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TMI Tax Updates - e-Newsletter
April 1, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
FEMA
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Valuation of goods - service of SCN (to accountant of the firm) - As the entire tax has been determined and the penalty has been levied only on the basis of a survey by taking recourse u/s 130 of the GST Act and not taking a recourse to Section 74, the order impugned is clearly unsustainable. - HC
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Detention of goods alongwith vehicle - without E-Way bill - invoice value less that monetary limit - as the petitioner is ready and willing to pay the liability in terms of Section 129(1)(a) of the Act, instead of remanding, it is deemed appropriate to direct the respondents to release the goods to the petitioners if the petitioners offer to pay two hundred percent of the tax payable on the goods valuing the same on the basis of the valuation as shown in the invoice - HC
Income Tax
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Delay in filling ROI - application for condonation of delay u/s 119(2)(b) - the PCIT ought to have taken a lenient view considering the difficulties, which the persons were facing during the period of Covid-19 pandemic and general lock-down imposed during the said period. - Matter restored back - HC
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Reopening of assessment u/s 147 - Validity of order u/s 148A - all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. - HC
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Rectification of mistake u/s 154 - the explanation of payments on Holidays appears highly doubtful but however such inference cannot be taken in the realm of obvious mistake. Section 154 has no application to gauge the purported mala fides in explanation offered by the Assessee behind such transaction. - AT
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Requirement of TDS - Levy of late filing fee on account of delay in filing of TDS statements u/s. 234E - it is unclear to us as to how the assessee is under an obligation to file TDS return in respect of taxes deducted at source by the Government of Gujarat, specially when the remuneration to the public prosecutors have been given directly by the Gujarat State in their bank accounts - matter restored back - AT
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Fixed Place PE - Taxability of offshore supply of goods - Attribution of profits - once the basis of determination of total income itself is illegal due to violation of provisions of section 144C(10) and 144C(13) of the Act, the ultimate determination of total income in the final assessment order also becomes bad in law. - AT
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Reopening of assessment u/s 147 - addition u/s 68 - As the failure on the part of the A.O to facilitate a cross-examination of the aforementioned persons, and also make available complete copies of their statements would have undeniably made it impractical for the assessee company to defend its case and rebut the adverse inferences which the A.O would have drawn by pressing into service the statements of the aforementioned persons, therefore, in our considered view the matter in all fairness would require to be revisited by the A.O. - AT
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Allowability of interest expenses under “Income from Other Sources” - interest paid to SBI loan - assessee has not shown any income from the said property - In the absence of evidence from the assessee, the disallowance made by the AO does not require any interference. - AT
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Exclusion of insurance charges from the export turnover for computing 10AA deduction - The assessee has not charged its customers separately in respect of the insurance charges nor has the assessee included the same in the export turnover nor recovered it from its customers. Export turnover of the assessee does not include the aforesaid expenses. Such being the case, the question of reducing the aforesaid expenditure from the export turnover does not arise. - AT
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Jurisdiction of Single Member Bench of the Income Tax Appellate Tribunal - Monetary limit Rs.50 lakhs for hearing Appeal - In the present case, the assessee returned loss of (-) Rs.1,05 crores. AO made addition of Rs.1,06 crores and finally he determined the income of (+) Rs. 40 thousands - Only assessed income has to be looked into as stipulated in sub-section (3) of section 255 of the Act - AT
Customs
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Classification of imported goods - LCD panels - LCDs are not articles provided “more specifically in other headings”, i.e., other than 90.13. Furthermore, the fact that LCDs could be used for purposes other than television sets or audio sets is also concluded because, in that decision, its use in meters was in issue. - SC
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Jurisdiction - power of DGFT to amend the Import Policy Condition - competent authority - Once the Central Government invoked the powers in the Act and issued Gazette Notification, the said Notification amounting to merit of policy of the Government cannot be challenged simply on the ground that the said Notification was signed by the Director General of Foreign Act. - HC
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EPCG Scheme - non-fulfilment of export obligation - The findings of the competent authority reveals that in order to relax the conditions, EPCG license number, date of the license and the name of the EPCG license holder should be endorsed in the shipping bills. However, the authority found that the petitioner repeatedly failed to file the copies of the shipping bills relating to the 3rd party exports made by them - Petition dismissed - HC
FEMA
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Search operation under Section 37 of FEMA - The petitioner instead of furnishing documents and statements have chosen to file the present writ petition. The original files reveals that the authorities have formed an opinion that there is a reason to believe, which is the condition stipulated in the Act and on satisfaction, they conducted a search and thereafter issued summons to the petitioner to respond and submit his explanations and documents. - the search and seizure conducted cannot be held as illegal or ultravires to the provisions of FEMA, 1999 and Income Tax Act and CPC. - HC
IBC
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Initiation of CIRP - Priority of consideration and admission of application - Keeping in view that the Order of Admission, has not yet been passed by the Adjudicating Authority, and also that no prejudice would be caused to the Appellant herein, as they can file their Claim, with the Resolution Professional, and also having regard to the fact that they were given Liberty, in accordance with Law by the Adjudicating Authority, this Tribunal, is not inclined to set the clock back on this ground. - AT
SEBI
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Allegation on Karvy Stock Broking committed fraud with respect to thousands of investors - not only the grievance of the petitioners but the grievance of similarly situated investors has also been considered by the appropriate authority as per the procedure prescribed by law. The manner in which grievances have been considered of course, would not be relevant at this stage as the investors and the petitioners would have appropriate remedy to test the validity of those decisions. - HC
Case Laws:
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GST
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2023 (3) TMI 1360
Condonation of delay in filing petition - present petition under Article 226 of the Constitution of India has been filed after a delay of more than 2 years - detention of goods alongwith vehicle - vehicle number not mentioned on E-way bill - HELD THAT:- The appellate authority after considering the order passed by the adjudicating authority had noted that the appellant did not file any document/evidence to show that on e-bill vehicle number was mentioned. Once the papers were not in accordance with the provisions of Act, 2017 and rules made thereunder, the adjudicating authority has proceeded to assess the tax and imposed penalty. The appellate authority did not find any error on law or facts. Sri H.N. Tiwari, learned counsel appearing for the petitioner submits that because of spread of COVID-19 the petitioner did not appear before the appellate authority. However, there is no explanation coming in the present petition regarding delay of more than two years. The only ground, which has been taken in the present petition, regarding delay and laches is the petitioner did not get copy of the impugned order - However, this ground falls on the ground by perusing the impugned order. After the impugned order was passed, a copy of order was sent to the Additional Commissioner- Grade 1, Assistant Commissioner and the petitioner. Moreover, it was the duty of the petitioner to find out what happened in the appeal which had been instituted by him. This petition is liable to the dismissed on the ground of delay itself - Petition dismissed.
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2023 (3) TMI 1359
Maintainability of petition - availability of statutory remedy of appeal - non-constitution of Tribunal - recovery of transitional credit - deduction of tax under Section 41 of the BVAT Act and carried forward under the VAT return - transitional to GST regime - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act. Under the circumstances, the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112 - The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. This Court in the case of Angel Engicon Private Limited vs. the State of Bihar Anr. [ 2023 (3) TMI 879 - PATNA HIGH COURT ] has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner, holding that the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. There is an additional fact in the instant case, as asserted by the petitioner, that in terms of the liberty granted under earlier order dated 09.12.2022, in these proceedings, he has already deposited 20 percent of the remaining amount of tax in dispute. Subject to verification of the fact of deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, or deposit of the same, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act, for he cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. The instant writ petition disposed off subject to conditions imposed.
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2023 (3) TMI 1358
Search and seizure - Valuation of goods - service of SCN (to accountant of the firm) - goods quantified only on the basis of the eye estimation - power of taking recourse to Section 73 or Section 74 of the Act, while proceeding to pass an order under Section 130 of the GST Act - Whether tax can be assessed/ determined in exercise of powers under Section 130 of the GST Act? - HELD THAT:- In the light of what has been decided by this Court in the case of M/s Metenere Limited [ 2020 (12) TMI 790 - ALLAHABAD HIGH COURT ], it is clear that the entire exercise resorted to under Section 130 of the GST Act for assessment/ determination of the tax and the penalty is neither stipulated under the Act, nor can be done in the manner in which it has been done, more so, in view of the fact that the department itself had undertaken the exercise of quantifying the tax due, by taking recourse under Section 74 - As the entire tax has been determined and the penalty has been levied only on the basis of a survey by taking recourse under Section 130 of the GST Act and not taking a recourse to Section 74, the order impugned is clearly unsustainable. Whether penalty can be levied only on the allegations that at the time of verification of goods, the goods in excess were found at the premises? - HELD THAT:- On a plain reading, the scope of Clause (ii) of sub-section (1) of Section 130 is that any assessee who is liable to pay tax and does not account for such goods, after the time of supply is occasioned, would be liable to penalty under Clause (ii). Analyzing Clause (iv) of sub-section (1) of Section 130, the contravention of any provision of the Act or the Rules should be in conjunction with an intent to evade payment tax and penalty can be levied by invoking Clause (iv) only when the department establishes that there were a contravention of the Act and Rules coupled with the intent to make payment of tax . There is no such allegation in the show cause notice or any of the orders, I have no hesitation in holding that even the Clause (iv) of sub-section (1) of Section 130 would not be attracted in the present case. Whether the service of notice as claimed by the respondent satisfies the requirement contemplated under Section 169 of the GST Act? - HELD THAT:- In terms of Clause (a) of Section 169(1), a service would be completed only when it is tendered to the taxable person or on his Manager or authorized representative. - Serving on the Accountant of the firm is neither contemplated nor provided for under Section 169(1)(a) and thus, the service as claimed by the Counsel for the respondent on the Accountant cannot be held to be a valid service, thus, on that count also, the entire proceedings are liable to be quashed. Whether the valuation of goods can be done on the basis of eye estimation alone and on the basis of production capacity and/ or the consumption of electricity etc? - HELD THAT:- In the present case, the valuation of the goods is required to be done in terms of the mandate of Section 15(1) read with Section 15(2) and read with Section 15(3). In the said Section 15 or the Rules framed thereunder, there is no prescriptions for valuation of the goods on the basis of eye estimation as has been done by the department and has been repelled by the appellate authority. The appellate authority has erred in repelling the valuation done on the basis of eye estimation, however, has proceeded to value the goods (although differently) at the appellate stage without resorting to the mandate and manner prescribed in Section 15 read with the Rules, thus, on that count also, the impugned order is not sustainable. The impugned order dated 29.01.2019 is set aside and the writ petition is allowed.
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2023 (3) TMI 1357
Detention of goods alongwith vehicle - detention mainly on the ground that the goods were without E-Way bill - petitioner argues that the order imposing the penalty that too on valuation without jurisdiction is wholly bad in law. HELD THAT:- Section 7 of the Act provides for levy and collection of tax and Chapter IV provides for determination of value of supply. Section 15 of the Act provides for value of taxable supply, Section 15(4) makes it clear that if the value of the supply of goods or services or both cannot be determined under Section (1), the same shall be determined in such manner as may be prescribed - the value of the goods in transit is to be determined in accordance with the provisions of Section 15 declared in an invoice or a bill of supply or a delivery challan in respect of the consignment. Even Section 15 Sub-Section 1 of the Act prescribes that the value of the supply of goods or services shall be the transaction value which should include the amounts as clarified under Section 15(2) and the benefits as contained in Section 15(3). Recourse to Section 15 Sub-Section 4 can be taken only when the value of the supply of goods cannot be determined under Sub-Section 1. In the present case, the value of the supply of goods is clear from the transaction value as indicated in the tax invoice which is on record and there being nothing on record to demonstrate that the said tax invoice was not acceptable to the respondents for any reason, as such, there are no hesitation in holding that in view of Explanation 2, Rule 138 read with Section 15(1), the transaction value is the value which is indicated in the invoice. Considering the fact that the petitioner has to be treated as the owner of the goods in view of the law laid down in the case of M/S MARGO BRUSH INDIA AND OTHERS VERSUS STATE OF U.P. AND ANOTHER [ 2023 (1) TMI 1237 - ALLAHABAD HIGH COURT] , there are no hesitation in holding that the orders impugned insofar as it imposes the burden on the petitioner to get the goods released in terms of Section 129(1)(b) of the Act is bad in law. The matter is liable to be remanded to the Assessing Authority to pass fresh orders treating the petitioner to be the owner of the goods in terms of the mandate of Section 129(1)(a) of the Act treating the valuation of the goods as specified in the invoice, however, as the petitioner is ready and willing to pay the liability in terms of Section 129(1)(a) of the Act, instead of remanding, it is deemed appropriate to direct the respondents to release the goods to the petitioners if the petitioners offer to pay two hundred percent of the tax payable on the goods valuing the same on the basis of the valuation as shown in the invoice - petition allowed by way of remand.
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Income Tax
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2023 (3) TMI 1356
Delay in filling ROI - application u/s 119(2)(b) - requesting condonation of delay and permission to file the return of income for the assessment year 2020-21 (financial year 2019-20) has been rejected - said application has been rejected by the impugned order mainly on the ground that the petitioner failed to substantiate before the Principal Chief Commissioner, Income Tax, that it was facing genuine hardship because of which the return could not be filed on time. HELD THAT:- In the present case, Principal Chief Commissioner of Income Tax Department was vested with the power of acceptance/rejection of an application for condonation of delay and accordingly the impugned order has been passed by the Principal Chief Commissioner, Income Tax. We find force in submission made on behalf of the petitioner that the Principal Chief Commissioner ought to have taken a lenient view considering the difficulties, which the persons were facing during the period of Covid-19 pandemic and general lock-down imposed during the said period. As Submitted that this Court, exercising power of judicial review under Article 226 of the Constitution of India, cannot substitute its own opinion in place of the opinion of the Principal Chief Commissioner, to the extent the same relates to rejection of the petitioner's prayer for condonation of delay in exercise of power under Section 119(2)(b) of the Act. We remand the matter back to the Principal Chief Commissioner of Income Tax (Bihar and Jharkhand), after setting aside the impugned order dated 31.05.2022, with a direction to him to reconsider the petitioner's case for condonation of delay under Section 119(2)(a) of the Act. It is expected that the Principal Chief Commissioner of Income Tax shall keep in mind the ratio laid down by the Supreme Court in the case of B.M. Malani [ 2008 (10) TMI 2 - SUPREME COURT] and the concern shown by the Division Bench of Uttarakhand High Court in the case of Dehradun Chartered Accountants Society vs. Union of India [ 2021 (1) TMI 689 - UTTARAKHAND HIGH COURT]
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2023 (3) TMI 1355
Reopening of assessment u/s 147 - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT:- As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time. In Keenara Industries Pvt. Ltd. [ 2023 (3) TMI 104 - GUJARAT HIGH COURT] this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions. The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into in respect of the above petitions. All other questions on facts involved in the reasons weighed with Assessing Officer seeking to reopen the assessment are kept open in all cases.
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2023 (3) TMI 1354
Validity of re-opening post insolvency proceedings - demand of income tax after the Approval of Resolution Plan - approval of the resolution by the NCLT - HELD THAT:- As respondent income tax authority is not in a position to deny the aforesaid factual and legal position. See EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] , THE SIRPUR PAPER MILLS LIMITED ANOTHER [ 2022 (1) TMI 977 - TELANGANA, HIGH COURT] , MURLI INDUSTRIES LIMITED., [ 2021 (12) TMI 1182 - BOMBAY HIGH COURT] Thus the impugned notice under Section 148A(b) of the Income Tax Act dated 1st June, 2022 and all subsequent proceedings are without jurisdiction and are not tenable in the eye of law and as a consequence of this declaration, all legal consequences will automatically follow.
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2023 (3) TMI 1353
Agricultural income - assessee produced agricultural income certificate from the Village Revenue Officer (VRO) in support of his claim before the AO - CIT(A) restricted the agricultural income for the agricultural land to the extent of Ac.23.91 cnts, taking into account the proposition that any agricultural land with commercial / cash crop will fetch net income of Rs.20,000/- per acre - AR contended that the AO without verifying the records and without bringing any contrary facts on record, rejected the agricultural income of the assessee - HELD THAT:- CIT(A) viewed that it is an accepted proposition that any agricultural land with commercial / cash crop would fetch net income of Rs.20,000/- per acre. The agricultural land of the assessee, being Ac.23.91 cnts, the CIT(A) viewed that it is reasonable to earn Rs.4,78,200/- (i.e. Rs.20,000/- x Ac.23.91 cnts) as the ownership was not in doubt. CIT(A) therefore, directed the AO to restrict the addition to Rs.4,78,200/- and disallow Rs.71,800/-. We find, that the Ld.CIT(A) has rightly estimated the agricultural income of the assessee basing on the valid proposition. Hence, we do not find any infirmity in the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. Unexplained cash deposits - HELD THAT:- Since the assessee has no regular source of income and could not explain the sources of cash deposits, the assessee treated the amount of Rs.1,98,000/- as unexplained income and brought to tax - HELD THAT:- After verifying the return of income filed by the assessee admitting income from auto consultancy and agriculture and bank account statements, CIT(A) has rightly considered the cash deposits of Rs.15,000/- as explained, as in the earlier years, the agricultural income earned by the assessee is reasonable and treated the cash deposits to the extent of Rs.1,33,000/- as unexplained. Since, the assessee could not furnish any corroborative evidence either during the appellate proceedings or before the Tribunal except the confirmation letter for the gift received, we are inclined to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. Investment towards insurance premium - assessee contended that insurance premium was made out of gross earnings received through agriculture and auto consultancy - HELD THAT:- AO has made an addition of cash deposit of Rs.90,000/- and the payment made to Insurance Company as unexplained. The bank statement shows that cash deposits were made on 12th and 13th and made cheque payment of Rs.90,000/- to the Insurance Company for insurance premium. Then only one addition should be made. Hence, the insurance premium amount of Rs.90,000/- cannot be sustained. Therefore, the AO is directed to delete the said amount of Rs.90,000/-. Hence, we set aside the order of the Ld.CIT(A) and allow the appeal of the assessee on this ground.
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2023 (3) TMI 1352
Rectification of mistake u/s 154 - disallowance u/s 40A(3)which was in turn endorsed by the CIT(A) in the first appeal and decided against the assessee - assessee contended that the cash payments were made on Holiday/Sunday and is thus covered by extant clause (J) of Rule 8DD of the Income Tax Rules as well as by considerations of business expediency - assessee further contends that provisions of Section 154 confer a very narrow and limited power to rectify any mistake which is apparent from record - HELD THAT:- We agree. The Rule 6DD(J) at the relevant time provided for inapplicability of Sect ion 40A(3) where the payments were made in cash on bank Holidays. The Assessing Officer has questioned the intention of cash payments shown on Sunday of every month and thus rejected the explanation. While, the explanation of payments on Holidays appears highly doubtful but however such inference cannot be taken in the realm of obvious mistake. Sect ion 154 has no application to gauge the purported mala fides in explanation offered by the Assessee behind such transaction. The narrow jurisdiction of Section 154 is thus not available to the Assessing Officer to rectify such so called mistake. We thus set aside the order of the CIT(A) and cancel the rectification carried out on this point.Appeal of the assessee is allowed.
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2023 (3) TMI 1351
Levy of late filing fee on account of delay in filing of TDS statements u/s. 234E - contention of the assessee before the ld. CIT(A) was that the assessee is a Government Authority working under the Department of Law, State of Gujarat - HELD THAT:- As from the language of section 200A of the Act, it is clear that responsibility of preparing statement of TDS is on the person who has deducted any sum u/s. 200 of the Act. However, in the instant facts, it is unclear to us as to how the assessee is under an obligation to file TDS return in respect of taxes deducted at source by the Government of Gujarat, specially when the remuneration to the public prosecutors have been given directly by the Gujarat State in their bank accounts. CIT(A) while upholding the levy of fee u/s. 200A of the Act did not enquire into the aspect whether the assessee was under a legal obligation to file TDS return in respect of TDS so deducted (and subsequently deposited by the Government of Gujarat to the Central Government) and paid directly to the bank account of public prosecutors. We are hereby restoring the file back to the ld. CIT(A) to analyze under what capacity the assessee is filing TDS returns and whether the assessee in the first instance, is under an obligation, to file statement of tax deducted at source u/s. 200A - Appeals of the assessee are allowed for statistical purposes.
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2023 (3) TMI 1350
Deduction u/s 80IB - disallowance of interest income derived from assessee s business advances and derived on fixed deposits placed by the assessee for availing credit facility, performance guarantees, bank guarantees, bid bonds etc. exclusively for the purpose of business in computing eligible profit and gains - HELD THAT:- Interest income related to FD interest, interest from customer s receipts and interest income from business advances, the said issue has been allowed by the Tribunal in A.Ys. 2008-09, 2009-10 2010-11. The facts are identical in the present assessment year as well. DR could not point out any distinguishing facts and the decisions relied upon by the Ld. DR are on different facts altogether. As regards scrap sale income and currency swap income, the same is also identical as referred by the assessee to various decisions before us and no distinguishing facts were pointed out by the Ld. DR. Hence, ground no.1 to 3 of assessee s appeal is allowed. Disallowance u/s 14A - HELD THAT:- It is pertinent to note that disallowance under Section 14A of the Act, the Assessing Officer has given satisfaction but the fact remains that own funds are more than investments and the same was utilised while making investments. From the perusal of records it appears that the alternate argument of the assessee that only those investments which are yielded from sales income during the year should be allowed as per the decision of Delhi Tribunal in case Vireet ( 2017 (6) TMI 1124 - ITAT DELHI] appears to be correct. Therefore, alternate argument of the assessee is allowed and ground no.4 is partly allowed. Disallowance of depreciation on right to use lease hold land - HELD THAT:- It is pertinent to note that the recognition of the right to use lease hold land as intangible asset as per the statement of account and the same was not disputed by the Department at any stage. Thus, the claim of depreciation was correctly made and the same should have been taken into account by the Assessing Officer as well as CIT(A). Thus, ground no.5 and ground no.5.1 are allowed. Amortisation expenditure claimed in relation to leasehold land - HELD THAT:- It is pertinent to note that the amortisation expenses are not available to the assessee as it was part of lease rent payment and, therefore, the plea of the assessee that eligible profit for computation of deduction under Section 80IAB should increase is acceptable. Hence, ground nos.6 and ground no.6.1 are allowed. Addition in respect of retention money from customers - HELD THAT:- It is pertinent to note that, retention money from customers if added, the eligible profit for computation of deduction under Section 80IAB should increase, this contention is on the legal principle and it appears to be correct statement. Thus, Ground no.7 is allowed. Deduction in respect donation u/s 80G - CIT(A) has observed that the said donations were related to the business income and hence rightly claimed deduction under Section 80IAB - CIT(A) has given detailed finding and there is no need to interfere with the same. Hence, ground no.7 of the Revenue s appeal is dismissed.
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2023 (3) TMI 1349
Fixed Place PE - Taxability of offshore supply of goods - Attribution of profits - AO was of the view that the presence of the assessee in India for the purpose of securing the contract and the presence of its employees and equipment indicates a Permanent Establishment (PE) in India - whether DCIT erred in holding that the assessee has a fixed place PE in India and is not following the directions passed by the DRP, wherein the DRP held that the appellant does not have a fixed place PE in India? - HELD THAT:- In the instant case, the reasoning for making the addition in the final assessment order by the ld. AO is by treating the assessee as a Fixed Place PE, which has already been nullified by the ld. DRP. AO in the final assessment order is bound to complete the assessment in conformity with the directions of the ld. DRP as per the provisions of section 144C(13) of the Act. In the instant case, AO had not framed the final assessment order in complete conformity with the directions of the ld. DRP, thereby violating the provisions of section 144C(13) - only the determination of total income as directed by the ld. DRP had been complied with by the ld. AO in the final assessment order. This is a case of ld. AO completing the assessment by determining the total income as directed by the ld. DRP , but did not follow the basis and reasoning of determination of income as directed by the ld. DRP. Hence we are in agreement with the ld. AR that once the basis of determination of total income itself is illegal due to violation of provisions of section 144C(10) and 144C(13) of the Act, the ultimate determination of total income in the final assessment order also becomes bad in law. Moreover, the ld. AO had not even bothered to rectify his order u/s 154 of the Act by conforming to the directions of ld. DRP which forms the basis of determination of total income. We have no hesitation to hold that the final assessment order passed by the ld. AO , which is in appeal before us, is bad in law and accordingly the final assessment order framed is hereby quashed. Appeal of the assessee is allowed.
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2023 (3) TMI 1348
Reopening of assessment u/s 147 - addition u/s 68 - absence of cross-examination of a person on the basis of whose statement proceedings had been launched in the hands of the assessee - HELD THAT:- A.O had grossly erred in law and facts of the case, both in withholding the copies of the complete statements of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal; and also by refusing to allow their cross-examination to the assessee despite its persistent requests for the same. Although the Ld. AR by drawing support from the aforesaid judicial pronouncements had tried to impress upon us that the failure on the part of the A.O to facilitate cross-examination of the aforementioned persons; and also making available complete copies of their statements would be fatal to the validity of the assessment in hand, but we are unable to persuade ourselves to subscribe to his aforesaid contention. Admittedly, as observed failure on the part of the A.O to make available complete copies of the statements a/w. facilitating a cross-examination of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal is a serious flaw and is in fact a flagrant violation of basic tenements of the principles of natural justice, but the same in our considered view would not on such standalone basis render the assessment framed by the A.O as nullity. As the failure on the part of the A.O to facilitate a cross-examination of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal; and also make available complete copies of their statements would have undeniably made it impractical for the assessee company to defend its case and rebut the adverse inferences which the A.O would have drawn by pressing into service the statements of the aforementioned persons, therefore, in our considered view the matter in all fairness would require to be revisited by the A.O. We, thus, in all fairness by adopting a balanced approach restore the matter to the file of the A.O for re-adjudication after making available complete copies of the statements of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal and facilitating their cross-examination to the assessee company. Matter restored the matter for fresh adjudication to the file of the A.O in terms of our aforesaid observations, therefore, we refrain from dealing with the other contentions advanced by the ld. A.R before us, both as regards the validity of the jurisdiction that was assumed by the A.O for initiating proceedings u/s.147 of the Act; as well as those qua the merits of the case, which the assessee would be at a liberty to raise before the lower authorities in the course of de-novo proceedings. Appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.
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2023 (3) TMI 1347
Unexplained payment - Rejection of books of accounts - CIT (Appeals) as well as the Assessing Authority fails to cross-examine the deponent of the affidavits submitted before the CIT(A) - HELD THAT:- When the assessee stated on oath by way of an affidavit, the Assessing Authority ought to have cross-examined and also made further inquiry with regard to the correctness of the contents of such affidavit. When the Assessing Authority failed to avail this opportunity, Ld.CIT(A) ought to have deleted the entire additions. We therefore, allow Ground raised by the assessee and direct the AO to delete the remaining impugned addition. Appeal filed by the assessee is allowed.
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2023 (3) TMI 1346
Revision u/s 263 by CIT - Cash deposited in bank account unexplained - As per CIT assessee failed to provide explanation in respect of sources of funds introduced as capital and creditworthiness of the lender - HELD THAT:- AO specifically called for the details in the specified format as per the CBDT Circular to examine the cash deposits made by the assessee and the assessee had given a detailed reply explaining the circumstances and the sources for cash deposits by producing details of purchases, sales, cash book, stock registers, VAT return etc., and the increase in demand of gold during that period being wedding season when compare to the corresponding previous year. All these details and explanation were also produced before the Ld. Pr.CIT, however, the Ld. Pr.CIT in her order observed that even during the revision proceedings assessee has failed to provide the documentary evidences to prove its contention which is entirely contrary to record. The Ld. Pr.CIT had made no efforts to examine the evidences and replies furnished by the assessee explaining the anomalies pointed out by the Ld. Pr.CIT. Thus we set aside the order of the Ld. Pr.CIT passed u/s 263 - Grounds of appeal of the assessee are allowed.
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2023 (3) TMI 1345
Allowability of interest expenses under Income from Other Sources - interest paid to SBI loan - assessee has not shown any income from the said property - assessee was requested to show cause as to why the said interest expenses should not be disallowed u/s. 57 - HELD THAT:- During the appellate proceedings assessee could not demonstrate as to how the professional income was Income from Other Sources and how the loan taken from the bank was utilized exclusively for the purpose of earning said income. Thus the assessee has not proved allowability of interest expenses either u/s. 57 or u/s. 37 of the Act. In the absence of evidence from the assessee, the disallowance made by the AO does not require any interference. Even before us, no materials placed by the assessee, neither written submission nor Paper Book filed before us. The assessee has not given Power of Attorney to any Authorized Representative to appear for the above case. In the absence of same, we have no hesitation in confirming the order passed by the Lower Authorities. Thus the grounds raised by the assessee are devoid of merits and the same is hereby dismissed. Appeal filed by the Assessee is hereby dismissed.
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2023 (3) TMI 1344
Non deduction of TDS - Addition u/s 40(a)(ia) - disallowance of the ocean freight, survey expenses, testing charges and legal charges - HELD THAT:- In the case of Om Sri Nilamadhab Builders (P) Ltd [ 2022 (11) TMI 1337 - ITAT CUTTACK] the coordinate bench of the Tribunal restricted the disallowance to 30% as against 100% - Thus disallowance u/s.40(a)(ia) as made by the AO and as confirmed by the ld. CIT(A) stands restricted to 30%. Appeal of the assessee is partly allowed.
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2023 (3) TMI 1343
Allowability of expenditure related to the project or running of the company - business of the assessee was not set up, therefore, the expenses debited in P L account were not eligible for allowing as revenue expenditure u/s. 37(1) - whether the business of the assessee of Developing Real Estate Park was set up in the year under consideration/in prior year or not? - HELD THAT:- As the issue in dispute of set up of the business is emanating from the earlier assessment years 2012-13 and 2013- 14 which has already been allowed in favour of the assessee by the Tribunal [ 2018 (12) TMI 1566 - ITAT DELHI] therefore, respectfully following the findings of the Tribunal the finding of the Learned CIT(A) of the issue in dispute is upheld. The grounds raised by the revenue are accordingly dismissed.
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2023 (3) TMI 1342
Expenditure under the head expenses on Social Rural Development Programme - Allowable revenue expenditure or not? - whether fulfill the condition of Section 37(1)? - HELD THAT:- As no distinguishable facts or features are neither available on record nor brought to our knowledge by the Revenue Department, to contradict the findings of the authorities who have passed the orders in favour of the Assessee by holding the said expenditure as revenue in nature. Hence we are inclined not to interfere in the order passed by the learned Commissioner, as the same does not suffer from any perversity or impropriety or illegality. Appeal filed by the revenue department stands dismissed.
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2023 (3) TMI 1341
Allowability of Provision for discount - whether allowable as expense in the current year? - as contended that said provision for discount was in respect of crystallised liability and the same is to be allowed as deduction since the assessee was consistently following mercantile system of accounting - HELD THAT:- Tribunal for AY 2009-10 had accepted the claim of the assessee for provision for discount as an allowable expenditure Further the Department has filed appeal against the said order of the Tribunal for AY 2009-10 before the Hon'ble High Court of Karnataka [ 2017 (8) TMI 1699 - KARNATAKA HIGH COURT] wherein the issue relating to provision for discount was not assailed. In the light of the orders of the Tribunal in assessee s own case for AY 2004-05 and AY 2009-10 which is identical to the facts of the instant case, we reject the grounds of appeal raised by the Revenue. Exclusion of insurance charges from the export turnover for computing 10AA deduction - CIT(A) directed the AO to exclude from export turnover as well as from the total turnover, the insurance charges while computing deduction under Section 10AA - HELD THAT:- The insurance charges incurred by the assessee are not attributable to delivery/export of computer software outside India. AO and CIT(A) have failed to appreciate that the assessee is engaged in export of computer software which are developed by the assessee in India. The said software is exported through electronic media, i.e. internet/ digital media with click of a button and same are not physically exported to get it insured. Thus the question of insuring the software exported by assessee does not arise. Such being the case it cannot be said that insurance charges are included in export turnover. The assessee has not charged its customers separately in respect of the insurance charges nor has the assessee included the same in the export turnover nor recovered it from its customers. Export turnover of the assessee does not include the aforesaid expenses. Such being the case, the question of reducing the aforesaid expenditure from the export turnover does not arise. As decided in Tata Elxsi vs. ACIT [ 2015 (3) TMI 1220 - ITAT BANGALORE] if the expenditure incurred on telecommunication charges and insurance charges were not recovered and not included in the export turnover, the Assessing Officer shall not reduce the same from the export turnover We are of the view that there is no necessity to exclude from the export turnover the insurance charges. Therefore, we direct the AO to recompute the deduction under Section 10AA of the Act, keeping in view our aforesaid direction. Appeal filed by the Revenue dismissed.
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2023 (3) TMI 1340
Jurisdiction of Single Member Bench of the Income Tax Appellate Tribunal - Monetary limit Rs.50 lakhs for hearing Appeal - appeals where total income determined by AO does not exceed Rs.50 lakhs - question for determination here is as to what is the impression left on the mind by the use of the clause total income as computed by the AO - HELD THAT:- It may be noted here that the criterion adopted for determining the jurisdiction of Single Member Bench is not the quantum of addition but the quantum of assessed addition. In the present case, the assessee returned loss of (-)Rs.1,05,73,207/-. AO made addition of Rs.1,06,13,329/- (disallowance of interest at Rs.99,02,829/- and disallowance of expenses at Rs.7,10,500/-) and finally he determined the income of (+) Rs.40,120/-. Thus, assessed income in this case is only Rs.40,120/- and as such jurisdiction in this case will definitely be of SMC. It is therefore, have to look into only assessed income as stipulated in sub-section (3) of section 255 of the Act, therefore, the argument of ld. D.R. in this case is devoid of merit. Accordingly, this primary objection of ld. D.R. is dismissed. For this purpose, order of this coordinate bench of Tribunal in the case of Cawnpore Textiles Ltd [ 1990 (6) TMI 88 - ITAT ALLAHABAD-A] wherein the Tribunal has taken a similar view on this issue. Delay of 93 days in filing the appeal - reasonable cause in filing the appeal by delay of 93 days - There is a technical defect in the appeals since the appeals were not filed within the period of limitation. The assessee filed an affidavit stating that the appeals were not filed because of the improper service of notice by the Department. The Revenue has not filed any counter-affidavit to deny the allegation made by the assessee. Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in my opinion, by preferring the substantial justice, the delay of 93 days has to be condoned. Whether delay was excessive or inordinate? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. As seen the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor When there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay in filing the appeals before the CIT(A). In case the delay was not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in my opinion, the delay in filing the appeals before the CIT(A) has to be condoned and the appeals of the assessee have to be admitted and disposed of on merit. Thus we condone the delay in filing the appeal before the CIT(A) and remit the issue to the file of the ld. CIT(A) to decide the issue on the merit of the additions made by the Assessing Officer. Since the assessment order was passed ex parte u/s. 144 of the Act, the CIT(A), if required, may call for the remand report from the Assessing Officer and confront the same to the assessee before deciding the appeal. Disallowance of interest payment - A.R. submitted that the averments of the learned Assessing Officer in the order that the interest paid on loan to acquire shares of the promoters is the pre-acquisition cost and should therefore be added to the cost of shares is incorrect - HELD THAT:- In the present case there is specific provision in the memorandum that the assessee is permitted to acquire controlling interest as mentioned earlier, cl. 21 in the incidental objects clearly permits the assessee not only to acquire but also to hold shares in any other company. This power to hold shares is enough to permit the company to acquire and hold controlling interest in any other company. In my opinion, as such an activity can itself constitute a business when the real intention of the company is not to earn profit but to acquire and exercise control of the group company. When it is said that the shares were acquired to have controlling interest, it does not necessarily mean that the acquiring company should have majority share holding in the other company. Many group concerns may be holding shares in the other company and all their holdings put together will enable the group as a whole to exercise control on the other company. We observe that it is for the assessee to decide as a businessman as to how much number of shares would be sufficient to control its stake and the motive of the company cannot be to earn profit if, it was to acquire controlling interest, which is the commercial expediency. Thus as given a finding that the business of the assessee is to invest in shares and that the borrowing was for the purpose of business, the entire interest has to be allowed under s. 36(l)(iii) of the Act. Ground of appeal of the assessee allowed. Disallowance being the expense incurred on legal and professional charges debited to P L account - HELD THAT:- While adjudicating the earlier ground for making investment in shares is for business activity of the assessee company and it was carried in terms of the object clause mentioned in the Memorandum of Articles of Association and it cannot be considered as acquisition of capital assets. Accordingly, hold that the above expenditure incurred under the head Professional and legal charges to be allowed as expenditure incurred for wholly and exclusively for the purpose of business of the assessee and accordingly, this ground of the assessee is allowed.
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2023 (3) TMI 1339
Expenses by pharma companies - expenditure incurred towards freebies to doctors by the Pharma Agencies as disallowable u/s.37(1) - expenditure made towards selling and marketing as well as travelling and conveyance as held to be in contravention of the Circular No.5/2012 issued by the CBDT - HELD THAT:- After hearing both the parties, we are of the opinion that this issue required to be re-examined by the AO in the light of the earlier order of the Tribunal in the assessee s own case [ 2023 (3) TMI 1299 - ITAT BENGALURU] wherein held A.O. has not critically examined the nature of expenditure incurred by the assessee. In the larger interest of justice, in view of the latest judgment of the Hon ble Apex Court, which has examined the very same issue, it becomes necessary to examine the exact nature of expenses incurred by the assessee for Doctors from all angles. Therefore, for substantial question and cause, the additional evidence are taken on record. Since the additional evidence is taken on record, necessarily, the matter needs fresh verification by the A.O. especially in the light of the recent judgment of the Hon ble Supreme Court in the case of M/s.Apex Laboratories Pvt. Ltd. v. DCIT [ 2022 (2) TMI 1114 - SUPREME COURT] Deduction u/s 80G - donation made to TATA Memorial Hospital while determining the taxable income - HELD THAT:- We are of the opinion that the AO has to examine the receipt issued by Tata Memorial Hospital and if that assessee duly approved u/s 80 G of the Act, the exemption u/s 80G of the Act is to be granted to the assessee. TP Adjustment - comparable selection - HELD THAT:- ITDC Limited - In our opinion, it is appropriate to remit the issue to the file of AO/TPO to consider the order of the Tribunal in the case of Funda R D India Pvt. Ltd. [ 2022 (1) TMI 1045 - ITAT DELHI] we find it difficult to accept the observation of Ld. DRP that because it is a Govt. company, it is not a good comparable. For such years also the ITDC was a Government owned company and no change of facts and circumstances is brought to our notice. We, accordingly hold it to be a good comparable and direct the ld TPO/ AO to include it in the final list of comparable to bench mark the international transactions. Concept Public Relations has been included by the TPO, however, it has been excluded by the Ld. DRP without giving any notice to the assessee, which is incorrect. Accordingly, we vacate this findings of the Ld. DRP. Exclusion of BVG India Ltd. as it won t satisfy the filter adopted by the TPO - The contention of the ld AR is that it has been excluded in assessment year 2012-13 on same principle by ld DRP and it has to be excluded in this assessment year also. In our opinion, in this assessment, the FAR analysis is to be done and it has to be seen if the FAR analysis is to be done in assessment year if it is same in assessment year 2012-13, it should be excluded from the list of comparables. Accordingly, the issue is remitted to the file of AO/TPO for our consideration. Determining the operating margin of the comparable company 'I C R A Management Consulting Services Ltd' as 5.10% on operating cost vis-a-vis 4.31% on operating cost as per the Appellant - We remit this issue to the file of AO/TPO to ascertain the correct margin in case of ICRA Management Consulting Services Pvt. Ltd. and decide accordingly. International transaction relating to recovery of expenses is not at arm's length by regarding the same as the administrative support services and thereby making an adjustment - We remit this issue to the file of AO/TPO to examine this issue in the light of above order of the Tribunal.
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2023 (3) TMI 1328
Computation of Deduction u/s 10A - HELD THAT:- The High Court has merely disposed of the matter taking note of the submissions put forth on behalf of the learned counsel for the appellant(s) therein, themselves. Since it is contended that the matter requires consideration, the appropriate course for the petitioners herein, is to file appropriate application before the High Court to seek restoration of the appeal and reconsideration of the same.With the said liberty, the petition stands disposed of.
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2023 (3) TMI 1327
Validity of re-opening post insolvency proceedings - demand of income tax after the Approval of Resolution Plan - approval of the resolution by the NCLT - HELD THAT:- NCTL has approved the resolution plan submitted by the company on 24th February, 2020. Since the resolution plan has already been approved, the instant appeal has become infructuous and, accordingly, stands dismissed.
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Customs
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2023 (3) TMI 1338
Classification of imported goods - LCD panels - classifiable in Chapter Heading 9013.8010 of the First Schedule to the Customs Tariff Act, 1975, as Liquid Crystal Devices or classifiable as 85.29 parts of goods falling under heading 85.28? - HELD THAT:- When goods are excluded from a particular chapter, the pull in through a note has to be narrowly construed, as otherwise, the basis of exclusion would be defeated, and the earlier note (of exclusion) rendered redundant. Finally, Secure Meters [ 2015 (5) TMI 241 - SUPREME COURT ] is decisive on the question that LCDs are not articles provided more specifically in other headings , i.e., other than 90.13. Furthermore, the fact that LCDs could be used for purposes other than television sets or audio sets is also concluded because, in that decision, its use in meters was in issue. The CESTAT s reasoning and conclusions, in both cases, that the LCD sets were under Chapter 90, Entry 9013.8010, is sound and unexceptionable. - appeal dismissed.
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2023 (3) TMI 1337
Jurisdiction - power of DGFT to amend the Import Policy Condition - competent authority - delegation of power - validity of Notification No.17/2015-20 dated 29.07.2016 issued by the Central Government under Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 - import of poppy seeds - HELD THAT:- In the present case, the amendment was made subject to Import Policy Condition No.3 of Chapter 12 of the ITC (HS), 2012 Schedule I (Import Policy). The Gazette Notification Extraordinary unambiguously stipulates that In exercise of powers conferred by Section 3 of Foreign Trade (Development and Regulation) Act, 1992, read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby amends the Import Policy Condition No.3 of Chapter 12 of ITC (HS), 2012 . Thus the amendment was issued by the Central Government in exercise of the powers conferred under Section 3 of the Foreign Trade (Development and Regulations) Act, 1992, the alleged signature of the Director General of Foreign Trade made pursuant to the application of powers under Administrative Law shall not invalidate the Notification, which is otherwise, issued pursuant to Section 3 of the Foreign Trade (Development and Regulations) Act, 1992 - Once the Central Government invoked the powers in the Act and issued Gazette Notification, the said Notification amounting to merit of policy of the Government cannot be challenged simply on the ground that the said Notification was signed by the Director General of Foreign Act. The Directorate General of Foreign Trade (DGFT) was given delegation of powers for signing the Notification in view of the smooth functioning of the Central Government Administration - this Court do not find any infirmity in respect of the amendment issued to the Foreign Trade Policy. Petition dismissed.
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2023 (3) TMI 1336
EPCG Scheme - non-fulfilment of export obligation - petitioner mainly contended that the circular No.7/2002 is applicable to the case of the petitioner and the petitioner has already submitted all the relevant documents and thus, there is no reason, whatsoever, to reject the claim of the petitioner based on the said circular No.7/2002 - HELD THAT:- On consideration of clause (v) of the policy scheme No.7/2002, which reads as this would be subject to the condition that the relevant shipping bills contain both the names of the 3rd party(s) and the license holder . Therefore, the exemption is subject to the condition that the relevant shipping bills containing both the names of the 3rd party and the license holder must be produced. The findings of the authority in the impugned order with reference to condition (v) is that condition (v) of policy circular No.7/2002 dated 11.07.2002 clearly states that, condonation of procedural lapse of not mentioning EPCG license number and date on third party shipping bills relating to the exports for fulfilment of EO under EPCG scheme may be allowed, subject to the condition that the relevant shipping bills contain both the names of the 3rd party(s) and the license holder. The findings are to be read with reference to the conditions imposed in the policy scheme. The conditions imposed in the policy scheme is unambiguous that the relevant shipping bills should contain both the names of the 3rd party and the license holder. The findings of the competent authority reveals that in order to relax the conditions, EPCG license number, date of the license and the name of the EPCG license holder should be endorsed in the shipping bills. However, the authority found that the petitioner repeatedly failed to file the copies of the shipping bills relating to the 3rd party exports made by them - In respect of the opportunity granted, the petitioner could not establish the same through documents and thus, the authorities had no option but to reject the claim of the writ petitioner to grant of exemption. It is not as if the authorities have not considered the case of the writ petitioner, the authorities have gone into the documents filed by the petitioner and admitted to call out an opportunity in order to comply with clause (v) of the police scheme. Since, the requisite particulars are not available in the documents produced by the petitioner, they were not able to consider the case of the petitioner for grant of exemption positively. This being the factum, the case of the petitioner is to be considered only if the shipping bills contain these particulars and are produced before the authorities along with the application and not otherwise. This Court do not find any infirmity in respect of the order passed by the respondents - Petition dismissed.
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Securities / SEBI
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2023 (3) TMI 1335
Utilisation of amount deposited in Sahara- SEBI Refund Account - Directions to transfer an amount out of unutilized amount (lying in Sahara-SEBI Refund Account ) to be disbursed against the legitimate dues of depositors of Sahara Group of Cooperatives Societies - HELD THAT:- Having heard Shri Tushar Mehta, learned Solicitor General appearing on behalf of the Union of India and taking into consideration the facts narrated hereinabove and when it is reported that Rs. 2253 Crores had been taken out of the Sahara Credit Cooperative Society Ltd., i.e., one of the four Sahara Group Multi-State Cooperative Societies and deposited with SEBI in the Sahara-SEBI Refund Account and the amount lying in the Sahara-SEBI Refund Account is lying unutilized and the genuine depositors of the Sahara Group of Cooperative Societies, which otherwise, shall be entitled to get back their money, the prayer sought in the present application seems to be reasonable and which shall be in the larger public interest / interest of the genuine depositors of the Sahara Group of Cooperative Societies.
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2023 (3) TMI 1334
Allegation on Karvy Stock Broking committed fraud with respect to thousands of investors - petitioners, pray that this court in exercise of power under Article 226 of the Constitution of India should constitute appropriate committee of experts to examine the details of the manner in which the innocent investors have been fraudulently cheated - HELD THAT:- As it is seen that with respect to respondent No. 9-Karvy, the respondent No.3-NSE has taken appropriate steps in accordance with the applicable Bye-Laws. The cases of the individual investors including the petitioners have also been taken into consideration and appropriate orders have been passed therein. The facts of the present case are to be seen in the right perspective which has been discussed hereinabove and it would clearly reveal that not only the grievance of the petitioners but the grievance of similarly situated investors has also been considered by the appropriate authority as per the procedure prescribed by law. The manner in which grievances have been considered of course, would not be relevant at this stage as the investors and the petitioners would have appropriate remedy to test the validity of those decisions. Under the facts of the present case, this court is not inclined to accept the prayer for constitution of any individual committee or to monitor the further action to be taken by respondent No.3-NSE. Accordingly, the instant petitions stand dismissed alongwith pending application.
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Insolvency & Bankruptcy
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2023 (3) TMI 1333
Initiation of CIRP - Priority of consideration and admission of application - Effect of Interim Moratorium - It is the main case of the Appellant that the Section 95 Application was filed by them three days prior to the date when the State Bank of India, had filed their Application and therefore their Application, ought to have been admitted first - whether Interim Moratorium, ought to have commenced from the date of filing of the defective Application, as it would amount to violation of natural justice? HELD THAT:- It is seen from the Record that the Adjudicating Authority, has not yet admitted or rejected the Application, filed by the State Bank of India, under Section 95. It is seen from the record that the Section 95 Application has not been admitted against the said Personal Guarantor. Liberty has also been given in accordance with law to the Appellant/Union Bank of India in the Impugned Order dated 07.06.2022 in the event that the Section 95 Application filed by SBI is admitted, the Adjudicating Authority under Section 102 of the Code would issue a Public Notice within 7 days of passing of the Order inviting Claims from all the Creditors. The Appellant in the instant case namely Union Bank of India, can also file their Claim under Section 103 of the Code with the RP. Hence, no prejudice would be caused to the Appellant herein. Further, it is seen from the Impugned Order that though both the Counsels were present, it was not brought to the notice of the Bench that the Application, filed by the Appellant/Union Bank of India, was three days prior to the Application, filed by the SBI. This Tribunal, is of the considered view that indeed, the Date of Filing of the Application, under Section 95 is, what is to be taken into account and not the date when the Application is numbered. There is no appreciable evidence on record to state that the said Application was defective - in the present case, though the Section 95 Application was filed on 31.12.2021 and was assigned a Registration No. and SBI had filed an Application on 03.01.2022, the Registry, had registered the Section 95 Application of SBI, on 12.01.2022 and that of Union Bank of India on 09.02.2022. Though the Appellants Section 95 Application came up for Hearing on 04.03.2022, 01.04.2022, 02.05.2022 and on 07.06.2022, a perusal of the Order copies establishes that the Appellant/Union Bank of India, had never brought to the notice of the Bench that another Application, was also filed by SBI. The case of the Appellant that they had no opportunity, to bring to the notice of the Bench that the Appellant s Section 95 Application was filed in prior point of time i.e., three days prior to the SBI s Application, is untenable. Section 96(1)(a) provides that an interim-moratorium, shall commence on the date of the Application, in relation to all the debts. Section 96(1)(b) of the Code, also specifies that during the Moratorium period (i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and (ii) the Creditors of the Debtor, shall not initiate any legal action or proceedings in respect of any debt - when an Insolvency Resolution Process, commences against the Personal Guarantor, all Creditors of the Personal Guarantor, are taken care of in the proceedings under Chapter-III. The Code does not contemplate multiplicity of Applications, against the same Personal Guarantor. This Tribunal, is of the earnest view that when the Insolvency Resolution Process, commences against a Personal Guarantor, Claims of all Creditors, are taken care of under the scheme of the I B Code, 2016. Keeping in view that the Order of Admission, has not yet been passed by the Adjudicating Authority, and also that no prejudice would be caused to the Appellant herein, as they can file their Claim, with the Resolution Professional, and also having regard to the fact that they were given Liberty, in accordance with Law by the Adjudicating Authority, this Tribunal, is not inclined to set the clock back on this ground. Application dismissed.
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FEMA
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2023 (3) TMI 1332
Search operation under Section 37 of FEMA - writ petitioner mainly contended that, no incriminating materials were seized while conducting the raid in the premises of the petitioner - More than 5 years lapsed, still the respondents have not initiated any action under the FEMA 1999 - HELD THAT:- The original files relating to the initiation of proceedings are placed before this Court. Regarding the delay on the part of the respondents, the learned Additional Solicitor General of India drew the attention of this Court with reference to the letter sent by the learned counsel for the petitioner, who in turn by letter dated 04.12.2017 has stated that they have approached the High Court of Madras by filing a writ petition and therefore no further action to be continued pursuant to the search conducted. Petitioner issued a letter through his counsel not to conduct further enquiry or investigation and on the other hand before this Court the petitioner has stated that the respondents, even after lapse of 5 years, have not initiated any action. Such a dual stand taken is impermissible and therefore the writ petition is to be rejected. The mandatory condition contemplated under the Act regarding reason to believe , the file indicates certain intelligence informations about various investments which has been partly narrated in the counter filed by the respondents. Since the writ petition has been filed at the preliminary stage, certain informations and materials referred in the original files in the interest of petitioner need not be recorded in the order passed in the present writ petition. The counter reveals that there may be more such instances which is to be unearthed and the intelligence informations provided are also to be enquired into further for the purpose of initiation of further action. Investigations are to be conducted and an opportunity was provided to the writ petitioner to produce all those documents with reference to the informations or otherwise. The petitioner instead of furnishing documents and statements have chosen to file the present writ petition. The original files reveals that the authorities have formed an opinion that there is a reason to believe, which is the condition stipulated in the Act and on satisfaction, they conducted a search and thereafter issued summons to the petitioner to respond and submit his explanations and documents. This being the factum established, this Court is of the considered opinion that the search and seizure conducted cannot be held as illegal or ultravires to the provisions of FEMA, 1999 and Income Tax Act and CPC. The petitioner is bound to respond and defend the facts in the manner known to law. There is a prima facie case established with reference to certain transactions and investments in foreign countries and certain details are also available in the file which require a detailed investigation and necessarily the petitioner has to cooperate for further investigation and establish his case with documents and evidences. Accordingly, the petitioner has failed to establish any ground for interference and consequently, the writ petition stands dismissed.
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CST, VAT & Sales Tax
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2023 (3) TMI 1331
Rate of tax - HSD and LDO - fresh assessment under Section 12(8) of the OST Act - such reassessment is vitiated on account of change of opinion or not - disallowing set off of entry tax paid on the goods which were sold to the dealers at concessional rate of tax @ 4% as per Entry 81 of schedule appended to Notification dated 31.03.2001 issued under Section 5(1) of the OST Act - set off of entry tax - whether the petitioner is entitled to set off entry tax paid against tax payable for sale of goods? HELD THAT:- Both the First Appellate Authority and the Second Appellate Authority have come to the conclusion that the petitioner, having dealt with the item(s) mentioned in Entry No.101 and sold said item(s) against declaration in Form IV at concessional rate of tax, is not entitled to get set off of entry tax paid against the amount of tax payable for sale of goods. The Item No.101 deals with the general provision, so far as HSD and LDO are concerned, and for that the dealer is liable to pay tax @ 20%. There is no dispute on that. But here is a case where the petitioner is carrying on business in HSD and LDO, which is used within the State. There is no iota of doubt that the petitioner claims concessional rate of 4% tax on the strength of Form-IV. The transaction which was done by the petitioner with the others, being on the strength of Form-IV, set off was granted to the petitioner. The assessment order issued by the Assessing Officer under Section 12(4) is very clear to that extent, but reassessment made under Section 12(8) and confirmation thereof made by the First Appellate Authority and the Second Appellate Authority cannot be sustained in the eye of law. The reopening of the assessment is based on the investigation report of the tax authorities themselves and is, therefore, founded on nothing but a mere change of opinion. As a consequence thereof, the order passed by the Assessing Authority under Section 12(8) for reassessment has no justification in view of law laid down by the apex Court in Kelvinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT ] followed by Nava Bharat Ferro Alloys v. State of Orissa, [ 2010 (3) TMI 1009 - ORISSA HIGH COURT] . Therefore, the formation of opinion in the reassessment under Section 12(8) of the OST Act cannot have any justification and while forming such opinion, as it appears from the records, no opportunity of hearing to the petitioner was given in compliance of the principles of natural justice. It is also not in dispute that the petitioner-company has paid entry tax on procurement of HSD and LDO into the State of Orissa but has not sold any finished goods rather sold the same goods as procured. On perusal of the assessment order under Section 12(4) of the OST Act, it is made clear that the Assessing Authority has taken note of the fact that HSD and LDO, which have been utilized by different companies by furnishing the Form-IV, the same has been taken note of and assessment thereon has been made by the Assessing Authority - obviously the petitioner is liable to pay tax @ 20% as per Entry-101, ibid. In such eventuality, the petitioner is liable to discharge its liability by availing set off of entry tax paid. The issue of set off being taken into consideration while finalizing assessment under Section 12(4) of the OST Act, on account of change of opinion the reassessment under Section 12(8), ibid. is not legally tenable. HSD is one of the covered goods under Note-1(b) and, thereby, the petitioner is statutorily entitled to claim set off of entry tax against sales tax payable on sale of HSD. As the State Government has not imposed any restriction/limitation on the claim of set off of entry tax on the covered items, the reassessment made by the Assessing Authority under Section 12(8) and confirmation made thereof by the First Appellate Authority and also the Tribunal denying the benefit of set off cannot be sustained in the eye of law. The benefit statutorily permissible, vide notification dated 31.03.2001 issued by the Government, cannot be denied/disallowed without considering such notification in proper perspective. The reassessment order under Section 12(8) of the OST Act dated 27.01.2007 under Annexure-3 passed by the Assessing Officer disallowing the set off of entry tax to the petitioner, which comes under the purview of the notification dated 31.03.2001, cannot be sustained in the eye of law - Revision allowed.
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2023 (3) TMI 1330
Validity of assessment order - scope of rectification or reassessment and the powers under Section 10-B of the Act - non-entitlement to the amounts deposited towards development charges as the same were charged from the buyer - Tribunal specifically recorded that the material which led to the passing of order in the year 2015 were not available with the Assessing Authority when the assessment was done for the first time in the year 2012. HELD THAT:- In view of the law as laid down in the case of M/s. A.K. Corporation [[ 1993 (11) TMI 226 - ALLAHABAD HIGH COURT] ], it is well settled that the assessment after Section 10-B of the Act proceedings has to be confined to the material on record that were available when the first assessment order was passed, any subsequent material cannot be the basis for reassessment in view of the law laid down - The order of the Tribunal is in consonance with the law, as such the revision filed by the State is liable to be dismissed. Revision dismissed.
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Indian Laws
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2023 (3) TMI 1329
Dishonour of Cheque - insufficiency of funds - compounding of offence alleged to have been committed under Section 138 of the Act - whether after upholding the judgment of conviction and order of sentence passed by learned court below, this Court can proceed to compound the offence or not? HELD THAT:- This Court vide judgment passed in GULAB SINGH VERSUS VIDYA SAGAR SHARMA [ 2017 (12) TMI 1837 - HIMACHAL PRADESH HIGH COURT ], while relying upon judgment of Hon'ble Apex Court as well as other Constitutional Courts has already held that court, while exercising power under Section 147 of Act can proceed to compound offence even in those cases, where accused stands convicted. The Hon ble Apex Court in K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ] , also in similar situation ordered for compounding of offence after recording of conviction by the courts below, wherein it has been held that in view of the provisions contained under Section 147 of the Act, read with Section 320 of Cr.P.C, compromise arrived inter se the parties, can be accepted and offence committed under Section 138 of the Act, can be ordered to be compounded - Hon ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], has categorically held that offence punishable under Section 138 of the Negotiable Instruments Act can be compounded after recording of conviction, hence this court while exercising power under Section 482 Cr.PC read with Section 147 of the Act, can proceed to compound the offence alleged to have been committed by the petitioner and set-aside judgment of conviction recorded by the courts below. This Court holds that present application for compounding of offence after dismissal of criminal revision petition vide judgment dated 2.8.2022, is maintainable and as such, parties are permitted to get the matter compounded in the light of the compromise arrived inter se them. Accordingly, judgment of conviction and sentence recorded by the learned trial court is quashed and set-aside and petitioner is acquitted of the charge framed against him - Application disposed off.
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