support the claim that the notice u/s.143(2) was not served on the assessee. Appeal of the assessee is dismissed.
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2022 (3) TMI 1279
Approval u/ 80 G (5) (vi) - approval denied as application was pre-mature as the assessee had not yet been granted registration u/s 12A - assessee again filed an application for approval u/s 80G which was also rejected on the ground that the trust was overtly religious - HELD THAT:- The assessee trust continues to enjoy benefit of registration u/s 12AA of the Act and the Department has not initiated any action to cancel the said registration. Thus, for all practical purposes, the assessee trust continues to enjoy the benefit of registration u/s 12AA of the Act, as its activities are charitable in nature. No doubt has been raised about the charitable objects of the assessee trust. A perusal of the impugned order of the Ld. CIT(E) further shows that even the Ld. CIT(E) has not doubted the charitable nature of the objects of the assessee trust. Also there is no averment or allegation that the assessee trust does not fulfill the conditions as required u/s 80G(5)(vi) CIT(E) was not correct in rejecting the assessee s application for approval. Further, the Ld. CIT(E) s observation that the assessee did not prefer any appeal against the earlier orders rejecting the approval also does not hold good as the choice is left open to the assessee whether to file an appeal against the rejection of application or to file a fresh application. The case laws, as have been relied upon by the Ld. CIT DR, are also of no aid to the Department in, as much as, these case laws are on an entirely different footing and are not relevant in the present set of facts - CIT(E) was patently wrong in rejecting the assessee s application for approval u/s 80 G (5)(vi) - we direct the Ld. CIT(E) to grant approval to the assessee trust u/s 80G - Appeal of assessee allowed.
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2022 (3) TMI 1278
Late fee towards the delay in filing the TDS returns u/s 234(E) - Scope of regulatory provision being found in sec. 200A for computation of fees - AR submitted that the lower authorities have ignored the fact that prior to 1st June, 2015, there was no enabling provision for payment and levy of fee u/s 234E of the Act HELD THAT:- We respectfully following the binding decision of the jurisdictional High Court in the case of Shri Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] hold that the fee u/s. 234E cannot be levied without machinery provision of sec. 200A. The appeal therefore is allowed in favour of the assessee.
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2022 (3) TMI 1277
Disallowance u/s 14A - assessee had suo moto disallowed a sum on account of expenses pertaining to this exempt income - HELD THAT:- We find that while restricting the disallowance of expenses u/s. 14A to the extent of exempt income earned, the Ld. CIT(A) followed the decision of Corrtech Energy Pvt. Ltd.[ 2014 (3) TMI 856 - GUJARAT HIGH COURT] and also Chhetinad Logistics Pvt. Ltd. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] which decision he noted was upheld by the Hon ble Supreme Court on merits[ 2018 (7) TMI 567 - SC ORDER] . Thus we see no reason to interfere in the order of the Ld. CIT(A) restricting the disallowance of expenses u/s. 14A to the extent of exempt income earned. Addition u/s 14A made by the AO to the book profit of the assessee u/s 115JB - HELD THAT:- The issue was covered in favour of the assessee by the decision of Special Bench of ITAT in the case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . Disallowance of Forex Gain - HELD THAT:- CIT(A) correctly deleted the addition finding that in identical set of facts in the case of assessee itself, the ITAT had in earlier years i.e A.Y 2009-10 2010-11 held that no addition on account of notional gain or loss on account of foreign exchange fluctuation was warranted as per the provisions of Section 43A of the Act. - Assessee appeal allowed.
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2022 (3) TMI 1276
Levy of penalty u/s 271(1)(c) - disallowance of 100% of the expenses claimed by the assessee which was restricted to 50% on the reasoning that the other associated/sister concern of the assessee also availed the benefit of research and development activity carried out by the assessee - HELD THAT:- As decided in own case [ 2021 (12) TMI 1320 - ITAT AHMEDABAD] as regards the main provisions of section 271(1)(c) we find that the genuineness of the expenses were not doubted by CIT (A). As only alleged that the associated concern /sister concern have availed the benefit of the expenditures incurred by the assessee out of research and development activity - The entire expenses cannot be allowed as deduction to the assessee. As per the learned CIT (A) the impugned expenses should also be allocated to the other units of the assessee group concern which availed the benefit of research and development activity carried out by it. There was no doubt raised by the authorities below as far as genuineness of the expenses is concern. Undeniably research and development facility maintained by the assessee was approved by DSIR. What was doubted the quantum of the expenses by the learned CIT (A) which has led to the present penalty proceedings. Claim of the assessee at the most can be regarded as inaccurate claim which cannot be equated with the inaccurate particulars of income. It is for the reason that nothing has been brought on record by the authorities below suggesting that the assessee has furnished the particulars of income with dishonest intent. - Decided in favour of assessee.
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2022 (3) TMI 1275
Late fees u/s 234E - enabling clause (c) was inserted in the section 200A w.e.f. 01.06.2015 - whether late filing fee u/s 234E of the Act has rightly been charged in the intimation issued u/s 200A/206CB of the Act while processing the TDS returns/statements as the enabling clause (c) having been inserted in the section w.e.f. 01.06.2015 - HELD THAT:- We understand that earlier, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E. As such, as per the assessee, in respect of TDS statement filed for a period up to 31.03.2015, no late fee could be levied in the intimation issued u/s 200A of the Act. Respectfully following Shri Fatehraj Singhvi and Ors [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] and our own finding in the case of Sudershan Goyal [ 2018 (5) TMI 1626 - ITAT AGRA] we accept the grievance of the assessees as genuine. Accordingly, the orders of the CIT(A) are reversed and the fee so levied under section 234E of the Act is cancelled. Appeal of assessee allowed.
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2022 (3) TMI 1274
Best Judgement assessment u/s 144 - Estimation of income - Validity of assessment framed for want to service of notice u/s 143(2) - HELD THAT:- Department has filed the relevant record including the order-sheet of the assessment proceedings as well as the copy of the notice issued u/s 143(2) dated 14.09.2016 which was received by the assessee/AR on 16.09.2016. The assessee has not disputed the signature acknowledging the receipt of the said notice on behalf of the assessee. Accordingly, in view of the facts and circumstances of the case, the notice issued under section 143(2) dated 14.09.2016 was duly served on the assessee on 16.09.2016 which is within the period of limitation therefore, this ground of the assessee's appeal is de-void of merit and the same is dismissed. Addition while passing ex-parte assessment order u/s 144 - estimation the income of the assessee - AO applying net profit rate at 10% on the receipts as found deposited in the bank account of the assessee - CIT(A) restricted the addition to 5% as against 10% net profit rate applied by the Assessing Officer - HELD THAT:- There is no dispute that the return of income filed by the assessee does not disclose and contain the necessary information and details as required. Except the total income declared nil, no other details are given in the return of income. The Assessing Officer issued notices under section 143(2) as well as various notices issued under sections 142(1) alongwith the questionnaire to the assessee however, the assessee has not responded to the notice issued by the AO and consequently the assessment was framed under section 144 on the basis of the material available on record. CIT(A) has restricted the net profit applied by the Assessing Officer to 5% which shows that the adoption of net profit upon Assessing Officer was excessive and arbitrary however, the CIT(A) has also not given any basis for applying the net profit @ 5%. The assessee has not disputed the fact that for the assessment year 2014-15, the addition confirmed by the CIT(A) for applying profit rate at 5% is accepted and the dispute is settled under Vivad Se Vishwas Scheme, 2020. Since the computation of gross receipts/turnover of the assessee requires a proper verification of the details and facts to be produced by the assessee and consequently the estimation of the income is also required to be on the basis of some reasonable and proper criteria as a guidance for estimation of income therefore matter is set aside to the record of the Assessing Officer for the adjudication of these two issues for computation of gross receipts/turnover of the assessee and estimation of income by giving one more opportunity to the assessee to furnish the relevant details. Appeal is allowed for statistical purposes.
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2022 (3) TMI 1273
TDS u/s 194I - TDS on the payments made by the assessee to Greater Noida Authorities - assessee paid lease rentals on 30.10.2010 and failed to deduct TDS - HELD THAT:- The matter deductibility of TDS on the payments made to Greater Noida Authorities has been examined by the Hon'ble Supreme Court in the case of M/s. New Okhla Industrial [ 2018 (8) TMI 1374 - SUPREME COURT ] wherein it was held that deduction at source is on payment of rent under Section 194-I, which is clearly the statutory liability . - Decided in favour of Revenue.
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2022 (3) TMI 1272
Delay in payment of employees contribution of PF u/s 36(1)(va) - Assessee submitted that payment made within due date of filing the return of income u/s 139(1) of the Act for the year under consideration - DR contention is that as per sec.43B(b) of the Income-tax Act and explanatory notes to Finance Act 1983, that Employees Contribution was never intended to be covered by sec.43B - HELD THAT:- As relying on M/S JANA URBAN SERVICES FOR TRANSFORMATION PVT. LTD. [ 2021 (10) TMI 842 - ITAT BANGALORE] find no merit in the argument of the ld. DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed.
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2022 (3) TMI 1271
Nature of lad sold - treating the agricultural land sold by the Assessee as capital asset liable for long-term capital gain as against claim of the assessee that the land was agricultural land which would be exempt under the Act - As per DR gains were admitted by the assessee in the return of income and fresh claims could be made only by way of revised return of income - HELD THAT:- The department should freely advise the assessee as to their rights and liabilities and as to the procedure to be adopted for claiming refund and relief's. In CIT V/s Pruthvi Brokers and Shareholders Pvt. Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] noted that even if no claim is made before Ld. AO, the same could be made before appellate authorities and the jurisdiction of appellate authorities to entertain such a claim has not been negated by the Hon ble Supreme Court in Goetz India Ltd. Vs CIT. [ 2006 (3) TMI 75 - SUPREME COURT] In fact, the Hon ble court has made it clear that the judgment would not impinge on the powers of Tribunal u/s 254 of the Act. Considering all these factors, the Hon ble High Court of Madras in CIT V/s Perlo Telecommunication Electronics Components India Pvt. Ltd. [ 2021 (10) TMI 236 - MADRAS HIGH COURT] dismissed revenue s appeal. Respectfully following the same, we would hold that Ld. CIT(A) was not right in law to dismiss the otherwise eligible claim of the assessee. We order so. Accordingly, since the land sold by the assessee was an agricultural land, the same could not be brought to tax merely on the ignorance of the assessee. The on-money as admitted by the assessee has also been received as well as accepted by revenue to have arisen out of the sale of land. Therefore, the character of the same would remain the same i.e. agricultural income. Deduction u/s 54Fnoted that even if no claim is made before Ld. AO, the same could be made before appellate authorities and the jurisdiction of appellate authorities to entertain such a claim has not been negated by the Hon ble Supreme Court in Goetz India Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] In fact, the Hon ble court has made it clear that the judgment would not impinge on the powers of Tribunal u/s 254 of the Act. Considering all these factors, the Hon ble High Court of Madras in CIT V/s Perlo Telecommunication Electronics Components India Pvt. Ltd. [ 2021 (10) TMI 236 - MADRAS HIGH COURT] dismissed revenue s appeal. Respectfully following the same, we would hold that Ld. CIT(A) was not right in law to dismiss the otherwise eligible claim of the assessee. We order so. Accordingly, since the land sold by the assessee was an agricultural land, the same could not be brought to tax merely on the ignorance of the assessee. The on-money as admitted by the assessee has also been received as well as accepted by revenue to have arisen out of the sale of land. Therefore, the character of the same would remain the same i.e. agricultural income. The other grounds relating to deduction u/s 54F has been rendered infructuous.
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2022 (3) TMI 1270
Validity of reopening of assessment u/s 147 - Transfer of case from one Assessing Officer to another Assessing Officer - jurisdiction of ITO Ward 2 Narnaul to whom the case was transferred from ITO ward 2 Rewari by the JCIT Rewari - HELD THAT:- As decided in OM PRAKASH SON SH. NAND LAL VERSUS ITO WARD-2, REWARI [ 2017 (7) TMI 861 - ITAT DELHI] as assessment passed by the ITO Ward (2) Narnaul was without jurisdiction, in view of the arguments made by the Ld. counsel for the assessee. As in the absence of jurisdiction, order made by Addl. CIT is a nullity. Further provisions contained in section 124 is of no help to the Revenue in as much as here is a case where the Addl. CIT lacks jurisdiction and is not a case of exercise of jurisdiction of territorial jurisdiction. The assessment has to be completed by the authority who has initiated the proceedings for making assessment and any another authority and take over the proceedings only after a proper order of transfer u/s.127(1) or 127(2) of the proceedings. The Revenue has not brought any order for transfer of proceedings thus assessment proceedings are void without there being an order u/s. 127(1). Thus we hold that the assessment is without jurisdiction and is, accordingly, quashed. Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the case.
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Customs
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2022 (3) TMI 1269
Benefit of nil rate of additional duty of Customs (SAD) - Department formed an opinion that said exemption was applicable only to the pre-packaged goods intended for retail sale where as the software imported by the appellant was not for retail sale but was meant for the machines imported by them - section 5 of section 3 of Customs Tariff Act, 1975 - Time limitation - HELD THAT:- Coming to the facts of the present case, a mere fact that notification under which appellants were claiming exemption was not applicable to them, at the time of first audit, there was no reason with the appellant to discontinue the availment of exemption of NIL duty. Appellant stopped availing the same immediately it was pointed out by department at the time of 2nd audit. Thus there seems no mis-statement or suppression. The appellant, in addition, immediately paid the differential duty that too with interest and even penalty, question of any intent of evading duty by the appellant does not at all arise. Hon ble Apex Court decision in the case of PAHWA CHEMICALS PRIVATE LIMITED VERSUS COMMISSIONER OF C. EX., DELHI [ 2005 (9) TMI 92 - SUPREME COURT ] wherein it was held that mere failure to declare does not amount to willful mis-declaration or willful suppression. There must be some positive act on the part of the party to establish either willful mis-declaration or willful suppression. When all facts are before the Department. Hon ble Apex Court in the case of Union of India vs Ashok Kumar and Ors. reported as [ 2005 (10) TMI 536 - SUPREME COURT ] observed that it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility. Reverting to the facts of the present case, there already was an audit in the year 2013 hence entire information was with the department since then. Also no shortcoming was noticed during that audit, question of evasion of duty for the same period does not at all arise. Invoking the extended period under the proviso of Section 11A is accordingly not sustainable. Demand for extended period is barred by time. For the normal period also there is no evidence to prove the allegation of short payment of duty. Appeal dismissed.
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2022 (3) TMI 1268
Revocation of Customs Broker License - filing of benami Bills of Entry - forfeiture of security deposit - levy of penalty - under-valuation of imported goods - appellant s defence is that it was not a party to the SCN issued by the DRI and so knew nothing about it - HELD THAT:- It is evident that the appellant was dealing with the Anil and Abhimanyu for a long time and was aware that a case of under-valuation of the imported goods was booked against them by DRI. It was also aware that thereafter, they continued to import the goods by changing the suppliers and also started importing in the name of new firms including one M/s. Popular Metal Industries whose IEC is issued in the name of Shri Madan Gopal. The appellant never met Shri Madan Gopal but it had been filing Bills of Entry in the name of Popular at the behest of Anil. Not only has the appellant not brought to the attention of the department when it was fully aware that after the case was booked by DRI, Anil continued to import goods in the same manner by changing the suppliers and in the names of other importers but it has, knowingly filed Bills of Entry to facilitate this process. Evidently, it is not true as in the statement on 3.4.2017, Shri Vikas Gupta not only indicated that it was aware of the SCN being issued to Anil Aggarwal but also that it was issued for undervaluation. Further, he also explained what followed- that Anil changed the suppliers and also started importing in the name of other firms. Therefore, the appellant s defence that it knew nothing about the SCN issued by DRI to Anil is not supported by the facts. The second line of defence of the appellant was that since the Department knew that the SCN was issued, it had no liability to inform the department - HELD THAT:- It is true that the department need not be told that the SCN was issued. However, what is important is that Anil continued to import in the name of other firms by changing the suppliers also with the full knowledge of the appellant and the appellant continued to clear the goods in these benami transactions which, is nothing but collusion in the benami imports. The third line of defence of the appellant is that as Customs Broker, it earns its bread from trade facilitation and cannot act as a spy to the Department and if it spies for the department, it will lose its clients - HELD THAT:- This defence cannot be accepted for more than one reason. Firstly, Regulation 10(d) of the CBLR 2018 (read with erstwhile Regulation 11(d) of CBLR, 2013) places an obligation on the Customs Broker to advise its client to comply with the legal provisions and in case of non-compliance, report to the Assistant Commissioner or Deputy Commissioner of Customs. Reporting so, does not amount to spying as asserted by the appellant but discharging its obligations - it is evident from the submissions that the appellant has developed its business model based not on fulfilling its obligations as Customs Broker but on facilitating frauds and evidently if it exposes the frauds by its clients such clients will not come to it. The Customs Broker s licence is not meant for those whose business is built on promoting and facilitating frauds. The fourth line of defence of the appellant is that it had not benefitted from the undervaluation - HELD THAT:- It is immaterial whether the appellant had profited from the undervaluation or not. The mere fact that it has knowingly facilitated the fraud and has not brought it to the notice of the Assistant Commissioner or Deputy Commissioner of Customs and has also filed benami Bills of entry to facilitate fraud is sufficient for action against the appellant under the Customs Broker s licensing regulations. The appellant, in this case, has filed benami Bills of Entry for Anil and Abhimanyu knowing fully that the IEC in which it filed the Bills of Entry did not belong to them and that it was a modus operandi started by Anil after a case of under-valuation was booked by DRI. The appellant neither advised its clients against such benami imports nor has it informed the Assistant Commissioner or Deputy Commissioner as it was required to under the regulation 10(d) of CBLR, 2018 (read with Regulation 11(d) of CBLR, 2013) because it feels that such disclosure to the department would amount to spying for the department and it would lose its clients if it fulfils this obligation. The irresistible conclusion is that the appellant has built its business based on facilitating fraudulent transactions for its clients and wants its Customs Broker Licence restored so that it can continue in such business - In this case, the appellant knowingly, actively, facilitated benami imports and hence is accountable for its actions. Penalty - HELD THAT:- In view of the limitation under section 18 of CBLR, 2013, the penalty of ₹ 50,000/- must be set aside while upholding the revocation of the licence and forfeiture of its security deposit. Learned counsel is correct in his submissions that under Regulation 18 of CBLR, 2013, there can be either revocation and forfeiture of security deposit OR imposition of penalty of up to Rupees fifty thousand. However, we do not agree with his submission that revocation of the appellant s licence must be set aside considering the gravity of the case and also considering that it built its business in a manner that if it fulfils its obligations of reporting violations by its clients to the Customs authorities it will lose its business and, therefore, instead, facilitates such clients. Therefore, we find that in view of the limitation under section 18 of CBLR, 2013, the penalty of ₹ 50,000/- must be set aside while upholding the revocation of the licence and forfeiture of its security deposit. Appeal allowed in part.
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Corporate Laws
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2022 (3) TMI 1267
Appointment of directors from the Petitioner families on the Board of Company - appointment of Alternate Director - Section 161 of the Companies Act, 2013 - HELD THAT:- In this case, the Articles of Association contain specific provision for appointing an alternate Director. Before approaching this Tribunal, the applicants could have taken up this issue in the Board Meetings of the Company. This Bench has not been informed about any such effort being made by the applicants and the results, if any, of the same. Furthermore, Section 161 of the Act lays down that an Alternate Director can be appointed if there is the absence of a director for a period not less than three months from India. In the case in hand, Shri Manmohan Singh Kalsi is in India and his possible absence is still in the realm of the future. This Tribunal is conscious of the decisions in the case of Union of India Ors. v. Modiluft Ltd., [ 2003 (5) TMI 530 - SUPREME COURT ] Raja Khan v. Uttar Pradesh Sunni Central Waqf Board Anr., [ 2010 (11) TMI 201 - SUPREME COURT ] wherein it has been held that if interim relief is same as that of permanent relief, then it is not permissible because no case would be left for adjudication at the time of final hearing. It was further held that in such a situation, the Court shall not grant any interim relief unless the case is fully heard. This Bench is of the considered view that the prayers made by the applicants cannot be acceded to - Application disposed off.
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Insolvency & Bankruptcy
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2022 (3) TMI 1266
Seeking Voluntary Dissolution - section 59 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- The applicant states that necessary compliances of Section 59 and other relevant provisions of the Insolvency and Bankruptcy Code, 2016 read with the regulations have been stated within time, more specifically submission of the Form GNL-2 to the ROC and the intimation to the IBBI vide email, after realisation and distribution of the assets to its members and closure of the Bank account. In view of the satisfaction accorded by the voluntary liquidator by way of the present application, the said company is hereby dissolved with effect from the date of the present order - Application allowed.
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2022 (3) TMI 1265
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The evidence placed by the financial creditor is sufficient to ascertain the existence of a default on the part of the Corporate Debtor and same is admitted by the counsel of the corporate debtor during oral submission. The Financial Creditor has fulfilled all the requirements of law. Accordingly, this Adjudicating Authority is inclined to admit this application and initiate the process of CIRP of the Corporate Debtor. Application admitted - moratorium delcared.
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2022 (3) TMI 1264
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is clear from the pleadings that the corporate debtor has admitted its liability towards the operational creditor in Demand notice as well as in reply. However, it failed to discharge its liability as the admitted amount remains unpaid as on date. It is worthwhile to mention here that this authority has to only satisfy itself regarding default in payment by the corporate debtor towards the operational creditor and there is no pre-existing dispute, the moment above conditions are fulfilled, this Adjudicating Authority has to admit the section 9 petition and in the present petition both the conditions are fulfilled. The Petition deserves to be admitted. Hence, this authority is inclined to initiate the CIR Process of Corporate Debtor. Accordingly, the captioned petition is admitted - moratorium declared.
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2022 (3) TMI 1263
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - Whether the application is filed within the period of limitation and whether the MoUs between the Financial Creditors and Corporate Debtor are executed under proper authorization? - HELD THAT:- Section 18 the acknowledgement of liability should be made before the expiration of the prescribed period for a suit or application in respect of the debt. If the acknowledgement is beyond the said period it does not amount to acknowledgment in terms of Section 18 of the Limitation Act. The Supreme Court held that the statement on which the plea of acknowledgment is founded must relate to a present subsisting liability and indicate the existence of jural relationship between the parties. It is also observed that the debtor and creditor should have an intention to admit such jural relationship, which need not be in express terms but can be inferred by implication from the nature of the admission and surrounding circumstances. It was held that a statement written in the form a cheque will obviously amount to acknowledgement in writing. To disprove the presumption, the drawer of the cheque should bring on record such facts and circumstances, upon consideration of which the Court may either believe that the consideration and debt did not exist or its non-existence was so probable that a prudent man would under the circumstances of the case act upon the plea that they did not exist. Even circumstantial evidence was held as sufficing to rebut the presumption. If the circumstances so relied upon are compelling the burden may shift to the Applicant. Whether there is any debt which is due to be paid to the Financial Creditors and whether any default in terms of Section 3(12) has been committed by the Corporate Debtor? - HELD THAT:- There is no doubt that this Tribunal has jurisdiction to lift the corporate veil, to understand the genuineness of the transaction. But for the purpose of understanding the genuineness of the transaction, if evidence need to be taken, the Tribunal would not have jurisdiction. In this case, from the terms of the MoU itself, it can be concluded that there is no concluded contract between the parties and that the due date for the debt has not arrived and consequently no default has been committed - The MoUs which are admitted to have been entered into, in the quash petition, are not filed before this Tribunal. However, even if it is accepted that the MoUs dated 25.10.2015 23.06.2016 are admitted by the Corporate Debtor, since the obligations under the MoUs stand unfulfilled, the right to file this Petition does not arise. Moreover, in the quash petition several disputed facts with regard to the issuance of the cheques are raised, which require a detailed enquiry which is not within the scope of this Tribunal. The angle of debt becoming due and the angle of the commission of default, the Petition is liable to be dismissed. If the Financial Creditor is bent upon realizing the amounts he has to get the performance of the MoUs done by approaching the appropriate Forum, but not by way of an application under Section 7 of IBC, 2016. Petition dismissed.
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2022 (3) TMI 1262
Maintainability of application - initiation of CIRP - Dishonor of Cheque - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time limitation - lifting of Corporate veil - Whether the application is filed within the period of limitation and whether the MoUs between the Financial Creditors and Corporate Debtor are executed under proper authorization? - HELD THAT:- The present Application which is filed after three years from the date of the MoU or from the date on which the six months falls, which is also beyond three years, is based on a cheque dated 19.11.2020 which is issued by the authorized signatories of LEPL Ventures Private Limited. The date of MoU being 23.06.2016, six months from then would be ending by 23.12.2016. If three years is construed from 23.12.2016, the three years period would be completed by 23.12.2019. Hence, clearly the limitation for filing a suit, based on the MoUs, stands expired by the date of this application. The contention is that by virtue of the cheque dated 19.11.2020, the debt stands acknowledged and hence, a fresh limitation starts from 19.11.2020. In support of the said contention, the Counsel for the Financial Creditor relies on certain judgments. A judgment of the Hon'ble Supreme Court reported in between Hindustan Apparel Industries Vs. Fair Deal Corporation, New Delhi [ 2000 (5) TMI 1095 - GUJARAT HIGH COURT ], in which the Supreme Court considered the judgment of Patna High Court in Rajpatiprasad's Case Vs. Kaushlya Kuer [ 1980 (8) TMI 213 - PATNA HIGH COURT ], wherein the view expressed was that all the post-dated cheques in satisfaction of dues would amount to acknowledgment of liability irrespective of the fact whether the cheques were subsequently dishonoured was relied upon - In the Judgment of the Supreme Court in Hindustan Apparel Industries, the Patna High Court has already held that a post-dated cheque would amount to acknowledgement of liability irrespective of it being dishonoured subsequently. It is also observed that a statement written in the form of a cheque will obviously amount to an acknowledgment in writing. What is important to be noticed from the judgments discussed by the Supreme Court as observed by the Supreme Court is, in the first place a cheque is undoubtedly an acknowledgement of right or debt or liability and when the same is not issued as a post-dated cheque, date of issuance of the cheque would assume importance, whether subsequently it is honoured or dishonoured. It is thus at the stage of issuance of the cheque that there surfaces an intention on the part of the debtor to acknowledge the liability/right/debt owing to the person in whose favour the cheque is issued. If the cheque is honoured it would amount to part payment in writing and the same would fall under Section 19 of the Act (Section 20 of the Previous Act). Hence, according to Section 18 the acknowledgement of liability should be made before the expiration of the prescribed period for a suit or application in respect of the debt. If the acknowledgement is beyond the said period it does not amount to acknowledgment in terms of Section 18 of the Limitation Act. The Supreme Court held that the statement on which the plea of acknowledgment is founded must relate to a present subsisting liability and indicate the existence of jural relationship between the parties - Hence the contention of the Counsel for the Corporate Debtor that unless the acknowledgement is in writing as specified under Section 18(1) it is not a valid acknowledgement as per Section 25(3) of Indian Contract Act, gets nullified since, issuance of cheque is held to be an acknowledgement in writing. There is no doubt that this Tribunal has jurisdiction to lift the corporate veil, to understand the genuineness of the transaction. But for the purpose of understanding the genuineness of the transaction, if evidence need to be taken, the Tribunal would not have jurisdiction. In this case, from the terms of the MoU itself, it can be concluded that there is no concluded contract between the parties and that the due date for the debt has not arrived and consequently no default has been committed. The Petition is liable to be dismissed. If the Financial Creditor is bent upon realizing the amounts he has to get the performance of the MoUs done by approaching the appropriate Forum, but not by way of an application under Section 7 of IBC, 2016 - Petition dismissed.
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2022 (3) TMI 1261
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Though in the reply notice, the Corporate Debtor took a stand that the Operational Creditor failed to perform his duties as prescribed under the agreements and that the term of 4 years elapsed as per contract dated 31.12.2011 and was not renewed and that the project did not materialise during the term in question, no evidence in that regard is produced and the Corporate Debtor did not choose to appear and contest the case and prove the contentions made in the reply notice. Whereas, by virtue of the documents filed by the Operational Creditor his case stand proved prima facie. Since his case is non-controverted, it has to be accepted as true. It is a fit case to admit and order initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - Company Petition is admitted - moratorium declared.
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Service Tax
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2022 (3) TMI 1260
Rectification of mistake - error apparent on the face of record or not - it is the stand that the orders rejecting the applications for rectification failed to consider the binding judgments of the jurisdictional High Court - opportunity of hearing was granted or not - Time Limitation - HELD THAT:- The normal statutory remedy against an order-in-original as contemplated under the Act is to prefer an appeal under section 84 or section 85 or section 86 of the Act, as the case may be. The orders-in-original, involved in the present dispute were both issued by the Assistant Commissioner of the Central Tax and Central Excise and hence the appeal ought to be preferred under section 85 of the Act. As per section 85 of the Act, the appeals were to be presented within a period of three months from the date of receipt of the order and a further period of three months is available, if there is proof of sufficient cause for not presenting the appeal within the time limit. In the instant case, admittedly, petitioner had not preferred any appeal against the two orders-in-original, which were dated 18-12-2018 and issued on 19-12-2018. Instead of preferring an appeal, petitioner has preferred rectification petitions separately for the two assessment years, invoking the provisions of section 74 of the Act. The applications for rectification are seen to have been filed on 14-09-2021. The period stipulated for filing an application for rectification is two years from the date on which the order was passed. Though the respondents have taken a specific contention that the applications for rectification is not maintainable since the same do not satisfy the ingredients of section 74, as what is sought to be projected under the rectification petitions, is in effect a rehearing or reconsideration of the order-in-originals, the said issue need not be considered. Opportunity of hearing - HELD THAT:- Indubitably an opportunity of hearing was not granted by the assessing officer while rejecting the applications for rectification. Though the statutory requirement of granting an opportunity of hearing is prescribed as one available only when there is an order enhancing the liability of the assessee or reducing a refund due to the assessee, in cases where the assessee had specifically sought for an opportunity of hearing, the situation assumes a different colour. It is crystal clear that there cannot be any doubt, that any decision rendered adversely affecting the rights and interest of a party, without hearing him, is not liable to be sustained. However, in the instant case, the provisions of the statute has incorporated a specific clause that compels the grant of an opportunity of hearing only when the order in rectification enhances the liability of the assessee or when refund is reduced. Since the statute has incorporated specific instances when there is a mandatory requirement of providing an opportunity of hearing, the legislative intention is clear that in other instances an opportunity of hearing is not required to be granted - A perusal of the application for rectification reveals that petitioner had specifically sought for an opportunity of hearing. Respondents have no case that such an opportunity was refused by any order in writing and intimated to the petitioner. In such circumstances, it was incumbent upon the assessing officer to grant an opportunity of hearing before issuing the orders of rectification. Thus there is a clear instance of violation of the principles of natural justice. Ext.P5 and Ext.P6 are liable to be set aside on that reason itself. The first respondent is therefore directed to grant an opportunity of hearing to the petitioner. The first respondent is thus directed to consider the applications for rectification filed by the petitioner afresh and as expeditiously as possible - Petition allowed.
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2022 (3) TMI 1259
Classification of services - Works Contract Service or construction of residential quarters for their employees - CBEC circular F No. 332/16/2010-TRU dated 24.05.2010 - extended period of limitation - HELD THAT:- In the instant case, it is not the case of the department that the residential quarters, the construction of which was undertaken by the appellants, for Shree Cements Ltd, Bewar, Wonder Cements Ltd, Nimbahera and Power Grid Corporation of India are for commercial use in any manner. Tribunal in the case of M/S MANISHA PROJECTS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., GHAZIABAD [ 2019 (3) TMI 448 - CESTAT ALLAHABAD] held C.B.E. C. had issued Circular No. 80/10/2004-S.T., dated 17-9-2004 and in Para 13.2 clarified that the leviability of Service Tax was primarily dependent upon the use of the building or civil structure. Further, it clarified that it was to be ascertained where building or civil structure was used or to be used for commercial or industrial purpose and further required or gather the information as to whether the buildings or civil structures were being used or to be used for the purpose of making profit or not and clarified that if the building or civil structure was used or to be used not for the purposes of profit then the same are not taxable. Invocation of extended period - HELD THAT:- The issue involved is of interpretation and thus, the bona fides of the appellants to hold a different opinion cannot be suspected and thus extended period cannot be invoked. The impugned order is not sustainable on merits as well as limitation - Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 1258
Refund of unutilised CENVAT credit paid - input services used for providing the output services exported during the impugned period - whether the authorities below are justified in treating the appellant as an intermediary and consequently justified in rejecting the refund claim of the appellant? - Rule 5 of the CENVAT Credit Rules 2004 read with Notification No.27/2012-CE (NT) dt. 18/06/2012 - HELD THAT:- It is quite clear from the very definition itself, that there should be at least two or more persons, excluding broker agent or any other person by whatever name called. The agreement which is referred to by the lower authorities whereby the appellant was obliged to provide Management and Technical Services to the company, is clearly between the appellant and the company alone with no third person anywhere figuring in it. It is the basic document which binds both the appellant as well as the company which also defines scope of services and hence, the necessary implication is that the Management and Technical Services which are provided by the appellant are only to the company which is located outside India. There is no allegation that the appellant was involved in any way, either in purchase or sale of goods or even in the collection of sale proceeds from the customers of the company. By this alone, it can be safely concluded that the appellant is not acting as an agent or a middleman for anyone, and hence, is not covered by the mischief of the definition of intermediary and consequently, Rule 9 of POP. Hence, the same cannot be held that there is no export of services under Rule 6A ibid. The authorities below have grossly misconstrued the relevant provisions to deny the valid refund claims of the appellant and hence, the order of Commissioner (Appeals) cannot sustain and hence, the same is set aside. Learned Chandigarh Bench of CESTAT in MACQUARIE GLOBAL SERVICES PVT LTD VERSUS COMMISSIONER OF CE ST, GURGAON-I [ 2021 (12) TMI 481 - CESTAT CHANDIGARH ] has analysed the scope of intermediary service and it was held that In the present case, the appellants are providing services to their parent company at Japan and they did not involve in any manner in the activity of negotiation for sale and purchase of goods in India or collection of sale proceeds from customers on behalf of the parent company, hence cannot be called as an intermediary and, accordingly, do not fall under Rule 9(c) of the Place of Provisions of Service Rules, 2012. The appeals are allowed.
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2022 (3) TMI 1257
Valuation of services - value of material supplied by M/s Power Grid to the appellant free of cost for erection commissioning of transmission lines shall form the part of gross value of services provided by the appellant from payment of service tax or not? - services of erection commissioning and installation provided for distribution of electricity is exempt from payment of service tax or not - show cause notice dated 18.10.2016 for the period April 2011 to March 2015 is barred by limitation or not? Whether the value of material supplied by M/s Power Grid to the appellant free of cost for erection commissioning of transmission lines shall form the part of gross value of services provided by the appellant from payment of service tax or not? - HELD THAT:- The issue has been examined by the Hon ble Apex Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - thus, for the period prior to May 2015 the free supplies of material by the service recipient is not includable in the gross amount of service provided by the service provider i.e. the appellant. Therefore, whole of demand is not sustainable. Whether the services of erection commissioning and installation provided for distribution of electricity is exempt from payment of service tax under Section 66 of the Finance Act, 1994 or not? - HELD THAT:- The said service has been provided by the appellant for distribution of electricity which is exempt from payment of service tax as held by this Tribunal in the case of M/S UP RAJKIYA NIRMAN NIGAM LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2015 (8) TMI 66 - CESTAT NEW DELHI] where it was held that the service tax payable on all services relating to transmission and distribution of electricity provided by the service provider to the service recipient is not required to be paid - thus, the services provided for distribution of power is exempt from payment of service tax. Whether the show cause notice dated 18.10.2016 for the period April 2011 to March 2015 is barred by limitation or not? - HELD THAT:- The appellant has informed to the respondent that they will discharge their service tax liability under Composite Scheme under Works Contract Services and the said activity was known to the respondent during the period of execution of work - the show cause notice issued by invoking extended period of limitation is not sustainable. Accordingly, the whole of demand is barred by limitation. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 1256
Classification of services - support services of business or commerce or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - HELD THAT:- What also needs to be noticed is that if the appellant was providing such a service, it would be the producers/ distributors who would be making payments to the appellant, but what comes out from a perusal of the Agreement is that in consideration for the distributor agreeing to grant to the appellant the license to exploit the theatrical rights of a motion picture, the appellant would have to pay such revenue share to the distributor as provided for in the said clause. In fact, the distributor agreed to grant to the Appellant the non exclusive license to exploit the theatrical rights of a motion picture during the term. In MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) [ 2016 (11) TMI 520 - CESTAT MUMBAI] , the Tribunal explained that public private partnerships between the Government/Public Enterprises and Private parties are in the nature of joint venture, where two or more parties come together to carry out a specific economic venture, and share the profits arising from such venture. Such public private partnerships are at times described as collaboration, joint venture, consortium or joint undertaking. Regardless of the name or the legal form in which the same are conducted, they are essentially in the nature of partnership with each co-venturer contributing some of the resources for the furtherance of the joint business activity. It is not possible to sustain the confirmation of the demand by the order dated 16.06.2016 passed by the Commissioner - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (3) TMI 1255
Valuation - inclusion of value of bought out items in the assessable value or not - value of bought-out item which has not come to the factory of the appellant and directly gone to the place of the customer - HELD THAT:- The facts of the case are not in dispute that electric motors are directly supplied to the customers by the manufacturer thereof either on behalf of the appellant or on behalf of the customers or purchased by the customers themselves. The issue has been squarely covered by the Tribunal in the case of M/S. CHEEMA BOILERS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, CHANDIGARH [ 2018 (4) TMI 1157 - CESTAT CHANDIGARH] where it was held that bought out items have never came to the factory of the appellant and the appellant is liable to pay duty only on the goods manufactured by them. In that circumstance, for the bought items, the appellant is not required to pay duty. In these circumstances, it is held that the value of bought out item which has gone directly to the customer place is not includable in the assessable value of PD Pumps - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 1254
Refund of accumulated balance of credit on education cess and secondary and higher education cess - time limitation u/s 11B of Central Excise Act, 1944 - submission of appellant is that refund of credit of cess cannot be denied merely on the ground that such credit which could not be utilised prior to GST regime would stand lapsed - HELD THAT:- In Bharat Heavy Electricals [ 2019 (4) TMI 1896 - CESTAT NEW DELHI ], a Division Bench of the Tribunal examined whether credits create a vested right and do not extinguish with the change of law and held that change of law cannot be a ground for divesting an assessee from this valuable right and in this connection, the Tribunal placed reliance upon the decision of the Karnataka High Court in Slovak India Trading [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT ]. In Shree Krishna Paper Mills [ 2019 (12) TMI 1348 - PUNJAB AND HARYANA HIGH COURT ], the Punjab and Haryana High Court examined whether refund could be ordered of unutilised credit on closure of the unit and held, in view of the earlier decision of the Punjab and Haryana High Court in Rama Industries Ltd. vs. CCE, Chandigarh [ 2009 (2) TMI 136 - PUNJAB AND HARYANA HIGH COURT ] and the decision of the Karnataka High Court in Slovak India [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT ], that refund should be granted. It is, therefore, seen that there are conflicting decisions of the Karnataka High Court and the Punjab and Haryana High Court on the one hand and the Rajasthan High Court on the other hand. The decision of the Karnataka High Court in Slovak India was affirmed by the Supreme Court. It would, therefore, be appropriate to follow the view taken by the Karnataka High Court and the Punjab and Haryana High Court. It needs to be noted that CENVAT credit avail is a vested right as has held by the Supreme Court in Eicher Motors [ 1999 (1) TMI 34 - SUPREME COURT] ] and Samtel India [ 2003 (3) TMI 121 - SUPREME COURT ]. The appellant is, therefore, clearly entitled to the refund of the balance amount of credit of cess and the decision to the contrary taken by the Commissioner (Appeals) cannot be sustained - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 1253
Clandestine manufacture and removal - Goa-1000 Gutkha - demand mainly based on statements of various persons - opportunity of cross-examination provided or not - invocation of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008 - period 01st July, 2008 to 08th February, 2009 - HELD THAT:- It is apparent that a statement can be relevant without cross examination only if the person who has given evidence is dead or who cannot be found, or who is incapable of giving evidence, or who is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense. If the above circumstances do not exist then if a statement is to be relied, cross examination of witnesses is a must. The exact nature of effort made to cross-examine and how the statements become relevant under section 9D of Central Excise Act has not been stated. The appellant Shri Dipak Bhogilal Kothari has in his appeal specifically raised a plea of failure of Adjudicating Authority to grant cross examination. It is seen that the relief granted by the Commissioner is solely based on the statement of persons recorded during investigation. It is a fact that the machines were found present in the premises and as per Rule 6 read with sub rule 2 of Rule 17 of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008, in such case involving clandestine manufacture the duty needs to be demanded from 1st July, 2008 to the date of which the factory was sealed by the Central Excise officers - In the instant case, the relief has been granted by the Commissioner relying on the statements which are not proven relevant evidence in the current circumstances. For statement to be relevant the conditions prescribed in rule 9 D of Central Excise Act need to be followed. The Revenue too in its appeal has argued that Commissioner had not examined the evidence in the proper perspective and should have confirmed duty for the entire period in terms of sub rule 2 of Rule 17 of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008. It is seen that there are many more inconsistencies as the timeline given by each person gives different outcomes. Shri Himanshu Jasubhai Shukla in his statement states that construction of factory lasted for one and half month but it is not consistent with the date when Shri Kantibhai Patel met Shri Kiransingh for the first time. The generator was delivered on document dated 16.01.2009 by Eicher Truck (As per Shri Parekh s statement) but the same was received in the end of the month. The matter remitted back to the Commissioner for fresh adjudication keeping all the issues open - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2022 (3) TMI 1252
Classification of goods - sale of Printer under VAT Act as a Computer peripheral - taxable at 4% or as unclassified items under Schedule @ 12.5%? - HELD THAT:- Since the invoice produced by the Revisionist before the Tribunal by the revisionist showed Multifunctional Printer as Multifunctional Device, the Tribunal did not provide the benefit of the order dated 05.03.2014 of the Commissioner and confirmed the order passed by the Assessing Authority and the First Appellate Authority - It has also been stated in the said counter affidavit that in the case of the Revisionist for Assessment year 2010-11 the First Appellate Authority had cancelled the Assessment order and remanded the matter to the Assessing Authority by its order dated 01.12.2015. The Assessing Authority being satisfied that the case in hand was of a Multifunctional Device/Multifunctional Printer and came under the Category of Computer peripheral had accordingly taxed it @5% by the Assessment order dated 01.12.2015. Similarly, for the Assessment year 2011-12, by an assessment order dated 02.02.2015 tax has been levied @ 12.5% + 1% Additional Tax and on Appeal the matter was remanded. After remand the Assessing Authority had treated it as a Computer peripheral. Same is the case for Assessment Year 2012-13, wherein the Assessing Authority has treated the Printer in question as Multifunctional Device and taxed it @ 4% + 1% Additional Tax i.e. 5% by its Assessment order dated 02.03.2016. This Court has perused the impugned order it is apparent from a perusal of the order of the Tribunal that the Tribunal had not given the benefit of the judgment rendered in M/s Xerox India Limited Vs. Commissioner of Customs, Mumbai [ 2010 (11) TMI 20 - SUPREME COURT] and not treated Multifunctional Printer as a Computer peripheral only because the manufacturer in the case before the Supreme Court had given Certificates with regard to its Printers and various models thereof saying that parts of all such Multifunctional Devices were used to the extent of 75% to 85% for the purpose of printing - Keeping in mind the law settled by the Hon'ble Supreme Court in the case of M/s Xerox India Limited Vs. Commissioner of Customs, Mumbai , this Court finds that the Revisionist is an Authorized Dealer of a Printer manufacturer by the name of Sharp Computer Systems, and although their Printers are multifunctional in nature their components are mainly used for the purpose of printing and their main character is that of a Printer, therefore, the Revision deserves to be allowed. The Tribunal committed factual and legal error in treating the multifunctional printers sold by the revisionist as falling in the Residuary category - The Revision is allowed.
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2022 (3) TMI 1251
Realization of tax under Rule-94 of the Orissa Sales Tax Rules (OST Rules) - levy of tax the second time - suppression on the part of petitioner - HELD THAT:- In the present case, the transporter has already admittedly paid tax at the check post under Rule 94 of the OST Rules. There is no reason why the said payment of tax should not have been given credit for while determining the tax payable by the Dealer. There is merit in the contention that the same transaction cannot by subject to sales tax twice over, one at the hands of the transporter and another at the hands of the Dealer - In that view of the matter, the enhancement of the taxable turnover of the Assessee-Dealer in the manner it has been done by the STO in the Assessment Order dated 15th November, 1995 cannot be sustained - the question is answered in the negative, i.e. in favour of the Petitioner-Assessee and against the Department by holding that the same transactions covered by the two consignment notes in question cannot be treated as suppression on the part of the Dealer and cannot be taxed twice over. Threshold monetary limit involved - Whether the rate of sales tax in respect of sale of Hosiery woolen garments is exigible to tax at the rate of 12% under Entry-103 of the taxable list or under Entry-22 of the taxable list? - HELD THAT:- It is seen that the amount involved is not substantial. Consequently, leaving the question open for decision in some other appropriate case, the Court declines to answer it in the present revision petition. The revision petition is disposed of.
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2022 (3) TMI 1250
Rectification of assessment order - Section 84 of the TNVAT Act, 2006 - assessment years 2009-10, 2010-11, 2013-14 and 2014-15 - HELD THAT:- Section 84 does not speak about the revision of assessment and also the assessing officer is not empowered to revise the assessment etc., this Court is of the considered opinion that the same are not the proper reason to reject the rectification application filed by the petitioner. Therefore, this Court has no hesitation to hold that, the impugned order does not stand in the legal scrutiny as no consideration has been shown with regard to the reason stated by the petitioner for such rectification. Hence, the impugned orders are liable to be set aside. The impugned orders are set aside and the matters are remitted back to the respondent for reconsideration.
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