TMI Tax Updates - e-Newsletter
March 6, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws

Articles

1. TAXABILITY OF MINI-BAR SALES IN HOTEL ROOMS

   By: Dr. Sanjiv Agarwal

2. What are the Elements That Should be in Your Business Plan

   By: Ishita Ramani

3. Defects in Display: Unpacking the Tribunal's Verdict on Service Tax

   By: Kamal Aggarwal

4. Assessee is entitled to claim refund under Inverted Duty Structure even in case of same inward and outward supplies

   By: Bimal jain

News

1. Union Finance Minister Smt. Nirmala Sitharaman inaugurates first-ever National Conference of Enforcement Chiefs of the State and the Central GST Formations in New Delhi

2. DPIIT organises LEAPS Valedictory Session recognising 12 participants across logistics industries

3. Repayment of ‘8.35% SBI RTS ISU GOI SPL Bond 2024’

4. Review of Foreign Direct Investment Policy on Space Sector

5. Competition Commission of India to hold 9th National Conference on Economics of Competition Law scheduled tomorrow

6. Promoting Voluntary Compliance through e-Verification Scheme-2021

Notifications

GST - States

1. 30/2023 – State Tax - dated 12-12-2023 - Jharkhand SGST

Special procedure to be followed by a registered person engaged in manufacturing of the goods - Additional records to be maintained by the registered persons manufacturing the goods mentioned in the Schedule

2. G.O.Ms. No. 38 - dated 6-2-2024 - Tamil Nadu SGST

Supersession Notification No. II(2)/CTR/17(c-4)/2024 dated 9th January, 2024

Circulars / Instructions / Orders

Income Tax

1. 02/2024 - dated 5-3-2024

Order under section 119 of the Income-tax Act, 1961

Customs

2. PUBLIC NOTICE No. 21 / 2024 - dated 29-2-2024

Jurisdiction of Commissionerates (Nhava Sheva-I/II/III/TV/V/General) under Mumbai Customs Zone-II.

Highlights / Catch Notes

GST

• Challenge to Show Cause Notices: Court Urges Fair Assessment with Petitioner's Input on Goods Classification Dispute.

  Case-Laws - HC : Classification of goods - The petitioner alleges that the show cause notices were issued with a pre-determined notion regarding the classification of goods, thereby raising concerns about the fairness of the assessment process. - The High court notes the conflicting interpretations regarding the classification of goods and the reliance on HSN Explanatory Notes and legal precedents. - The court directs the petitioner to respond to the show cause notices, emphasizing the assessing officer's obligation to consider the petitioner's submissions and provide a reasonable opportunity for a personal hearing.
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• Court Upholds Penalty for Missing E-Way Bill; Petitioner Fails to Prove No Tax Evasion Intent Despite Providing Documents Later.

  Case-Laws - HC : Levy of penalty - Non-production of e-way bill in time due certain difficulties - intention to evade tax (mens rea) - The High Court emphasizes that the burden of proof lies with the petitioner to demonstrate no intention to evade tax. - Despite the subsequent production of documents, the petitioner fails to provide a reasonable explanation for their absence at the proper time. - The court notes that the difficulties with generating e-way bills were resolved after April 2018, and the petitioner's arguments are not supported by the facts. - The court dismisses the writ petition, affirming the validity of the actions taken by the respondent authorities.
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• Court Overturns Assessment Order on Harpic and Lizol Classification Due to Lack of Transparency and Consideration.

  Case-Laws - HC : Classification of goods - Harpic Disinfectant Toilet Cleaner - Lizol Disinfectant Toilet Cleaner - The High Court held that the impugned order of assessment suffers from the vice of non-application of mind to the objection and also non-disclosure of the fact the proposal have been received from the enforcement wing thereby the impugned order of assessment stands vitiated - the impugned order of assessment is set aside.
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Income Tax

• Payments to SIPCL Not Taxable in India: High Court Rules Managerial Services Exempt Under DTAA and Income Tax Act.

  Case-Laws - HC : Challenge AAR ruling - Income taxable in India or not? - TDS liability u/s 195 - whether payments to SIPCL for BSS under the Cost Contribution Arrangement ("CCA") - The High Court determined the services availed to be managerial, not technical or consultancy that "make available" technical knowledge, skill, or processes as required by Article 13 of the DTAA. - The High Court found the AAR's interpretation flawed, emphasizing that the services in question did not satisfy the criteria of "making available" technical knowledge as per the DTAA. Consequently, it set aside the AAR's order mandating tax withholding under section 195 of the Income Tax Act, 1961.
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• Court Upholds TDS on Large Bank Withdrawals, Promotes Transparency and Tax Compliance; Cooperative Societies Not Exempt.

  Case-Laws - HC : TDS u/s 194N - Constitutional validity of TDS on cash withdrawal from Bank exceeding a certain threshold - The High Court upheld the constitutionality of Section 194N, stating that the provision's aim to reduce cash transactions and encourage a transparent and accountable economy is laudable. The Court emphasized that Section 194N, as a machinery provision, does not levy a new tax but provides a mechanism for tax collection on transactions that could potentially escape the tax net. - The Court clarified that the nature of withdrawals and their taxability is a matter for assessment and cannot be predetermined. It rejected the argument that the amounts withdrawn by the cooperative societies did not constitute taxable income.
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• Assessment Order Invalidated Due to Flaw: Notice Must Be Issued to All Heirs for Fair Hearing in Tax Proceedings.

  Case-Laws - HC : Liability of legal representative (LR) of deceased - validity of assessment order passed u/s 147 against only one LR - The High Court held that the impugned assessment order is liable to be quashed due to procedural irregularities. Show cause notice was issued to all legal heirs after the assessment order, indicating a procedural flaw. - The Court directs the continuation of proceedings after issuing show cause notice to all legal heirs and providing them with a necessary opportunity of hearing.
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• Tax Evasion Case Quashed; Court Orders Fresh Examination to Identify True Beneficiary in Transactions.

  Case-Laws - HC : Prosecution u/s 276C (2), 276CC and 276C (1) - willful attempt to evade the payment of tax and the penalty under Income Tax Act - Assessment u/s 143(3) r.w.s 153A - The High Court set aside the assessment order passed by the ITAT and remanded the matters for fresh disposal. The court directed the Assessing Officer to examine the issue in light of relevant material to determine the real beneficiary of the transactions. - As the order of assessment itself was set aside, the court held that the initiation of prosecution against the petitioner could not be sustained. Therefore, the criminal complaints filed against the petitioner were quashed.
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• Secured Creditor Rights Affirmed: Court Quashes Order Due to Vagueness in Tax Recovery and Equitable Mortgage Case.

  Case-Laws - HC : Valuable right of recovery of petitioner as secured creditor - Tax recovery proceedings - priority to secured creditors - equitable mortgage created by the bank - The High Court noted the absence of a clear finding on the date of initiation of proceedings and creation of the mortgage in the impugned order. - Emphasizes the importance of substantive evidence to declare the mortgage void. - Sets aside and quashes the impugned order due to vagueness and lack of conclusive findings.
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• Income Tax Act Section 43CA Not Applicable to Pre-April 2014 Flat Sales, Tribunal Rules on Valuation Discrepancies.

  Case-Laws - AT : Addition made u/s 43CA - difference between the amount of sale consideration appearing in the conveyance deed and the value adopted by the stamp valuation authority - The Tribunal held that since the flats in question were agreed to be sold prior to the implementation of Section 43CA (effective from 01/04/2014), the provisions of this section did not apply. Consequently, the addition was deleted.
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• Tribunal Orders Deletion of Additions Due to AO's Inadequate Investigation of Share Capital Cash Credits.

  Case-Laws - AT : Unexplained cash credit u/s 68 - share capital/share premium receipts - Despite substantial evidence provided by the appellant, including bank statements, share allotment documents, and resolutions of the board of directors, the AO failed to conduct further investigation, particularly after being informed of the change in the registered office address of the investing company. The Tribunal notes the reliance by the AO on the non-production of directors of the investing company for making the addition, without adequately considering the evidence provided by the appellant. - Additions directed to be deleted.
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• Surrender of Leasehold Rights Deemed Transfer of Capital Asset, Taxable as Capital Gains Under Income Tax Act.

  Case-Laws - AT : Capital gain u/s 45 - capital gain on surrender of leasehold right - Transfer u/s 2(47) or not? - The Tribunal held that, the act of these assessees in not disclosing the actual intent and purpose of surrender of lease deed to Government authority and withholding material information regarding their proposal/MOU with CGPL does not make their act of surrender voluntary - ITAT upheld the CIT(A)'s decision that the surrender of leasehold rights constituted a transfer of a capital asset, making the consideration received taxable as capital gains.
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• Capital Loss Disallowance on Share Sale Overturned; ITAT Upholds CIT(A)'s Decision, Validating Business Restructuring.

  Case-Laws - AT : Disallowance of Capital Loss on Sale of Shares - sale of shares due to the amalgamation of certain entities - The AO disallowed the loss, treating it as an artificial loss created on paper. - The ITAT held that the AO unjustifiably disallowed the capital loss. The transactions leading to the loss were legitimate and supported by commercial rationale, including a valid business restructuring and divestment strategy supported by an independent valuation. Therefore, the CIT(A)'s deletion of the disallowance was upheld, dismissing the Revenue's appeal on this issue.
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• ITAT Rules Business-Related Credit Card Payments Not Taxable as Perquisites Under Income Tax Act.

  Case-Laws - AT : Addition as perquisite u/s 17(2)(iv) - payment for credit card bills made by the company on her behalf - The ITAT deleted the addition accepting the assessee's contention that the expenses were for business purposes and not personal perquisites. This decision was made considering the evidence provided by the assessee demonstrating the nature of the expenses incurred in connection with the business.
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• ITAT orders fresh review of foreign bank account deposits amid joint holder's non-involvement claim in dispute with spouse.

  Case-Laws - AT : Undisclosed deposits in foreign bank account - assessee a joint holder along with her husband - The ITAT remanded this issue to the AO for fresh examination, recognizing the assessee's claim of non-involvement in the account's operations and her dispute with her husband. The decision to restore the issue was based on the need for a fair reassessment after allowing the assessee an opportunity to be heard, without directly concluding on the matter.
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• Interest Income from Staff Loans Classified as "Other Income," Not "Business Income," Rules ITAT in Tax Dispute.

  Case-Laws - AT : Characterization of receipts - Treatment of interest income from staff loans and advances, interest income from other loans and advances and miscellaneous income - Classification as Business Income vs. Other Income - Despite the assessee's assertion that the loans to employees were part of a business strategy to retain talent and the miscellaneous income arose from routine business activities, the ITAT found the Revenue's argument persuasive. Specifically, it highlighted that the income did not directly result from the assessee's primary business activities and that separate heads for interest income in the return of income necessitate its inclusion under "Other Income."
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• Unexplained Investments Not Justified if Declared in Wealth Tax or Settlement Commission, Belonging to Other Family.

  Case-Laws - AT : Unexplained income and undisclosed interest - The tribunal held that, additions for unexplained investments cannot stand if the items in question are accounted for in wealth tax returns or declared to the Settlement Commission, and belong to other family members not directly implicated in the incriminating evidence.
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• Income Tax Tribunal: DTAA Provisions Prevail, Salary Taxed in USA Not India for Resident Employee.

  Case-Laws - AT : Accrual of income in India - period of stay in India - salary received by the assessee from his foreign employer - DTAA between India and USA - Revenue contended that, since the assessee was a resident and ordinarily resident in India during the year, therefore, the provisions of DTAA would not apply in the case of the assessee - the Tribunal found that the provisions of Article 16(2) of the DTAA are to be read together, and all conditions must be satisfied simultaneously to determine the tax liability of the assessee's foreign income. It held that the income earned by the assessee in the USA should be taxed in the USA, as the conditions under Clause (a), (b), and (c) of Article 16(2) were not fully met.
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Customs

• Government's Ban on Non-Basmati White Rice Exports Upheld to Control Domestic Prices; Petition Dismissed.

  Case-Laws - HC : Validity of the Notification Prohibiting Export of Non-Basmati White Rice - Purchase contracts executed by the petitioner prior to the Notification - The High court found the government's prohibition on the export of Non-Basmati White Rice to be a policy decision aimed at controlling domestic market prices. The petitioner's case did not meet any of the exceptions outlined in the notification allowing certain exports. Thus, the petition was dismissed.
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• Tribunal Allows Refund Claim for Wireless Telephones, Dismisses Penalty, and Rejects Unjust Enrichment Argument.

  Case-Laws - AT : Refund claim - Principles of unjust enrichment - Imported goods as ''wireless telephone'' - The Tribunal's findings indicated that the appellant had paid duty without waiting for a show cause notice, leading to the penalty being set aside. Thus, denial of refund based on non-appeal against Order-in-original 36/2004 was deemed incorrect. - The Tribunal found no merit in denying the refund on the ground of unjust enrichment. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief, if any, as per law.
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• Imported 'Power Weeders' Reclassified as 'Brush Cutters'; Not Eligible for Agricultural Machinery Exemptions.

  Case-Laws - AT : Demand Duty - Mis-declaring imported goods ‘Brush Cutters’ as ‘Power Weeders’ - The Tribunal found the goods to be 'Brush Cutters' not 'Power Weeders' based on examination and supporting documentation. They were classified under CTH 8467 as tools for working in the hand with a self-contained motor, distinguishing them from machinery meant for soil preparation or cultivation under CTH 8432/8433. The appellants were not entitled to the claimed exemptions under Notification No.12/2012 because those exemptions applied specifically to machinery designed for agricultural use, which did not include 'Brush Cutters'.
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• Tribunal Rules Re-Issued Show Cause Notices in Fraud Case Legally Unsustainable; Appeals Allowed in Both Categories.

  Case-Laws - AT : Fraudulent exports - Seeking to recover the drawback as well as seeking to impose penalties on all the noticees thereon - after about two years supplementary Show Cause Notices issued - The Tribunal observes that the re-issuance of Show Cause Notices in Category 1 Appeals, after the initial adjudication, lacks statutory backing. The Tribunal finds this action erroneous and legally unsustainable, ultimately leading to the allowance of these appeals. - Similarly, in Category 2 Appeals, tribunal concludes that the issuance of Show Cause Notices to the Appellants based on unrelated cases lacks legal merit, leading to the allowance of these appeals as well.
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• Request to Reclassify Echo Dot with Clock for Import Benefits Denied; Original Ruling Stands Unchanged.

  Case-Laws - AAR : Request for modification of Advance Ruling - Classification of Echo Dot with clock - Benefit of exemption notifications on their import. - The previous ruling classified Echo Dot (5th Generation) and Echo Dot (5th Generation) with clock under sub-heading 8518 22 10 of the Customs Tariff Act, 1975. - It also determined that exemptions were not applicable to these products. - The authority held that, the ruling on the classification of Echo Dot (5th Generation) and Echo Dot (5th Generation) with clock was not made under any mistake. - The modification petition dismissed.
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Corporate Law

• Tribunal Confirms Audit Powers to Address Allegations of Mismanagement and Fund Siphoning under Companies Act.

  Case-Laws - AT : Oppression and Mismanagement - inherent powers of NCLT to cause audit of accounts - allegations of siphoning funds, breach of agreements, and failure to maintain proper books of account - Section 241 & 242 of the Companies Act, 2013 - The NCLAT held that the NCLT has inherent powers under Rule 11 of the NCLT Rules, 2016, to order an audit for the ends of justice and to prevent abuse of process.
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Indian Laws

• Cheque Dishonor Charge Dismissed: Courts Find No Proof of Legal Debt, Uphold Trial Court's Decision Dismissing Complaint.

  Case-Laws - HC : Dishonour of Cheque - legally enforceable debt or liability - The accused denies the allegations and contends that there was no loan transaction with the complainant. The accused also questions the service of the demand notice and raises issues regarding the credibility of the complainant's evidence. - The Trial Court found that the complainant failed to establish that the accused issued the cheque for lawful discharge of debt. Therefore, the Trial Court dismissed the complaint. - IT was found that the possibility of complainant coming in possession of the cheque of accused with respect to any earlier transaction cannot be totally ruled out. - The appeal is dismissed by the High Court, affirming the decision of the Trial Court.
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• Appeal Dismissed: Court Upholds 20% Deposit Rule for Cheque Dishonor Conviction Under Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - suspension of sentence and criminal appeal - Validity of imposing a condition of depositing 20% of the compensation amount - statutory liability u/s 148 - Violation of principles of natural justice - The High Court dismissed the petitioner's plea, stating it lacked merit, and imposed no costs. This decision reinforces the statutory obligation of depositing 20% of the compensation amount in cases involving dishonored cheques under the Negotiable Instruments Act, unless exceptional circumstances warrant otherwise.
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• Court Overturns Decision: Plaintiff Wins Money Recovery Suit on Promissory Note; Defendants' Arguments Dismissed.

  Case-Laws - HC : Suit for recovery of money on the foot of promissory note - Burden/onus to prove - The High Court found in favor of the plaintiff, overturning the decision of the subordinate court. The court ruled that the plaintiff had adequately proved the execution of the promissory note, and the defendants failed to rebut the presumption under the Negotiable Instruments Act. The court also rejected the defendants' arguments regarding non-impleading of a party and discrepancies in witness testimony.
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PMLA

• Bail Denied: Court Cites Strong Evidence Against Petitioner in Money Laundering Case, Highlights Serious Offenses.

  Case-Laws - HC : Seeking grant of bail - Money Laundering - reason to believe - cessation from the directorship from the above companies - beneficial ownership directly or indirectly through company - The High court held that the evidence clearly showed the petitioner's involvement in money laundering, thereby justifying the denial of bail. The court emphasized the serious nature of the offences and the substantial evidence against the petitioner, including his control over the company involved in the fraudulent transaction.
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Service Tax

• Eligibility for Sabka Vishwas Scheme Upheld; Post-June 2019 Investigation Deemed Irrelevant, Order Set Aside.

  Case-Laws - HC : Benefit of SVLDRS - Bar imposed by an enquiry / investigation or audit post 30.06.2019 - The court set aside the impugned order, holding that the petitioner's eligibility under the Sabka Vishwas Scheme was not affected by the investigation initiated post 30.06.2019. Consequently, the writ petition was disposed of, with no costs awarded.
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• Tribunal Rules Service Tax Demand Invalid Due to Deficient Show Cause Notice and Misinterpretation of Taxability Clause.

  Case-Laws - AT : Validity of SCN - SCN suffers from incurable deficiency - Demand raised solely on the basis of Income Tax data shared by the Income Tax authorities - CESTAT found that the orders confirming the service tax demand were beyond the scope of the SCN and did not specify the clause under which the service fell for taxability. - The tribunal interpreted Section 65(91a) of the Finance Act, 1994, and determined that the appellant's activities did not constitute the construction of a residential complex liable for service tax. - The tribunal set aside the service tax demand upheld by the impugned orders, ruling in favor of the appellant.
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• Tribunal Rules Procedural Lapses Insufficient for Denial of Service Tax Exemptions in Export Service Case.

  Case-Laws - AT : Export of services - Procedural lapse in submitting the proof of documents - Non-fulfilment of conditions prescribed in the N/N. 18/2009-ST - After hearing both sides, the Tribunal observed that the sole ground for confirming the demand was the non-fulfillment of conditions specified in the Notification. However, considering the explanations provided and the subsequent submission of documents by the appellant, the Court concluded that denial of exemption due to procedural lapses was unjustified.
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• Appeal for Service Tax Refund on Ocean Freight Dismissed; New Grounds Not Considered Without Fresh Claim.

  Case-Laws - AT : Refund of service tax on ocean freight under reverse charge mechanism - The tribunal noted that considering this ground would amount to assessing a new refund claim which was not part of the original authority's consideration. The appellant's failure to challenge the assessment/payment led to the finality of the duty paid. - The CESTAT Allahabad dismissed an appeal for a refund of service tax paid on ocean freight, stating the appellant failed to make a valid case under the originally filed claim. The court indicated that a fresh refund claim must be pursued for issues relating to the levy's ultra vires status, adhering to principles regarding the amendment of claims and the finality of unchallenged assessments.
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Central Excise

• Court Upholds Denial of Cenvat Credit Refund; Exemption Conditions Must Be Met to Claim Benefits.

  Case-Laws - AT : Refund of duty paid on self assessment basis - Refund of the Cenvat credit reversed - benefit of exemption notification - The High court scrutinizes the appellant's arguments regarding the absence of a mechanism for recovering already taken credit and the interpretation of the exemption notification's requirements. It concludes that the appellant cannot undo the fulfillment of the notification's conditions after availing the exemption. - The court dismisses the appeal, upholding the impugned order that rejected the appellant's claim for a refund of the reversed Cenvat credit.
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Case Laws:

• GST

• 2024 (3) TMI 220
  Validity of SCN issued in respect of distinct assessment periods - petitioner contends that the show cause notices were issued by pre-determining and pre-judging that the goods fall within Chapter 8708 and not 8512 - HELD THAT:- Ordinarily, a show cause notice is not interfered with unless issued by a person without jurisdiction or unless no case is made out even proceeding on the assumption that the statements in the show cause notice are correct. The petitioner has placed on record the notes under Section XVII, which deals with chapter 85. He has also placed on record the HSN Explanatory notes. In multiple judgments of this Court and the Supreme Court, the HSN Explanatory notes have been referred to and relied upon as an authoritative guide to issues relating to classification. The petitioner has also placed for consideration Instruction No.1/2022, which refers to several judgments of the Supreme Court. If the petitioner / assessee placed this material before the assessing officer, it is needless to say that the assessing officer is under an obligation to consider this material with an open mind in an objective manner before concluding the assessment. Petition are disposed of by directing the petitioner to reply to the respective show cause notices. Upon receipt thereof, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter conclude the assessments.

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• 2024 (3) TMI 219
  Levy of penalty - Actual intention to evade tax on part of the petitioner (mens rea) or not - petitioner failed to produce the e-way bill in time due to certain difficulties - HELD THAT:- It is a well settled position of law that if there is no intention to evade tax on the part of a person then imposition of tax and penalty is not proper and justified. But there must be some reasonable grounds to show that there was actually no intention to evade tax on the part of tax payer. In the present case, it is an admitted fact that neither invoice nor e-way bill were accompanying the goods when it was intercepted by the authorities. This contravention of rules can not be treated as a mere common mistake. In this situation, burden of proof for establishing that there was no intention to evade tax shifts to the assessee. This court in case of M/s Akhilesh Traders V. State of U.P. and 3 others [ 2024 (2) TMI 1128 - ALLAHABAD HIGH COURT ] has held that in cases where the goods are not accompanied by the invoice and e-way bill, a presumption may be raised that there is an intention to evade tax. The petitioner, in the present case, could not explain the absence of invoice and e-way bill with a proper and reasonable explanation. Ergo, he has not been able to rebut the presumption of evasion of tax - Mere furnishing of the documents subsequent to the interception can not be a valid ground to show that there was no intention to evade tax. There must be some reasonable grounds to justify the non-production of documents at the proper time. The argument raised by the counsel appearing on behalf of the petitioner that the vehicle was parked at the godown for unloading is not supported by the facts. The interception of the vehicle was in a place away from the godown and this entire argument is obviously an afterthought. Accordingly, the application of Section 129(3) of the Act by the authorities is valid and just in law. The petitioner herein has not complied with the provisions of law, hence the steps taken by the respondent authorities are proper and in accordance with the law and require no interference by this court - Petition dismissed.

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• 2024 (3) TMI 218
  Classification of goods - Harpic Disinfectant Toilet Cleaner - Lizol Disinfectant Toilet Cleaner - to be classified under Item 31 of the Fourth Schedule to the Tamil Nadu Goods and Services Tax Act, 2017 or in terms of Item 87 of the Third Schedule to the TNGST Act for the period 01.07.2017 to 13.11.2017 - non-application of mind - violation of principles of natural justice - HELD THAT:- On a close reading of the impugned order of assessment, it is found that though detailed objections under various Heads have been made by the petitioner the impugned order of assessment has not dealt with the same. It is fundamental that any quasi judicial order ought to be made taking into account all factors that are relevant while eschewing the irrelevant. The fact that the impugned order of assessment do not even refer to several aspects raised in the objection indicates that the same has been made without applying its mind to the objections made. It is trite law that when objections are raised a duty is cast on the assessing authority to apply its mind to the objections and deal with each one of them. Failure to do so would vitiate the order of assessment on the ground of non-application of mind. Secondly, the impugned orders of assessment for the first time reveals that the entire proposal have been made on the basis of the proposal received from the enforcement wing authorities. Since, it is only in the impugned order of assessment it was disclosed for the first time about the fact that proposal had been received from the enforcement wing authorities, the petitioner s was disabled from submitting their objections on the above aspect. The impugned order of assessment suffers from the vice of non-application of mind to the objection and also non-disclosure of the fact the proposal have been received from the enforcement wing thereby the impugned order of assessment stands vitiated - the impugned order of assessment is set aside - Petition disposed off.

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• Income Tax

• 2024 (3) TMI 217
  Delay in filling appeal before Supreme court - Denial of principles of natural justice - Assessee permitted to file revised returns - Claim for benefit of Section 10(38) - additions u/s 68 and 69 - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings Assessee turned around and make such claim of wanting to cross-examine persons make adverse statements against the Assessee at the stage of the appeal before the ITAT - As decided by HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. HELD THAT:- There is gross delay of 273 days, 288 days and 267 days in filing the special leave petitions. The explanation offered is not sufficient in law to condone the delay. Hence, the applications seeking condonation of delay are dismissed. Consequently, the special leave petitions are also dismissed keeping open the question of law, if any.

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• 2024 (3) TMI 216
  Challenge AAR ruling - Income taxable in India or not? - TDS liability u/s 195 - determination of tax liability of the payments made by Petitioner to its non-resident group company for availing General Business Support Services ( BSS ) under a Cost Contribution Arrangement ( CCA ) - AAR held that Petitioner is under obligation to withhold tax u/s 195 - scope and ambit of Article 13 of the India-UK DTAA whether the finding of the AAR that services availed by Petitioner from non-resident group company or payments made by Petitioner to it are of/for technical/ consultation services? and whether such services are made available to Petitioner? HELD THAT:- AAR has not gone into but prima facie has accepted the declaration provided by SIPCL that it does not have permanent establishment in India and in any case that was not the issue before AAR. There is no discussion or finding pertaining to the status of SIPCL [non-resident group company] as having permanent establishment in India in terms of Article 5 of the DTAA. Hence, determination by the AAR on this issue remains inconclusive. A perusal of the list of services relate to managerial services not involving anything of a technical nature. The AAR has discussed the services appearing in the CCA and has concluded that these activities in a retail business are at the core of retail marketing and hence advice tendered in taking a decision of commercial nature is a consultancy service. AAR has further considered the definition of the word Consultancy as defined in the Oxford English dictionary and has observed that a consultant is a person who gives professional advice or services in a specialized field. However, the AAR failed to appreciate that the word Consultancy appearing in the Article is to be interpreted in the context of consultancy which makes available technical knowledge, etc. and not of managerial nature. The reading of the Article clearly indicates that the consultancy service must be which makes available technical knowledge, etc. Sub-para (c) to Article 13(4) restricts such services to those which make available technical knowledge or consist of development and transfer of a technical plan or technical design. The services availed by Petitioner cannot be said to be technical services and Article 13 is wholly inapplicable in the facts and circumstances of the present case. Even if it is fees for technical or consultancy services, it can be only where fees are paid in consideration for making available technical knowledge, experience etc. Thus the view of the AAR that SIPCL works closely and advises the employees of Petitioner and hence makes available the services is not correct. This view in fact suffers from fallacy since the agreement continues to operate till date. If the view of AAR is to be held as correct then the contract must stand concluded as once the services and the know how, skill etc is transferred to Petitioner, the need of continuing to render said services must end. This is factually not so as the CCA is in effect till date. As it is clear that the AAR has interpreted the requirements to be satisfied for make available based on its own general notion of the said term without appreciating the applicable law on the subject and also reached an erroneous conclusion that the services availed are technical services. AAR has not dealt with the issue relating to the Permanent Establishment of SIPCL and there is no determination on the same. Of course, that was not a subject of reference before AAR. Thus, we have no hesitation in holding that the impugned order of AAR suffers from legal infirmity and is quashed and set aside.

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• 2024 (3) TMI 215
  TDS u/s 194N - Constitutional validity of TDS on cash withdrawal from Bank exceeding a certain threshold - cash withdrawals by the Societies - default under Section 201(1) - deduction of tax at the rate of 2% from aggregate payment of sums to the recipient in excess of a sum of Rs.1.00 crore during that financial year in question - petitioner adopted the stand before the authorities that Section 194N was itself not valid and in any event, would not be applicable to its case, since some of the cash withdrawals noticed by the authorities had been prior to 01.09.2019 when the provision had been inserted. HELD THAT:- Section 194 N operates as a charge of tax on the amount withdrawn in cash, which is unsustainable as there could be no charging provision other than Sections 4 or 5 of the Income Tax Act. It has been pointed out that the very placement of Section 194N in Chapter XVII B would show that it is not a charging provision, and several cases have been cited to establish that the sections under Chapter XVII B are only machinery provisions, not intended to fasten any charge. Nothing would turn specifically on the terminology used in the provision as the terminology is not fixed but varies from one provision to the other. Moreover, the use of the terminology itself is an aid in the construction of the statutory provision and the object for which it has been inserted. Thus the fact that Section 194N uses the word sum does not advance the petitioner s case to any extent. While not going into the specifics of the assessment, what is clear is that the Societies have been assessed to income tax by the Department and, in some cases, have challenged those orders. It is thus premature and also incorrect for the petitioner to state that the amounts withdrawn by the societies do not constitute taxable income in the absence of any material/record to indicate the same. Challenge to the constitutionality of Section 194 N is rejected. Writ Petitions filed by the District Central Cooperative Banks challenging orders under Section 201 and 201(1A) for non-deduction of tax at source under Section 194N - This is a settled position seen from the judgment in Hindustan Coca Cola Beverage (P) Ltd. V. Commissioner of Income Tax [ 2007 (8) TMI 12 - SUPREME COURT ] to the effect that what is liable for deduction is only a portion of the tax on income. Taking note of certain Circulars issued by the Central Board of Direct Taxes, the Hon ble Supreme Court held that such deduction was not intended to unjustly enrich the Department. Hence, in those cases where the payer was able to establish that the payee has met the tax demand, no consequences would lie on the payer for non-deduction of tax at source. The conclusion of the learned Judge to the effect that the Societies have acted as business correspondents of the Writ Petitioners does not find any support from the records or from any material produced by them to that effect. True, as far as the mode of disbursal of the amounts under various schemes are concerned, the network of distribution is clearly established and to that extent, there may be a loose categorization of the parties as being engaged in various limbs of the same transaction. The term business correspondents assumes importance for the reason that it is one of the exclusions set out under the third proviso of Section 194 N which contains certain exclusions from the applicability of that Section. The third proviso to Section 194N has been extracted elsewhere in this order, and states that any business correspondent of a banking company or cooperative societies engaged in carrying on the business of banking in accordance with the guidelines issued by the RBI will stand excluded from the rigour of Section 194N. None of the respondents pursue this line of argument before us now. Thus, the conclusion of the Writ Court to the effect that the transactions at issue, being cash withdrawals by the Societies, stand excluded from the purview of Section 194N by virtue of clause (iii) of the third proviso is reversed. That apart, the respondents do not express any serious objection in revisiting the proceedings under Section 201/201(1A). Thus, while sustaining the direction to the respondents to re-do the assessments, we add only that such proceedings must be completed within a period of three (3) months from date of receipt of a copy of this order in accordance with law and in line with the principles of natural justice. Needless to say, any payment of tax made by the Cooperative Societies will be given credit to in finalizing the proceedings under Section 201(1). Interest under Section 201(1A) will run from the due date of deduction till date of passing of order as per statute. Learned Judge has made an observation to the effect that the validity of the provision has not been questioned. In fact, it is and, under this order has been upheld as well. We clarify that the applicability of the provision is with effect from 01.09.2019 only as the provisions of Section 194N have been inserted with effect from that date. Section 198 provides for the grossing up of income, clarifying that the amounts deducted under Chapter XVII shall be deemed to be income in the computation of income of an assessee. The second proviso to Section 198 inserted by Finance No.2 Act 2019, with effect from 01.09.2019, states that the sum deducted in accordance with the provisions of Section 194N shall not be deemed to be income received for the purpose of computing the income of the assessee. In our view, this only provides an amplification to the effect that even though deduction of tax is to be compulsorily effected, it shall not lead to any conclusion that the amount deducted constitutes income of the recipient, who is free to seek refund of the same by filing a return of income. Writ Petition is dismissed

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• 2024 (3) TMI 214
  Liability of legal representative (LR) of deceased - validity of assessment order passed u/s 147 against only one LR - main contention of the petitioner was that even though she is the adopted daughter of the deceased and there are two other legal heirs apart from the petitioner, the impugned Assessment order was issued in the name of the petitioner alone, that too without issuing any show cause notice and without affording an opportunity of personal hearing HELD THAT:- Show cause notice was not issued to the petitioner and no opportunity of personal hearing was offered to the petitioner before the impugned Assessment Order came to be passed in the name of the petitioner as the legal heir of the deceased assessee. Hence, the impugned Assessment Order is liable to be quashed on this ground itself. Further, it is to be noted that on 27.05.2023, the respondent had issued show cause notice to all the legal heirs of the deceased Yelchur Ranganathan. Learned counsel for the petitioner fairly submits that Ms.R.Lakshmi Priya and Mr.R.Suriya Prakash are the other legal heirs of the deceased Yelchur Ranganathan. This Court is inclined to quash the impugned Assessment Order and the respondent shall continue the proceedings subsequent to the issuance of show cause notice issued in the name of all the legal heirs viz., the petitioner herein (Smt.Sandhya Sailesh), Ms.R.Lakshmi Priya and Mr.R.Suriya Prakash and proper communication is directed to be sent to all the legal heirs and necessary opportunity of hearing shall also be given before passing the Assessment Order.

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• 2024 (3) TMI 213
  Faceless assessment scheme - Extraordinary circumstance to intervene with the assessment order - specific grounds raised in these writ appeals on the side of the appellant are that the order of assessment proposed variation under the faceless assessment scheme and in view of the observation that the appellant was not entitled to long term capital loss, the order has travelled beyond the scope of show cause notice, thereby violating Section 144B(1)(xii) - HELD THAT:- As seen that the learned Judge, while dismissing the writ petitions, held that the matter may be pursued in the statutory appeal which was filed by the appellant before the appellate authority. Considering all, this Court deems it fit and proper to direct the appellate authority to take into account the above specific grounds raised by the appellant while considering the appellant s appeal, which was filed on 27.01.2023 and pass appropriate orders on merits and in accordance with law, after affording an opportunity of personal hearing to the appellant, within a period of twelve weeks from the date of receipt of a copy of this judgment.

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• 2024 (3) TMI 212
  Allowability of provision for expenses on solid waste disposal - accrual of expenses - CIT(A) allowed the appeal of the assessee mainly on the ground that the expenses have been accrued and also claimed by adopting scientific method - ITAT deleted the addition too - HELD THAT:- In view of the concurrent finding of fact that the provision created by the assessee is allowable as an accrued liability taking the fact that the income in relation to the solid waste disposal undertaken by the assessee was already accounted for the year under consideration, we could not find any error of fact or law in the order of the ITAT. No substantial question of law - Decided against revenue.

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• 2024 (3) TMI 211
  Prosecution u/s 276C (2), 276CC and 276C (1) - willful attempt to evade the payment of tax and the penalty under Income Tax Act - respondent initiated prosecution u/s 200 and 190(1)(1) of Cr.P.C. f or the offence under Section 276 C (2) read with Section 153(A) of the Income Tax Act - petitions have been filed seeking quashment of the private complaint proceedings made in C.C. pending on the file of the Judicial Magistrate No.III, Coimbatore - HELD THAT:- It is seen that, the entire prosecution initiated as against the petitioner is in pursuant to the order of assessment and penalty under Section 143(3) read with Section 153A of The Income Tax Act, 1961. Now, the order of assessment itself is set aside and as such, this Court is of the view that, initiation of the prosecution as against the prosecution cannot be sustained till the fresh assessment order is passed and therefore the C.C pending on the file of the Judicial Magistrate No.III, Coimbatore are liable to quashed. Accordingly, these Criminal Original Petitions are allowed.

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• 2024 (3) TMI 210
  Valuable right of recovery of petitioner as secured creditor - Tax recovery proceedings - priority to secured creditors - equitable mortgage created by the bank - dues of a secured creditor preference over Crown debts or not? - overriding effect and priority as given to secured creditors over claims, inter alia, of revenue, tax, cess etc with effect from 1st September, 2016 as per section 26-E of SARFAESI Act, 2002 - HELD THAT:- Section 281 on amendment with effect from 1st October, 1975 provides for certain transfers to be void. The voidable transfer is to be shown as made during pendency of any proceeding under the Act of 1961 or after the completion thereof but before service of notice under rule 2 of the Second Schedule, resulting in a claim in respect of any tax or any other sum payable by the assessee on completion of the proceeding. Clause (i) in the proviso excepts the transfer from being void if made for adequate consideration and without notice of pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee. Impugned order does not give illumination regarding the assessment proceeding pursuant to notices issued under provisions of assessment procedure, referred therein, as had resulted, on completion of the proceeding, in a claim of tax requiring the TRO to certify the claim and thereafter declare the mortgage void. There is also no finding in impugned order that the mortgage was created after notice of the tax or other sum payable by the mortgagor assessee as a result of completion of the assessment proceeding in respect of one or more of the assessment years referred to in the mentioned notices. By impugned order valuable right of recovery of petitioner as secured creditor was sought to be interfered with. We notice that impugned order was made after [ 2023 (1) TMI 226 - ORISSA HIGH COURT] giving liberty to both, borrower and revenue, there being connection between said and present borrowers to be essentially the same person, to approach the DRT or any other forum for ventilating their grievance. We are told, instead of so doing, in this case revenue has issued impugned order. As aforesaid, from it we have been unable to locate finding on date of initiation of proceeding as prior to date of creation of the mortgage. Neither of the two dates have been mentioned in impugned order. In the circumstances, impugned order is bad for being vague. We are fortified in taking such view, without going into enquiry on documents referred to in impugned order, by judgment of the Supreme Court in Mohinder Singh Gill v. Chief Election Commissioner [ 1977 (12) TMI 138 - SUPREME COURT] Omission to mention finding on dates of initiation of proceeding and creation of the mortgage, to demonstrate that the mortgage was created subsequent to initiation of the proceeding cannot be supplied on contention that the Tax Recovery Officer has power under rule 83 in the Second Schedule empowering him to take evidence exercising power of civil Court. The power is undoubtedly there and the officer has and had the power but in exercise of the power there must be laid evidence to substantiate declaration of the mortgage being void. So far as rule 86 is concerned, revenue was not heard to argue that impugned order is not one, which is conclusive in declaring the mortgage void. Impugned order is set aside and quashed.

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• 2024 (3) TMI 209
  Revision u/s 263 - Addition invoking of provisions of section 68 in respect of share premium received by the assessee - HELD THAT:- Both the parties herein fairly conceded that these orders are passed by the lower authorities before passing of the judgement by Hon ble Supreme Court in assessee s own case [ 2022 (1) TMI 774 - SUPREME COURT] which have full bearing on the decision of ld. AO in these assessment years wherein held admittedly, every one of the investors procured shares of the company in liquidation and each shareholder had a representative in the board of directors. Since the board controlled the company, the directors were guilty of the conduct of the affairs of the company in a fraudulent manner. Since each shareholder had a representative in the board, the shareholders had to take the blame for the misdeeds of the directors; Additionally, the shareholders were fully aware of the fact that the application for approval dated 02.02.2006 to the FIPB was for ISP services. But they entered into a Share Subscription Agreement on 06.03.2006 for Devas services. The Share Subscription Agreement discloses that they were aware of the false statements contained in the Agreement dated 28.01.2005. Therefore, the shareholders, who now want to reap the fruits of a tree, fraudulently planted and unlawfully nurtured, cannot feign ignorance and escape the allegations of fraud. As above findings of Hon ble Supreme Court is having great bearing on the decision of lower authorities in these assessment years since the said judgement of Hon ble Supreme Court was delivered subsequent to the decision of the lower authorities and as such, it is appropriate to remit the entire issue to the file of ld. AO for de-novo consideration.

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• 2024 (3) TMI 208
  Validity of assessment u/s 153A - revenue precisely claims that the CIT(A) was wrong in giving benefit of certain decisions of non-jurisdictional High Courts to assessee and at the same time ignoring the decision of Raj Kumar Arora [ 2014 (10) TMI 255 - ALLAHABAD HIGH COURT favouring revenue - HELD THAT:- As search was conducted on 01.06.2011 and the AY 2011-12 AY 2012-13 with which we are concerned in present-appeals were falling within the category of pending years as on the date of search whereas the decision in CIT Vs. Raj Kumar Arora (supra) was pertaining to completed/unabated years wherein it was held that the addition can be made in completed/unabated years even in absence of incriminating material. Ld. AR submitted that the Raj Kumar Arora decision has no relevance to assessee s case and the ground raised by revenue should not arise for AY 2011-12 and 2012-13 under consideration before us. Further, the decision in Raj Kumar Arora is not valid after subsequent decision of Hon ble Supreme Court in PCIT Vs. Abhishar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] . Therefore, the grounds raised by revenue are meritless and liable to be dismissed. Exemption u/s 11 - violation of section 13 - assessee-society has given its office premise on rent to concerns wherein the members of society were directors/shareholders/partners/substantially interested less than prevalent rates of rent - HELD THAT:- The submission of Ld. DR for revenue that the assessee s submission in letter dated 24.03.2014 was self-serving is not convincing because of the reason that when the assessee made such a categorical submission, it was the minimum duty of AO to discuss the assessee s submission in assessment-order and to rebut or contradict the same. But the AO has kept silence on assessee s submission and went ahead to make adjudication against assessee. In the situation, we are inclined to accept CIT(A) s order which takes into account assessee s categorical submission and thereby hold that the rent charged by assessee was fair, rather higher than prevailing rent and further holding that there was no violation of section 13 of the Act. Faced with this situation, we are not inclined to make any interference with the order of CIT(A); the same is hereby upheld. These grounds are therefore dismissed. Addition u/s 69B on account of unexplained investments in buildings - AO has made these additions by making a reference to DVO u/s 142A and after taking into account the final report submitted by DVO to him, on the basis of difference in the cost of construction recorded in books of account of assessee and the valuation thereof reported in DVO s report - CIT(A) deleted the addition - HELD THAT:- CIT(A) correctly deleted addition by holding the reference made by AO u/s 142A as non- maintainable. The reasoning adopted by CIT(A) is that prior to amendment in section 142A from 01.10.2014, the AO could not have make such a reference without finding any defect in books of account and without rejecting books of account. In accepting this, Ld. CIT(A) relied upon several judicial rulings including the decision of Hon ble Apex Court in Sargam Cinema Vs. CIT[ 2009 (10) TMI 569 - SC ORDER ] - Respectfully, following the same, we are inclined to uphold the order of CIT(A) and dismiss these grounds of revenue. Unexplained cash u/s 69A - CIT(A) deleted the addition - HELD THAT:- We find that the search authorities have found petty amounts of cash with three different colleges at three different places which are not abnormal or unusual. Further, the assessee has also submitted that the cash-balance is duly reflected in its cash-book. Considering these aspects, the submission of assessee can be treated as bona fide and believable. Therefore, we are not persuaded to upset the order passed by CIT(A) in this regard, the same is hereby upheld. These grounds are also dismissed.

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• 2024 (3) TMI 207
  Addition made u/s 43CA - difference between the amount of sale consideration appearing in the conveyance deed and the value adopted by the stamp valuation authority - HELD THAT:- Impugned addition is uncalled for as provisions of Section 43CA of the Act are not applicable to the transactions in question which we have been originally agreed to sell during FY 2011- 12 and part sale consideration have also been received. Accordingly the finding of the ld. CIT(A) is set aside and Ground No. 1 raised by the assessee is allowed. Addition on the income from real estate business - Estimation of profits of the assessee s business - AO has not rejected the book results and provisions of Section 145(3) of the Act has not been invoked - HELD THAT:- We delete the addition made by the AOestimating higher net profits without rejecting the books of accounts. Findings of the ld. CIT(A) is set aside. Ground No. 2 raised by the assessee is allowed. Estimating the profits over and above the profits declared by the assessee in the liquor business carried out - AO again failed to reject the book results u/s 145(3) of the Act before estimating the profits of the liquor business declared by the assessee - HELD THAT:- The estimation has been made by the ld. Assessing Officer mainly on surmises and conjectures without bringing any other evidence on record and such action of the Assessing Officer of assuming jurisdiction u/s 145(3) of the Act without rejecting the book results and without pinpointing the specific defects in the books of accounts regularly maintained and audited, cannot be held to be justified. Ground No. 3 raised by the assessee is allowed. Addition made for unexplained cash deposited during the demonetisation period - HELD THAT:- Assessee is carrying out business of selling goods and providing services regularly and books of accounts of each of the concerns have been maintained. Financial statements are duly audited and profits from each of the concerns are declared. As per the consolidated cash statement as on 08/11/2016, there is a cash balance of Rs. 96,34,619/-, which is sufficient enough to explain the source of alleged cash deposit of Rs. 67,94,000/-. Where the nature and source of the cash credit is explained satisfactorily by the assessee and the Assessing Officer fails to find any defect or any inconsistency in such explanation then, provision of Section 68 of the Act cannot be invoked. We, therefore, hold that no addition is called for u/s 68 - Ground Nos. 4 5 raised by the assessee are allowed. Addition made for estimating the income for clearing and forwarding agent business - AO has taken the basis of the VAT returns to come to a conclusion that the assessee has suppressed the sales and thereby suppressed a net profit - HELD THAT:- Both the lower authorities have failed to consider the fact that one of the business of assessee is that of clearing and forwarding agent and he sells the goods of the companies for which he is acting as an agent. Since the assessee is liable to collect and deposit the value added tax, the details of such sales have been mentioned in the VAT return. However, for the purpose of income tax, assessee has to only account for the commission income earned for carrying out such business as a clearing and forwarding agent. Both the lower authorities missed to consider this fact. Assessee has filed complete reconciliation statement depicting that there is no suppressed sales and, therefore, the income estimated by the ld. Assessing Officer is merely on surmises and conjectures and have no legs to stand. The addition is hereby deleted. Ground No. 6 raised by the assessee is allowed. Addition u/s 68 - Whether genuine transaction and the identity and creditworthiness of the creditor not proved? - onus to prove - HELD THAT:- Funds which were actually required to be received in the account of M/s. Gitanjali Hotels and Inn Private Limited, were received by the assessee on behalf of M/s. Gitanjali Hotels and Inn Private Limited. The audited balance sheet of M/s. Gitanjali Hotels and Inn Private Limited has been filed in the alleged transaction has been mentioned therein both on the liability as well as the asset side. Since the asset owned by GHIPL was not transferred during the eyar, the same is duly regulated in balance sheet as on 31/03/2017. As well as the liability is concerned, the same are shown as advance against sale of land and so far as the asset side is concerned it is loan/advance to the assessee which in turn has been shown as liability in the books of the assessee. The complete details of the said transaction has been placed on record. We thus, find that the assessee has successfully explained the nature and source of the alleged sum and has discharged its burden casted u/s 68. Since the revenue authorities have failed to bring any contrary material on record, we find it to be a genuine transaction and the identity and creditworthiness of the creditor is not disputed. Thus, the addition u/s 68 of the Act, is uncalled for and the same is hereby deleted. Ground Nos. 7 8 of the assessee are allowed.

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• 2024 (3) TMI 206
  Exemption u/s 11 - Claim denied as assessee filed Form 10B beyond the time limits specified u/s 139(1) - assessee is a registered Trust u/s 12A - AR has submitted that the assessee filed Form 10B within the time limit prescribed u/s 139(1) and time limit prescribed for the A.Y. 2018-19 was 31.07.2018 - HELD THAT:- On verification of the acknowledgement filed by the assessee, it is clear that the assessee filed Form 10B on 31.07.2018 i.e. on the last day of due date of filing of Form 10B. But the revenue authorities have not at all considered the filing of Form 10B and erroneously denied the exemption claimed by the assessee u/s 11 of the Act. It is also undisputed fact that the assessee is a registered Trust u/s 12A of the Act. Therefore, we set aside the orders passed by the revenue authorities and direct the AO to allow the exemption claimed by the assessee u/s 11 of the Act, after verification of the claim. Accordingly, the grounds raised by the assessee are allowed.

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• 2024 (3) TMI 205
  Unexplained cash u/s. 69A - Difference in turnover - CIT(A) deleted addition admitting additional evidences - explanation of the assessee is that this amount is being deposited by the sister concern of the assessee for the purpose of taking a Demand Draft favouring Andhra Pradesh Beverages Corporation for procuring of stock by them - CIT(A) deleted addition as observed that once the cash deposit is treated as turnover, the same shall not be treated as unexplained money HELD THAT:- As the sister concern by way of an affidavit has confirmed the cash deposits in the assessee s bank account stating their inability to obtain Demand Draft from their bank account. The details with the dates of cash deposits are also made in the affidavit and it corresponds to the bank statements provided by the assessee. In the light of the peculiar circumstances as stated above, on merits, we are of the considered view that these cash deposits do not belong to the assessee but for only to accommodate the sister concern to obtain the Demand Draft favouring Andhra Pradesh Beverages Corporation for procuring stock for their entity and therefore it cannot be treated as income in the hands of the assessee. Admission of additional evidence by the CIT(A) under Rule 46A(2) and 46A(3) of the Income Tax Rules, 1962 - Act confers powers U/s. 250(4) of the Act to the Ld. CIT(A) to dispose of the appeal by making further enquiry as he thinks fit and if the Ld. CIT (A) thinks fit, he may direct the Ld. AO to make further enquiry and report the same to the Ld. CIT(A). In the instant case, the Ld. CIT(A) has exercised his powers U/s. 250(4) of the Act. In the light of the facts and circumstances of the case as discussed above, we find no infirmity in the order of the Ld.CIT(A) and hence the Grounds raised by the Revenue on the issue are dismissed.

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• 2024 (3) TMI 204
  Unexplained cash credit u/s 68 - share capital/share premium receipts - as submitted assessee has raised money through banking channel and the evidences qua the money received by the assessee were duly furnished the documents before the AO as well as CIT(A) - HELD THAT:- We note that the AO has also issued summons to share subscribers however the same could not be served to the subscriber at the registered office as the same wads shifted to the new address . AO did not carry out any further investigation despite the AO being apprised with the new address. AO deputed the inspector to visit the subscriber s office which he could not find as is apparent from the record. The AO did not carry out any further investigation on the evidences filed by the assessee and harped on the Investigation Wing report that Shri Chandan Chowdhury, the director of Satyatej Vyapaar Pvt. Ltd. was dummy director and thus the subscriber was mainly engaged in the business of providing accommodation entries as Shri Chandan Choudhury was also named in the STR by the investigation wing. We find merit in the contentions of Ld. A.R that authorities below have not carried out any investigation on the evidences furnished before them. Besides it was argued before us that the assessee was not allowed any cross-examination of Shri Chandan Choudhury and the report of the wing was relied on the back of the assessee as the piece of evidence to make the addition which is not permissible under the law. In our opinion, the order of Ld. CIT(A) sustaining the addition appears to be incorrect and consequently cannot be sustained. Thus AO directed to delete the addition - Decided in favour of assessee.

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• 2024 (3) TMI 203
  Disallowance of deduction claimed u/s 80P - interest earned on deposits pertaining to reserve fund with sponsor Bank - HELD THAT:- Coordinate Bench of this Tribunal in the case of Kakateeya Mutually Aided Thrift and Credit Co-op Society [ 2023 (9) TMI 211 - ITAT VISAKHAPATNAM] held in favour of the assessee held that the cooperative society is eligible for deduction u/s. 80P(2)(a)(i) of the Act on the interest income received from investment in banks - Decided in favour of assessee.

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• 2024 (3) TMI 202
  Capital gain u/s 45 - capital gain on surrender of leasehold right - Transfer u/s 2(47) or not? - transactions involved between the assessee and Government of Gujarat, wherein the assessee surrendered leasehold rights of the lands voluntarily in favour of the Government and the assessee has not received any compensation from the Government in lieu thereof - as argued mere fact that the assessee has declared the underlying sum as income under the capital gains cannot be a ground to treat the underlying sum as capital gains when, as a matter of fact, such sum is a capital receipt - Another transaction is the assessee entered into a MOU with M/s. CGPL, however not transferred the lands to M/s. CGPL but received a sum from M/s. CGPL HELD THAT:- The claim of the assessee that its surrender of lease hold rights to Government of Gujarat is independent of its receipt of money from M/s. CGPL is negated by the copy of proposal for lease rights surrender of Balaji Salt Works and copy of MoU submission in paper book dated 23-01-2024. A conjoint reading of the documents suggests that the act of surrender of lease hold land by the assessees and M/s.CGPL application to Government of Gujarat was a planned action. Further MoU speaks of receipt of 80% of total consideration to both Radhaswamy Salt Works/Balaji Salt Works upon their making an application of surrender to Government of Gujarat. The act of these assessees in not disclosing the actual intent and purpose of surrender of lease deed to Government authority and withholding material information regarding their proposal/MOU with CGPL does not make their act of surrender voluntary and thus the lower authorities is correct in charging Capital Gains on the above transaction, which does not require any interference and assessee appeal is liable to be rejected. No doubt, the above surrender of leasehold rights amounts to transfer as per Section 2(47) of the Act, as it amounts to extinguishment of the rights of the assessees, which is a capital asset as per Section 2(14) of the Act. Though the consideration is received from M/s. CGPL, a third party, not from Government of Gujarat on account of surrender of leasehold rights, the same is assessable to tax as capital gains, since Section 45(1) of the Act does not stipulate as to the person from whom consideration is to be received. Further perusal of the MOU entered between the parties, it is a clear cut case that the assessees were compensated by a sum of Rs. 8.55 lakhs per acres of lands surrendered to Government of Gujarat and a week thereafter the above compensation payment is payable to the assessees by M/s. CGPL. On an identical transaction where compensation received from third party was held to be a transfer within the meaning of Section 2(47) r.w.s. 45(1) of the Act, by Hon ble Calcutta High Court in the case of A Gasper Vs. CIT [ 1978 (3) TMI 4 - CALCUTTA HIGH COURT] which was approved by Hon ble Supreme Court reported in [ 1991 (8) TMI 7 - SUPREME COURT] . Thus we do not find any legal force in the submissions made by the assessee. Decided against revenue. Charging of interest u/s. 234B - appellant is entitled to adjustment of seized cash/FDRs against the self-assessment tax liability from the said date i.e. 15.09.2010 on which the period of 120 days is over in terms of section 132B of the I.T. Act - HELD THAT:- Coming to the main section 132B(1) of the Act, which prescribes that the assets seized u/s. 132 can be adjusted against any existing liability as per IT, WT or the amount of liability determined on the completion of regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment. As per this sub-section, the Ld AO ought to have adjusted against the tax liability while framing the regular assessment as against the FDRs seized from M/s. Balaji Salt Works and M/s. Radhaswamy Salt Works respectively. In that event also, the assessee is entitled for refund of surplus FDRs seized by the Department as per section 132B [3] of the Act and therefore there is no question of levy of interest under section 234 B and C of the Act. Thus AO miserably failed to adhere to the provisions of section 132B[1] of the Act and the Ld CIT [A] is not justified in confirming the interest charged u/s. 234B of the Act for the period up to 15-09- 2010. Therefore we direct the Ld AO to rework the computation in accordance with the provisions of law after providing proper opportunity of hearing to the assessees.

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• 2024 (3) TMI 201
  Bogus long-term and short-term capital loss arising upon sale of shares - WEPL (which stood merged with the assessee) had claimed capital loss on sale of shares of WECL to its related entity SIPPL - loans provided by WEPL to WECL for funding the project SPVs were converted into OCPS[Optionally Convertible Preference Shares] - According to the AO, the aforesaid loss was an artificial loss created on paper and thus should not be allowed to the assessee HELD THAT:- The acts involving issuance of OCPS of Rs. 375 crores in October 2014, and the subsequent scheme of merger undertaken in AY 2015-16; was neither a colorable device nor did it result in creation of any artificial loss. Accordingly, the cost of OCPS of Rs. 375 crores subscribed by WEPL in the first tranche cannot be disregarded or be said to exist only on paper. Second tranche of cost of acquisition of OCPS of Rs. 310.60 crores, assessee had initially granted loan in several tranches to WECL, majorly from September 2014 to March 2016. Later on, these loans were converted to OCPS at face value in November 2016. As in absence of any foreseeable cash flows, which would enable WECL to clear the loans obtained from the assessee, a commercial decision was taken to convert the outstanding loans into OCPS. Further, the first tranche of Rs. 375 crores was subscribed more than two year ago i.e. in October 2014. Having regard to surrounding circumstances and based on human probabilities, one cannot infer that the assessee would have known the outcome of the petition before the NGT which would adversely impact the valuation in the relevant FY 2016-17 and thus the assessee could have planned to purportedly generate overall loss by selling OCPS which were subscribed as far back in October 2014. According to us therefore, the overall cost of acquisition of Rs. 686 crores, for capital gain computation purposes, is found to be tenable and includable in computing cost of acquisition deductible from the sale consideration, for arriving at capital gain/loss. Sale consideration component involved in this transaction - AO was of the view that the transaction with SIPPL, a related entity was a controlled transaction and that the OCPS was sold at an undervalued figure to generate a loss - AO had ignored the report obtained by the assessee from merchant banker who had valued the OCPS based on risk and business profile as per the Net Asset Value ( NAV ) Method. Although this valuation report is noted to have been placed by the assessee before the AO, but no defect or infirmity therein has been pointed out by the AO. According to us therefore, when the sale consideration agreed upon between related parties was supported by an independent valuation report obtained from an expert in this field, there was no reason to allege it to be under-valued, unless the Revenue points out any defect or error in the valuation methodology. If the transactions entered between various parties are analysed, we notice that following two different types of transactions would emerge:- (a) The first one is the investment made by WEPL in the OCPS issued by WECL. It consisted of Rs. 375 crores (+) Rs. 305.20 crores (+) Rs. 5.40 crores aggregating to Rs. 686 crores (rounded). This investment of Rs. 686 crores have been sold for a consideration of Rs. 300 crores. The issue before us is related to the loss claimed by the assessee in respect of these transactions. It is pertinent to note that the above said OCPS were sold by WEPL in March, 2017 falling in AY 2017-18. (b) The second one is the investment made by WECL in the OCPS issued by WERPL. It consisted of Rs. 300 crores only. Since WERPL merged with WEPL, the above said investment made by WECL was required to be written off. The fact would remain that the loss arising on account of writing off of Rs. 300 crores was not claimed as deduction by WECL nor was it carried forward. It is pertinent to note that the merger of WERPL with WEPL has taken place on the appointed date of 01-01-2015. Consequently, WECL has written of investments in the year relevant to AY 2015-16. It can be noticed that both the above said transactions are independent transactions and they are nothing to do with each other, except for the fact that a part of amount of Rs. 375 crores collected by WECL by issuing OCPS was invested to the extent of Rs. 300 crores in the OCPS of WERPL. Thus, (a) the OCPS issued by WECL to WEPL and (b) the OCPS issued by WERPL to WECL are two different transactions carrying different rights and liabilities. Hence they are not connected with each other. However, it appears that the AO has mixed up both the transactions. We notice that the AO has examined the transactions relating to issue and writing off of Rs. 300 crores in AY 2017-18, even though those transactions are relevant for AY 2015-16. The AO has taken adverse view with respect to the same and accordingly, arrived at the conclusion that the investment made by WEPL in the OCPS issued by WECL is also sham, even though it is an independent transaction. However, we are of the view that the AO was not justified in doing so. Hence the disallowance of claim of both long term and short term capital loss was not correct on this reasoning also. AO was unjustified in disallowing the aggregate capital loss by treating the transaction involving sale of OCPS by WEPL to be a colorable device and accordingly uphold the order of Ld. CIT(A) deleting the impugned disallowance. This ground is therefore dismissed. Disallowance u/s 14A both while computing income under normal computational provisions as well as book profit computed u/s 115JB - AO rejected the same and invoked Rule 8D and thereby computed disallowance u/s 14A being 1% of average value of investments - HELD THAT:- We note that the Ld. CIT(A) had rightly followed the decision of Hon ble Bombay High Court in the case of M/s. Nirved Traders Pvt. Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT] for holding that the disallowance u/s 14A of the Act is to be restricted to the extent of exempt income earned by assessee. Thus the disallowance u/s 14A cannot exceed the exempt income, and thus directed the AO to restrict the quantum of disallowance accordingly. Thus we see no reason to interfere with the above findings of the Ld. CIT(A) restricting the disallowance u/s 14A to the extent of exempt income i.e. Rs. 55/- as suo moto offered by the assessee. MAT computation u/s 115JB for addition u/s 14A - As in Vireet Investments Pvt Ltd ( 2017 (6) TMI 1124 - ITAT DELHI] has held that Rule 8D cannot be invoked and applied, while computing book profit under clause (f) of Explanation (1) to Section 115JB. Following the same we uphold the order of Ld. CIT(A) deleting the further addition u/s 14A r.w. Rule 8D made by the AO while computing book profit under clause (f) of Explanation (1) to Section 115JB of the Act. Accordingly, these grounds of appeal stand dismissed.

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• 2024 (3) TMI 200
  Undisclosed deposits in foreign bank account - assessee a joint holder along with her husband - stand of assessee is that she was having dispute with her husband and was disowned from being beneficiary in all assets of her husband - HELD THAT:- As there is no dispute that the assessee was co-signatory along with her husband of the foreign bank account maintained with Standard Chartered Trust (Guernsey). However, the stand of the assessee from the very beginning is that she was not having any knowledge about the opening of the account and the sum credited into such account and the account was operated and managed by the husband of the assessee; that there was dispute between wife and husband and the assessee was disowned from being beneficiary in all assets of her husband. It is also the stand of the assessee that she had never made any transaction into such account and she had made complaint to Enforcement Directorate on 21.05.2012 much before conducting of search and seizure on 11.02.2014 regarding no connection with the disputed foreign bank account. Therefore, to verify the veracity of assessee s claim, in order to subserve the ends of natural justice and to be fair to both the parties, we restore this issue to the file of the AO for decision afresh - Ground is allowed for statistical purposes. Addition as perquisite u/s 17(2)(iv) - payments towards assessee s credit card bills have been done through assessee s own bank account - whether payment for credit card bills made by the company on her behalf to not be treated as her perquisites ? - HELD THAT:- Considering the fact that the assessee has been able to prove that the expenses in question were incurred in connection with the business of the company in which she was director, we are of the considered view that the lower authorities were not justified in treating these payments as perquisite of the assessee and no addition thereof could be made in the hands of the assessee. Accordingly, orders of the authorities below on the issue in question are set aside and the addition on this account is deleted.

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• 2024 (3) TMI 199
  Disallowance u/s 14A - Addition of expenditure attributable to exempt dividend income - HELD THAT:- As decided in assessee own case [ 2014 (6) TMI 1041 - ITAT AHMEDABAD ] the matter is set aside to the file of AO to examine the facts and figures of the case in the light of our observations made above in order to arrive at a final conclusion as to whether disallowance u/s 14A is to be made and if so, then the amount thereof which in no case should exceed the exempted income earned by assessee during the year under appeal. It is needless to mention that AO shall allow reasonable and sufficient opportunity of hearing to the assessee before adjudicating the same. These grounds are allowed for statistical purposes. Characterization of receipts - Treatment of interest income from staff loans and advances, interest income from other loans and advances and miscellaneous income - HELD THAT:- Though interest on other loans and advances has been contended as was of business exigencies on the assessee, it has not been able to be demonstrated by the assessee that the nature of this income is from business activities particularly when separate head for interest income in the return of income has been shown which is to be included in other income. Neither the miscellaneous income has been able to be shown from routine business activities of the assessee. The assessee failed to demonstrate that the income which is not revenue from operations as required to be treated in the other heads which includes income from other sources and capital gain. The impugned amount of 33.23 lakhs on account of interest income from other loans and advances and miscellaneous income of 9.46 lakhs are rightly been treated as income from other sources. We, therefore, quash the order passed by the Ld. CIT(A) in granting relief to the assessee and confirm the order passed by the AO. Hence, this ground of appeal raised by the Revenue is allowed. Disallowance u/s. 14A for the purpose of computation of book profit u/s. 115JB is hereby deleted.

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• 2024 (3) TMI 198
  Unexplained income and undisclosed interest - additions were made on the basis of incriminating documents extracted from the mobile phone of the assessee during the course of search proceedings - as per DR assessee has failed to furnish any credible evidences or explanation in respect of the entries found therein - CIT(A) deleted the addition - HELD THAT:- AO has not recorded in the assessment order whether such image/photo was received by assessee in WhatsApp image or it was sent. The source of image was not investigated by Assessing Officer. Assessing Officer nowhere mentioned whether such image was confronted to the assessee during the search action or his statement was recorded for such image. Thus, in absence of any corroborative evidence, we do not find any justification for making such addition. Hon ble Supreme Court in Common Cause Vs Union of India [ 2017 (1) TMI 1164 - SUPREME COURT] also held that loose sheets of papers are wholly irrelevant as evidence being not admissible u/s 34, so as to constitute evidence with respect to transaction mentioned therein being of no evidentiary value. Thus, we affirm the order of ld. CIT(A) on our aforesaid additional observation. Unexplained money and unexplained interest - CIT(A) deleted addition - HELD THAT:- AO on the basis of images recovered from the mobile phone of Naresh Agarwal assumed that the assessee advanced Rs. 13.30 crores and earned interest of Rs. 3.72 crores. The figure of principal amount and interest amount in no why can be correlate with each other. Unless and until such principal amount was lent for years together. Alleged interest figure of Rs. 3.72 crores is more than 30% of alleged principal amount which is beyond imagination. AO added five zeros against the figure of 13.30 and added only two zero against the interest which is again without any rational. Thus, we do not find any justification for making such addition in crores without any independent or corroborative material on record. At least such figure or incriminating material should have been confronted with Naresh Agarwal to explain it in a better way. There is no material on record to suggest that such figure was confronted with Naresh Agarwal nor addition is based on his statement. Thus, with the aforesaid additional observation, we affirm the order of ld. CIT(A). In the result, ground No. 2 of appeal is dismissed. Addition u/s 69B - revenue submits that during the search action, jewellery and other valuable articles were found - HELD THAT:- We find that the AO made addition ignoring the fact that Panchnama contained the name of all lady members of the family. All three female members were assessed to tax as well as to wealth tax. AO simply made the addition by allowing relief as per CBDT Circular No. 1916 of 1994. We find that the entire jewellery consisting of gold and diamond were shown in the Wealth tax Return and was declared before the Income Tax Settlement Commission. We find that the order of ld. CIT(A) is based on proper appreciation of facts. No contrary fact to take other view is brought to our notice, therefore, we affirm the order of ld. CIT(A) with our additional observation. In the result, this ground of appeal is dismissed. Addition u/s 69C - Unexplained expenditure - addition on the basis of image found from the digital device of assessee which contained the transaction related to furniture - HELD THAT:- We find that the ld. CIT(A) on appreciation of writing on the digital image found that there is not detail of seller or buyer in the image. No corroborative evidence was found with regard to existence of furniture in the residential or official premises of assessee. There are no details of payment made in cash or cheque whether furniture was really purchased or not is not clear on the image. AO made addition merely on the basis of WhatsApp image without ascertaining whether such furniture was purchased or not, so such addition cannot be sustained. We find that the Assessing Officer has not brought any corroborative evidence to support the addition. Such digital image was not confronted with the assessee or with any other family members. Thus, we do not find any justification of making addition merely on the basis of details found in the digital device particularly in absence whether such image was sent or received by the assessee. Thus, we affirm the order of ld. CIT(A). In the result, this ground of appeal is dismissed. Addition u/s 69A on account of unexplained money - CIT(A) deleted the entire addition by taking a view that said packet contained the name of Vijay Jain - HELD THAT:- AO neither summoned Vijay Jain nor recorded his statement to ascertain the exact details about the said packet (Image). The ld. CIT(A) held that the addition of Rs. 3.00 lacs is made solely on presumption basis. In fact, this packet was received or not is not clear as it contains the name and address and not to the name and address. CIT(A) held that merely on the basis of figure mentioned on the image of packet cannot be basis for making addition by adding three zeros to the figure and deleted the addition. We find that the addition is based on assumption without verification of fact. We find that the AO has not made any independent investigation or verification whether mobile number written is correct or not. No such effort, if made, is recorded in the assessment order, thus we do not find any reason to interfere with the finding of ld. CIT(A) which we affirm. In the result, this ground of appeal is dismissed. Unexplained money u/s 69A - CIT(A) held that the Assessing Officer merely relied on presumption that noting mentioned on the same page elating to other land in Kuberji group, thus, this land is related to assessee, thus deleted addition - HELD THAT:- There is no corroborative evidence, the same is merely based on presumption. There is no detail from whom such land was purchased or to whom such consideration was paid. No such fact is brought on record. If such land is sold to whom the land is sold and from whom the sale consideration is received is not brought on record. There is no reference or location or situation of land, all facts are totally absent in the assessment order. CIT(A) held that loose paper found in the search is not in the handwriting of assessee so it cannot be made a basis for addition. The addition could be made when there is some corroborative evidence brought on record. There is no corroborative evidence to prove that the assessee received payment or receipt of any amount on the transaction. CIT(A) held that such loose paper is nothing but a dump document which cannot be relied solely for making huge addition. On independent examination of facts, we find that neither the Assessing Officer has brought any corroborative evidence nor further investigated the fact nor referred any corroborative evidence if collected during the search action by the Investigation Wing. Thus, we do not find any infirmity in the order of ld. CIT(A) which we affirm. In the result, this ground of appeal is dismissed. Appeal of revenue is dismissed.

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• 2024 (3) TMI 197
  Accrual of income in India - period of stay in India - salary received by the assessee from his foreign employer - DTAA between India and USA - assessee qualified as resident but ordinarily resident in India and DTAA with the USA was not applicable to the assessee in respect of his global income ignoring the provisions of Section 90 - AO observed that since the assessee had conceded that he was physically present in India for more than 182 days (i.e. 200 days) during the financial year 2015-16 and for more than 729 days (i.e 1044 days) in the seven tax years (2008-09 to 2014-15) immediately preceding the financial year 2015-16, hence, the assessee qualified as resident and ordinarily resident of India during the tax year in question HELD THAT:- Admittedly, the assessee stayed less than 183 days in United States, therefore, as per Clause (a) to Article 16(2) of the Indo-US DTAA, the income of the assessee is liable to be taxed in India. In view of the Clause (b) (c), the salary income of the assessee is liable to be taxed in United States as the remuneration was paid by the resident of the United States and therefore, Clause (b) (c) are not attracted in the case of the assessee. As per Article 16(1) of the Indo-US DTAA, such salary income of other similar remuneration, drived by a resident of a contracting state (in our case in India ) in respect of an employment exercised in the other State (in our case USA ) is taxable in that other state (USA). As per Article 16(2), notwithstanding the provisions of Article 16(1), if the conditions stipulated in Article 16(2) are attracted then the said salary or similar remuneration will be taxable in the contracting state of which the resident/assessee is a resident of. Whether the Clause (a), (b) (c) to Article 16(2) of the Indo-US DTAA are to be read together and that of the three clauses have to be simultaneously applied to see as to whether the salary income of a resident is liable to be taxed in the state of which the assessee is the ordinary resident or in the other contracting state where he has exercised his employment and received the remuneration? - A perusal of the provisions of Article 16(2) reveals that Clause (a), (b) (c) have been written together in conjunction of each other. These clauses are not separated with the word or , hence there is no impression given that they can be applied independent of each other or to say either of these clauses can be applied. Even, Clause (b) (c) have been conjuncted with the word and . Though, the word and has not been mentioned between Clause (a) and (b), however, that does not make a difference as until and unless Clause (a) is not separated from Clause (b) with the word or . Therefore, these clauses same have to be read together. Therefore, the reasonable interpretation would be that all of the conditions mentioned in Clause (a), (b) (c) are to be satisfied simultaneously to attract the provisions of Article 16(2) of the Indo-US DTAA. In the case in hand, though provisions of Clause (a) are attracted, however, the provisions of Clause (b) (c) are not applicable to the case of the assessee. When we read Article 16 of the DTAA as a whole, the reasonable interpretation which would come that the salary and other similar remuneration drived by resident of a contracting state in respect of an employment exercised in the other contracting state is liable to be taxed in that other state. However, if such resident has not stayed more than 183 days in that other state and the remuneration has not been paid by resident of that other state and even the remuneration is not borne by a permanent establishment or fixed base or a trade or business which the employer has in that other state, then the remuneration of the resident is liable for taxation in the state of which he is a resident. As observed in this case, the assessee is a resident of India, however, he has exercised employment and received remuneration in United States, therefore, at the first instance, as per the provisions of Article 16(1) of the Indo-US DTAA, such salary/remuneration of the assessee is liable to tax in the United States only. The exception clause as mentioned in Article 16(2) of the DTAA is not applicable in toto to the case of the assessee as the condition of Clause (b) and (c) to Article 16(2) of the DTAA have not been satisfied in this case. Since, we have held that the conditions mentioned in Clause (a), (b) (c) to Article 16(2) of the Indo-US DTAA have to be applicable together or to say simultaneously and since all the conditions mentioned in Article 16(2) of the DTAA are not attracted in the case of the assessee, therefore, it is held that the income of the assessee is taxable in USA and not in India. In the case in hand, this claim of the assessee has not been rebutted or denied by any of the lower authorities. Both the lower authorities have simply relied upon the provisions of section 5 and section 90 to state that since the assessee was a resident and ordinarily resident in India during the year, therefore, the provisions of DTAA would not apply in the case of the assessee. However, a perusal of section 90 read with Article 16 of the DTAA would show that section 90 did not bar in any manner the operation of the relevant provision of DTAA in respect of income earned by the assessee in other country, with whom the Central Government has entered into a DTAA. In view of this, the impugned order of the CIT(A) on this issue is not sustainable and the same is accordingly set aside. The additions made by the AO on this issue are accordingly ordered to be deleted.

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• Customs

• 2024 (3) TMI 196
  Validity of the Notification Prohibiting Export of Non-Basmati White Rice - Seeking directions to permit the export of non-basmati white rice for which shipping bills had been filed by the Petitioner and the rotation number had also been generated - Notification No. 20/2023 - purchase contracts executed by the petitioner prior to the Notification - HELD THAT:- Admittedly, the case of the petitioner does not fall in any of the above sub-paragraphs (i) to (iv) of para 2 of the said Notification, meaning thereby, neither the loading of Non-Basmati White Rice on the ships commenced before the said Notification nor the ships already berthed or arrived at for the shipping bills filed by the petitioner nor the petitioner had handed over the consignments to the Customs before the said Notification nor any permission was granted by the Government of India to the other countries to meet their food security needs in the facts of the case. The aforesaid Notification No. 20/2023 was further explained by the Trade Notice No. 23/2023, whereby the DGFT, on receipt of the representations made from the Stakeholders including Customs Authorities clarified with regard to conditions (i), (ii), and (iii) of para 2 of the said Notification as to whether all the three conditions are independent of each other or exporter has to fulfill all the conditions together and for that, the clarification was issued that all the three conditions are independent of each other and export is allowed in case of completion of any one of the conditions of para 2 of the said Notification by the exporter. However, in the facts of the case, none of the conditions is fulfilled by the petitioner, and therefore, even the Notification No. 23/2023 would not be applicable to the facts of the case. The Hon ble Delhi High Court, in the case of VI Exports India Private Limited [ 2024 (1) TMI 647 - DELHI HIGH COURT] , dealt with the similar issue as to the issuance of writ of mandamus to the respondent for permitting the petitioner to export the Non-Basmati White Rice under the said Notification No. 20/2023, dismissed the writ petition. We are in complete agreement with the reasons assigned by the Hon ble Delhi High Court, and therefore, in order to avoid duplication, the same are not reiterated., Thus, this petition petition is not entertained and is accordingly dismissed. Notice is discharged.

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• 2024 (3) TMI 195
  Refund claim - Principles of unjust enrichment - Imported goods as wireless telephone - whether the lower authorities were right in rejecting the refund claims on the question of unjust enrichment - whether the refund amount of the penalty was rightly rejected as time barred - HELD THAT:- With regard to refund of the penalty amount, As seen from the order, an appeal was filed by the appellant against the Order-in-Original No. 36/2004 and the penalty was set aside. Therefore, the observations of the Commissioner (Appeals) in the impugned order that the appellant has not preferred any appeal before the Tribunal against the Order-in-original 36/2004 is factually incorrect and accordingly, denial of refund of Rs.20,00,000/- cannot be sustained. Refund of the differential duty amount - It is clear that the tender documents clearly prove that the appellant was to bear the increase in duty burden and as submitted by the appellant s Chartered Accountant certificate dated 15.3.2012 had only stated that the additional duty along with interest and penalty paid had resulted in erosion of profit/increase in the loss. Alternative plea of the appellant that unjust enrichment is not applicable to State Undertakings as has been held in the case of CCE, Bangalore vs. Karnataka State Agro Corn Products Limited [ 2006 (7) TMI 11 - HIGH COURT OF KARNATAKA (BANGALORE)] . Thus, we do not find any merit in the impugned orders to deny the refund on the ground of unjust enrichment. For the reasons discussed above, the impugned orders are set aside and allow the appeals with consequential relief, if any, as per law.

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• 2024 (3) TMI 194
  Demand Duty - Mis-declaring imported goods Brush Cutters as Power Weeders - classifiable under CTH 8467 8990 and not under CTH 8432 2990 as claimed in the respective Bill of Entry - Applicability for Benefit of Notification 12/2012 - period of limitation - confiscation - redemption fine u/s 111(m) - Interest - Penalty - Personal penalty on CEO and Director u/s 112 114AA - HELD THAT:- Coming to the classification of the brush cutter, this Bench in the case of Hikoki Power Tools India Pvt. Ltd. Ors. Vs. CC, Bangalore [ 2024 (3) TMI 137 - CESTAT BANGALORE] has already decided considering the CTH 8432 / 8433 and 8467 and based on the HSN notes, it is rightly classifiable under CTH 8467. The claim of the appellants in the respective bills of entry is that the declared product namely brush cutters is classifiable under CTH 8432 2990 since this product is meant for agricultural purposes and cleared to the farmers. Its use for agricultural purposes has been supported by certificates issued by the University of Agricultral Sciences, Bangalore. Thus, the impugned goods in question i.e. brush cutters is correctly classifiable under CTH 8467 8990 of CTA,1975. Therefore, the question of classification is settled and hence, the impugned goods are classifiable under 8467 as brush cutters. Whether the benefit of notification is available to brush cutters - Since we have already decided that the item imported is a brush cutter, therefore the question of extending the benefit of Notification does not arise. In view of the Supreme Court s decision in the case of Commissioner of Customs (Import), Mumbai vs. Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT] , the exemption Notification has to be interpreted strictly and therefore, question of extending the benefit to brush cutter does not arise. It is also on record that in appellant s own case, this Bench vide Final Order No.20934-20936/2018 held that the appellants are not eligible for exemption under Notification No.21/2002. As regards to demand against extended period of limitation, though it is admitted by the appellant that they were aware about the fact that power weeder is a machinery, they have obtained expert opinion from different sources to make proper preparation regarding the classification and as per expert opinion, it is exempted as per Notification No.12/2012. In the absence of any specific averments regarding wilful suppression of the fact. The impugned goods are classifiable as Brush Cutters under Chapter Heading 8467 and not eligible for the benefit of Notification. Invoking extended period of limitation cannot be sustained. The redemption fine of Rs.1,50,00,000/- was imposed on the Bills of Entry cleared earlier on the goods valued at Rs.8.48 crores and the redemption fine imposed of Rs.8,00,000/- was imposed on the present Bill of Entry cleared on the goods valued at Rs.40,58,791/-. The issue that goods when not available are not liable for confiscation is a settled law as held in the case of Commissioner of Customs (Import), Mumbai Versus Finesse Creation INC [ 2009 (8) TMI 115 - BOMBAY HIGH COURT] . Therefore, the confiscation and redemption along with penalty for the extended period is set aside and for the present consignments valued at Rs. 40.58 lakhs, the redemption fine is reduced to Rs.4,00,000/- (Rupees Four Lakhs Only) u/s 111(m) of the Customs Act, 1962 and penalty to Rs.2,00,000/- (Rupees Two Lakhs Only) is confirmed u/s 114AA of the Customs Act, 1962 on the appellant-company and all other penalties are set aside. In the result, duty demand is confirmed for normal period with interest and the impugned order is modified in the above terms and the appeal No.20012 of 2015 is partially allowed and Appeal No. 20008 of 2015 pertaining to personal penalty on Shri S. A. Gopalakrishna, Director is set aside and this appeal is allowed.

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• 2024 (3) TMI 193
  Fraudulent exports - Seeking to recover the drawback as well as seeking to impose penalties on all the noticees thereon - after about two years supplementary Show Cause Notices issued - Penalties imposed - HELD THAT:- It is observed that the Appellants have been made co-noticees only on the basis of DRI s letter dated 15.03.2017 read with the Show Cause Notice dated 26.08.2016 and supplementary Show Cause Notice dated 18.05.2017. The Revenue is not able to point out any other specific allegations against the Appellants. On going through the Show Cause Notice dated 26.08.2016 and the relevant supplementary Notice dated 18.05.2017, it is seen that this Show Cause Notice is in respect of some other exporters, in respect of some other Shipping Bills, and in respect of some other Drawbacks which in no way are connected to the present Exporters, Shipping Bills or the Drawbacks. Therefore, the Department could not have used any materials found to be in their favour in that particular case, to implicate the present Appellants (Departmental Officers) in the present proceedings. We do not see as to how the Department can on its own assume that these two persons are also part of this letter dated 15.03.2017 so as to make them the co-noticees. The Ld.Counsel has also produced a copy of DRI s final Report dated 21.03.2017. Even in this final report, only the name of Shri Jyoti Biswas and Shri Vikash Kumar are being found. There is no mention of the names of the present two Appellants in this letter also. The Revenue cannot generalize the issue and based on the specifics of one case, the notice cannot be issued in other cases without any proper ground work. Thus, the observations towards the category 2 is equally applicable to category 1 also, wherein even in that case, the Show Cause Notice has been issued based on the DRI s letter as well as the Show Cause Notice and supplementary Notice issued to some other exporters on 26.08.2016 and 18.05.2017. Therefore, we hold that the impugned orders are not legal and proper. Accordingly, we allow the Category 2 Appeals also. As a result, all the eight Appeals are allowed with consequential relief, if any, as per law.

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• 2024 (3) TMI 192
  Confiscation of the gold seized - penalty - HELD THAT:- We find force in the submission made by the Learned Advocate. The Seizure Report itself states that the goods is of about 20-21 Carat and subsequent quality test has revealed that its purity is only 80.66%. Therefore, this could not be classified as gold of foreign origin. Therefore, we hold that the confiscation and relevant penalty towards the same are required to be set aside. In respect of the proceedings conducted about 6 Kgs of gold seized at Patliputra Railway Station, the Learned Advocate submits that the initial statements given by the Appellant No. 2 3 were subsequently retracted. The Appellants have sought cross- examination of the Panchas and other persons who have recorded the statement. After the Cross-Examination proceedings are completed, the same should be taken on record and the Appellant should be given opportunity to make all their submissions and Order should be passed after following the principles of natural justice. Since the value of seized/confiscated gold is very high and the matters pertain to the year 2021, the Adjudicating Authority is directed to complete the proceedings within 4 months from the date of receipt of communication of this Order. In respect of the seized gold of 1096.03 gms, the Appeals stand allowed. The confiscated goods should be released immediately on receipt of communication of this Order. The Appeal is disposed of thus.

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• 2024 (3) TMI 191
  Request for modification of Advance Ruling - C lassification of goods proposed to be imported - Echo Dot (5lh Generation) Model No. C2N6L4 - Echo Dot (5th Generation) with clock Model No. C4E8S3 - HELD THAT:- It is pertinent to mention that the said advance ruling has been issued by the Authority following the due procedure. It is a speaking order providing specific reasons for classifying the goods in question and answering the question regarding applicability of exemption notifications. The said regulation empowers this Authority to modify its orders or rulings in the event that the same was pronounced under mistake of law or fact. This power is only to modify the ruling and is evidently not a power to review its own ruling. The provisions of Chapter V-B of the Customs Act, 1962 do not provide for powers of review, even as appeal provisions are duly included. I also find that in the instant application, the advance ruling pronounced by this Authority on the question of classification of Echo Dot (5th Gen) and Echo Dot (5th Gen) with clock was neither under a mistake of law nor of fact. It is a ruling pronounced after due consideration of facts and law. Under the circumstances, provisions of Regulation 21 of CAAR Regulations, 2021 cannot be invoked in the instant case. The modification petition dated 16-8-2023 is, therefore, dismissed.

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• Corporate Laws

• 2024 (3) TMI 189
  Oppression and Mismanagement - inherent powers of NCLT to cause audit of accounts or to make such orders as may be necessary - Section 241 242 of the Companies Act, 2013 - allegations of siphoning funds, breach of agreements, and failure to maintain proper books of account - whether NCLT is empowered to direct audit and is it required to give a finding of fraud before ordering the audit by independent Auditor? - HELD THAT:- As per Rule 11 of the National Company Law Tribunal Rules, 2016, Tribunal may make such Order as may be necessary for meeting the ends of justice or to prevent, abuse of the process of Tribunal - It is seen that no pre-conditions are given in the said Rules for exercising of these inherent powers by the Tribunal. The Tribunal has directed conduct of audit through independent Auditor to ascertain the correct facts in the light of allegations and counter allegations by the parties to the dispute in Company Petition filed under Section 241 242 of the Companies Act, 2013, which was being adjudicated upon by them. The issues raised in this appeal were considered by Three Member Bench of this Tribunal in the case of Archer Power System P. Ltd. Vs. Cascade Energy P. Ltd. Ors. [ 2020 (8) TMI 583 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that We are of the opinion that imposition of forensic audit and calling for the report of forensic audit before the Tribunal is a measure to help the Tribunal to appreciate the issue on the basis of an independent report so as to ensure that the case is processed with due regard to rights and obligations of contesting parties would be in the interest of justice. The Tribunal under Rule 11 of NCLT Rules, 2016 has the inherent powers to cause audit of accounts or to make such orders as may be necessary for meeting the ends of justice and there are no fault in the impugned order on this account - the present Appeal fails and is accordingly dismissed.

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• Insolvency & Bankruptcy

• 2024 (3) TMI 190
  Direction to handover vacant and peaceful possession of the premises licensed to the Appellant by the Corporate Debtor within 15 days - impugned order has been challenged on the ground that the issue of eviction vests with the Learned Court of Small Causes under Section 41 of the Presidency Small Causes Courts Act, 1882 - HELD THAT:- The issue of passing an eviction order qua immovable properties forming part of assets of Corporate Debtor, despite injunctions, have been discussed in various judgements. In M/S. JHANVI RAJPAL AUTOMOTIVE PVT. LTD. VERSUS VERSUS R.P. OF RAJPAL ABHIKARAN PVT. LTD., AGARWAL REAL CITY PVT. LTD. [ 2023 (1) TMI 301 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , this Hon ble Tribunal has taken a view in case of M.P. Accommodation Control Act, 1961 that where the Corporate Debtor has ownership right over the premises, the premises can be taken in control by IRP/.RP. This Hon ble Tribunal was of the view that the suit is not contemplated in the statutory scheme contained in the IBC. The order of this Hon ble Tribunal was challenged before Hon ble Supreme Court and the petition was dismissed. The argument that despite five attempts Respondent has been unable to carry out auction sale is also not convincing as it may be due to appellant being in possession, as no intending purchaser may purchase premises in an auction, which is in possession of someone else and may land such intending purchaser(s) in litigation. Even the subsisting status quo as was issued by the Learned Court of Small Causes, only restrained the Liquidator from dispossessing the appellant without following due process of law, but admittedly the Respondent had invoked the jurisdiction of NCLT, per Section 60(5) of the Code, hence this argument of appellant too lacks merit. There could be no challenge to the powers of the NCLT to pass an eviction order in the factual matrix - Appeal dismissed.

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• PMLA

• 2024 (3) TMI 188
  Seeking grant of bail - Money Laundering - proceeds of crime - scheduled offence - reasons to believe - twin condition as available under Section 45 of PMLA - Principles of parity - cessation from the directorship from the above companies - beneficial ownership directly or indirectly through company - HELD THAT:- The offence of money-laundering means whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering - It is further evident that the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. In the judgment rendered by the Hon ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. [ 2022 (7) TMI 1316 - SUPREME COURT] as under paragraph- 284, it has been held that the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of proceeds of crime . Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. It is alleged that cessation of Dilip Kumar Ghosh from the directorship from the above companies of the Agarwal group was thoughtful move driven by a deliberate and the conspiracy between Amit Kumar Agarwal and Dilip Kumar Ghosh to project Dilip Kumar Ghosh as a separate and detached entity from the Agarwal group of companies and acquire the property in possession of defence Indirectly through Jagatbandhu Tea Estates Pvt. Ltd. - it is evident that the email ids of Rajesh Auto Merchandise Pvt. Ltd. (a company which is owned by Rajesh Kumar Agarwal and Amar Kumar Agarwal, (brothers of Amit Kumar Agarwal) and SanayuktVanijyaPvt. Ltd has been used in the KYC of M/s Jagatbandhu Tea Estate Pvt. Ltd. which leads to the conclusion that M/s Jagatbandhu Tea Estate Pvt. Itd. is a company which is solely under the control of Amit Kumar Agarwal - It is, thus, evident on the basis of the aforesaid material collected that there is reason to believe of commission of offence said to be committed under the provisions of the Act, 2002. Principles of parity - HELD THAT:- Law the well settled that the principle of parity is to be applied if the case of the fact is exactly to be similar then only the principle of parity in the matter of passing order is to be passed but if there is difference in between the facts then the principle of parity is not to be applied - It is further settled connotation of law that Court cannot exercise its powers in a capricious manner and has to consider the totality of circumstances before granting bail and by only simple saying that another accused has been granted bail is not sufficient to determine whether a case for the grant of bail on the basis of parity has been established. The Hon ble Apex Court in Tarun Kumar Versus Assistant Director Directorate of Enforcement [ 2023 (11) TMI 904 - SUPREME COURT] where it has been held that parity is not the law and while applying the principle of parity, the Court is required to focus upon the role attached to the accused whose application is under consideration. In has further been held in the said judgment that the principle of parity is to be applied in the matter of bail but equally it has been laid down therein that there cannot be any negative equality, meaning thereby, that if a co-accused person has been granted bail without consideration of the factual aspect or on the ground said to be not proper, then, merely because the co- accused person has been directed to be released on bail, the same will not attract the principle of parity on the principle that Article 14 envisages positive equality and not negative equality. This Court on the basis of the different role committed by Dilip Kumar Ghosh, the accused person who has been granted bail and comparing his accountability with the act of the present petitioner, is of the view that it cannot be said that what has been done by Dilip Kumar Ghosh is identical to the case of the present petitioner as it would be evident from the discussion made in the preceding paragraphs as also by going through the counter affidavit that the said company, i.e., M/s Jagatbandhu Tea Estate Pvt. Ltd. is completely under the control of Amit Kumar Agarwal - It is, thus, evident that so far as the case of the present petitioner is concerned, the twin condition as provided under Section 45(1) of the Act, 2002 is not being fulfilled so as to grant the privilege of bail to the present petitioner. Even on the ground of parity, the same on the basis of the role/involvement of the present petitioner in the commission of crime in comparison to that of the said Dilip Kumar Ghosh is quite different. This Court is of the view that the present application is fit to be dismissed - the instant application stands dismissed.

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• Service Tax

• 2024 (3) TMI 187
  Benefit of SVLDRS - Bar imposed by an enquiry / investigation or audit post 30.06.2019 against filing a declaration under Sabka Vishwas (Legacy Dispute Scheme) 2019 - HELD THAT:- The impugned order is liable to be set aside inasmuch as the impugned order proceeds on the erroneous premise that since an investigation was initiated prior to filing of the declaration by the petitioner under the Scheme, the same would be hit by embargo contained in Section 125 (i)(e) of the Act - The above provision had come up for consideration and it has been held by the Bombay High Court that on a cumulative / conjoint reading of clauses (e) and (f) to Section 125(1) of the Act it would be evident that the embargo against filing a declaration on the premise that the declarant has been subjected to an enquiry on investigation would only relate to an enquiry or investigation which has been initiated on or before 30.06.2019. In the present case admittedly the investigation was initiated by a issuance of a summon only on 26.09.2019 and thus the rejection / withdrawal of the discharge certificate by invoking Section 125(i)(e) is unsustainable. It may be relevant to refer to the relevant portions of the decision of the Bombay High Court in the case of M/S. NEW INDIA CIVIL ERECTORS PRIVATE LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2021 (3) TMI 545 - BOMBAY HIGH COURT] wherein it was held respondent No. 4 was not justified in rejecting the declaration of the petitioner dated 26-12-2019 on the ground that petitioner was not eligible to file declaration under the category of voluntary disclosure since enquiry was initiated against the petitioner on 19-12-2019 whereafter petitioner flied declaration. Though other contentions were raised viz., that the impugned order suffers from violation of principles of natural justice and the impugned order by a member of the Designated Committee revoking / cancelling the discharge certificate by the Designated Committee is without jurisdiction, since this Court has already found that the reason which prompted the respondent to withdraw / revoke / cancel the discharge certificate viz., an enquiry / investigation initiated post 30.06.2019 cannot be a bar against the petitioner filing a declaration under the scheme, the above contentions need not be examined. The writ petition is disposed off.

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• 2024 (3) TMI 186
  Rejection of declaration of the petitioner under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that other noticee application rejected - HELD THAT:- In case of M/S. Sunshine Corporation [ 2022 (2) TMI 1322 - GUJARAT HIGH COURT] , this Court allowed the Special Civil Application holding that The respondents shall accept the form of declaration under the category of litigation sub-category SCN involving duty pending and undertake the process of verification through the designated committee. Since the petitioner is a co-noticee, the benefit of the judgment of this Court in case of M/s Sunshine Corporation and the directions issued therein shall apply to the case of the petitioner also. Accordingly the impugned orders dated 05.12.2019 and 17.01.2020 are hereby quashed and set aside and the respondent shall accept the Form of declaration filed by the petitioner and undertake the process of verification to issue the discharged certificate. Petition allowed.

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• 2024 (3) TMI 185
  Levy of Service tax - courier services - Pick-up of shipments from the customers of M/s. Blue Dart in a timely manner in the specified territory - Delivery of shipments to the customers of M/s. Blue Dart in a timely manner within the said territory - HELD THAT:- The appellant has rendered the service of speedy, expeditious and timely pick-up and delivery of time-sensitive shipments, packages, documents, etc. The services rendered by the appellant are in the nature of courier agency service as defined in clause (33) of Section 65 of the Finance Act, 1994. It is found that the Board Circular F.No. 341/43/96-TRU dated 31.10.1996 has clarified the Service Tax liability of the services rendered by co-loaders to the courier agencies. A co-loader is required to deliver documents, goods or articles on behalf of the courier agency and charges the courier agency for the service rendered. The appellant has been rendering some other services like tracking the delivery through software applications, submitting a tally of the report at the end of the day, etc. However, we find that all these activities are associated with the courier services only. The primary service rendered by the appellant is courier service and the service of tracking of delivery schedules, managing logistics, accounting, processing transactions, etc., are all ancillary services to their courier services. Thus, the activities rendered by the appellant as a co-loader to the courier agency are categorically exempted from the payment of Service Tax vide the Board Circular mentioned above. The services rendered by the appellant as a co-loader to the courier agency / M/s. Blue Dart are not liable to Service Tax - the demand of Service Tax along with interest and penalty confirmed in the impugned order set aside - appeal allowed.

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• 2024 (3) TMI 184
  Validity of SCN - SCN suffers from incurable deficiency - Demand raised solely on the basis of Income Tax data shared by the Income Tax authorities - HELD THAT:- In the present case, there is no dispute on the facts that SCN dated 25-03-2021 is issued solely on the basis of Income Tax data shared by the Income Tax authorities to the Central Excise authorities for F.Y. 2015-16 to 2017-18 [upto 30-06-2017], without causing any independent inquiry caused by Central Excise officers and that Data does not appear taken on records as provided under section 36B of the Central Excise Act, 1944. Therefore, there are force in the submission made that SCN suffers from incurable deficiency. There are force in Appellant s contention that impugned Order is beyond SCN as Service Tax demand is confirmed under Construction of Residential Complex, whereas, SCN dt. 25-03-2021 has not specified under which clause Service falls, for taxability. Order has taken into consideration declared service u/s 66E(b) of Finance Act 1994, which is for construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority. However, construction of complex intended for sale to a buyer is not correctly considered in these Orders. In the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] , it is seen that a club and its members are one and the same and the club is formed for the purpose for mutual benefit of its members. This principle equally applies in this case to the Radhe Villa Co-Operative Society, which has constructed residential units for its members only under development agreement with Appellant. Hence, no service tax is payable on Residential units created by Co-operative Society for its Members for personal use, as it is also in exclusion clause of section 65(91a) of the Finance Act 1994. Since the demand service tax is not sustainable on its merit, the issue of limitation need not be dealt and the same is left open in this case. The Service Tax demand confirmed with interest and penalties is not sustainable in this case. The demand of Service Tax upheld by O-I-A with interest and penalties deserves to be set aside - appeal allowed.

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• 2024 (3) TMI 183
  Export of services - Procedural lapse in submitting the proof of documents - Non-fulfilment of conditions prescribed in the N/N. 18/2009-ST dated 07.07.2009 to furnish EXP-1 and EXP-2 documents - HELD THAT:- The Ld. Consultant has explained that the delay in furnishing the above documents (EXP-1 and EXP-2) occurred only because of the delay in receiving the invoices from the foreign commission agents. They have subsequently submitted the documents and the CA Certificate was also furnished before the authorities. Taking note of the fact that the Service Tax paid in respect of export of services and cannot be subject to levy of Service Tax under Notification No. 18/2009-ST dated 07.07.2009, the denial of exemption on procedural lapses cannot be sustained. The impugned order is set aside - The appeal is allowed.

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• 2024 (3) TMI 182
  Refund of service tax on ocean freight under reverse charge mechanism - Claim of refund in cash as per section 142 (8) (b) of the Central Goods and Service Tax Act, 2017 - rejection of refund on the ground that the appellant is belonging to a taxable territory and he is not liable for CENVAT Credit of the service tax paid - HELD THAT:- From the perusal of the Section 35 C (1) of the Central Excise Act, 1944 it is quite evident that the appellate tribunal cannot allow any ground which would have amounted to a fresh refund claim while deciding the appeal. In the case of LIFE INSURANCE CORPORATION OF INDIA VERSUS SANJEEV BUILDERS PRIVATE LIMITED ANR. [ 2022 (9) TMI 1564 - SUPREME COURT] Hon ble Supreme Court observed The delay in filing the application for amendment of the pleadings should be properly compensated by costs and error or mistake which, if not fraudulent, should not be made a ground for rejecting the application for amendment of plaint or written statement. In the case of MILES INDIA LIMITED VERSUS ASSISTANT COLLECTOR OF CUSTOMS [ 1984 (4) TMI 63 - SC ORDER] Hon ble Supreme Court has held If really the payment of the duty was under a mistake of law, the appellant may seek recourse to such alternative remedy as it may be advised. There are no infirmity in the impugned order - appeal dismissed.

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• 2024 (3) TMI 181
  Scope of SCN - no demand of service tax has been made under Works Contract Service from the appellants - Benefit of Notification No.1/2006-ST dated 01.03.2006 was not given to the appellant - want of evidence - HELD THAT:- In this case, it is not in dispute that the appellant is providing the services along with materials. Therefore, the appropriate classification of the services is under Works Contract Service and no demand of service tax is raised against the appellant under Works Contract Service. Therefore, following the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ], wherein the Hon ble Apex Court has observed the finding that Section 67 of the Finance Act, which speaks of gross amount charged , only speaks of the gross amount charged for service provided and not the gross amount of the works contract as a whole from which various deductions have to be made to arrive at the service element in the said contract. We find therefore that this judgment is wholly incorrect in its conclusion that the Finance Act, 1994 contains both the charge and machinery for levy and assessment of service tax on indivisible works contracts. The appropriate classification of the impugned service is under Works Contract Service and no demand of service tax has been made under Works Contract Service from the appellants under Works Contract Service. In that circumstances, the demand of service tax is not sustainable. Appeal allowed.

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• Central Excise

• 2024 (3) TMI 180
  Refund of the Cenvat credit reversed - Refund of duty paid on self assessment basis - benefit of exemption notification no. 30/2004-CE dated 9.7.2004 rejected - HELD THAT:- There is no dispute that the appellant was eligible to the benefit of this Exemption notification and had, in fact, availed its benefit. The condition for this exemption notification is that no Cenvat credit on inputs or capital goods has been taken. On 8.7.2004, the appellant had inputs and capital goods on which Cenvat credit was taken by the appellant. Needless to say that such inputs were used to manufacture goods which were cleared therefore claiming the exemption under this notification. To claim this exemption, the appellant should NOT TAKE Cenvat credit on capital goods or inputs. When the appellant cleared the goods after 8.7.2004 availing the benefit of the notification, such goods may have been manufactured before or after this date. If the goods were manufactured before this date- either fully or partly- they would have been lying as finished goods or as work in progress on 8.7.2004 and Cenvat credit would have been availed on the inputs and capital goods which had gone into their manufacture. They can be cleared either without availing the benefit of the notification or by availing the benefit of the notification after reversing the Cenvat credit taken. Similarly, if the goods were manufactured after 8.7.2004, their inputs may have been bought after this date or may have already been bought and were lying in stock. They can be cleared under the notification only if no Cenvat credit is availed (or if it has already been availed on the inputs bought before this date, by reversing it). In Collector of Central Excise versus Flock India [ 2000 (8) TMI 88 - SUPREME COURT] the Assistant Collector had, after examining the classification lists filed by Flock India (as assessees were required to during the relevant period), rejected the classification claimed and passed an order changing the classification. This order of the Assistant Collector was appealable but the assessee had not appealed to the Collector (Appeals). Instead, Flock India directly filed a refund application for the differential duty. Supreme Court held that refunds can be claimed if they flow from the assessment and not so as to modify the assessment. Therefore, unless the assessment order is appealed against and is modified, no refund can be sanctioned. The self-assessment and selective re-assessment by the officers were introduced initially as a practice. The question which arose in such cases was if the goods were cleared without any assessment by the proper officer, can a refund be claimed because there is no order or assessment by the proper officer to appeal against. In AMAN MEDICAL PRODUCTS LTD. VERSUS COMMISSIONER OF CUSTOMS, DELHI [ 2009 (9) TMI 41 - DELHI HIGH COURT ] and MICROMAX INFORMATICS LIMITED VERSUS UNION OF INDIA ORS. [ 2016 (4) TMI 1235 - DELHI HIGH COURT ], Delhi High Court held that in cases where there is no assessment or order by the proper officer, refunds can be claimed without any appeal to the Commissioner (Appeals). These and several other cases were appealed to the Supreme Court by the Revenue. In this appeal, the appellant had filed the refund application without appealing against its own self-assessment and therefore no refund can be sanctioned - Appeal dismissed.

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• 2024 (3) TMI 179
  CENVAT Credit - process amounting to manufacture or not - repacking of the goods from bulk to small packs in drums/barrels to cater to the requirement of the industrial consumers - it is the case of the revenue that as no/new separate commodity emerges as a result of repacking of the said goods into smaller drums/barrels they are not eligible for availment of credit on the inputs - HELD THAT:- It is evident that the dispute as to whether the processes undertaken the appellant at their factory, amounted to manufacture or not, was well within the knowledge of the Department, as early as in 2008 and multiple queries have been shown to be made by audit. Each time the appellant have replied to such queries. Since the matter has been well within the knowledge of the Department at all times, the question of invoking of proviso to Section 11A(1) of the Central Excise Act, 1944, does not arise and the demand is entirely barred by limitation. There is no doubt that the appellant did avail Cenvat Credit on the goods received by them at their factory premises and after processing, they have paid the duty higher than the Cenvat Credit availed. It has been held by various judicial bodies that where credit has been availed of and duty paid, which was not lesser in amount than the credit availed, there is no need for initiation of proceeding against the assessee. In a catena of decisions it has been held that when final product is treated as dutiable and duty paid thereon, the facility of Cenvat Credit is open to them and there is no question of the reversal of the said credit. The Cenvat Credit availed by the appellant is not deniable. The impugned order of the lower authority is vexatious in law and fails to succeed both on the grounds of limitation as well as merits - Appeal allowed.

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• 2024 (3) TMI 178
  Method of valuation of physician samples supplied free of cost - determination of assessable value - confirmation of demand invoking of extended period of limitation - suppression of facts or not - HELD THAT:- The appellant during the said period, cleared the goods on payment of duty by determining its assessable value applying Rule 8 of the Central Excise Valuation Rules, 2000 by adopting Cost Construction Method as was clarified by the CBEC in its Circular dated 01/07/2002. The later Circular dated 25/04/2005 directed that the assessment should be under Rule 4 of the Valuation Rules, 2000. Even though the appellant has submitted the monthly Returns from time to time indicating clearance of the said goods adopting Cost Construction Method, but no objection was raised by the Department during the course of audit or during the visit of the preventive officers to their factory. Under these circumstances, allegation of suppression or mis-declaration of facts by the Revenue cannot be sustained. A similar view has been expressed by this Tribunal in Bora Pharma Pvt. Ltd. case [ 2017 (11) TMI 1509 - CESTAT MUMBAI] wherein it is observed that in the absence of any evidence to support the allegation of suppression, misrepresentation, extended period of limitation cannot be invoked. There are no merit in the impugned order to the extent of confirming demand invoking extended period of limitation - Consequently, the impugned order is set aside and the appeal is allowed on limitation.

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• 2024 (3) TMI 177
  CENVAT Credit - electricity sold being generated out of waste product viz. bagasse - demand of 6% of the value of the electricity generated and sold under Rule 6 of the Cenvat Credit Rules, 2004 - HELD THAT:- The Hon ble Supreme Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] , while examining the amendment to the definition of goods under Section 2(d) of the Central Excise Act, 1944 has held in the said case that Rule 6 of the Cenvat Credit Rules, 2004 cannot be made applicable to waste products i.e. bagasse. The said principle has been followed subsequently in UNION OF INDIA ORS. VERSUS M/S INDIAN SUCROSE LIMITED [ 2022 (7) TMI 353 - SC ORDER] . Appeal allowed.

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• 2024 (3) TMI 176
  CENVAT Credit - electricity sold, generated out of waste product, bagasse - use of common inputs/input services in the generation of electricity, which is a non-excisable product - applicability of Rule 6(3)(i) of Cenvat Rules, 2004 - HELD THAT:- The Hon ble Supreme Court in DSCL Sugars case [ 2015 (10) TMI 566 - SUPREME COURT] while examining the amendment to the definition of goods under Section 2(d) of the Central Excise Act, 1944 observed Rule 6 of the Cenvat Credit Rules, 2004 cannot be made applicable to waste product i.e., Bagasse. There are no merit in the orders of the learned Commissioner (Appeals). Consequently, the impugned orders are set aside - appeal allowed.

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• Indian Laws

• 2024 (3) TMI 175
  Seeking grant of bail - charges under the UAP Act along with other charges under the Indian Penal Code and Arms Act - reliance placed on disclosure statement - HELD THAT:- The test for rejection of bail is quite plain. Bail must be rejected as a rule , if after hearing the public prosecutor and after perusing the final report or Case Diary, the Court arrives at a conclusion that there are reasonable grounds for believing that the accusations are prima facie true. It is only if the test for rejection of bail is not satisfied - that the Courts would proceed to decide the bail application in accordance with the tripod test (flight risk, influencing witnesses, tampering with evidence). This position is made clear by Sub-section (6) of Section 43D, which lays down that the restrictions, on granting of bail specified in Sub-section (5), are in addition to the restrictions under the Code of Criminal Procedure or any other law for the time being in force on grant of bail. The question of entering the second test of the inquiry will not arise if the first test is satisfied. And merely because the first test is satisfied, that does not mean however that the Accused is automatically entitled to bail. The Accused will have to show that he successfully passes the tripod test . The material available on record indicates the involvement of the Appellant in furtherance of terrorist activities backed by members of banned terrorist organization involving exchange of large quantum of money through different channels which needs to be deciphered and therefore in such a scenario if the Appellant is released on bail there is every likelihood that he will influence the key witnesses of the case which might hamper the process of justice. Therefore, mere delay in trial pertaining to grave offences as one involved in the instant case cannot be used as a ground to grant bail. Hence, the aforesaid argument on the behalf the Appellant cannot be accepted. The material on record prima facie indicates the complicity of the Accused as a part of the conspiracy since he was knowingly facilitating the commission of a preparatory act towards the commission of terrorist act Under Section 18 of the UAP Act - Bail application dismissed.

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• 2024 (3) TMI 174
  Dishonour of Cheque - complainant could not show, by producing any evidence that in fact the notice was served on him - Onus to prove on complainant - non-fulfilment of essential condition for taking cognizance, as provided under Section 138 clause (c) read with section 142(1)(b) of the NI Act - whether non-filing of track report or acknowledgement due card would illegal to proceed with the case filed under Section 138 of the Negotiable Instruments Act, 1881 or not? - HELD THAT:- It appears from the complaint itself the requirements as provided under Section 138 of the Negotiable Instruments Act, 1881 have been fulfilled by the complainant. So far as the issue raised by the petitioner that no postal track report has been filed by the petitioner to show actual service of notice under Section 138 of Negotiable Instruments Act, 1881. The complainant has issued a demand notice to the correct address of the accused person. No envelope returned back to the claimant. So it seems notice is properly served. In several decisions, the Hon ble Supreme Court of India held that when the notice is served upon the actual or proper address of the addressee, it shall be deemed to be properly served unless contrary is proved. The trial Court seems to have drawn a presumption of law with regards to service of demand notice. Furthermore, onus lies upon the claimant to prove his case at the time of trial. At the same time, accused person also gets opportunity to contest the same during trial. This Court does not find any illegality or infirmity in taking cognizance by the learned Magistrate and issue summon upon the accused person. Accordingly, CRR 1710 of 2021 is devoid on merit and required to be dismissed.

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• 2024 (3) TMI 173
  Dishonour of Cheque - legally enforceable debt or liability - statutory presumption in terms of Sections 118 and 139 of the NI Act - time barred debt - HELD THAT:- It is evident that issuance of a cheque on a time barred debt is enforceable in terms of Section 25(3) of the Indian Contract Act and such debt is legally enforceable debt within the meaning of Section 138 of the NI Act. In the present case, according to the evidence of PW.1 he has paid Rs.3 Lakhs on 22.07.2009 by way of cheque and Rs.1,50,000/- by way of cash as on the date of issuance of cheque on 02.04.2013, it was barred by time. The fact alleged by complainant in the complaint that he has paid Rs.4,50,000/- as hand loan to the accused in the month of June 2012. The said statement is further reiterated in the demand notice - Ex.P3. However, the evidence of PW.1 in examination-in- chief itself as referred above in paragraph Nos.2 and 3 of the affidavit evidence would stand contrary to the pleading in complaint regarding giving hand loan of Rs.4,50,000/- to the accused. Complainant has also failed to establish the nexus between payment of Rs.3 Lakhs by way of cheque on 22.07.2009 - Ex.P6 to the transaction covered under cheque - Ex.P1. Complainant in the cross- examination has given again totally different version that he has given money of Rs.4,50,000/- in three installments to the accused. However, to evidence the said fact there are no any documents or requisite evidence to prove the said fact. The said circumstance would create serious doubt in the claim of complainant that accused has issued cheque in question - Ex.P1 for lawful discharge of debt. It is in the evidence of DW.1 regarding complainant taking advance of Rs.70,000/- for sale of open space belongs to his father-in-law. The documents at Exs.D2 to D7 would go to show that accused and her husband is known to complainant and there are transaction between complainant and accused. Further, accused was also surety for the loan transaction of complainant in the Society. The deposit of Rs.3 Lakhs by way of cheque shown in Ex.P6 is dated 22.07.2009 would go to show that there was earlier transaction of complainant with accused. Complainant has failed to establish the nexus of the said transaction evidence from Ex.P6 with the transaction covered under cheque - Ex.P1. Therefore, the possibility of complainant coming in possession of the cheque of accused with respect to any earlier transaction cannot be totally ruled out. The Trial Court has rightly appreciated the oral and documentary evidence placed on record in holding that the complainant has failed to prove that accused has issued the cheque in question - Ex.P1 for lawful discharge of debt. The said findings recorded by the Trial Court is based on the material placed on record and the same does not call for any interference by this Court. Appeal dismissed.

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• 2024 (3) TMI 172
  Dishonor of Cheque - suspension of sentence and criminal appeal - Validity of imposing a condition of depositing 20% of the compensation amount - Violation of principles of natural justice - order, where no reasoning has been given by the Lower Appellate Court, while issuing notice in the appeal but to grant bail and suspension of sentence subject to deposit compensation - HELD THAT:- This Court after having heard learned counsel for the petitioner with respect to the rationality of the order passed by the Lower Appellant Court in not giving any reason for deposit of 20 % of compensation amount, is of the view that no doubt that it is a statutory liability under Section 148 of Negotiable Instruments Act, which is enforceable by the Lower Appellate Court and has been very justifiably so ordered, therefore, this Court does not press for further reasoning to be mentioned in the order as to why 20 % compensation amount is to be deposited, rather the onus would be upon the petitioner-appellant to make out a case of an exception, if at all to show his inability to deposit the 20 % of compensation amount that too once he has been proved guilty and convicted by the trial Court for the offence under Section 138 of Negotiable Instruments Act, whereby cheque amounting to Rs.6,00,000/- issued by him was dishonoured, which has been ordered as compensation. Even before this Court, no such reason has been stated by learned counsel for the petitioner during the course of hearing or in the petition so pleaded at all that his case is covered under the ratio of JAMBOO BHANDARI VERSUS M.P. STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. AND ORS. [ 2023 (9) TMI 560 - SUPREME COURT] , wherein the Hon ble Apex Court has made it abundantly clear that Appellate Court will be justified in imposing the condition of deposit as provided under Section 148 of Negotiable Instruments Act, but only in a case, if it is satisfied that condition of such deposit will be unjust or imposing of such condition will amount to deprivation of right to appeal of the appellant, an exception can be made with the reason specifically recorded. This Court considered the question of validity for imposing the restriction to deposit 20% of the compensation amount as a pre-requisite for suspending the sentenced on the touchstone of the decision in SURINDER SINGH DESWAL @ COL. S.S. DESWAL AND OTHERS VERSUS VIRENDER GANDHI [ 2019 (5) TMI 1626 - SUPREME COURT] , wherein the Apex Court, after having considered the provisions of Section 148 of the NI Act and the objects and reasons for its enactment by way of Amendment No.20/2018, held that the power of the Appellate Court in directing the accused to deposit more than 20% of the fine is mandatory in nature and as such upheld such stipulation for suspension of sentence. The reasoning given by the Lower Appellate Court would only be a case, where the Court has to grant an exception from deposit of such 20 % compensation amount, which is a prerequisite for entering into an appeal under Section 148 of Negotiable Instruments Act of the amount awarded by the trial Court under Section 357(3) Cr.P.C., and not to record reasons, wherein it is an obligation as per the provisions of Negotiable Instruments Act itself and hence such an argument does not hold good and is not acceptable. Petition dismissed.

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• 2024 (3) TMI 171
  Suit for recovery of money on the foot of promissory note - Burden/onus to prove - Whether or not the burden is on the plaintiff to prove that the promissory note is given for valid consideration or proving the execution of promissory note is sufficient in view of Section 118 of Negotiable Instruments Act? - burden shifts on the respondent/defendants immediately on plaintiff proving the execution of Promissory Note or not - burden is on the plaintiff to prove the Promissory Note is supported by consideration, while the defendant had admitted the signature contained in Promissory Note in view of Section 101, 102 of Indian Evidence Act or not. HELD THAT:- The plaintiff, having prima facie proved to the court that the signatures were those of the defendants by examination of the attesting witnesses, the least that the defendants should have done was take out an application for appointment of an advocate commissioner to take the document to the forensic science laboratory and have obtained a report that the document is an act of forgery and does not contain their signatures. Unfortunately for Mr.N.Subramani, this act has not been done. This will also answer the argument of Mr.N.Subramani that the address of the attesting witnesses had not been mentioned in the document. The basis on which the said acquittal had been rendered, had not been made available to the court. A party relying upon a document must produce the document before the court and the mere fact that they have pleaded in the written statement about its pendency is insufficient for the court to conclude otherwise - the lower appellate court has not even discussed the scope of Section 118 of the Negotiable Instruments Act. In a suit based on the Negotiable Instruments Act, the presumption under Section 118 is a crucial point on law and in fact, not having been referred to, it amounts to the learned Appellate Judge ignoring the vital provisions of law and thus, requires interference. The substantial questions of law are answered in favour of the appellant and against the respondents - Second appeal is allowed.

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