TMI Tax Updates - e-Newsletter dated: April 1, 2022 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

Pricing Login

Tax Management India. Com
Law and Practice : Digital eBook
Research is most exciting & rewarding

For Sales / Support:
WhatsApp

9911796707

Case Laws Acts Notifications Circulars Classification Forms Manuals Articles News D. Forum Highlights Notes

TMI - e-Newsletter TaxTMI Excess Input Tax Credit penalty appeal dismissed... TaxTMI Income Tax Assessment Notice Issued by... TaxTMI Excessive delay in issuing show cause notice &... TaxTMI Rectification: Show Cause Notice quashed for period... TaxTMI Investor locked into long-term capital gains bonds;... TaxTMI Funds received by assessee overlooked during... TaxTMI Cash deposits explained through VAT returns, cash... TaxTMI Customs duty dispute: Imported goods classified as... TaxTMI Appointment of adjudicator for corporate penalties... TaxTMI Undisclosed investments, agricultural land... TaxTMI Taxpayer's victory: AO's order upheld, PCIT's... TaxTMI Non-resident Singapore firm's software licensing... TaxTMI Excessive transport expenses deduction and TDS... TaxTMI Importer imports "Ground Colemanite (B2O3 40%)... TaxTMI Bank penalized for delayed reporting of high-value... TaxTMI Latest Case-Laws TaxTMI Latest Notifications + Circulars TaxTMI GST Council Decisions TaxTMI

Follow us:


Tax Updates - TMI e-Newsletters

Home e-Newsletters Index Year 2022 April Day 1 - Friday ← Older Newer →
TMI e-Newsletters FAQ
You need to Subscribe a package.
Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 1, 2022 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Articles “Ease of Harassment by GST officers” Vs. “Ease of Doing Business” TAX DEPARTMENTS SHOULD SEEK RECONCILIATIONS OF FIGURES INSTEAD OF SCRUTINY AND REASSESSMENT TO AVOID UNNECESSARY PROCEEDINGS AND HARASSMENT OF PUBLIC. News FINANCE ACT, 2022 Income Tax Department conducts searches in Delhi-NCR on Automobile Manufacturing Group, Company Operating Chartered Flights and Real Estate Groups Signing of 62 Advance Pricing Agreements by CBDT in FY 2021-22 Central Government relaxes provisions of TCS under section 206C(1G) of the Income-tax Act, 1961 in respect of non-resident individuals visiting India Amendment to the provisions of Income-tax Rules, 1962 for prescribing fees under section 234H of the Income-tax Act, 1961 Notifications Customs S.O. 1511(E). - dated 30-3-2022 - Cus Central Government appoints the 1st June, 2022, as the date from which the new chapter VIIA shall be inserted in the Customs Act, 1962 - Payment of duty, interest, penalty, etc. under the Customs Act, 1962 shall be made through electronic cash ledger 20/2022 - dated 30-3-2022 - Cus (NT) Customs (Electronic Cash Ledger) Regulations, 2022 19/2022 - dated 30-3-2022 - Cus (NT) Exemption of deposits u/s 51A (4) of the Customs Act, 1962 - customs automated system is not in place, with respect to accompanied baggage and other than those used for making [electronic] payment DGFT 64/2015-2020 - dated 31-3-2022 - FTP Extension of FTP 2015-2020 GST - States EXN-B(1)-3/2018 - dated 28-3-2022 - Himachal Pradesh SGST Appoint officers as Additional Commissioner (Appeals) F.12(15)FD/Tax/2022-130 - dated 30-3-2022 - Rajasthan SGST Seeks to amend Notification No. F.12(46)FD/Tax/2017-Pt.V-152, dated the 30th March, 2020 F.12(15)FD/Tax/2022-128 - dated 10-3-2022 - Rajasthan SGST Regarding reimbursement of State Tax due and deposited to hotels and tour operators Income Tax 20/2022 - dated 30-3-2022 - IT Provisions of sub-section (1G) of section 206C shall not apply to an individual who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act, and who is visiting India. Circulars / Instructions / Orders SEBI SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/41 - dated 31-3-2022 Discontinuation of usage of pool accounts for transactions in the units of Mutual Funds, Two Factor Authentication (‘2FA’) for redemption and other related requirements: Extension of timeline SEBI/HO/CFD/CMD1/CIR/P/2022/40 - dated 30-3-2022 Clarification on applicability of regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in relation to Related Party Transactions Income Tax 07/2022 - dated 30-3-2022 Clarification with respect to relaxation of provisions of rule 114AAA of Income-tax Rules, 1962 prescribing the manner of making Permanent Account Number (PAN) inoperative DGFT 53/2015-2020 - dated 31-3-2022 Extension of HBP 2015-2020 Highlights / Catch Notes GST Rate of interest u/s 50(3) of the CGST Act, 2017 - where ITC has been availed and utilized wrongly reduced from 24% to 18% w.e.f. 1.7.2017 - Notification as amended vide Finance Act, 2022 Visit to Get Source Notifying common GST portal and e-way bill website. - in additions all functions under the CGST Act, 2017 (except e-invoice) shall be made through GST Portal - Notification as amended by Finance Act, 2022 Visit to Get Source Power to issue instructions or directions. - Power to commissioner - consequential amendment - Section 168 of CGST Act, 2017 Visit to Get Source Refund of tax. - Claim Form shall be prescribed - Power of proper officer to withheld the refund in certain cases - Relevant date in case of supply made to SEZ - Section 54 of CGST Act, 2017 amended Visit to Get Source Collection of tax at source. - Due date of furnishing statement - Section 52 of CGST Act, 2017 amended Visit to Get Source Interest on delayed payment of tax. - Interest on ITC wrongly availed and utilized - Section 50 of CGST Act, 2017 amended Visit to Get Source Payment of tax, interest, penalty and other amounts. - Transfer of amount from one head to another and Power to impose restriction of utilization of ITC beyond certain limit - Section 49 of CGST Act, 2017 amended Visit to Get Source Goods and services tax practitioners. - Consequential amendment pursuant to substitution of section 38 - Section 48 of CGST Act, 2017 amended Visit to Get Source Levy of late fee. - Consequential amendments with regard to additions or deletion of returns - Section 47 of CGST Act, 2017 amended Visit to Get Source Omitted - Procedure for furnishing return and availing input tax credit - Section 43A of CGST Act, 2017 omitted as scheme of availing ITC amended and this section never came into force Visit to Get Source Omitted - Matching, reversal and reclaim of reduction in output tax liability. - Section 43 of CGST Act, 2017 omitted as scheme of availing ITC amended Visit to Get Source Omitted - Matching, reversal and reclaim of input tax credit - Section 42 of CGST Act, 2017 omitted as scheme of availing ITC amended Visit to Get Source Availment of input tax credit - Where tax is not paid by the supplier, ITC shall be reversed with applicable interest liability - Section 41 of CGST Act, 2017 Amended Visit to Get Source Furnishing of returns (GSTR 3B or otherwise). - Various amendments in Section 39 of CGST Act, 2017 Visit to Get Source Communication of details of inward supplies and input tax credit - Auto-populated statement of ITC - Section 38 of CGST, 2017 substituted Visit to Get Source Furnishing details of outward supplies (GSTR-1) - various amendments made in Section 37 of the CGST Act, 2017 Visit to Get Source Credit and debit notes. - Time limit for issuance of Credit Note modified - Section 34(2) of CGST Act, 2017 amended Visit to Get Source Cancellation or suspension of registration. - Power of proper officer in case of default in furnishing the return from the due date within prescribed time lime - Clauses (b) and (c) of the Section 29(2) of CGST Act, 2017 amended Visit to Get Source Eligibility and conditions for taking input tax credit. - ITC cannot be claimed after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier - Section 16 of CGST Act, 2017 amended Visit to Get Source Eligibility and conditions for taking input tax credit. - Amount of ITC, even if communicated u/s 38, shall not be available if the same is restricted - Section 16 of CGST Act, 2017 as amended Visit to Get Source Territorial Jurisdiction - proper officer or not - Registration was assigned to Central GST Officer - SCN was issued by the State GST officer - the distribution of work for administrative convenience was made - it is not a case that the state officer lacks inherent jurisdiction but it is a case where the jurisdiction has been exercised by the state officer in the absence of any objection or pointing out by the petitioner that the case has been assigned to a central officer - the impugned show cause notice and the impugned assessment order do not suffer from any inherent lack of jurisdiction - HC Visit to Get Source Input Tax Credit - ITC on Gift - GST paid on inputs/input services procured by the appellant to implement the promotional scheme under the name 'Buy n Fly' - as per the provisions of the CGST Act/TNGST Act 2017 more precisely, Section 17 (5) of the Act, the gifts or rewards given without consideration even though they were given for sales promotion do not qualify as inputs for the purposes of Credit, since no GST is paid on its disposal. Therefore, the input tax credit on the inputs and input services involved in the goods and services used for the purpose of reward is not available for the appellant and accordingly the ruling given by the Advance Ruling Authority of Tamil Nadu requires no intervention. - AAAR Visit to Get Source Classification of supply of services - intermediary services or not - It is very clear from the applicant's submissions that they are not providing any services on its own account. The designs are provided to the third party vendors on behalf of the overseas customers of the applicant. The service provided by them is to their overseas customers and as per the requirements and directions of its overseas principals - thus the applicant is satisfying all the conditions of an intermediary and we have no hesitation in holding that, the applicant is supplying intermediary services as per the relevant provisions of the IGST Act, 2017 - AAR Visit to Get Source Levy of GST - classification of "Interest" portion of equated installments under Annuities Model - the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply. Therefore all the monies paid to the contractor by the applicant including the interest on delayed payments is liable to tax under CGST Act, 2017 under this provision. - AAR Visit to Get Source Classification of services - rate of GST - Ready to Eat popcorn sold in retail packages - when a specific entry is available for enumerating the commodity ‘RTE popcorn’ to relegate it to the orphanage of the residuary entry will be against the principle of classification as held by Hon’ble Apex Court in the above precedents. Hence RTE popcorn is classifiable under tariff head ‘1904’ - Liable to GST @18% - AAR Visit to Get Source Income Tax Clarification with respect to relaxation of provisions of rule 114AAA of Income-tax Rules, 1962 prescribing the manner of making Permanent Account Number (PAN) inoperative - Circular Visit to Get Source Validity of Reopening of assessment u/s 147 - When pursuant to an information received from the Assistant Director of Income Tax (Inv.), Unit-3 (3), Kolkata, the assessing officer has conducted an investigation, has gone through the income tax return and other related documents of the assessee and has observed that the assessee is a beneficiary of receiving bogus accommodation entries and he has found a reason to believe that the income has escaped assessment in respect of the assessee, we do not find any force in the submission made on behalf of the petitioner that the assessing officer has acted on a report of the Assistant Director of Income Tax (Inv.), Unit-3 (3), Kolkata and he has not recorded his own reasons to believe, and thus the same is rejected. - HC Visit to Get Source Documents seized during a search and seizure Retained by the Department - As a taxing statute, strict interpretation is to be adopted and that being so, recourse by the assessee to the provisions of the Constitution by filing a special leave petition before the Supreme Court cannot be regarded as 'a proceeding under this Act'. The statutory authority lost its power to grant further authorisation to retain the documents. Therefore, even on this count, the respondents are not authorised or justified in retaining the documents of title seized by them under section 132 of the Act. - HC Visit to Get Source Refund of tax paid as advance tax after opting for VDIS scheme - Since he did not submit any return under section 139 before this scheme, therefore involuntarily disclosed income, he ought to have disclosed his entire income. He cannot be permitted to commit mischief with the Act or VDIS by disclosing part of his income in VDIS and thereafter part of his income by submitting belated return - HC Visit to Get Source Assessment u/s 158BC - period of limitation - Though the learned counsel for the appellant /Revenue contended that there is no time limit prescribed in the statute for completion of block assessment in respect of persons other than the person on whom search was made and therefore, the notice issued under section 158BD of the Act by the Assessing Officer is valid, this court is not inclined to accept the same, as it is settled law that where limitation is not prescribed, action must be taken within reasonable period. - HC Visit to Get Source Assessment u/s 144B - Faceless Assessment - request for personal hearing or to make oral submissions, on approval of the request, the personal hearing shall be conducted exclusively through Video Conferencing was not honoured - As observed by Delhi High Court, the use of the word 'may' u/s 144B is to be construed as 'shall', if otherwise the requirements under the said Circular are complied with. - Matter restored back - HC Visit to Get Source Denial of exemption u/s.54 - purchasing a new house in the name of the assessee’s son - The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion – for or against - on that point. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court - we bound to follow the view taken by the Hon’ble jurisdictional High Court. - Exemption was rightly denied - AT Visit to Get Source Validity of Survey proceedings u/s 133A conducted in absence of assessee - Manner of conducting survey u/s 133A - There was a time gap of more than 3 ½ years between the survey operation and the assessee giving her statement before the Income Tax Authorities. If the plea taken by the assessee is correct, the assessee should have brought it to the notice of the authorities her grievance in respect of the manner of conducting the survey or manner of valuing the excess stock or the details about the gold ornaments that were given for repairs/re-modelling by the customers. - plea taken by the assessee rejected - AT Visit to Get Source Reopening of assessment u/s 147 - Time limit for notice to be issued u/s 149 - escaped income from an asset outside India - there is no bar on the retrospectivity of a statute - Our humble understanding is that so far as escaped income from an asset outside India is concerned, any completed assessment can be reopened as long as sixteen years have not elapsed from the end of the relevant assessment year. Admittedly, that is not the position in the present case, as the relevant assessment year was completed on 31st March 2000, and the assessment was reopened on 27th March 2015. The plea of the Assessing Officer is thus indeed well taken. - AT Visit to Get Source Nature of expenditure - Disallowance of repair and maintenance charges - The assessee has taken a plea that no new asset is created or no benefit of enduring nature has been derived. We do not see any rebuttal on this score from the revenue. The Assessing Officer has merely proceeded on a hypothesis of such expenditure being capital in nature without showing any justifiable grounds for doing so. The Assessing Officer has capitalized such expenditure without showing any reasonable grounds - CIT(A) rightly allowed the claim - AT Visit to Get Source Claim of deduction u/s 37(1) - Security deposit written off - security wa paid for obtaining shops on lease - the assessee be allowed to claim the loss incurred in forfeiture of security deposits given for lease of rental premises as the expenses are incurred wholly and exclusively for the purpose of business - AT Visit to Get Source Disallowance of Expenses u/s. 40(a)(ia) - Non deduction of TDS on commission - Pricing mechanism fixed by the Government of India, it is clear that the assessee has merely paid the purchase price as agreed. However, only to monitor the pricing, the cost components are separately shown so as to reimburse the assessee for any loss incurred by it in execution of PSS/MIS - Since the amount paid by the assessee to the Dist/State Level Cooperatives is only the purchase price and not in the nature of commission, no disallowance under section 40(a)(ia)is called for. - AT Visit to Get Source Exemption u/s 11 - provisions of section 2(15) - If the assessee has to claim relief under charity, it has to carry out charitable activities of relief to poor or education or medical relief. In the case in hand, the assessee neither carried out any activity relating to relief to poor nor education or medical relief. - If payment of a small amount is treated as charity, then everyone who pays a small amount of donation may claim charity. The assessee can claim deduction under section 80G for the above payment of donation and not exemption under section 11 of the Act. - AT Visit to Get Source Customs Payment of duty, interest, penalty, etc. under the Customs Act, 1962 shall be made through electronic cash ledger w.e.f. 1.6.2022 - Notification Visit to Get Source Benefit of exemption - second-hand slurry seal machine for filling up cracks in roads (slurry paver) - import of There is nothing on record to indicate that the proposed project was not intended for permissible upgradation. - There is no reason to conclude that the road construction, as intended in the exemption notification, is limited to ‘black topping’ of surface or that the importer is likely to indulge in ineligible activities during the period of lock-in prescribed in the exemption notification. The importer has complied with all the conditions specified in the said notification and it would be incorrect in law to deny exemption allowed by the first appellate authority - AT Visit to Get Source Provisional release of goods - API supari - Even if customs authorities felt obliged with, or without, justification or authority, to protect domestic consumers of arecanut/supari, the option of return to sender should have been permitted in circumstances of denial of recourse to section 110A of Customs Act, 1962 on grounds other than that which legitimized seizure. Therefore, it is only equitable that the prayer for issue of ‘detention certificate’ for enabling waiver of demurrage is allowed. - AT Visit to Get Source Indian Laws Linking of PAN with AADHAR - Amendment to the provisions of Income-tax Rules, 1962 for prescribing fees under section 234H of the Income-tax Act, 1961 - News Visit to Get Source Service Tax Validity of Show Cause Notice (SCN) - service tax is leviable on royalty paid on mining operations or not - issue is pending before the larger bench of the Supreme Court in a reference to 9 judge bench - If all the proceedings are stayed awaiting the reference judgment even before the adjudication has been completed, there is serious apprehension of the evidence and materials getting lost. We would therefore not like to stop the department from even carrying out the adjudicating process on the petitioner’s expectation that the larger bench of 9 judge may reverse the decision in the case of Kesoram Industries. - HC Visit to Get Source Levy of service tax - Construction of Residential Complex Services/ Construction of Commercial Complex Services - Department has not brought out any independent facts or evidence as who is the service receiver, whether the cash receipts shown in the xls. Files pertaining to the service component only or otherwise and no corroborative evidence produced in support of details mentioned in the said xls. Files. In the present matter collection of a huge amount of cash in respect of provisions of services involved. However not a single rupee of unaccounted cash was found during the search conducted by the income tax. - Entire demand of service tax as proposed in the show cause notice is not sustainable. - AT Visit to Get Source Central Excise Classification of goods - PCB assembly, also known as T.V. chassis - As per section note 2 of section 16 of the Central Excise Act, the goods were rightly classifiable as parts and merit classification under heading 8529 of the Central Excise Tariff Act 1975. As it has been held that the goods in question are not complete TV sets, it has been cleared under SKD or CKD condition, therefore, the classification under chapter heading 8528.00 at Sl. No. 204 of the notification is not applicable to the facts of the case. - AT Visit to Get Source VAT Mandatory pre-deposit - Vires of the second proviso to Section 84 (1) of West Bengal Value Added Tax Act, 2003 - right to appeal - Mere filing of an appeal does not suspend the liability so determined. The liability would subsist until it is set aside or modified. Therefore, to state that the 15% is a compulsory extraction, is incorrect, as it is only a measure or quantification for the appeal being entertained - the second proviso to Section 84(1) is neither discriminatory nor violative of Article 14 of the Constitution of India and accordingly. - HC Visit to Get Source Levy of tax - renewal of software licences - the service tax collected on this transaction of renewal of software licence at 10.30% and remitted to the Central Government cannot be construed as transfer of right to use the goods, more particularly, when the goods are not available with the respondent. When the original goods are not available with the respondent, the aspect theory and the divisibility of the contract in furtherance of deemed sale as envisaged under Article 366 (29-A) of the Constitution, is only a myth and is not valid in the eye of law - - HC Visit to Get Source Validity of reassessment order - actual suppression of turnover - if an inspection is not conducted in the business premises of the petitioner, the sales suppression could not have come to light. In such event, the third respondent is wholly justified in imposing double the sale suppressed amount in the revised assessment proceedings together with 150% of penalty. The appellate authority as well as the Tribunal have also dealt with this aspect and refused to accede to the plea of the petitioner. - HC Visit to Get Source Case Laws: GST 2022 (3) TMI 1372 Seeking grant of Regular Bail - availment of fake GST credit - Creation of fake firms - HELD THAT:- After hearing learned counsel for the parties, without commenting anything on merits of the case and considering the long custody of the petitioner and the fact that no investigation is pending against him and it will take some time in conclusion of the trial, as only 01 PW has been examined so far, this petition is allowed and the petitioner is directed to be released on regular bail subject to furnishing his bail bonds and two sureties of the like amount, to the satisfaction of the trial Court/Illaqa Magistrate/Duty Magistrate, concerned. Petition allowed. 2022 (3) TMI 1371 Seeking issuance of Writ of Habeas Corpus for for release of brother of petitioner - the brother of the present petitioner is alleged to be illegally confined by GST - Respondent No.2 herein since 18.3.2022 - It is the grievance made on the part of the petitioner that he was permitted to give two pairs of clothes to one GST officer at the main gate of the GST Office building on 20.3.2022 but till date he is not permitted to meet his brother - HELD THAT:- The safeguards mandated through the guidelines in VIMAL YASHWANTGIRI GOSWAMI VERSUS STATE OF GUJARAT [ 2020 (11) TMI 40 - GUJARAT HIGH COURT] , particularly the requirement to prepare an arrest memo, are directed towards transparency and accountability in the powers to arrest and detain. These safeguards flow from the fundamental rights guaranteed in Articles 21 and 22 respectively of the Constitution of India. The life and liberty of a person is secured under Article 21 and supplemented by Article 22 that provides key protection against the arbitrary arrest or detention to every arrested person. Issue Notice returnable on 24.3.2022 - Respondent No.2 shall present himself before this Court along with the Corpus at 11:00 a.m. tomorrow. 2022 (3) TMI 1370 Territorial Jurisdiction - proper officer or not - Registration was assigned to Central GST Officer - SCN was issued and adjudicated by the State GST officer - validity of impugned show cause notice and the impugned assessment order - HELD THAT:- It is admitted fact that the taxpayer i.e. the petitioner has been assigned to the Central Officer whereas the impugned show cause notice was issued by the State Officer i.e. the respondent no. 4 ( Dy. Commissioner, Commercial Tax Saharanpur, Sector 10, Saharanpur (B), Uttar Pradesh) before whom, despite show cause notice, the petitioner did not raise any objection as to the jurisdiction and instead participated in the proceedings and submitted to his jurisdiction. Thereafter the respondent no. 4 passed the impugned assessment order creating certain demand against the petitioner. It is thereafter that the petitioner filed the present writ petition and challenged the show cause notice and the assessment order solely on the ground that it is without jurisdiction. It is clear that the proper officer as defined under the CGST Act and UPGST Act, both are proper officers within their territorial jurisdiction and have been conferred with jurisdiction and powers under both the Acts to exercise their jurisdiction as proper officers subject to a rider that if an order is issued by a proper officer under the State Act or the Union territory Act on a subject matter then on the same subject matter, order shall not be passed by a proper officer under the CGST Act and vice versa and the orders so passed shall be intimated to the other jurisdictional officer under the other Act - Since proper officers under both the Acts have been empowered to exercise powers within their territorial jurisdiction and since both the set of officers i.e. under the CGST Act and UPGST Act are authorized to pass assessment orders, therefore, there arose necessity for division of work between two sets of officers, i.e. under CGST Act and UPGST Act having same territorial jurisdiction. A proper officer under the UPGST Act/CGST Act has inherent jurisdiction over assessees falling within his territorial jurisdiction but that jurisdiction has to be exercised as per cases assigned by the designated committee comprising Chief Commissioner/Commissioner, Commercial Taxes of respective States and jurisdictional Central Tax Chief Commissioners/Commissioners. In the present set of facts, the Chief Commissioner of Central Taxes, Lucknow and Meerut Zone, Lucknow and the Commissioner of Commercial Taxes, U.P. issued the aforesaid order no. 04/2018 assigning the taxpayers to proper officers and the case of the petitioner has been assigned to the proper officer under the CGST Act i.e. Central Officer and not to the respondent no. 4. Present case is not a case of inherent lack of jurisdiction rather it is a case of error of jurisdiction on account of non allotment of case of the petitioner assessee to the respondent no. 4/State officer. The respondent no. 4 being proper officer under the Act having territorial jurisdiction over the petitioner assessee is competent to exercise the powers conferred under the Act in respect of assessee, falling under his territorial jurisdiction. But as per minutes of the meeting of the G.S.T. Council and the circular issued in this regard, the distribution of work for administrative convenience was made and as per which the case of the petitioner was assigned to a central officer. Thus it is not a case that the state officer i.e. the respondent no. 4 lacks inherent jurisdiction but it is a case where the jurisdiction has been exercised by the respondent no. 4 in the absence of any objection or pointing out by the petitioner that the case has been assigned to a central officer - the impugned show cause notice and the impugned assessment order do not suffer from any inherent lack of jurisdiction and instead it is the result of contributory error of jurisdiction by the respondent no. 4., in the circumstances that the petitioner submitted to the jurisdiction of the respondent no. 4 without informing or without raising objection as to the assignment of the case to the central officer and after well participating in the assessment proceedings allowed the assessment order to be passed by the respondent no. 4. The writ petition is dismissed. 2022 (3) TMI 1368 Input Tax Credit - ITC on Gift - GST paid on inputs/input services procured by the appellant to implement the promotional scheme under the name 'Buy n Fly' - Section 16 read with Section 17 of the CGST Act, 2017 and TNGST Act, 2017 - contention is that these goods/services do not fall under 'gift' (Section 17(5)(h)) as the same was not given in volition, but on contractual obligation, on retailers achieving the targeted sales nor these goods/services called as goods/services used for personal consumption - HELD THAT:- Section 16 of the CGST Act, 2017 empowers the taxpayer for entitlement of taking the tax charged on the Inputs as input tax credit on the goods or services or both supplied to him which are used or intended to be used in the course or furtherance of his business and such unbridled flow of input tax credit got restriction in section 17 of the Act. The sub-section (5) of the section 17 begin with Non-obstante clause that Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18 and hence the sub-section (5) of section 17 would independently apply and the Parliament consciously restricts the input tax credit which is a concession and not a vested right. The clause (g) forbid the input tax credit for the goods or services used for personal consumption and the Parliament in its wisdom did not place any further restriction as to who use the goods or services or both for personal consumption and it is obvious reason that under the GST law the flow of input tax credit is allowed until its consumption and hence such personal consumption be by the appellant or by its retailers would disentitle them to avail such input tax credit. Hence the plain reading of clause (g) reveals that the goods or services or both used for personal consumption by the appellant or its retailers would make the related input tax credit unavailable for the appellant, as the retailers of the appellant ultimately consumed the goods and services provided under reward scheme and the contention that the clause (g) would be applicable to the stage of procurement use and not on the last use would be of no avail to the appellant In the case at hand, the actual costing which is assessed has not been substantiated to hold the expenses at hand tor which credit is claimed. It is pertinent to note that the appellant has stated that the M.R.P. remained the same both Pre and Post Campaign, which points that the goods and services distributed under the scheme were without valuable consideration - It is interesting to note that the appellant provided rewards by way of goods and also foreign tours by providing valid air tickets and that's why they coined the reward scheme as Buy n Fly . Thus what they provided in the scheme was goods and services. The provisions of the clause (h) stipulates that input tax credit would not be available for goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. The appellant has referred to the Circular No.92/11/2019 dated 7.3.2019 issued under Section 168 (1) of the Act, and claimed that their situation falls under C. Discounts including 'Buy more, save more offers'. Para: 'C' provides clarification in cases when staggered discount is offered to customers; periodic/year ending discounts to stockiest, etc based on the criteria spelt in, whereas in the case at hand, the retailers/stockiest are extended rewards which are definitely not' 'Discounts' discussed in Para C of the circular. The appellants case more aptly falls under Para A of the Circular - It has been established that the giving away of goods/services under the scheme is not a 'Supply' and therefore ITC of the GST paid on the goods/services procured for the 'Buy n Fly Scheme' is not available to the appellant. Thus, as per the provisions of the CGST Act/TNGST Act 2017 more precisely, Section 17 (5) of the Act, the gifts or rewards given without consideration even though they were given for sales promotion do not qualify as inputs for the purposes of Credit, since no GST is paid on its disposal. Therefore, the input tax credit on the inputs and input services involved in the goods and services used for the purpose of reward is not available for the appellant and accordingly the ruling given by the Advance Ruling Authority of Tamil Nadu requires no intervention. The appeal is dismissed. 2022 (3) TMI 1367 Classification of supply of services - composite supply - principal supply is supply of services or not - activity of design and development of patterns used for manufacturing of camshafts for a customer - naturally bundled services or not - intermediary services or not - HELD THAT:- The applicant, on instructions of the OEMs / Machinists and on the basis of the specifications agreed between itself and the OEM / Machinist identifies and engages a third party Indian manufacturer to manufacture the pattern and tools which are then delivered to the applicant on behalf of the overseas OEMs/Machinists (since the ownership of tools lie with OEMs/ Machinists), for use in manufacture of camshaft prototype. Therefore, the applicant on behalf of the overseas OEMs/Machinists, not only identifies third party vendors who can manufacture the pattern and tools as per the design/drawings, but also explains and closely works with third party manufacturer to develop the patterns and tools thereby engaging with the third party manufacturers for supply of tools. The applicant is not only providing services to the overseas OEMs/Machinists, but they also actively identify and closely engage with third party vendors on behalf of the overseas OEMs/Machinists. The supply in the instant case consists only of service and there is no supply of goods. Such supply of services appears to be that of an intermediary service - the Applicant is located in India and in the subject case, in respect of patterns and tools, the applicant represents it's overseas OEMs/Machinist as their representative. The applicant actively identifies and closely engages with third party vendors, for manufacture of patterns and tools; by such third party vendors (on behalf of the overseas OEMs/Machinist). Thus, the applicant is effectively connecting the third party vendors in India with the requirements of its overseas OEMs/Machinist. In the subject case the main supply would be supply of tools and patterns to the overseas customers by the third party vendors, which is not actually happening physically since the tools and patterns are moving from the third party vendors directly to the applicant. Such movement of goods to the applicant appears to be on behalf of the overseas vendors because the ownership of the tools and patterns is with such overseas vendors as submitted by the applicant. Secondly the ancillary supply would be the supply of designs and drawings of the patterns and tools by the applicant, on behalf of the overseas customers to third party vendor/s and also the activity of identifying the third party vendors who can manufacture the pattern and tools as per the design/drawings (requirements) and explaining and closely working and engaging with such third party manufacturer to develop the patterns and tools. It is very clear from the applicant's submissions that they are not providing any services on its own account. The designs are provided to the third party vendors on behalf of the overseas customers of the applicant. The service provided by them is to their overseas customers and as per the requirements and directions of its overseas principals - thus the applicant is satisfying all the conditions of an intermediary and we have no hesitation in holding that, the applicant is supplying intermediary services as per the relevant provisions of the IGST Act, 2017. 2022 (3) TMI 1366 Maintainability of Advance Ruling application - appropriate forum - Levy of GST - HR supply service received by pimpri chinchwad smart city - exemption from GST - HELD THAT:- As seen from the material papers submitted by the applicant, the place of supply of service under Section 12(2) of the IGST Act is in the State of Maharashtra and therefore this AAR is not the appropriate forum in terms of Section 96 of the CGST Act, 2017. The application is rejected. 2022 (3) TMI 1365 Maintainability of Advance Ruling application - appropriate Forum - Requirement of registration - provision of service related to Renting of Immovable property - requirement of registration of person registered in the State of Telangana who is in possession of an immovable property in the State of Maharashtra - HELD THAT:- As seen from the material papers submitted by the applicant, the place of supply of service under Sub Section 3 of Section 12 of the IGST Act is in the State where the immovable property is located and therefore this AAR is not the appropriate forum in terms of Section 96 of the CGST Act, 2017. The application is rejected. 2022 (3) TMI 1364 Levy of GST - classification of Interest portion of equated installments under Annuities Model - payment of interest is a Pure Service or not - applicable rate of GST - HELD THAT:- The clause (d) of sub section 2 of Section 15 clearly states that the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply. Therefore all the monies paid to the contractor by the applicant including the interest on delayed payments is liable to tax under CGST Act, 2017 under this provision. Interest is part of consideration as per the valuation rules discussed above. Therefore no separate classification exists - there is no requirement of discussing the issue applicability of Entry No. 3 of the Notification Number 12/2017 - Central Tax (Rate), dt: 28th June, 2017. 2022 (3) TMI 1363 Classification of services - rate of GST - Ready to Eat popcorn sold in retail packages - HELD THAT:- As seen from the facts of the case the tariff heading 2008 pertains to a class of commodities covering fruits, nuts and other parts of plants and not the preparations pertains to cereals etc., which are enumerated in the competing tariff entry 1904 . Therefore the commodity under question clearly does not fall under tariff head 2008 - Regarding the contention of the applicant with respect to classification of RTE popcorn under a general tariff heading 2016 it is to inform that, the Hon ble Supreme Court of India in a catena of case laws held that a general entry or a residual entry will be preferred for a classification of commodity only in the absence of a specific entry. Hon ble Supreme Court of India in the case of DUNLOP INDIA LTD. MADRAS RUBBER FACTORY LTD. VERSUS UNION OF INDIA AND OTHERS [ 1975 (10) TMI 94 - SUPREME COURT] held that when an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. Thus when a specific entry is available for enumerating the commodity RTE popcorn to relegate it to the orphanage of the residuary entry will be against the principle of classification as held by Hon ble Apex Court in the above precedents. Hence RTE popcorn is classifiable under tariff head 1904 enumerated at Serial No. 15 of Schedule III of Notification No. 01/2017 dated: 28.06.2017 - thus, HSN classification is 1904 and the rate of tax is 9% SGST CGST each. 2022 (3) TMI 1362 Maintainability of Advance Ruling application - Recipient of supply seeking ruling - Levy of GST - purchase of a plot for residential purpose - Levy of GST on sale/purchase of plots, when it is immovable property - HELD THAT:- Section 95(c) defines applicant as any person registered or desirous of obtaining registration under this Act. And Section 95(a) enumerates that a Advance Ruling needs decision for providing in relation to supply of goods or services undertaken or proposed to be undertaken by the applicant - In the present case, the person applying for Advance Ruling does not qualify under Section 95(c) to be an applicant and also he is not making or proposing to make any supplies of goods or services. An Advance Ruling cannot be given by this authority. Hence the application is rejected. Income Tax 2022 (3) TMI 1361 Validity of Reopening of assessment u/s 147 - assessee is one of the beneficiaries of bogus accommodation entries - ACIT has expressed the view that the assessee has introduced her own undisclosed income in her books of account by way of accommodation entries by showing artificial transactions to make the same valid transactions, though it is simply a planning to introduce unexplained money into books of account - HELD THAT:- A perusal of the reasons recorded by the assessing officer shows that after considering the report of the Assistant Director of Income Tax (Inv.), AO has conducted an investigation and has gone through the income tax return and other related documents of the assessee and has observed that the assessee is a beneficiary of receiving bogus accommodation entries and it is only thereafter that he has recorded that he has reason to believe that the income has escaped assessment in respect of the assessee. When pursuant to an information received from the Assistant Director of Income Tax (Inv.), Unit-3 (3), Kolkata, the assessing officer has conducted an investigation, has gone through the income tax return and other related documents of the assessee and has observed that the assessee is a beneficiary of receiving bogus accommodation entries and he has found a reason to believe that the income has escaped assessment in respect of the assessee, we do not find any force in the submission made on behalf of the petitioner that the assessing officer has acted on a report of the Assistant Director of Income Tax (Inv.), Unit-3 (3), Kolkata and he has not recorded his own reasons to believe, and thus the same is rejected. When we examine the facts of the present case keeping into view the scope of power of judicial review while scrutinizing a notice issued under Section 148 of the Act as explained in Raymond woolen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT ] and Phool Chand Bajarang Lal [ 1993 (7) TMI 1 - SUPREME COURT ] , we find that the notice under Section 148 of the Act has been issued by the assessing officer after conducting an investigation and going through the income tax return and other related documents of the assessee and after giving reason to believe that the income has escaped assessment in respect of the assessee. We are satisfied that there is prima facie material available on record before the assessing officer for issuing a notice for reassessment and the notice under Section 148 - order passed by the Assessing Officer rejecting the petitioner s objections against issuance of the notice, does not suffer from any such illegality as to warrant interference by this Court in exercise of its Writ Jurisdiction, - Decided against assessee. 2022 (3) TMI 1360 Deduction u/s 80-IC - assessee was not entitled to claim any benefit under Section 80-IC as Unit-III was not a new Unit and it was re-construction of an existing Unit-II - Appellate Authority held that the Assessing Officer had rightly held that the operation of Unit-III was nothing but an extension of operation of Unit-II - HELD THAT:- Assessing Officer was influenced by the fact that since Unit-III was being run by the assessee in its registered office, therefore, activities done in Unit-III were identical in nature to those done by Unit-II. The Assessing Officer had failed to appreciate that the building, where Unit-III had been started, had in fact been given on rent, whereas, Unit-II was being run in a separate building which was at a distance of about 7 kilometers. The building where the registered office was started in the assessment year 2009-10, was got vacated and thereafter Unit-III was started in the said premises in assessment year 2010-11. It was not a case where plant and machinery of Unit-II had been used for Unit-III. The business of the company had grown and with a view to expand its business, the company started a new Unit by making investment as shown in the Chart reproduced abve. New employees were recruited by the Assessee for Unit-III. Separate account books were maintained by Assessee qua Unit-II Unit-III. Tribunal rightly came to the conclusion that the assessee was entitled to claim benefit under Section 80-IC of the Act by treating Unit-III of the assessee-company as a separate and distinct Unit - findings recorded by the Tribunal can neither be said to be perverse or result of misreading of evidence and material on record. The substantial question of law decided in favour of assessee. 2022 (3) TMI 1359 GP estimation - Closing stock estimation - assessee had tried to furnish month wise closing stock and had failed to produce/justify/explain/ substantiate the same during the period of assessment - HELD THAT:- AO had computed month wise and quarter wise trading account for enhancing the gross profit. AO had failed to consider the genuine purchases and sales made by the assessee, which had been duly entered in the books of account. The nature of business carried by the assessee was also not considered by the AO. The assessee was receiving goods throughout the year from different warehouses, through bills or challans. Lump-sum payments were made to the different suppliers throughout the year. All the records, i.e., books of account, sales and purchase vouchers had been fully produced by the assessee - Assessing Officer had, however, prepared month wise trading account and had found negative stock in the books of account of the assessee. Although, the Assessing Officer had not found any unrecorded purchases, but had, in his own way, prepared the trading account for enhancing the gross profit. No sales were found outside the books of account. AO could have made the assessment as per the provisions of the Income Tax Act, 1961. In the subsequent assessment years, the AO had passed the order u/s 143(3) of the Act in respect of the same business activities of the assessee, which gave rise to net profit of 2.53% and 2.99%. The learned Tribunal had, thus, rightly dismissed the appeal filed by the department. 2022 (3) TMI 1358 Search and seizure proceedings - Documents seized during a search and seizure Retained by the Department - Revenue argued that Documents are retained due to proceedings pending before the Supreme Court - period beyond 30 days from the date of order of assessment u/s 158BC - HELD THAT:- The word proceeding is a term of wide importance and it includes the original proceedings as well as the appellate proceedings as it is trite law that an appeal is a continuation of the original proceedings (see the decision in State of Tamil Nadu and Others v. S. Subramaniam [ 1996 (1) TMI 480 - SUPREME COURT ]. In the context in which the word 'proceedings' appear in section 132(8), it can be held to be used in a very comprehensive sense to include even revisional proceedings, provided the same is invoked under the statutory provisions of the Income Tax Act. Thus an assessment proceeding, appellate proceeding, and even revisional proceeding are all proceedings under this Act . Proceedings under this Act expired by the disposal of the appeal by this Court. Thereafter, no proceedings under this Act are in existence. On the contrary, the special leave petition having been filed under Article 136 of the Constitution of India cannot be regarded as a proceeding under this Act. As a taxing statute, strict interpretation is to be adopted and that being so, recourse by the assessee to the provisions of the Constitution by filing a special leave petition before the Supreme Court cannot be regarded as 'a proceeding under this Act'. The statutory authority lost its power to grant further authorisation to retain the documents. Therefore, even on this count, the respondents are not authorised or justified in retaining the documents of title seized by them under section 132 of the Act. Petitioner is entitled to succeed in this writ petition. Accordingly, while quashing Ext.P13 proceedings issued by the first respondent, this Court directs the first and second respondents to return to the petitioner the originals of document all executed before the Sub-Registrar's Office, Ernakulam, as expeditiously as possible, at any rate, within a period of 30 days from the date of receipt of a copy of this judgment. 2022 (3) TMI 1357 Validity of assessment order passed u/s 147 read with Section 144 - appellants contended that the assessment order is vitiated on account of non-service of notice or in other words, failure to follow the procedure under the Act and the Rules framed therein in the matter of service of notice - respondent submitted that the assessee despite having been granted sufficient opportunity did not submit the return of income which has been specifically recorded by the assessing officer - HELD THAT:- Firstly, the question of jurisdiction, as raised by the appellants in the instant case, is not purely a question of law. It is a mixed question of fact and law and, therefore, a vigilant assessee should raise such an issue at the earliest point of time. This is shown to have not done by the aseessee despite issuance of show cause notice and it has been canvassed for the first time in the writ petition. To decide such an issue, facts have to be examined. Such exercise cannot be done in a writ petition. It would be well open to the appellate authority to reexamine the facts, call for all details as to the manner and procedure adopted by the assessing officer while completing the assessment, examine the procedure for its correctness, whether it satisfies statutory requirement and then take a decision apart from the fact that the appellate authority will also be entitled to re-appreciate the facts which the assessee may place before the appellate authority. Therefore, to state that the appellants are purely questioning the assessment order on account of jurisdictional error, is not acceptable. We are of the considered view that the appellants should avail the alternative remedy of appeal before the Commissioner of Income Tax (Appeals). We find no ground to interfere with the order passed by the learned Single Judge. Hence, the appeal fails and is dismissed. Consequently, the connected application also stands dismissed. 2022 (3) TMI 1356 Revision u/s 264 - Refund of tax paid as advance tax after opting for VDIS scheme - Availing the benefit of VDIS while claimed the benefit by filing belated ITR u/s 139(4) - petitioner took advantage of the VDIS by voluntary disclosing his income in respect of assessment years 1993-94 to 1997-98 - HELD THAT:- In the present case, the petitioner has first availed the benefit of VDIS by submitting the return 01.07.1997 and 31.12.1997 for the assessment year 1993-94 to 1997-98 and paid the income-tax @ 30%. Thereafter, he filed the belated IT returns u/s 139 on 23.01.1998 and deducted income so disclosed in VDIS i.e. voluntary disclose income. The voluntarily disclosed income is not liable to be included with regular income declared in the return u/s 139 as tax paid under VDIS is not liable to be refunded at any cost. The income tax return submitted under Section 139 is not liable to be reopened after availing of the VDIS. The source of income shown for voluntary disclose income and income source shown in the return under Section 139 is altogether different. Under Section 64 of the Finance Act only those persons are entitled to give declaration in respect of income chargeable under the tax under the Income Tax Act for any assessment year, firstly for which he has failed to furnish return u/s 139, secondly, which he has failed to disclose in a return of income furnished by him under the Income Tax Act before the date of commencement of the scheme, thirdly, which has escaped assessment by reason of the omission or failure. As per clause sub-clause (a), in this case, the petitioner did not furnish any return under Section 139 before 31.12.1997, therefore, in voluntarily disclosed income, he ought to have disclosed his all income from all the sources because till 31.12.1997, he did not disclose his any of the income by submitting the return under Section 139. He submitted the return under section 139, after 31.12.1997 i.e. 23.01.1998 to bring his case within clause 64 (1) (b). As submitted belated IT returns under section 139 but as per the requirement of section 64 (1)(b) that ought to have been filed before the date of commencement of the scheme. Since he did not submit any return under section 139 before this scheme, therefore involuntarily disclosed income, he ought to have disclosed his entire income. He cannot be permitted to commit mischief with the Act or VDIS by disclosing part of his income in VDIS and thereafter part of his income by submitting belated return as the Bombay High Court in case of Earnest Business Services (P) Ltd [ 2017 (3) TMI 1185 - BOMBAY HIGH COURT] has rightly held that both the tax altogether different and there cannot be any adjustment between them. Section 70 and 71 mandate that the income disclosed in VDIS shall not be included income under section 139 means income which had already been disclosed and that assessment is not liable to be reopened. The petitioner in order to avail the undue benefit of this scheme has filed the belated return by contending that the filing of such belated return is permissible and claimed the deduction of income as well as the refund of the tax. Thus we are not inclined to interfere with the order passed by the Commissioner, Income-tax. Hence, Writ Petition is hereby dismissed. 2022 (3) TMI 1355 Exemption u/s 11 - application of the respondent seeking registration under section 12AA rejected on the ground that there was no satisfactory materials produced by the respondent - As per revenue respondent/assessee failed to produce the requisite documents for consideration of its application seeking registration under section 12AA - HELD THAT:- It is not in dispute that the respondent trust applied for registration under section 12AA of the Act, for the purpose of claiming exemption from the payment of tax. After thorough analysis of the legal position and the materials placed, by order dated 10.12.2010, the said application was rejected by the CIT, Madurai, based on the circular no.762 dated 18.02.1998 issued by the CBDT, New Delhi, on the ground that the respondent trust did not furnish the requisite satisfactory materials to grant such registration. Without properly examining the activities carrying on by the respondent trust and utilisation of the surplus funds received by them, in the light of the documents furnished, the ITAT, Chennai, merely referring to the objects of the respondent trust, opined that the purpose of the respondent trust was nothing but education; construction of infrastructure for pursuing educational activity is also by its very nature a necessary expenditure for effectively pursuing the educational objects; and the Act itself contemplates exemption to income of institution imparting education. Ultimately, it was concluded by the Tribunal that the respondent trust was eligible for registration under section 12AA. This court is of the view that such reasoning of the Tribunal without proper verification of the requisite materials, cannot be countenanced and on that score alone, the order impugned herein deserves to be set aside. We set aside the order of the Tribunal and remand the matter to it for fresh consideration. The respondent trust is at liberty to submit all the requisite documentary evidence available to them to substantiate its claim for registration under Section 12AA of the Act, to the Tribunal, within a period of two weeks from the date of receipt of a copy of this judgment. 2022 (3) TMI 1354 Assessment u/s 158BC - period of limitation - time limit prescribed in the statute for completion of block assessment in respect of persons other than the person on whom search was made - HELD THAT:- Admittedly, based on the search and seizure operation conducted in the premises of one R.Ganesan, on 12.12.2002, the respondent issued the notice under section 158BD to the respondent / assessee only on 17.02.2005, requiring them to file return of income in respect of the sand quarrying business carrying by them in the capacity as AOP. As such, the notice issued after three years from the date of search as well as after completion of the assessment under section 158BC, is certainly beyond the time limit of two years as provided under section 158BE. Taking note of the same, the Tribunal rightly allowed the appeal filed by the respondent / assessee on the ground that the notice issued under section 158BD is barred by limitation. Though the learned counsel for the appellant /Revenue contended that there is no time limit prescribed in the statute for completion of block assessment in respect of persons other than the person on whom search was made and therefore, the notice issued under section 158BD of the Act by the Assessing Officer is valid, this court is not inclined to accept the same, as it is settled law that where limitation is not prescribed, action must be taken within reasonable period. This court is of the opinion that there is no question of law, much less substantial question of law, arising for consideration in this appeal. Hence, the tax case appeal filed by the Revenue stands dismissed. 2022 (3) TMI 1353 Reopening of assessment u/s 147 - Notice after four years - Deduction u/s 80IB - HELD THAT:- Admittedly, for the assessment years 2006-2007, 2004-2005 and 2004-2005 respectively, the respondents herein have filed their returns of income and the assessments were also concluded. After expiry of four years, notices under Section 148 of the Act were issued to the respondents herein on 01.03.2011, 16.03.2011 and 25.03.2011 respectively. On receipt of such notices, the respondents have submitted their objections by stating that they have not suppressed any material particulars at the time of original assessment and therefore, the re-assessment proceedings is not warranted - such objections were rejected by the respective appellant on 25.11.2011. Therefore, challenging the show cause notices issued under Section 148 of the Act as well as the orders of rejection dated 25.11.2011, the writ petitions were filed. The writ petitions were allowed by the learned Judge on the ground that there is no proof to show that there was escapement of income warranting initiation of re-assessment proceedings. In the decision of the Division Bench of the Gujarat High Court in the case of Ganesh Housing Corporation Limited vs. Deputy Commissioner of Income Tax, Circle 4 1 [ 2016 (9) TMI 764 - GUJARAT HIGH COURT ] it was held that re-assessment proceedings are not warranted if the assessee did not suppress any material particulars at the time of assessment or the assessing officer had not collected any new materials to show that there was escapement of assessment. The contention of the learned Senior Standing Counsel for the appellants that the re-assessment is not solely based on the amendments brought to the statute, but due to the fact that the respondents herein undertook and constructed the building as a contractor and not as a developer, also cannot be sustained in the light of the decision of the Division Bench of the Gujarat High Court mentioned supra. The learned Judge also categorically held that the Assessing Officer is not in possession of tangible material evidence to initiate re-assessment proceedings against the respondents herein. Such a finding rendered by the learned Judge, in our opinion, is proper and therefore, we are not inclined to interfere with the orders, which are impugned in these writ appeals. 2022 (3) TMI 1352 Assessment u/s 144B - Faceless Assessment - request for personal hearing or to make oral submissions, on approval of the request, the personal hearing shall be conducted exclusively through Video Conferencing was not honoured - HELD THAT:- It is clear from the procedure prescribed u/s 144B(7)(vii viii) that in the event of any variation proposed in the draft assessment order or final draft assessment order, the assessee is to be granted an opportunity by serving a notice to show cause and that if the assessee requests for personal hearing, the same is to be considered by the Chief Commissioner or Director General In-charge and the Regional Faceless Assessment Centre. Circular providing Standard Operating Procedure for personal hearing through Video Conferencing under the Faceless Assessment Scheme, 2019 vide Circular bearing F.No.PR.CCIT/NeAC/SOP/2020-21 dated 23.11.2020 clarifies this position. Accordingly, when the petitioner makes such request for personal hearing, the same must be provided to the petitioner. As observed by Delhi High Court, the use of the word 'may' u/s 144B is to be construed as 'shall', if otherwise the requirements under the said Circular are complied with. Accordingly, on this ground itself, the Assessment order at Annexure-A dated 09.09.2021 and the Computation Sheet at Annexure-B dated 09.09.2021 and the Demand Notice at Annexure-C dated 09.09.2021 are hereby set aside 2022 (3) TMI 1351 Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [ 2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law. Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid. If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid. We are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021. In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed. 2022 (3) TMI 1350 Disallowance u/s 80P(2)(d) - AO held that a Co-op Bank does not fall under the purview of coop society referred to in section 80P(2)(d) - AO denied the claim of exemption u/s 80P in respect of interest derived from Saraswat Cooperative Bank Ltd. - HELD THAT:- What is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank not from cooperative society has no legs to stand as a cooperative bank is also a cooperative society as held by the Karnataka High Court in the case of CIT vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot [ 2015 (1) TMI 821 - KARNATAKA HIGH COURT] As regards to the eligibility of exemption u/s 80P(2)(d), this issue was considered by the Hon ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] wherein referring to the case of Totgars Co-operative Sales Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon ble Supreme Court in the aforesaid case (supra) held not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. Thus the reasoning adopted by the lower authorities cannot be accepted. However, there can be no dispute on facts that the appellant society had received the interest from another cooperative society and, therefore, the income so derived is exempt under the provisions of section 80P(2)(d) of the Act. Thus, the grounds raised by the assessee are allowed. 2022 (3) TMI 1349 Computation of capital gain - non-granting of deduction which the assessee claimed to have paid to other co-owners in connection with the property transferred - HELD THAT:- Since the full value of consideration, subject matter of the capital gain under consideration, did not have any relation with Gut No.222/13 in respect of which the assessee along with Sh. Vilas Keshavrao Autade paid a total sum of ₹ 50.00 lakh to the other four co-owners, this transaction of payment in my opinion has rightly been disassociated from the computation of capital gain from transfer to Gut Nos. 222/1 to 222/6. It can be gathered from the impugned order qua the Gut No.222/13 that Sh. Vilas Keshavrao Autade entered into agreement for jointly developing and selling the land which covered Gut No.222/13. Other four co-owners had some right and interest in the said land at Gut No.222/13. To purchase their right, a total sum of ₹ 50.00 lakh was paid by the assessee and Sh. Vilas Keshavrao Autade. On 17-08-2013, Sh. Vilas Keshavrao Autade entered into sale deed for transfer of his land admeasuring 80R out of Gut No.222/13 in favour of two sons of the assessee and no payment was made by the assessee or his sons towards acquiring the share in Gut No.222/13 along with Vilas Keshavrao Autade. This shows that sum of ₹ 25.00 lakh paid by the assessee along with Sh. Vilas Keshavrao Autade to the other co-owners was a consideration for transfer of Gut No. 222/13, inter alia, in the name of two sons of the assessee. Notwithstanding this factual aspect, since the payment of ₹ 25.00 lakh made by the assessee to other co-owners has no relation whatsoever with the property transferred that became subject matter of computation of long term capital gain under consideration, there can be no question of allowing any deduction in respect of this sum. The impugned order is countenanced on this score. Non-granting of exemption u/s.54F - C laim was jettisoned by the AO on the ground that the assessee did not purchase a new residential flat but only an office premises and hence, section 54F could not apply - It is apparent from bare reading of section 54F that the exemption becomes available towards capital gain arising from the transfer of any long term capital asset on purchasing or constructing one residential house in India. Thus, it is patent that in order to qualify for exemption u/s.54F, it is necessary that the new asset must be a residential house . Turning to the facts of the instant case, it is seen that the new asset purchased by the assessee is an office premises and not a residential premises . In that view of the matter, the inescapable conclusion is that the authorities below were justified in repelling the assessee s contention on this issue. 2022 (3) TMI 1348 Denial of exemption u/s.54 - purchasing a new house in the name of the assessee s son - whether exemption u/s.54 can be allowed when the new property purchased by the assessee in the name of someone else other than self? - Diversified decisions - HELD THAT:- When discordant views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that the other view of the non-jurisdictional High Court may sound more appealing on individual level vis-a-vis the view of the jurisdictional High Court. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion for or against - on that point. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon ble Supreme Court - we bound to follow the view taken by the Hon ble jurisdictional High Court. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon ble Bombay High Court in favour of the assessee on this issue. Therefore, hold that the authorities below were justified in denying the benefit of exemption u/s 54. - Decided against assessee. 2022 (3) TMI 1347 Additions in respect of employees contribution towards ESI/PF - Deposits before the due date of filing of return of income u/s 139(1) - HELD THAT:- As admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) - D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case. Addition by way of adjustment while processing the return of income u/s 143(1) made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted.- Decided in favour of assessee. 2022 (3) TMI 1346 Exemption u/s 11 - Denial of grant of registration and approval u/s. 12AA/80G - HELD THAT:- From perusal of the written submissions made by the assessee before the Ld. CIT(E), we note that they are dated 04.10.2018, 14.09.2018, but bears acknowledged stamp/seal of the office of the CIT(E), Patna which is dated 11.10.2018. It is noted that impugned order of the Ld. CIT(E) is dated 03.10.2018 whereas the submissions made and received by the O/o the CIT(E) are dated 11.10.2018. On a specific query by the Bench to assessee on these dates, it was submitted by him that the impugned order of rejection of application was passed by the Ld. CIT(E) without considering the submissions made by the assessee for which the assessee should not be made to suffer. In the present set of facts and circumstances and considering the material and the relevant documents on record, we find it fit and proper to set aside the matter to the file of the Ld. CIT(E) and to reconsider the application made by the assessee for grant of registration and approval u/s. 12AA/80G of the Act by taking into account the material which is already on record and to pass a fresh order in accordance with law. Needless to say that the assessee be given reasonable opportunity of being heard with liberty to file any further details/documents before the Ld. CIT(E) in support of its application for grant of registration or approval. We set aside the impugned order and restore the matter back to the file of Ld. CIT(E) to re-consider the application made for registration u/s 12AA afresh by providing reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purpose. 2022 (3) TMI 1345 Reopening of assessment u/s 147 - Eligibility of reasons to believe - AO has proposed to assess the income being notional rent in respect of the closing stock in the commercial complex, namely, Kreishna Square - HELD THAT:- There is no allegation by the AO in the reasons recorded that the income proposed to be assessed in the reassessment proceedings has escaped assessment due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Even otherwise, we find that all the relevant material in respect of the issue of assessment of rental income of the unsold stock was already available with the Assessing Officer at the time of scrutiny assessment. Hence, when the original assessment was framed under section 143(3) and the reopening is after the expiry of four years from the end of the relevant assessment year then the Assessing Officer is not permitted to reopen the assessment until and unless the conditions prescribed in the proviso to section 147 are satisfied. Assessing Officer himself has not alleged that the income proposed to assess has escaped assessment for want of disclosure of all material facts necessary for assessment. Thus in view of the above facts and circumstances as well as the binding precedents on the issue being decision of GKN Driveshafts (India) Ltd,[ 2002 (11) TMI 7 - SUPREME COURT] and CIT Udaipur vs. Hindustan Zinc Ltd. [ 2016 (6) TMI 1045 - RAJASTHAN HIGH COURT] , we are of the considered view that the assessee deserves to succeed and the impugned order of the ld. CIT (A) for A.Y. 2010-11 is set aside. Addition of the respective amounts by determining the ALV in respect of unsold stock of the assessee at Krishna Square the commercial complex - Notional ALV of the units held as stock in trade cannot be chargeable as income in the case of builder since the property is not constructed for letting out but the same is held for sale and actually was sold out on subsequent dates. Further, the builders take booking advance from several parties against the units and is under obligation to deliver possession of unsold stock to the concerned parties and such units cannot be let out by the builder. Therefore in absence of any specific provision in law ALV of stock in trade cannot be taxed. The sub-section (5) of section 23 was inserted by Finance Act 2017 with effect from 01.04.2018. The amended provision of sub section (5) of section 23 allows relaxation from taxability of ALV on unsold stock for the period upto 2 (two) years from the end of the financial year in which the certificate of completion of construction of the property is obtained. In the case of the assessee, construction of the property was completed on 31.08.2009. Even if we consider the relaxation period upto two years as envisaged in section 23(5), the ALV on unsold stock cannot be taxed for assessment year 2010-11 and 2011-12. Accordingly,e decide this issue against the revenue and in favour of the assessee and consequently the additions made by the AO and sustained by the ld. CIT (A) for A.Y. 2010-11 and 2011-12 are deleted and the order of the ld. CIT (A) is set aside. 2022 (3) TMI 1344 Delayed employee s contribution to ESI PF - assessee filed complete details of the entire payments i.e. employee s PF ESI contribution paid before the due date of filing of return of income - Scope of amendment - HELD THAT:- There are series of decisions of various Hon ble High Courts M/S. INDUSTRIAL SECURITY INTELLIGENCE INDIA PVT. LTD [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] on this issue and held that the payment of employees contribution in regard to PF ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B of the Act. See M/S MOHANLAL KHATRI VERSUS A.C.I.T., CIRCLE-2 AJMER [ 2021 (11) TMI 1035 - ITAT JAIPUR] We are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee s appeal is allowed. 2022 (3) TMI 1343 Revision u/s 263 by CIT - Bogus purchases - HELD THAT:- When the assessment order which was subject matter of section 263 of the Act was passed after discreet enquiry and applying its mind the same cannot be revised under section 263 of the Act. Since order passed by the Ld. PCIT does not fulfill the condition laid down under section 263 of the Act the same is not sustainable in the eyes of law, so far as issue as to the bogus sub-contract expenses claimed by the assessee are concerned. We are unable to agree with this reasoning given by the Ld. PCIT as well as by Ld. D.R. for the Revenue because power to reopen the assessment under section 147 of the Act is vested with the AO and not with the Ld. PCIT. For that matters limitation cannot be stretched beyond two years as laid down under section 263(2) of the Act. So assuming jurisdiction qua income from arbitration award under section 263 of the Act is hopelessly time barred and as such the impugned order in this regard is not sustainable. We are of the considered view that the said order was passed on the basis of settled principle of law but we are to decide this issue on the basis of particular facts of this case. In the instant case, we are of the considered view that when after due enquiry, the AO has taken plausible view on the issue in question by calling necessary information from the assessee, such assessment order cannot be held to be prejudicial to the interest of the revenue. So we are of the considered view that very initiation of proceedings by invoking the provisions contained under section 263 of the Act by the Ld. PCIT lacks jurisdictional error and as such not sustainable in the eyes of law. We are of the considered view that very initiation of the proceedings under section 263 of the Act are not sustainable in the eyes of law for lack of jurisdiction as required under section 263(2) to Explanation 1 of the Act, hence ordered to be quashed. Since the assessee has got the relief on legal issue, we find no need to go into the merits of this case. Resultantly, appeal filed by the assessee is allowed. 2022 (3) TMI 1342 Validity of Survey proceedings u/s 133A conducted in absence of assessee - Manner of conducting survey u/s 133A - excess stock containing the ornaments given by the customer for repairs/re-modelling available at the stock at the time of the survey - additional income in the hands of the assessee who happens to be the proprietor of the business - HELD THAT:- It is also not in dispute that the summons, u/s 131 of the Act were issued to the assessee on 7.11.2012 itself requiring her presence on 8.11.2012 before the Income Tax Authorities. Assessee did not present herself as required in the summons but on the other hand, the husband of the assessee was present on 8.11.2012 before the authorities and he submitted before the authorities that in part performance of his promise, he paid a sum of ₹ 5.00 lakhs for the A.Y 2013-14 towards advance tax and produced the copy of challan. Subsequently on 18.12.2014, though the assessee challenged the authority of her husband to give any statement binding her, did not dispute the fact of survey or the findings of any excess stock during that survey worth - Even at that time also, the assessee did not plead about the errors, if any, in the valuation of jewellery or that part of excess stock contains the gold ornaments received from or being given by certain customers for repairs/re-modelling available in the shop. Even during the appeal before us also, no details of such customers or the gold ornaments attributable to them are produced. There was a time gap of more than 3 years between the survey operation and the assessee giving her statement before the Income Tax Authorities. If the plea taken by the assessee is correct, the assessee should have brought it to the notice of the authorities her grievance in respect of the manner of conducting the survey or manner of valuing the excess stock or the details about the gold ornaments that were given for repairs/re-modelling by the customers. It could be seen from the record that even during the stage of first appellate proceedings, the assessee did not mince many words nor had she took any such plea on those aspects. The assessee is taking several pleas at several stages and they did not fit in the conduct of an ordinary prudent person. We are therefore, not inclined to accept the plea taken by the assessee before us and the learned CIT (A) considered these aspects in a proper way while granting relief and declining to delete the addition to the extent - We, therefore, do not propose to interfere with the findings of the learned CIT (A). The appeal of the assessee is accordingly found to be devoid of merits and dismissed. Appeal of the assessee is dismissed. 2022 (3) TMI 1341 Assessment u/s 153A - Addition u/s 68 - HELD THAT:- Admittedly, in the instant case no assessment was pending as on the date of search and the addition under consideration is not emanating from any incriminating material seized during the course of search and seizure operation as it clearly reflects from the assessment order, hence, the addition under challenge in any sense is un-sustainable and cannot stand in the eyes of lawon legal aspect as well as per judgment of the Jurisdictional High Court in the case of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] wherein it was held that that if on the date of search, the assessment proceedings already stood completed and no incriminating material unearthed during the search, then no addition can be made to the income already assessed.‟ The said dictum of the Hon'ble High Court was confirmed by the Hon'ble Apex Court in the case of Pr. Joint CIT vs. Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER ] - Decided in favour of assessee. 2022 (3) TMI 1340 Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - HELD THAT:- The penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware as to what is the charge made against him so that he can respond accordingly. Having regard to the manner in which the Assessing Officer has issued notice dated 29.12.2016 under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceedings have been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which is bad in law, hence cannot be considered a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act and therefore we are of the considered view that under these circumstances, the penalty is not leviable as held by the various Court including Apex Court and hence, we have no hesitation to delete the penalty levied by the AO and affirmed by the Ld. Commissioner - Appeal of assessee allowed. 2022 (3) TMI 1339 Exemption u/s 11 and 12 - AO denied the benefit of deduction under section 11 to the assessee by holding that the assessee cannot be regarded as existing for charitable purposes under section 2(15) - HELD THAT:- We find that the AO on noticing that the assessee was in receipt of voluntary contributions came to the conclusion that the voluntary contributions were received only from students and were admitted in the assessee s educational institutions. According to the AO, the contributions were not given out of free will and was a quid-pro-quo for admission of students in the assessee s educational institutions. There is no material whatsoever for this conclusion drawn by the AO. On the other hand, the AO has proceeded purely on the basis that there was a suggestion and unwritten direction from the assessee for contributions to be made mandatorily for the purpose of securing admission in the assessee s educational institutions. AO, thereafter, concluded that voluntary contributions are nothing but a capitation fee. It is seen that the assessee enjoys registration under section 12A and except for the compliant of the AO that the assessee received voluntary contribution, there has been no other charge in so far as allowing exemption under section 11 is concerned. The receipt of so called capitation fees has been interpreted by the AO as an act which will go against the definition of charitable purpose under section 2(15) - CIT(A) has rightly observed that the conclusions of the AO are without any material and that the receipt of capitation fees has not been established nor were there any proceedings against the assessee under the Karnataka Educational Institutions (Prohibition of Capitation Fees) Act, 1984. In the given circumstances of the case, we are of the view that the conclusions drawn by the CIT(A) that the assessee cannot be denied the benefit under section 11 of the Act cannot be said to be erroneous and we concur with the said findings. Hon ble Karnataka High Court in the case of Children s Educational Society [ 2013 (7) TMI 519 - KARNATAKA HIGH COURT ] has held that application of surplus for educational purpose is sufficient to conclude that an educational institution is just solely for educational purpose. In the given facts and circumstances of the case, we find no merits in these appeals by the Revenue and consequently these appeals deserve to be dismissed and are hereby dismissed. 2022 (3) TMI 1338 Reopening of assessment u/s 147 - validity of notice of reopening, which was also issued on the basis of information of investigation wing that they have searched a person who is engaged in providing accommodation entries - estimation of income for bogus purchases - HELD THAT:- AO validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd [ 2016 (8) TMI 276 - GUJARAT HIGH COURT] clearly held that when assessing officer received information from the investigation wing that two well-known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee s appeal is dismissed. Bogus purchase - No comment was made by Assessing Officer on the documentary evidence furnished by assessee. The sales of assessee was not disputed. No sale is possible in absence of purchases. The Assessing Officer estimated addition on account of purchases without rejecting books of accounts of assessee. CIT(A) restricted to addition to the extent of 12.5% of the total purchase shown by taking view that the assessee shown G.P of less than 1.15% .In our view the disallowance restricted by Ld. CIT(A) is on higher side. The profit margin in the industry is 5% to 7%. It is settled law in case of disputed purchases shown from such hawala dealers on the profit element embedded to avoid the possibility of revenue leakage is to be disallowed. No doubt made the assessee has shown extremely low G.P i.e. 1.15% only, yet the disallowance at rate of 12.5% is on higher side. This combination is similar cases, wherein the purchases are shown from Bhawarlal Jain for providing accommodation entry, have restricted or enhanced the addition to the extent of 6% of impugned or disputed purchases. Therefore, taking the consistent the disallowance of purchases in the present case is also restricted to 6% of the disputed purchases. In the result, the grounds of appeal raised by assessee is partly allowed. 2022 (3) TMI 1337 Disallowance u/s 54F - assessee has sold the immovable property within the definition of capital asset in India - reason for denying benefit of 54F by the AO as well as the Ld.CIT(A) was solely on the ground that the assessee has reinvested the amount in USA in the residential house property - HELD THAT:- In our considered opinion, once, the assessee invested the long term capital gain in buying the residential house either in India or outside India prior to 01.04.2015, the assessee is entitled for exemption. The literal meaning of construction of a residential house used in section 54 cannot be restricted to only purchasing or constructing or acquiring a residential house within India . In our considered opinion, the golden rule of interpretation as envisaged in law is required to be applied. In our view, when the statue is clear and unambiguous, then the Tribunal or court should refrain from adding any meaning or word which has not been provided by the statute, to the provision , while interpreting the section . Undoubtedly, the word used in section 54 is a residential house and not a residential house in India , therefore, it will be violation of literal interpretation of statute, if we read a residential house as residential house in India. The Tribunal is bound to interpret the law within four corners of statute and refrain from inserting any word in the statute and it would amount to legislating the Act. - Appeal of assessee allowed. 2022 (3) TMI 1336 Disallowance of interest u/s.14A r.w.Rule 8D - disallowance to the extent of exempt income earned for the year - HELD THAT:- Although, the assessee claims to have used fresh capital raised during the financial year to make investments in share application money in subsidiary company, but on perusal of financial statements filed by the assessee, we find that the assessee has availed huge borrowings from banks and paid interest. Further, the assessee failed to prove its claim that it has not utilized borrowed funds for investment purpose with necessary evidence. Therefore, we are of the considered view that there is no error in the reasons given by the Assessing Officer as well as learned CIT(A) to sustain additions towards disallowance of interest u/s.14A r.w.Rule 8D. Fact remains that the assessee has earned dividend income of ₹ 15,71,210/- whereas, the Assessing Officer has disallowed expenses relatable to exempt income at ₹ 69,29,042/- which is in excess of dividend income earned for the year. It is well settled principle of law by the decision of various courts, including decision of M/s. Redington India Ltd. [ 2017 (1) TMI 318 - MADRAS HIGH COURT ] where it has been clearly held that disallowance contemplated u/s.14A r.w. Rule 8D cannot exceed exempt income. CIT(A), after considering relevant facts has rightly directed the Assessing Officer to recompute disallowance u/s.14A but restrict disallowance to the extent of exempt income earned for the year. Hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the revenue as well as the assessee. Additions towards deferred income on account of change in method - AO made addition on the ground that the assessee has failed to explain reasons for change in method of accounting and further, when income has already accrued or deemed to be accrued for the relevant assessment year, question of deferral of income to subsequent year does not arise - CIT-A deleted the addition - HELD THAT:- As from the impugned assessment year, the assessee has changed its method of accounting and thus, deferred AMC charges pertains to subsequent financial year, because the assessee has not rendered services to the customers and thus, question of accrual of any income to the period pertaining to subsequent assessment year does not arise. Therefore, we are of the considered view that when the assessee has explained reasons for change in method of accounting and further, disclosed effects in profit or loss for the relevant financial year in a statement of financial accounts prepared for the year, then the Assessing Officer should not have made additions towards deferred income only on the ground that the assessee does not explain reasons for change in method of accounting. AO has observed that when the assessee has deferred income to subsequent financial year, it ought to have deferred expenses pertains to deferred income. We find that the assessee does not incur expenditure relatable to income deferred to subsequent financial year. Therefore, when there is no expenditure incurred and debited into profit loss account, then question of deferral expenses to subsequent year does not arise. Therefore, we are of the considered view that reasons given by the Assessing Officer to make additions towards deferred income on account of AMC charges cannot be sustained. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer. - Decided against revenue. 2022 (3) TMI 1335 Deduction u/s. 80IC - claim of the assessee is that it was engaged in the manufacture of the Antivirus software at its Parwanoo unit and hence entitled to deduction of the full profit of that unit - AO found that the software development activity was done at the R D cost centre of the assessee in Pune and only the CD writing activity, of the software developed by the Pune R D Centre, was taking place at the Parwanoo unit thus deduction u/s.80IC could be allowed only with reference to the profit attributable to the CD writing activity at the Parwanoo unit and not the software development - as per CIT-A appellant s claim that it was not cost effective to dispatch goods from Parwanoo units to customers outside H.P. as credit for CDT paid was not available to customers outside H.P. against the local VAT liability cannot be appreciated for the simple reason that what was sold to Pune was CD after writing and not complete software and the cost of writing CD cannot be the amount claimed by the appellant shown in its invoice and confirming the addition - HELD THAT:- On going through the above operative part of the impugned order, it is overt that the ld. CIT(A) has confined his decision precisely to the view point of the AO as incorporated in the assessment order. All the submissions made by the assessee beyond the assessment order, which have bearing on the ultimate decision, albeit recorded in the impugned order, remained unaddressed - impugned order does not deal with all the issues raised by the assessee. The ld. AR emphatically submitted, which we also endorse, that the ld. first appellate authority ought to have disposed of all the points raised by the assesee so that an effective challenge could be laid before the Tribunal against his decision, if warranted. In view of the fact that several issues raised by the assessee have not been adjudicated by the ld. CIT(A), we are of the considered opinion that it would be in the fitness of the things if the impugned order is set-aside and the matter is restored to his file for dealing with all such issues and then pass a speaking order thereon. We order accordingly. Needless to say, an adequate opportunity of hearing will be granted by the CIT(A) to the assessee in such proceedings. Disallowance u/s.14A - AO observed that the assessee earned exempt income from mutual funds - HELD THAT:- The Hon'ble Delhi High Court in ACB India Ltd. [ 2015 (4) TMI 224 - DELHI HIGH COURT] has held that the average value of investments, for the purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not the total investments. Similar view has been taken by the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . In view of the afore referred precedents, we set aside the impugned order to this extent and remit the matter to the file of the ld. CIT(A) for re-computing the disallowance under Rule 8D(2)(iii) by considering only such investments in calculating the average value of investments, which yielded exempt income during the year. The assessee will be allowed hearing opportunity in such fresh proceedings. 2022 (3) TMI 1334 Reopening of assessment u/s 147 - Time limit for notice to be issued u/s 149 - escaped income from an asset outside India - time limit u/s 149 within which notice for reassessment can be issued in respect of income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment - HELD THAT:- Section 149(1)(c) provides that no notice for reassessment can be issued if more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment . Therefore, as long as sixteen years from the end of the relevant assessment year have not expired, the reassessment notice is in a case involving income from assets located outside India. As for the retrospective application of this provision, Explanation to Section 149 unambiguously provides that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012 . The amendment in Section 149(1), introduced with effect from 1st July 2012, is thus expressly stated to be retrospective in nature, and there is, in our humble understanding, there is no bar on the validity of the retrospectivity of the taxing statute as long as it is clearly specified to be so. there is no bar on the retrospectivity of a statute, though, in the absence of any express intention to that effect, it is presumed to be only prospective. The validity of a statute being retrospective in effect cannot, as such, be questioned in principle. In any event, it is not open to a forum like this Appellate Tribunal-much less a Commissioner (Appeals), to contest validity of a retrospective amendment in law. Once the statute clearly provides that the amended section 153(1) and (3), as amended by the Finance Act 2012, shall also be applicable to any assessment year beginning on or before 1st day of April 2012, it cannot be open to us to hold otherwise. To suggest that this amendment was intended to be prospective in effect would mean that the legislature, which undisputedly has the powers to make amendments with retrospective effect, intended to introduce section 149(1)(c) to take full effect from 1st April 2022 - an incongruity by any standard. The interpretation adopted by the learned Commissioner (Appeals) is thus clearly contrary to the specific words of the statute and unambiguous intent of the legislature. We, therefore, vacate the relief, quashing the reassessment proceedings as time-barred, granted by the learned Commissioner (Appeals) and restore the stand of the Assessing Officer on this point. Our humble understanding is that so far as escaped income from an asset outside India is concerned, any completed assessment can be reopened as long as sixteen years have not elapsed from the end of the relevant assessment year. Admittedly, that is not the position in the present case, as the relevant assessment year was completed on 31st March 2000, and the assessment was reopened on 27th March 2015. The plea of the Assessing Officer is thus indeed well taken. Thus respectfully following the views so taken by the coordinate bench in the case of DCIT vs. Dilip J Thakkar [ 2022 (3) TMI 1307 - ITAT MUMBAI] , we uphold the plea of the appellant in the terms indicated above. The impugned order accordingly stands were taken and the matter stands restored to the file of the Assessing Officer for adjudication on merits. In the light of our observations. 2022 (3) TMI 1333 Depreciation claimed by the assessee at a higher rate - oil rigs used being plant of specific category are owned by the assessee and used in drilling operations for the purpose of exploration and extraction of mineral oil in the field of mineral oil concerns - AO substituted the accelerated depreciation rate from 60% as claimed to a normal depreciation of 15% as eligible to assessee - HELD THAT:- As relying on decision of HLS India [ 2011 (5) TMI 322 - DELHI HIGH COURT] and Co-ordinate Bench of ITAT [ 2011 (5) TMI 322 - DELHI HIGH COURT] has agreed with the plea of the assessee for entitlement of accelerated rate of depreciation @ 60% on oil rigs which has been used for drilling operations in the oil field of mineral oil concernsCo-ordinate Bench of ITAT in ITA No. 5710/Del/2014 order dated 3rd April, 2019 has agreed with the plea of the assessee for entitlement of accelerated rate of depreciation @ 60% on oil rigs which has been used for drilling operations in the oil field of mineral oil concerns. Nature of expenditure - Disallowance of repair and maintenance charges - assessee claimed the aforesaid expenditure towards repair and maintenance as revenue expenditure - HELD THAT:- We take note of the plea of the assessee that there is no reimbursement of expenses and such expenses are integral part of the execution of the contract as demonstrated. Hence, the expenditure incurred requires to be set off against the revenue income arising from contract as per rudimentary principles of accountancy. The assessee has taken a plea that no new asset is created or no benefit of enduring nature has been derived. We do not see any rebuttal on this score from the revenue. The Assessing Officer has merely proceeded on a hypothesis of such expenditure being capital in nature without showing any justifiable grounds for doing so. The Assessing Officer has capitalized such expenditure without showing any reasonable grounds. On the contrary, we find merit in the conclusion drawn by the CIT(A) holding the same to be revenue expenditure on the face of such tell-tale facts. In the absence of any merits in the plea of the revenue, we decline to interfere with the order of the CIT(A). - Decided in favour of assessee. 2022 (3) TMI 1332 Addition on account of ALP - CIT(A) deleted the adjustment made by the TPO in connection with international transaction on account of - TPO held that the case of the assessee failed on need, benefit and rendition test to justify any payment for reimbursements paid to the parent entity payments expatriates - HELD THAT:- This issue stands adjudicated for the A.Y. 2007-08, A.Y. 2008-09, A.Y. 2009-10 and A.Y. 2010-11 wherein it was held that there was no meaningful analysis or evidence provided by the TPO to hold that entire payment made by the assessee to expatriate should be reduced to zero. Since, the matter squarely covered by the order of the Tribunal, the vehement arguments of the ld. DR have been duly considered. However, in the absence of any material change in the factual matrix and legal proposition, we decline to interfere with the order of the ld. CIT(A). Security deposit written off - assessee has entered into a letter of intent for obtaining shops on lease. As per this letter, the assessee was required to pay security deposits at the time of executing this letter of intent. As per the termination clause of the letter, in case the lease has been terminated by the lessee, the entire amount of security deposit shall be forfeited by the lessor - HELD THAT:- As gone through the judgment in the case of Badridas Daga [ 1958 (4) TMI 2 - SUPREME COURT] wherein it was held that the profit to be assessed are the real profits and they must be ascertained on ordinary principles of commercial training and commercial accounting. The profit should be computed after deducting losses and expenditure incurred for the purposes of business unless such losses or expenditure are expressly, or by necessary implication, disallowed by the Act. Hon'ble Supreme Court in the case of CIT vs. Nainital Bank Ltd.[ 1964 (9) TMI 11 - SUPREME COURT] wherein it was held that under section 28, the trading loss of a business is deductible in computing the profits earned by a business. Every loss is not deductible unless it is incurred in carrying out the operation of the business and is incidental to the operation. Whether loss is incidental to the operation of a business or not, is a question of fact to be decided on facts of each case, having regard to the nature of the operation carried on and the nature of risk involved in carrying them out. The degree of the risk or its frequency is not much relevant but its nexus to the nature of the business is material. Having gone through the entire judgments quoted by both the parties, provisions of the Act pertaining to interplay between Section 28 and Section 37 and facts of the case, we have no hesitation to hold that the assessee be allowed to claim the loss incurred in forfeiture of security deposits given for lease of rental premises as the expenses are incurred wholly and exclusively for the purpose of business. - Decided against revenue. 2022 (3) TMI 1331 Deduction on account of interest payment based on the judgment of decree passed against the appellant by the Hon'ble Delhi High Court - grievance of the department is that though the same has been claimed in the computation of income, but the same has not been charged as an expense in the audited accounts/books - HELD THAT:- Since, the issue has travelled a series of judgments of the Tribunal, Special bench and the Hon'ble High Court and the matter has been settled with regard to the payment of interest, we decline to interfere with the order of the ld. CIT(A). Disallowance of Expenses u/s. 40(a)(ia) - HELD THAT:- The amount paid by the assessee is the cost of purchase and not in the nature of commission. The procuring organization i.e. the Village, District State Level Co-operative Societies had to incur expenses on maintaining offices and administrative staff to carry out the work of procurement. They also had to earn some net profit from all their effort/work. Accordingly, the appellant allowed the Village, District . State Level Co-operative Societies to raise their sales invoices on the appellant on a similar basis which the Govt. of India (GOI) has prescribed for the appellant i.e. cost plus a fixed gross margin. In fact even the market/mandi charges and other taxes etc. are also charged as a percentage. The State Level Cooperatives raise their sale bills on NAFED giving various components of the direct costs like basic price, purchase tax, marketing fees, packing charges etc. as well as their margin of profit for meeting their own administrative costs etc. Pricing mechanism fixed by the Government of India, it is clear that the assessee has merely paid the purchase price as agreed. However, only to monitor the pricing, the cost components are separately shown so as to reimburse the assessee for any loss incurred by it in execution of PSS/MIS - Since the amount paid by the assessee to the Dist/State Level Cooperatives is only the purchase price and not in the nature of commission, no disallowance under section 40(a)(ia)is called for. Disallowance of Expenses u/s. 40(a)(ia) - HELD THAT:- Disallowance u/s. 40(a)(ia) was made by the AO for late deposit of TDS deducted u/s. 194C during December 2008 and February 2009 for payments made. TDS was deposited in the government treasury on 25.05.2009 which was before the due date of filing of return u/s. 139(1) of the Income Tax Act, 1961. No disallowance is called for u/s. 40(a)(ia) owing to the decision of the Income Tax Appellate Tribunal, Delhi 'H' Bench, in the case of Taru Leading Edge (P) Ltd., New [ 2012 (6) TMI 296 - ITAT DELHI ] for Assessment year 2008-09. 50% of depreciation on the warehouse holding that it has been put to use for less than 180 days - HELD THAT:- Warehouse bills on sample basis were furnished vide letter dated 08.11.2011 to prove that the warehouse is in operation. The bills were issued by NAFED to FCI for giving warehouse storage facility by NAFED to FCI. These bills are therefore evidence to establish that the warehouse was in operation in the year under assessment. The invoices submitted on sample basis before the AO were not the purchase invoices for acquisition of the asset rather these invoices were in evidence to use of such assets. The document pertaining to handing over note of warehouse dated 31.03.2008 before the ld. CIT(A) which was remanded back to the office of AO. AO vide remand report dated 19.11.2013 rejected the claim of assessee without pointing out any reason as to why the aforesaid document does not prove the date of put to use. This contention of AO was not accepted by the ld. CIT(A) and relief was provided to assessee. Hence, we decline to interfere with the order of the ld. CIT(A) Disallowance u/s. 14A - HELD THAT:- During the year, the assessee received dividend income of ₹ 1,01,33,000/- from IFFCO and Cooperative Bank of India. The similar issue has been adjudicated by the Co-ordinate Bench of ITAT in the case of the assessee [ 2012 (4) TMI 803 - ITAT DELHI ] wherein the disallowance made by the AO has been deleted. Since, the matter stands adjudicated, in the absence of any material change and the legal proposition, we decline to interfere with the order of the ld. CIT(A). Disallowance on account of Claims Rejected - HELD THAT:- Assessee claimed from railways and Government of India and an amount of ₹ 20,75,889/- for loss suffered in stock transfer from one branch to another and on account of purchase sale of agriculture products on behalf of the Government of India. This is the rejection of expenses incurred by the assessee and not reimbursed by the GOI/Railways on account of Price Support Scheme and Market Intervention Scheme. These expenses are not penal in nature and hence claimed u/s. 37 - Since, the expenses are incurred in connection with the business of the assessee, no disallowance is called for. Disallowance u/s. 37 - assessee has claimed in the P L Account an amount towards Reimbursement of Deficit/Surplus from/to business associates on account of reimbursement as per the terms of Memorandum of Understanding dated 11th April 2008 between the said entity and the assessee - HELD THAT:- Recorded sales and purchases/costs (though made/incurred by the business associate) in the books of the assessee, as the result an amount of ₹ 10,03,22,868/- is shown as the difference between the sale and the purchase in the books of the assessee which was payable to the business associate after deducting the service charges of ₹ 53,33,813/- being income of the assessee. Thus, the balance amount of ₹ 9,49,89,055/- payable to the business associate namely M/s. R. Piyarelal Global Impex Ltd. was recorded as an expense in the books and the account of the business associates was credited. Export sales made by the business associates, the sales have been credited by the assessee in its books of accounts as normal sales, being pursuant to the tie-up business model adopted for recording of sales and purchase transactions, to that extent the revenue is recognized in the books of the assessee. Correspondingly the purchase cost/expenses incurred by the business associates were also debited by the assessee in its books of accounts and to that extent the cost is recorded.Thus, the difference is sitting in the books of the assessee after reducing the service charges being the true income of the assessee, was nullified by debiting the profit Loss account under the head Reimbursement of Deficit/Surplus from/to business associates . Disallowance of prior period adjustments - AO made the aforesaid disallowance by holding that the liability of these expenses were crystallized in previous years - HELD THAT:- Since, the expenses were found to have been crytalized during the year, no disallowance is called for. Disallowance of interest u/s. 36/37 - HELD THAT:- Mere non-accrual of any income does not ipso facto make the tie-up advances as not for business purposes and very importantly when the same were given as held driven out of commercial expediency and the income has been earned in the past and duly included in the taxable income and assessed under section 143(3) of the Income Tax Act for those years and for subsequent assessment years. NAFED is persistently pursuing the recoveries against these tie-up advances. A Year Wise breakup of recoveries made against Tie-Up Advances and total recoveries aggregated to ₹ 158.24 crores. To expedite the remaining recovery, all the efforts are being made by the NAFED including legal proceedings which have been initiated against the defaulting parties at various levels i.e., CBI, Enforcement of Economics Offences Wing, High Court, etc. Since, the tie-ups could be said to be a part of the business operation, no disallowance of interest on this account is called for and hence we decline to interfere with the order of the ld. CIT(A). Appeal of revenue dismissed. 2022 (3) TMI 1330 Exemption u/s 11 - Whether assessee is entitled to exemption of all its income, including rental income out of letting, interest income on investments and miscellaneous income, under Sec 11 13? - assessee has established Research Institute for learning and research and study in depth of all Vedas and effect of Vedic chants on human life, nature and universe. The trust also has objects of awarding scholarships to students and gives donation to any trust existing for charitable purpose etc. - HELD THAT:- Since the assessee was not able to carry out the activities for which it has obtained 12A registration, started construction activities and letting out to corporate houses and getting rental income out of which some portion of amount was donated to educational institution. The assessee has not carried out any activity relating to medical and education or any medical relief. Therefore, the activities carried out by the assessee cannot be said as charitable activity. The assessee was only constructing commercial complex and the same was given to long lease for 99 years. Therefore, there is no possibility that the assessee can again revive its main object of carrying out research on Vedas. We find that in the assessment years under consideration, the assessee has only carrying out construction of building and letting out it to the corporate houses. If the assessee has to claim relief under charity, it has to carry out charitable activities of relief to poor or education or medical relief. In the case in hand, the assessee neither carried out any activity relating to relief to poor nor education or medical relief. Therefore, the provisions of section 2(15) of the Act clearly attracts in the case of the assessee, i.e., other object of general public utility. Therefore, the Assessing Officer has rightly decided that the assessee has not carried out any charitable activity and not entitled for claiming deduction under section 11 to 13 - CIT(A), without examining any material documents and provisions of section 2(15) of the Act, simply reversed the order passed by the Assessing Officer. We find that the order passed by the ld. CIT(A) is without any material and any basis. Therefore, the order passed by the ld. CIT(A) has to be reversed. Donation given to the other charitable organization is concerned, only 10% of the assessee s income was donated to other Trust/organization, which is only an incidental activity, though; it is not a main objective of the assessee. Once, the assessee has not carried out its main objectives and only carried out an incidental activity, it cannot be said that the assessee was carrying charitable activities and therefore, the provisions of section 2(15) clearly applies to the assessee s case. The income earned out of construction of multi-storeyed building and leasing out to corporate houses was not at all applied for any of the charitable activity except payment of a small amount of donation. Out of the total income of ₹.3,58,21,185/- for the assessment year 2011-12, only ₹.36,06,166/- was paid as donation out of which, a sum of ₹.25 lakhs was paid to a trust which was managed by one of the trustee viz., Smt. Meena Muthiah. If payment of a small amount is treated as charity, then everyone who pays a small amount of donation may claim charity. The assessee can claim deduction under section 80G for the above payment of donation and not exemption under section 11 of the Act. Thus we set aside the order of the ld. CIT(A) for all the assessment years under appeal and that of the Assessing Officer is restored. Thus, the ground raised by the Revenue is allowed. Disallowance of depreciation claimed - HELD THAT:- We have perused the decision of the Hon ble Supreme Court in the case of CIT v. Rajasthan and Gujarati Charitable Foundation [ 2017 (12) TMI 1067 - SUPREME COURT] as held that even though the cost of asset was allowed as application of income in the year of acquisition of asset, the charitable institution is still entitled for depreciation - the orders of the authorities below are set aside and the Assessing Officer is directed to allow the depreciation as claimed by the assessee for the assessment years 2010-11, 2012-13 and 2013-14. Thus, the ground raised by the assessee is allowed. 2022 (3) TMI 1329 Disallowance u/s 14A r.w.r. 8D - HELD THAT:- AO completely ignored the submission of assessee and made the disallowance. At this juncture, our attention was drawn towards the Balance Sheet observed that out of total investment of ₹ 4,33,92,050/-, a sum of ₹ 2,77,92,050/- represents the amount invested in Convertible Warrants and thus could not form part of total investments eligible for consideration of disallowance u/s 14A read with Rule 8D of the Rules. AO while computing the disallowance, considered total value of investment, thus the basic approach of the AO to the issue in hand is patently wrong. Further investment in equity shares was carried over from preceding year and was not made in the year under consideration. Apart from this, the AO has failed to bring on record the nexus between the funds borrowed and invested in the equity shares having tax free income, therefore, we are of the view that the AO without appreciating these facts concluded that investment in shares was made out of borrowed funds. Assessee is having Closing Balance of Unsecured Loan taken from M/s Anil Special Steels Industries Ltd. (ASSIL) of ₹ 3,34,31,537/- out of which a sum of ₹ 83.20 lacs was old term loans given for the acquisition of Plant Machinery on which interest @ 18% is being paid and balance amount is interest free receipt, meaning thereby that assessee has already received more interest free funds than advance made and no interest bearing fund were utilized during the year for making providing advance to ASSIL, thus question of making any disallowances is beyond the scope of section 14A and 36 (1)(iii) - we are of the considered view that the interest bearing funds taken by assessee were utilized wholly and exclusively for the purpose of business, in respect of which no disallowance could be made, therefore, we direct to delete the disallowance so made and confirmed qua this issue. Addition u/s 68 - AO doubted the creditworthiness of the lender and made addition - HELD THAT:- Assessee has discharged the onus as required u/s 68 of the Act by proving identity of creditor, genuineness of transaction and creditworthiness/capacity of creditor. In fact, the AO has not disputed the identity and genuineness of lender rather made the addition solely alleging creditworthiness. So far as creditworthiness is concerned, the assessee has furnished audited Balance Sheet of M/s Pooja Vintrade Pvt. Ltd. which duly incorporates all the entries. It was submitted by the ld. AR that the assessee cannot be penalized for non compliance of notices on the part of debtor. In this regard, we are of the view that it is not the case that notice u/s 133(6) remained unserved rather notice remain uncomplied for the reason best known to them. During the course of appellate proceedings, the ld. CIT(A) directed to produce the party, however being located outside Jaipur (at Kolkatta), they could not be produced and due to the fact that the borrower is always in subdued capacity, assessee could not compel the lender to appear. However, assessee with best efforts was able to obtain affidavit from director of Pooja Vintrade Private Ltd , duly confirming the fact that they have advanced loan to assessee in F.Y. 2011-12, which has closing balance of ₹ 21,80,000/- as on 31.03.2012, which was furnished before ld.CIT(A), however was brushed aside. The ld. CIT(A) while confirming the addition has stated that the assessee has not submitted complete Balance whereas the assessee vide letter has submitted detailed Balance Sheet. Thus we found merit in the contention of the ld. AR and the case laws relied upon before us are also found support the case of the assessee. No new facts and circumstances has been put forth by the ld. DR, therefore, we direct to delete the addition made and confirmed U/s 68 of the Act. Disallowance of expenses claimed in the P L account as vehicle and travelling expenses - HELD THAT:- The Coordinate Bench of Pune Tribunal in the case of DCIT v. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. [ 2008 (3) TMI 389 - ITAT PUNE-A] has held that S. 37(1)-For the expenditure to be allowable u/s. 37(1), it may be incurred `voluntarily' and without any 'necessity' and if it is incurred for promoting business and to earn profits, assessee can claim deduction u/s. 37(1), even though there was no compelling necessity to incur such expenditure. We found merit in the contention of the ld. AR and the case laws relied upon before us are also found support the case of the assessee. No new facts and circumstances has been put forth by the ld. DR, therefore, we direct to delete the addition made and confirmed qua this issue. 2022 (3) TMI 1328 Exemption u/s 11 - entitled for exemption u/s 10(15)(iv) - HELD THAT:- AR demonstrated the computation of total income for the period 01.04.2014 to 31.03.2015 AR highlighted that as per Audited income and expenditure account, there is a deficit. But while preparing the computation of total income, only Bank interest, interest on income tax refund, scrap sale and rent from hospital are chargeable under income from other sources as the assessee is entitled for exemption u/s 11 - AR also submitted that the tax free interest on bonds cannot be brought under the purview of the taxation and referred demonstrating tax free interest on bond of NHAI, REC, PFC etc. with Actual dates. Whereas the date was changed due to the typing mistake and the computer system package. Hence the tax free interest on bonds to the extent falls in the F.Y 2014-15 relevant to current assessment year and entitled for exemption u/s 10(15)(iv) of the Act. AR submitted that the interest income component was aggregated in the bank account and referred to the bank statements at page 9 to 12 of the paper book. On perusal of these factual aspects discussed above, We find there is a technical error/mistake in computer package which cannot be ruled out. We find the Ld.AR submissions are realistic and duly supported with material evidences in the paper book is appreciated. Accordingly, we direct the Assessing officer to delete the addition of tax free interest on securities-bonds as it pertains to F.Y 2014-15 and the assessee is eligible for exemption u/s 10(15)(iv) of the Act and allow the ground of appeal in favour of the assessee. Addition of donation expenses - AR submitted that the assessee has not claimed deduction in respect of donation while preparing the computation of income and though donation expenses included under head Miscellaneous income was debited to the Audited income and expenditure account but for the purpose of exemption under the provisions of Sec.11 of the Act, the assessee has not claimed it as deduction - HELD THAT:- AR demonstrated the computation statement of income - we find that the assessee on applying the principles of mutuality has considered only the bank interest, interest on income tax refund, scrap sales and rent from hospital chargeable under income from other sources and the total income disclosed was ₹ 30,18,600/-. We find Prima facie the assessee has not claimed the deduction of donation while computing the statement of total income. Accordingly, we find the addition sustained by the CIT(A) is not justified and we direct the Assessing officer to delete the addition and allow the ground of appeal in favour of the assessee. Dispute between committee members and the trustees and the best judgment assesseement order is passed under 144 r.w.s 147 - no proper accounting principles were applied and the A.O has made an addition after allowing the certain expenditure - HELD THAT:- We considering the overall facts, circumstances and the disputes between the trustees and committee members pending before Hon ble High Court Of Bombay are of the substantive opinion that, on the principles of natural justice the assessee should be provided one more opportunity of hearing before the lower authorities to substantiate the case with the material evidences. Accordingly, the information/details submitted before the CIT(A) by the assessee are restored to the file of the A.O to consider afresh and decide on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information expeditiously and allow the grounds of appeal of the assessee for statistical purposes. 2022 (3) TMI 1311 Disallowance u/s. 14A - Sufficiency of own funds - HELD THAT:- We notice that the own funds available with the assessee in both the years are in far excess of the value of investments. Accordingly, as per the decision rendered in the case of Micro Labs Ltd. [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] no disallowance out of interest expenditure is called for. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in both the years under consideration and direct the A.O. to delete disallowance made u/s 14A of the Act in both the years under consideration. Disallowance of Cost of Club Services - HELD THAT:- As decided in own case [ 2021 (7) TMI 1019 - ITAT BANGALORE] when membership of a club is taken in the name of director, it is for the assessee-company to prove that membership was obtained solely for the purpose of business. [New India Extrusions (P) Limited [ 2011 (2) TMI 529 - ITAT, MUMBAI] ]. Further Entrance fees paid towards corporate membership of the club is an expenditure incurred wholly and exclusively for the purpose of business and not towards capital account as it only facilitates smooth and efficient running of a business enterprise and does not add to the profit earning apparatus of a business enterprises and accordingly CIT (A) was justified in deleting the disallowances of entrances fee made by the Assessing Officer. Expenses on the basis of purchase of packing material, loose tools etc., in the year of purchase - HELD THAT:- As decided in own case [ 2021 (7) TMI 1019 - ITAT BANGALORE] Assessee submitted before Assessing Officer that; (i) packing material shown as purchases as on 31-3-2005 was actually purchased in earlier months and such packing material was consumed during process; (ii) on account of some computer problem, bills were posted on 31-3-2005, and (iii) entire packing material left after end of year became obsolete and, therefore, it was not shown in closing stock. The Assessing Officer rejected account books of assessee and made certain addition to his income. The Tribunal held that:- (i) it was not case of revenue that purchases as debited as on 31-3-2005 were not genuine, and (ii) assessee was following a consistent method of valuing closing stock by including packing material as consumed at time of purchase. Rejection of account books of assessee and addition to his income was held to be not justified. Deduction u/s. 10A - Telecommunication expenses being excluded from export turnover - HELD THAT:- As decide in TATA ELXSI LTD. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] the grievance of the assessee projected in the additional ground would get redressed, if the AO is directed to reduce the telecommunication expenses from the export turnover as well as the total turnover, while computing deduction under section 10 A of the act. We hold and direct accordingly. Respectfully following the above view, we direct the Ld.AO to exclude the telecommunication expenses from the total turnover for the purpose of computing deduction under section 10 A. 2022 (3) TMI 1310 Late payments towards EPF and ESI u/s 36(1)(va) - payment before furnishing the return of income under section 139(1) - HELD THAT:- Admitted facts of the present case are that the payments of PF ESI contribution relating employee s contribution are before the due date of filing of return of income U/s 139(1) of the Act. We have noted that the issue under consideration is covered by the decision of the Coordinate Bench in case of M/s Mohanlal Khatri [ 2021 (11) TMI 1035 - ITAT JAIPUR] wherein did not accept the Ld. CIT(A) s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund and as per section 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds - We are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee s appeal is allowed. Decided in favour of assessee. Customs 2022 (3) TMI 1327 Benefit of exemption - second-hand slurry seal machine for filling up cracks in roads (slurry paver) - Classification of imported goods - non-acceptance of the intent of deployment of the goods in construction of roads on the finding that the equipment could be used only for repair/maintenance work of existing roads on the part of Revenue - HELD THAT:- It is seen from the communication of 17th April 2009 that work of micro surfacing of various roads for a period of one year under M.Maintenance-I PWD (NCTD) was awarded to the appellant. The exemption notification envisages concessions from the standard rate of duty upon demonstrated qualification, as contract awarding authority or as contractor of project for construction of road , and upon furnishing of certain undertakings and certifications. In the present dispute, the certifications are not of relevance and any breach of the undertaking is to be elicited upon post-importation deployment of the equipment. The apprehension of the original authority, and of the reviewing authority, that the goods were intended to be used in breach of the condition of exemption is built upon their determination of the permitted activity as cutting of paths to be levelled and hardened before being layered with macadam just enough provide a ride smoother than on the cobblestoned highways of ancient Rome with no immediate requirement of microsurfacing until a few years down the line. In GAMMON INDIA LTD, CHARAN SINGH, UMAKANT TIWARI VERSUS COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI [ 2018 (12) TMI 1122 - CESTAT MUMBAI ], the Tribunal makes it abundantly clear that any violation of the post-importation conditions is to be responded to by enforcement of the undertakings furnished at the time of import and not by pre-emptive burdening of some part of the construction of roads project by executive overreach. The eligibility of the project itself or the status of the appellant, as contractor eligible to import specified goods for the project, is not in dispute; it is the use that the impugned equipment has for the project that is with the original authority restricting the proceedings to the eligibility of the impugned goods at the threshold. Without examining the nature of the project itself, a finding on use or misuse intended or actual is beyond the scope of assessment to duties of customs as the actual usage of the goods thereafter are not the subject of the impugned proceedings. In COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] , the Hon ble Supreme Court adjured rigid application of the contents of exemption notification. As narrated supra, the eligibility for availment of the notification at the time of import is not under challenge of Revenue and entitlement to the exemption is within the terms of the notification. The cautionary directive of the Hon ble Supreme Court is not disharmonious with the findings of the first appellate authority. The appeal, itself, is based on apprehension of likely usage after clearance by breach of condition in notification that lies entirely within the realm of empirical evidence of actual usage for purposes not intended in the notification which has not been brought on record by Revenue in the present proceedings. The strict enforcement that is obligated by the cited decision is no less pertinent to interpretation of the stage of denial or consequent recovery, as the case may be, in the exemption notification by customs authorities. In the present case, the inclusion of the description of the imported goods in the enumeration of the eligible equipment makes it abundantly clear that, even if its purpose is to fill cracks on road surface, its utility in eligible projects is not deniable. Furthermore, we cannot conjecture the possibility of resort to filling up of cracks in greenfield roads and it would appear that the deployment of this equipment, so essential in upgradation of existing roads, for other than greenfield road development, is within the intent of the notification. There is nothing on record to indicate that the proposed project was not intended for permissible upgradation. There is no reason to conclude that the road construction, as intended in the exemption notification, is limited to black topping of surface or that the importer is likely to indulge in ineligible activities during the period of lock-in prescribed in the exemption notification. The importer has complied with all the conditions specified in the said notification and it would be incorrect in law to deny exemption allowed by the first appellate authority - appeal dismissed. 2022 (3) TMI 1326 Provisional release of goods - API supari - Correctness of outcome, based on a selected report of sample testing - edible fruit and nuts - peel of citrus fruit or melons covering areca nuts - whether these goods are unfit for human consumption? - conflicting test results - Correct classification of goods - release of seized goods - applicability of section 110A of Customs Act, 1962 - HELD THAT:- There is no allegation about the competence of, or the quality of the test undertaken by, the laboratory to which the samples drawn on the direction of this Tribunal had been forwarded. The domain expertise of Central Revenue Control Laboratory (CRCL) in relation to classification of goods does not extend to the prescriptive requirements of Food Safety and Standards Act, 2006. In these circumstances, an unending series of tests on requests and counter-requests cannot be approved; but it was done, and with reluctance, solely owing to the procedural lacunae that strained the credibility of the conflicting reports produced. There is a test report that is not sought for discarding except by assertion of the sanctity of Central Revenue Control Laboratory (CRCL) which has no domain expertise over food safety standards. The Food Safety and Standards Authority of India (FSSAI) has also not discredited this result. The denial of provisional release must be reviewed in the light of this report under section 110A of Customs Act, 1962 forthwith and, in any case, not later than ten days from the date of receipt of this order, and, as directed by the Hon ble High Court of Bombay, strictly within the framework of the law. Consequence of denial of access to impugned goods is a commercial detriment that burdens the appellant. The impugned goods are not a produce of India with nowhere else to go but have been imported from a place outside India with commercial intent. The regulatory standards of India are not mandated for implementation across the globe. Each country adopts its own and the country of origin of the impugned goods must, if necessary, be the final resting place of such as are unfit to be cleared here for home consumption - Even if customs authorities felt obliged with, or without, justification or authority, to protect domestic consumers of arecanut/supari, the option of return to sender should have been permitted in circumstances of denial of recourse to section 110A of Customs Act, 1962 on grounds other than that which legitimized seizure. Therefore, it is only equitable that the prayer for issue of detention certificate for enabling waiver of demurrage is allowed. The respondent-Commissioner is directed to apply the law in section 110A of Customs Act, 1962, arising from seizure under section 110 of Customs Act, 1962, in the light of the report of the tests undertaken on the samples drawn - Appeal allowed. 2022 (3) TMI 1325 Valuation of export goods - export of goods under duty drawback scheme - enhanced valued declared - rejection of declared value - HELD THAT:- There was an existing dispute with regard to valuation of the exported goods, which is relevant for the purpose of calculation of draw back. The export was allowed under provisional Let Export Order . Hence, there was an existing dispute (subjudice) between the parties, when the amount of ₹ 18,68,000 was deposited in July, 2013. Accordingly, such deposit ipso facto is in the nature of pre-deposit, which is subject to outcome of the Adjudication Order. Such amount of pre-deposit never becomes time barred, under the provisions of the Act and the same has to be refunded. The impugned order-in-appeal is upheld and the Revenue is directed to disburse the said amount of ₹ 18,68,000/- forthwith within a period of 4 weeks, with interest @ 12% p.a. from the date of deposit till the date of refund - appeal dismissed - decided against Revenue. PMLA 2022 (3) TMI 1324 Seeking grant of anticipatory bail - provisional attachment order - schedule offence - proceeds of crime - Sections 44 and 45 of PMLA 2002 - HELD THAT:- The PML Act, 2002 deals with the offence of money laundering and Parliament enacted this law to deal and curb the activities of money laundering. Being a special enactment it has overriding effect on general law. Section 71 of PML Act specially provides that provisions of PML Act shall have overriding effect on any other law time being in force. Thus, it is very clear that provisions of Code of Criminal Procedure will not be applicable until there is no specific provision given in PML Act, 2002. Money Laundering being an offence is economic threat to national interest and it is committed by the white collar offenders who are deeply rooted in society and cannot be traced out easily. These kind of offences are committed with proper conspiracy, deliberate design with the motive of personal gain regardless of the consequences to the society and economy of Country. Hence, for money-launderers jail is the rule and bail is an exception - On prima facie reading of the material placed on record and considering the parameters of Section 45(1) PMLA as well as the gravity of the alleged offences, it cannot be held that the applicant was not guilty of the alleged offences or that he was not likely to commit any such offence while on bail. The anticipatory bail application is dismissed . Service Tax 2022 (3) TMI 1369 Validity of Show Cause Notice (SCN) - service tax is leviable on royalty paid on mining operations or not - petitioner contended that this issue is pending before the larger bench of the Supreme Court in a reference to 9 judge bench in the meantime, service tax should not be allowed to be recovered - HELD THAT:- Firstly this petition is directed against the show cause notice and in this adjudication process is still not over. It is true that even against the show cause notice this Court would entertain the writ petition if jurisdiction question is raised. In other words, if the authority issuing show cause notice has no jurisdiction to levy a tax, this Court would not insist on the assessee submitting to such notice. However in the present case the issues as of now stand concluded against the petitioner. Petitioner has candidly placed for consideration a Division Bench judgment of this Court in the case of UDAIPUR CHAMBERS OF COMMERCE AND INDUSTRY VERSUS THE UNION OF INDIA, THE SUPERINTENDENT, CENTRAL EXCISE AND OTHERS [ 2017 (10) TMI 975 - RAJASTHAN HIGH COURT] in which the question of service tax on royalty on mining lease was examined and decided against the assessee. The decision of 5 judge bench of the Supreme Court in case of STATE OF WEST BENGAL AND ANOTHER VERSUS KESORAM INDUSTRIES LTD. AND ANOTHER [ 2004 (1) TMI 71 - SUPREME COURT] would also be applicable. Merely because the Supreme Court in subsequent decisions has doubted the correctness of the view of the 5 judge bench and referred the issue to 9 judge bench, would not persuade us to stay the department from issuing notice and adjudicating the demands. It is noted that the reference was made to the larger bench by an order passed in MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS [ 2011 (3) TMI 1554 - SUPREME COURT] . If all the proceedings are stayed awaiting the reference judgment even before the adjudication has been completed, there is serious apprehension of the evidence and materials getting lost. We would therefore not like to stop the department from even carrying out the adjudicating process on the petitioner s expectation that the larger bench of 9 judge may reverse the decision in the case of Kesoram Industries. Petition dismissed. 2022 (3) TMI 1323 Refund of Service Tax - Foreman Commission - amount paid under VCES would partake the character of tax or it is only a deposit - tax dues under Section 73A of the Finance Act, 1994 - Section 11B of the Central Excise Act, 1944 - HELD THAT:- The claim of the appellant is not a refund under Section 11B ibid. simplicitor , the appellant was tempted by the Scheme introduced whereby, in compliance with the payment of taxes, certain benefits would pass on to such taxpayers. Hence the decisions / orders relied on by the appellant which are mainly on Section 11B per se are not applicable to the facts of the present case. It is clear that no amount paid by an assessee in terms of the above Scheme shall be refunded under any circumstances, which is quite obvious since, the Scheme would also pass on some benefits to the taxpayer like reduction in interest or waiver of penalty, etc. as the case may be. Clearly there was no compulsion on any of the assessees and hence, it was a voluntary option exercised by the assessee to opt for the Scheme perhaps because of other benefits that would ensue. Having opted, the rules and regulations prescribed thereunder alone are very much applicable and, because of it being a special enactment, the same excludes the applicability of general law governing the refund provisions. Appeal dismissed. 2022 (3) TMI 1322 Classification of services - Business Support Services or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - appellant acquires the rights/ license to exhibit the films at the designated theatres from various distributors by entering into separate license agreements for each film - It was alleged that the agreement between the appellant and the distributors created an Association of Persons so as to undertake jointly the activities of screening of the films - HELD THAT:- The agreement in the present appeal is almost the same as the agreement in other appeals that have been decided including that in INOX LEISURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, HYDERABAD [ 2021 (10) TMI 893 - CESTAT HYDERABAD] It would be seen from the agreement that the producer/distributor is engaged in the business of production and distribution of films, while the appellant is an exhibitor engaged in the business of exhibition of films and owns/operates a chain of multiplex theatres. The exhibitor decides which screens would play the motion picture, the numbers of shows, the show timings and the ticket pricing including the right to decide on a week to week basis, whether or not to continue to exhibit the motion picture. The distributor/producer had granted the exhibitor the non exclusive license to exploit the theatrical rights of a motion picture and each party was entitled to conduct its business in its absolute and sole discretion. In MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) [ 2016 (11) TMI 520 - CESTAT MUMBAI] , the Tribunal explained that public private partnerships between the Government/Public Enterprises and Private parties are in the nature of joint venture, where two or more parties come together to carry out a specific economic venture, and share the profits arising from such venture. Such public private partnerships are at times described as collaboration, joint venture, consortium or joint undertaking. Regardless of the name or the legal form in which the same are conducted, they are essentially in the nature of partnership with each co-venturer contributing some of the resources for the furtherance of the joint business activity. The Tribunal held that such public private partnerships meet the test laid down by the Supreme Court in FAQIR CHAND GULATI VERSUS UPPAL AGENCIES PVT. LTD. [ 2008 (7) TMI 159 - SUPREME COURT] , for ascertaining whether or not the arrangement is one of joint venture. In view of the decision of the Supreme Court in Faqir Chand Gulati and the decision of the Tribunal in Mormugao Port Trust, no service tax can be levied on the appellant under BSS. It is not possible to sustain the confirmation of the demand by the order dated 17.12.2018 passed by the Commissioner - Appeal allowed - decided in favor of appellant. 2022 (3) TMI 1321 Levy of service tax - providing earthening of lightning arrestors at various building - erection, installation, commissioning, management, repairs and maintenance services or not - demand on the basis of form 26A obtained from Income Tax Department showing the deduction of income tax at source - HELD THAT:- From the work orders enumerated in the impugned order in most of the cases that there is services has been provided along with material if that is the case, in that circumstances, service tax cannot be demanded under the category of erection, commissioning and installation services and management and repair services as same is merit classifiable under works contract services. In most of the cases the appellant has also supplied the goods which are in nature of sale of goods activity / trading activity. In that circumstances also, no service tax is payable by the appellant. Further, it is found that any services provided to deal with was excluded by virtue of entry no. 8 in the circular no. 103/05/2010-ST dated 24.5.2010. Therefore, the services provided to these agencies are not taxable. Further, Indian Institute of Technology, Kanpur is having sovereign power of clause 13/2016 in STR dated 1.3.2016. The same is exempted from payment of service tax being non commercial entity - any service in nature of erection, commissioning and installation, management and maintenance repair provided to local authority or government authority are exempt from payment of service tax. The matter is remanded back to the adjudicating authority to ascertain the service tax payable by the appellant on services which has been provided by the appellant without material under the respective categories of services - appeal allowed by way of remand. 2022 (3) TMI 1320 Levy of service tax - Construction of Residential Complex Services/ Construction of Commercial Complex Services - corroborative evidence is produced by the department to show that the Appellant have received unaccounted cash towards provision of construction services during the disputed period or not - Reliability on the statements - Admissible evidence or not - Jurisdiction to issue SCN - penalties on co-appellant - HELD THAT:- The revenue has proceeded in confirmation of the demand on the basis of documents and information provided by the Income Tax Department. The entire case of Revenue in the present matter is based on .xls sheets retrieved by the Income Tax Authorities and Statement of Smt. Kalindi Shah recorded by the Income tax Authorities. However, it is seen that apart from recording the statement of Shri Venkataramana Ganesa in the present matter no independent investigation has been carried out by the department. We observed that Department has not brought out any independent facts or evidence as who is the service receiver, whether the cash receipts shown in the xls. Files pertaining to the service component only or otherwise and no corroborative evidence produced in support of details mentioned in the said xls. Files. In the present matter collection of a huge amount of cash in respect of provisions of services involved. However not a single rupee of unaccounted cash was found during the search conducted by the income tax. Reliability on the statements - Admissible evidence or not - HELD THAT:- In the whole matter revenue rely upon the statement of Ms. Kalindi Shah and Shri Venkataramana Ganesna both are the employees of the Assessee s company. No statement of Directors of the Appellant company recorded by the revenue to find out the truth of employee s statements. It was on records that Assessee company have raised the dispute on both the statements of employees recorded during the course of investigation by Income tax Authority and revenue. Therefore the said statement cannot be relied upon as admissible evidence in terms of the provisions of Section 9D of the Act. In the present case the Revenue has raised the Service tax demand merely on the ground of investigation conducted by the Income Tax Authorities. We find that demand cannot be raised merely on the basis of assessment made by the Income Tax Authorities. Tribunal in the case of M/S. RAVI FOODS PVT. LTD. OTHERS VERSUS CCE, HYDERABAD [ 2010 (12) TMI 290 - CESTAT, BANGALORE] has held that admission by assessee to Income Tax department as regards undisclosed/suppressed sales turnover cannot be held to be on account of clandestine removal of their final products, in the absence of any other corroborative evidence. In the present matter entire demand of service tax as proposed in the show cause notice is not sustainable. Construction of Residential Complex Service/ Construction of Commercial Complex Service - period from 01.04.2014 to 30.06.2017 - Ld. Adjudicating Authority in present case dropped the demand on the ground that in all cases where the assessee have entered into a sales deed or an Agreement to sale prior to 01.04.2014, the amount have been received prior to the said date - HELD THAT:- The Ld. Adjudicating Authority failed to extend the same logic where the booking amount is received by cheque and the letters of reservation have been issued prior to 01.04.2014. The demand of Service tax confirmed by the Ld. Adjudicating authority pertaining the period where the letters of reservation have been issued prior to 01.04.2014 and cheque received by Appellant prior to 01.04.2014 not sustainable on this ground. The Revenue could not establish the charge of cash receipt beyond doubt, accordingly entire demand raised in the Show Cause Notice will not sustain even without going to the grounds of the department s appeal - the Adjudicating Authority with careful application of mind dealt with the issue on facts and statutory provisions for dropping of part demand. Therefore, we do not find any infirmity in the finding of the impugned order, except the finding on receipt of cash. Accordingly, the same is upheld to the above extent. Consequently, the Revenue s appeal is liable to be dismissed. Jurisdiction - whether the DGGI has power to issue show cause notice? - HELD THAT:- The entire case is decided on its fact and merit, we do not address the issue of jurisdiction and the said issue is left open. Penalties imposed on co-appellants - HELD THAT:- The demand itself is not sustainable against the main Appellant, hence the question of penalties on co-appellants does not arise. Decided in favor of assessee. Central Excise 2022 (3) TMI 1319 Maintainability of appal - Monetary limit involved in the appeal - CENVAT Credit - supply of MS Platform at the site - credit can be availed or not as the component of the electronic weigh bridge (MS Platform) was not received in the petitioner's factory, but were sent directly to the customers' site for Erection and Commissioning - HELD THAT:- The demands for the respective periods, was beyond the monetary limit and technically there was no bar for the Authority to have filed appeals and to take up the matter before the higher adjudicating Authorities. In light of a finding of law and facts which is identical and has been a subject matter of earlier orders between the same assessee and the Department, it was not open for the second respondent to ignore such orders and pass an order contrary to the conclusion arrived at, as has been done in the order in original at Annexure - A. Hon'ble Apex Court in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. [1991 (9) TMI 72 - SUPREME COURT], has clarified, that once there is an order by the Superior Authority, the Authorities low down in the hierarchy which may be adjudicating Authorities, are to give effect to the orders of the Authorities higher to them in the hierarchy. It is further to be noted that the learned counsel for the Revenue Authority is not in a position to controvert the assertion of the petitioner that the question involved and decided in the orders at Annexures - B, C and D were identical in the facts and in law as was being considered in the proceedings leading to the passing of the Order-in-Original at Annexure-A. Normally, the Court would have remanded the matter back to the Authority for fresh consideration in light of observations made - However, in the present case, if the conclusion at Annexures - B, C and D are to be made applicable with respect to the period which was subject matter of proceedings culminating in the Order-in- Original, there could be nothing more that could be done by the second respondent except in accepting the conclusion as per the orders at Annexures - B, C and D. Thus, though the supply of MS platforms is directly to the customers' site, as the said component is used in the manufacture of the final product on which duty of excise is discharged, the petitioners are eligible for the credit on MS Platforms used for the manufacture of weigh bridges. Petition allowed. 2022 (3) TMI 1318 Classification of goods - PCB assembly, also known as T.V. chassis - sub-assembly of CTV, comprising of the chassis with cabinet, speakers and picture tube etc. - classifiable under sub-heading 8529.00 of the Excise Tariff or under Sub-heading 8528.00 of Central Excise Tariff Act, 1985 - applicability of Rule 2(a) of the Rules for the Interpretation of the Schedule to the Central Excise Tariff - N/N. 6/2002-CE dated 1.3.2002 (sl. No. 204) - HELD THAT:- The observation of the Hon ble Apex Court in the case of M/s. Salora International Ltd. 2012 (9) TMI 276 - SUPREME COURT is somewhat different wherein the Hon ble Apex Court has observed that the complete TV was assembled thereafter it was tested and dissembled and cleared in SKD condition but it is not in the case in hand. In those circumstances, the clarification adopted by the Hon ble Apex Court in M/s. Salora International Ltd. is not applicable to the facts of the case in hand. Further, it is found that the learned AR has relied on the decision of this Tribunal in the case of M/S PANASONIC AVC NETWORKS INDIA CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA-I [ 2020 (1) TMI 672 - CESTAT ALLAHABAD ]. In that case also the fact recorded by this Tribunal is that the appellant has filed declaration that goods to be complete unit of CTV and same were being cleared as CTV only. As per section note 2 of section 16 of the Central Excise Act, the goods were rightly classifiable as parts and merit classification under heading 8529 of the Central Excise Tariff Act 1975. As it has been held that the goods in question are not complete TV sets, it has been cleared under SKD or CKD condition, therefore, the classification under chapter heading 8528.00 at Sl. No. 204 of the notification is not applicable to the facts of the case. It is held that the merit of the facts of the case are as that the appellant is clearing the TV chassis, sub-assembly of CTV, comprising of the chassis with cabinet, speaks and picture tube etc. are not colour TV and therefore are the parts of CTV merits classification under sub heading 8529.00 of Tariff Act 1975 - appeal allowed - decided in favor of appellant. 2022 (3) TMI 1317 Refund for unutilised Cenvat Credit - closure of the factory - HELD THAT:- The jurisdictional High Court has already held that on closure of the factory the assessees are entitled for refund claim lying unutilised in their Cenvat Credit Account. In case of MODIPON LTD. VERSUS COMMISSIONER [ 2015 (8) TMI 1545 - ALLAHABAD HIGH COURT] although the said order has been challenged by the Revenue before the Hon ble Apex Court but no stay has been granted by the Hon ble Apex Court. In that circumstances, relying on the decision in the case of PRINCIPAL COMMISSIONER OF C. EX., DELHI-I VERSUS SPACE TELELINK LTD. [ 2017 (3) TMI 1599 - DELHI HIGH COURT] , the Hon ble Delhi High Court has held that unless and until the order is set aside the sanctity of the order remains. The appellant is entitled for refund claim lying unutilised in their Cenvat Credit account on closure of the factory - appeal allowed - decided in favor of appellant. 2022 (3) TMI 1316 100% EOU - Permission to debond the unit - allegation of irregular clearance of unutilized/surplus raw material in excess of the permissions sought from the Customs Authorities - violation of the Foreign Trade Policy - HELD THAT:- The appellant had sought to debond and was permitted to debond. The debonding was allowed by the Development Commissioner after the Jurisdictional Assistant Commissioner has confirmed in writing to him that no Central Excise or Customs Duty are pending from the appellant and they have been duty paid. The audit objection raised by CERA does not indicate how it had come to conclusion that there was a short payment of ₹ 139.58 Lakhs and that the appellant had cleared goods in excess of the permission granted by the Customs Authorities. A perusal of the letters issued by the Customs officers shows that no limit whether in terms of quantity or value was fixed or specified in either of the letters. If the allegation is that goods over and above these were cleared by the appellant without paying duty there must be evidence that: (a) that goods were cleared in excess; and (b) no duty was paid on such clearances - There is no evidence either in the audit report or in the show cause notice, which was issued on the basis of the audit report with respect to either of the above. The appellant had sought the details from the Commissionerate by filing an application for information under the Right to Information Act and received a reply dated 02.11.2018 signed by the Central Public Information Officer - the clarification makes it abundantly clear that the Department has no idea as to on what basis the demand has been raised and has no documents to support the demand at all. The show cause notice raising a demand only on the ground that audit said that you have short paid duty with not even a vague attempt to explain how the demand was calculated cannot be sustained. The inescapable conclusion is that the demand has been confirmed on some figment of imagination not supported by any facts or documents. Such a demand cannot be sustained and needs to be set aside - the demand of interest and imposition of penalty also cannot sustain - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (3) TMI 1315 Mandatory pre-deposit - Vires of the second proviso to Section 84 (1) of West Bengal Value Added Tax Act, 2003 - right to appeal - fundamental rights guaranteed under Article 19(1)(g) - insistence of protection of payment of 15% of the disputed tax as stipulated in the second proviso to Section 84(1) of the Act infringes/abrogates the vested right of appeal under Section 84(1), when such right accrues to a dealer on the date of filing the return - compulsory extraction of tax before the same becomes due and payable - second proviso to Section 84(1) infringes Article 14 of the Constitution of India - right of appeal conferred under Section 84(1) can be construed as an absolute right - effect of substitution of second proviso to Section 84(1) of the West Bengal Finance Act, 2015 - alleged hardship of a dealer would be a relevant consideration while considering the vires of a statutory provision or not. HELD THAT:- Section 84(1) of the Act provides for an appellate remedy to an aggrieved dealer. The said provision is a substantive law, which confers a right on an aggrieved dealer. The provisos contained in sub-section (1) of Section 84 regulate the procedure for exercising such right of appeal. The first proviso to Section 84(1) deals with procedural aspects in respect of an appeal in which the dispute is in excess of rupees twenty lakh and the authority, which will be disposing of such appeal as may be constituted by the Commissioner. The second proviso deals with the procedure to be adopted by the aggrieved dealer in cases where appeals are preferred on or after the 1st day of April, 2015 - if the right of appeal as provided under Section 84(1) could be entertained upon compliance of certain conditions by the aggrieved dealer at the time of preferring an appeal, which would be a provision in the realm of procedural law. It can be further clarified by observing that Section 84(1) of the Act provides for the authority before whom the appeal can be preferred and the circumstances under which the dealer could exercise such right and the conditions to be followed by the dealer for availing such right are stipulated in the proviso, which are procedural in nature. Thus, the appellants cannot be heard to say that they have a vested right in a procedural law. For entertaining an appeal under Section 84(1), the dealer is required to produce proof of payment of 15% of the disputed tax in terms of the procedure prescribed in Clause (b) of second proviso to Section 84(1). It cannot be disputed by the appellants that on and after the order of assessment is passed and the tax is quantified the liability accrues. Mere filing of an appeal does not suspend the liability so determined. The liability would subsist until it is set aside or modified. Therefore, to state that the 15% is a compulsory extraction, is incorrect, as it is only a measure or quantification for the appeal being entertained - the second proviso to Section 84(1) is neither discriminatory nor violative of Article 14 of the Constitution of India and accordingly. The tests which are to be applied to test the constitutional validity of a substantive law is not required to be applied to the cases on hand as we have conclusively held that the provisos to Section 84(1) are procedural. The constitutional validity of the second proviso to Section 84(1) is upheld. In cases where the appellants have prayed for consequential relief in the writ petitions by challenging show-cause notices or assessment orders, liberty is granted to such of those appellants to file the reply to the show-cause notices within 30 days from the date of receipt of the server copy of this judgment and order after which the concerned assessing authority shall proceed with the matter in accordance with law - Appeal dismissed. 2022 (3) TMI 1314 Recovery of arrears of tax - communication dated 04.05.2009, did not accompany a fresh Form B-6 under Rule 18(8) of the TNGST Rules - whether the notice dated 04.05.2009, was sufficient so as to attract liability under Section 26 (4) of the TNGST Act, 1959? - HELD THAT:- A reading of Section 26 of the TNGST Act makes it clear that the assessing authority may at any time or from time to time, amend or revoke any such notice or extend the time for making any payment in pursuance of the notice. In this case, though in the original notice, the amount was confined for a paltry amount of ₹ 2,00,000/-, the facts on record indicate that a subsequent notice was issued on 04.05.2009, which made it amply clear that the third respondent was in arrears of ₹ 79,13,281/- to the Commercial Taxes Department towards tax. Despite the same, the petitioner continued to make payment of ₹ 76,57,863/- for the period between 28.05.2009 and 30.07.2009 to the third respondent and further sum of ₹ 60,27,290/- for the period between 28.04.2009 and 22.05.2009 and thereby, denied the legitimate revenue to the Government. The Commercial Taxes Department was not required to issue a fresh notice in Form B-6 as long as there was a further intimation of arrears of tax due from the third respondent to the Commercial Taxes Department. In this case, there was an intimation of arrears by a notice dated 15.04.2009 of the Commercial Taxes Department. It was incumbent on the part of the petitioner to have obtained proper clarification from the Commercial Taxes Department. Instead, the petitioner continued to make payment to the third respondent. There is no merit in the present Writ Petition, as the petitioner has taken a chance to violate Section 26 of the TNGST Act. The petitioner ought to have been cautious while making further payment to the third respondent. The sting under Section 26(4) stared at the petitioner - Petition dismissed. 2022 (3) TMI 1313 Levy of tax - renewal of software licences - whether renewal of the license has the characteristics of sale or not? - demand under Section 39(1) of the Act - levy of interest and penalty as well - HELD THAT:- The software licences are taxable as per Entry 34 of the III Schedule to the Act. The stance of the department that the respondent has effected transfer of right to use the software as paid subscription, hence liable to tax under the provisions of the VAT Act, cannot be countenanced in view of the amendment brought to Section 65(105)(zzzze) with effect from 16.5.2008 which has been considered in the judgment of this Court in SASKEN COMMUNICATION TECHNOLOGIES LTD. VERSUS JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) -3 BANGALORE [ 2011 (4) TMI 566 - KARNATAKA HIGH COURT ]. In the case of Bharath Sanchar Nigam Limited and another v. Union of India and others, [ 2006 (3) TMI 1 - SUPREME COURT ], the Hon ble Apex Court has considered the mutual exclusivity reflected in Article 246(1) of the Constitution and has held that sales tax and the service tax are mutually exclusive of each other. The reasoning of the authorities that the original software which was sold was still the property of the respondent and later versions developed or upgraded are also software which is again transacted by allowing access to the customers for a consideration and hence, the transaction is transfer of right to use the upgraded version of the said software by renewal of licence, is wholly misconceived. The renewal of software licences are not routed through the respondent - Once the original software is sold, the same would not continue to be the property of the respondent. The post sale activity relating to renewal of software licence is directly from the foreign vendors to the end customers electronically through e-mail. Thus, the service tax collected on this transaction of renewal of software licence at 10.30% and remitted to the Central Government cannot be construed as transfer of right to use the goods, more particularly, when the goods are not available with the respondent. When the original goods are not available with the respondent, the aspect theory and the divisibility of the contract in furtherance of deemed sale as envisaged under Article 366 (29-A) of the Constitution, is only a myth and is not valid in the eye of law - Sales Tax Revision Petition stands dismissed. 2022 (3) TMI 1312 Validity of reassessment order - actual suppression of turnover - levy of penalty under Section 16(2) of TNGST Act - HELD THAT:- Admittedly, the actual sales suppression was arrived at by the third respondent only after an inspection was conducted in the business premises of the petitioner. The records so collected during such inspection has prompted the third respondent to arrive at actual sales suppression by means of a revised assessment order. Thus, if an inspection is not conducted in the business premises of the petitioner, the sales suppression could not have come to light. In such event, the third respondent is wholly justified in imposing double the sale suppressed amount in the revised assessment proceedings together with 150% of penalty. The appellate authority as well as the Tribunal have also dealt with this aspect and refused to accede to the plea of the petitioner. This Court is of the view that the order, which is impugned in this writ petition, is not required to be interfered with. However, taking note of the fact that the petitioner had already paid the entire disputed tax amount as well as a portion of the penalty amount to the tune of ₹ 13,651/-, this Court is inclined to reduce the balance amount payable by the petitioner towards penalty from 150% to 50% - Petition disposed off.
← Older Newer →

Quick Updates:

What's New:
Latest Case Laws

What's New:
Latest Notifications

What's New:
Latest Circulars

F: Stock damaged in recent floods

F: GST on Solar Plant

A: PENALTY ON DIRECTORS CONTRAVENING EXPORT REGULATIONS UNDER FOREIGN EXC...

A: Difference between “License” and “Royalty”

A: Penalty proceedings under Section 130 of the CGST Act cannot be initia...

N: Inland Container Depots for loading and unloading of goods - Seeks to ...

C: Guidelines to Stock Exchanges, Clearing Corporations and Depositories

T: Supreme Court Upholds Validity of Re-Assessment Notices Issued During ...

F: Transfer of ITC without filing ITC-02

F: assessment order

F: INTERMEDIARY SERVICES OR EXPORT SERVICES

H: Revision: Hospital receipts verified, partial refunds & fees paid subs...

F: ITC Issue in case of Acqusition of Company in Insolvency

H: Goods matched documents like e-way bill and invoices; detention order ...

H: Goods Inspection Matches E-Way Bill, Lack of Tax Evasion Intent Quashe...

H: Income tax reassessment validity: AO initiated proceedings u/s 147 ins...

H: Reassessment Rules Interpretation: Taxpayer Wins Over Accommodation En...

H: Sale-purchase loss disallowed unreasonably by tax officer, commercial ...

H: Building sale value can't determine depreciation; actual consideration...

H: Loan to equity conversion attracts income tax on excess share premium ...

H: Property purchase: Joint owners pay via banking channels before regist...

H: Tax exemption limit for leave encashment: Local authorities' employees...

H: Tax assessments beyond 6-year limit quashed, satisfaction note lacked ...

H: Cash found in lockers linked to temple trust and educational foundatio...

H: Microphone Tech Classification: Functionality Over Technology.

H: Exemption from Social Welfare Surcharge on duty-free imports via scrips.

H: Claim for performance pay not an operational debt under IBC; Multiple ...

A: Director Identification Number

A: No GST is applicable for the services provided by the Director under p...

A: Income Tax Act Revamp (Comprehensive Review): Status and Suggestion on...