Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 10, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
GST - States
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04/2023-State Tax (Rate) - dated
14-3-2023
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Mizoram SGST
Amendment in Notification No. 2/2017-State Tax (Rate), dated the 7th July, 2017
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03/2023-State Tax (Rate) - dated
14-3-2023
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Mizoram SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 7th July, 2017
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03/2023-State Tax (Rate) - dated
16-3-2023
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Tripura SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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02/2023-State Tax (Rate) - dated
16-3-2023
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Tripura SGST
Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017
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01/2023-State Tax (Rate) - dated
16-3-2023
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Tripura SGST
Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017
Highlights / Catch Notes
GST
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Levy of Tax and penalty - expired E-way bill - Despite specific direction passed by this court, the respondent no. 3 caused an assessment imposing tax and penalty under the Act and Rules. Even the respondents did not feel it necessary to issue any notice upon the petitioner in terms of the order passed by this court after passing of the judgment, which act is purely non-compliance of the order passed by this court. - The notice and orders are quashed - HC
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Benefit of exemption from GST - The manpower supply by the appellant for housekeeping, cleaning, security, data entry operators etc. to various Government departments, mentioned in their application, is not eligible for exemption - AAAR
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Scope of Advance Ruling application - This application, is not filed by Firm / LLP, but by the Chartered Accountant in his own name. Since the person who has applied, is not the person who proposes to undertake the supply, question of giving an advance ruling in the matter simply does not arise. - AAR
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Scope of supply - one time premium from the lessee - The applicant wishes to allot developed units to prospective buyers on a long term lease basis for a period of 90 years. - The one time premium received by the applicant on allotment of completed commercial units/building is taxable supply in terms of section 7 of the CGST/GGST Act, 2017 - AAR
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Supply or not - subsidized deduction made by the applicant from the employees, who are availing food in the factory - the subsidized deduction made by the applicant from the employees who are availing food in the factory would not be considered as a 'supply; under the provisions of section 7 of the CGST Act, 2017. - No GST - AAR
Income Tax
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Scope of amendment brought to Section 153C introduced vide Finance Act, 2015 w.e.f. 01.06.2015 - any interpretation, which may frustrate the very object and purpose of the Act / Statute shall be avoided by the Court. If the interpretation as canvassed on behalf of the respective respondents is accepted, in that case, even the object and purpose of Section 153C namely, for assessment of income of any other person (other than the searched person) shall be frustrated. - SC
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Surrendered income - Surrender by the son of the assessee during the course of survey - the delay in retraction by the assessee as pointed out by the Ld. AO cannot be of much significance when admittedly the assessee did not declare the surrendered amount in the return filed by her on 31.10.2018 just after a few months of the survey. This is also indicative of the fact that the surrender was not voluntary and with the consent of the assessee. - AT
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Nature or receipt - goodwill for closing down own hospital - Addition u/s 28(1) or 28(IV) or capital receipt - The reasoning of the ld. CIT(A) that since the name of the new entity is different than the assessee’s clinic called Mother and Child, the agreement is not to be believed. It is noted that it is the doctor and the skill which has got reputation and not the name board of the said clinic. Hence, the ld. CIT(A)’s finding fault in the non-user of assessee’s own clinic name is not sustainable. - AT
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Penalty levied u/s 271(1)(c) - Basis adopted during the assessment proceedings cannot be used in the penalty proceedings without following the due process. As such, to levy penalty under section 271(1)(c) of the Act, the revenue has to reach to unambiguous finding that the income assessed in the hand of the assessee represent actual income which has been either concealed or inaccurate particular has been furnished with regard to such income. - AT
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Royalty - Income taxable in India or not - access to online database of journals and books - it is very much clear, only limited right of access to the database was granted to customers on subscription basis. Therefore, in our view, the amount received will not fall within the ambit of royalty as defined under Article 12(3) of the tax treaty. - AT
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Power of CIT for enhancement u/s 251 - those items, which were not part of the ROI, Assessment proceedings or Assessment order, cannot be considered by the ld CIT (A) for enhancement. Right course would have been to intimate ld AO to issue notice u/s 148 of the Act or to propose revision u/s 263 of the Act. - AT
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Unexplained cash deposits into bank accounts during demonetization period - If we consider the quantum of cash deposits into bank accounts of the assessee and the quantum of the business of the assessee, then the explanation of the assessee seems to be reasonable and deserves to be accepted. - No additions - AT
Customs
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Classification of imported goods - Goods were cutting waste/ mutilated woven worn-out garments found not to be completely in running length, they were cut into small pieces which could not be used in the manufacture of chindi rugs and also for pulling of fabrics. - Benefit of circular cannot be given - Such goods which are totally unserviceable and beyond repair, are classifiable under CTH 63109020 and can be imported only under a license from DGFT. - AT
IBC
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Initiation of CIRP - Personal Guarantor - the application filed by the Financial Creditor against the Personal Guarantor was fully maintainable - the Adjudicating Authority has committed error in allowing the applications filed by the Personal Guarantors and dismissing the Company Petitions. - AT
PMLA
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Validity of search - it was necessary to conduct search under Section 17 of PMLA in the premises mentioned in the note; to identify and seize available incriminating record/documents relating to the predicate offence and to the offence of money laundering; relating to the whereabouts of the proceeds of crime; to identify and trace the proceeds of crime; to recover incriminating documents relating to commission of the offence of money laundering. - Single Judge had erred in holding that no reasons to believe were recorded - Search action validated - HC
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Money Laundering - proceeds of crime - The amount accrued as discussed earlier is on account of dollar- rupee fluctuation and it cannot in any manner be held that the petitioner had derived or obtained any property. Though, it was agreed that differential amount of rupee dollar fluctuation would be paid, at most it can be termed as an outstanding which can be recovered in a civil suit and by no stretch of imagination can it be called as Proceeds of Crime or the outstanding amount can be called as property as defined under Section 2(1)(v) of the Act. - HC
Service Tax
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Levy of service tax - renting of property jointly owned by five persons - receipt of rental income by every individual is only subject to liability of service tax. If the value is below thresh-hold exemption limit in case of any individual, the same will not be taxable being the value is below threshold limit - AT
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Levy of penalty - it is seen that the assessee did not make a single attempt for more than a year to seek clarification. It is evident that the assessee in the meantime was collecting service tax from his students for the services being extended by them. So it is apparent that the assessee was very much aware that service tax was liable to be paid but they did not deposit the said amount so collected to the Government exchequer nor did they file their ST 3 returns. - Levy of penalty confirmed- AT
Central Excise
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CENVAT Credit - Process amounting to manufacture or not - The processes of grinding, sizing and packaging undertaken by the Appellant on the inputs namely ferro silicon cake, in their factory amounts to ‘manufacture’ as they are all essential processes for making the goods marketable, as per Section 2(f) of the CETA 1944 - AT
VAT
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Jurisdiction of Lok Ayukta - Rejection of option for settling arrears of sales tax under the Amnesty Scheme - If orders passed by quasi-judicial functionaries exercising powers under a statute are for any reason untenable in law, resort must be had to the remedies under the statute and the complainants cannot bypass the procedure and approach the Lok Ayukta. - HC
Case Laws:
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GST
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2023 (4) TMI 309
Levy of penalty - before filing of annual return, assessment made under Sub-Section 10 of Section 74 of CGST Act, 2017 - It is urged that the adjudicating authority, i.e. the respondent no.3 imposed penalty under Section 74 of CGST Act, 2017 which is contradictory and is a clear violation of principle of natural justice - HELD THAT:- This court finds a clear contradiction in between the two orders i.e. the order dated 06.01.2021 passed by the respondent no.3, the adjudicating authority and the order dated 30.03.2022, passed by the respondent no.2, the appellate authority. Therefore, Section 74 of the CGST Act, 2017 will not apply in this case since no case has been made out in the show cause notice as well as in the impugned orders which are under challenge and the same are liable to be set aside and quashed. Accordingly, the impugned order dated 06.01.2021, passed by the respondent no.3 as well as the order dated 30.03.2022, passed by the respondent no.2 are hereby set aside and quashed - The matter is remanded back to the respondents authority concerned to decide afresh.
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2023 (4) TMI 308
Short payment of GST - suppression of outward supply of taxable goods - petitioner entered into an agreement with its recipients on a letter after giving post supply volume discount and issued GST Credit notes involving tax amount in question in order to reduce its value of supply during the relevant period - contravention of Section 15(3) (b) (i) of the CGST/WBGST Act, 2017 - non-constitution of statutory appellate forum of Tribunal - HELD THAT:- Since it is an admitted position that there is no further statutory appellate forum of Tribunal available at present for redressal of the petitioner s grievance and in view of the discussion made, and that petitioner has been able to make out a case for entertaining this writ petition for two reasons, firstly, at present petitioner has no alternative forum of the Tribunal for its remedy and secondly that the amount of recovery of demand is more than 20% of the disputed tax and the ground that the petitioner does not exist in its registered place of address was neither a part of the show-cause notice nor there is such finding in this regard by the first appellate authority. Considering the facts and circumstances of the case and submission of the parties and discussion made above, the issues involved in this writ petition deserve adjudication after calling for affidavits from the respondent - List this matter for final hearing in the monthly list of June, 2023 under the heading Hearing .
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2023 (4) TMI 307
Detention of goods - main ground is that the petitioner was not offered any hearing prior to passing of the impugned order - violation of principles of natural justice - HELD THAT:- The petitioner had filed a detailed reply on 24.03.2023 stating that the provisions of the IGST Act are inapplicable to the transaction in question. On the same date, the respondent has issued a revised notice, in Form GST MOV - 07 proceeding to apply the applicable provisions of the CGST/SGST Act - However, no opportunity was granted to the petitioner to respond to that notice and the petitioner was further never heard. What had transpired on 24.03.2023 was a hearing only in respect of notice dated 18.03.2023 and not subsequent notice dated 24.03.2023. There is some merit in the allegation that the proceedings have been concluded contrary to the principles of natural justice - petitioner is permitted to appear before the 1st respondent on 05.04.2023 at 10.30 a.m., without expecting any further notice in this regard along with a reply to notice dated 24.03.2023. Writ Petitions are allowed.
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2023 (4) TMI 306
Cancellation of GST registration of petitioner - petitioner submits that till date no GST Tribunal has been constituted - HELD THAT:- This is an order passed by the first appellate authority under Section 107(1) of the CGST Act. As per subsection (1) of Section 107 of the CGST Act, limitation for filing appeal is three months from the date of communication of the order appealed against. Under subsection (4) of Section 107 of the CGST Act, the appellate authority may allow the appeal to be presented within a further period of one month, provided sufficient cause is shown by the appellant. Though the lower appellate authority may be right in holding that while it may allow filing of an appeal beyond the limitation of three months for a further period of one month, but the delay beyond the extended period of one month cannot be condoned, such a stand taken by respondent No.2 may adversely affect the petitioner - In the facts and circumstances of the case, it would be just and proper if the entire matter is remanded back to respondent No.1 to reconsider the case of the petitioner and thereafter to pass appropriate order in accordance with law. The matter remanded back to the file of respondent No.1 to consider the grievance expressed by the petitioner against cancellation of GST registration and thereafter pass an appropriate order in accordance with law - petition allowed by way of remand.
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2023 (4) TMI 305
Levy of Tax and penalty - Seeking release of seized vehicle alongwith the goods - expired E-way bill - petitioner submitted that only due to mechanical defect of the vehicle, the validity of the e-way bill had expired - HELD THAT:- As per Section 129(3) of the said Act, the seizing officer has to issue notice specifying the penalty payable. Section 129(4) of the Act says that no penalty can be determined without giving the person concerned an opportunity of being heard. Despite the said Act prohibits imposing tax and penalty, but the respondent no. 3 without giving any opportunity to the petitioner of being heard had passed the impugned order dated 01.04.2022. It is also evident from the record that the validity of the e-way bill was upto 17.03.2022, but due to some mechanical defect the vehicle reached Churaibari on 18.03.2022, and by that time the validity of e-way bill has expired for which the vehicle was detained and seized and ultimately on 18.03.2022 the driver of the vehicle was informed regarding such seizure - Despite specific direction passed by this court, the respondent no. 3 caused an assessment imposing tax and penalty under the Act and Rules. Even the respondents did not feel it necessary to issue any notice upon the petitioner in terms of the order passed by this court after passing of the judgment, which act is purely non-compliance of the order passed by this court. The impugned order dated 01.04.2022 passed by the respondent no. 3 and the demand made by the respondent no. 4 imposing penalty and tax upon the petitioner by its order dated 02.04.2022 stands quashed and are set-aside - Petition allowed.
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2023 (4) TMI 304
Cancellation of GST registration of petitioner - HELD THAT:- If the petitioner was in custody from 16.11.2022 until 08.12.2022 when he was admitted to bail and released, the petitioner could not have been served with Show Cause Notice dated 17.11.2022 and he could not have issued any response, but the GST registration is cancelled based on the said Show Cause Notice holding that petitioner s response is considered. It would be irrefutable that the cancellation of GST registration is without due opportunity and is arbitrary, and as such, this Court must interfere with the impugned order - However, neither can substantiate this argument based on a reference to the reasons assigned in the impugned order. The petition is allowed - The second respondent the Superintendent of Central Tax is permitted to pass suitable orders for revocation of the cancellation of the registration, if the petitioner files Returns for the relevant period for which returns have to be filed.
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2023 (4) TMI 303
Levy of GST - Benefit of exemption from GST - - manpower services provided to the Central Government, State Government, Local authorities, Governmental authorities and Government entities - Entry No.3 to Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The words or a Governmental authority or a Government Entity in the heading Description of services against above referred Entry No.3 has been omitted vide Notification No. 16/2021-Central Tax (Rate) dated 18.11.2021 - for claiming benefit of exemption, is that the term 'in relation to' used in the exemption provided at Entry No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017. as amended, is very much wide enough to cover every kind of services that results in performance of the functions as mentioned in Article 243 W and 243G of the Constitution of India either directly or indirectly. Therefore the supply of manpower services for housekeeping, cleaning, security, data entry operator etc. to the referred service recipients are eligible for exemption under the above said entry. The manpower supply by the appellant for housekeeping, cleaning, security, data entry operators etc. to various Government departments, mentioned in their application, is not eligible for exemption against Entry No. 3 to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended. Appeal dismissed.
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2023 (4) TMI 302
Classification of services - rate of tax - services provided by appellant (sub-contractors) to the main contractor pertaining to the irrigation, construction and maintenance works to the irrigation department, State of Gujarat - taxable a tax rate of 12% GST or 18% GST? - time limit for filing appeal - HELD THAT:- T here is a prohibition imposed by the main Contractor on the sub-contractor M/s Radhe Construction from further subcontracting the work allotted to them, without the consent of the main contractor. The appellant has also not produced any evidence to show that they were appointed by M/s Radhe Construction after obtaining the consent of the main contractor. On further verification of the EPC contract dated 08.03.2019 awarded by the Irrigation Department to the main contractor, it is seen that the main contractor has sub contracted only a part of the main contract to M/s Radhe Construction who in turn had engaged the appellant for further execution of the services as per the work order issued in the name of the appellant. Further, in the work order dated 05.09.2019 of M/s Radhe Construction, it is seen that at point No. 5. M/s Radhe Construction has mentioned that they would be paying applicable GST @18% in addition to the other prices mentioned in work Order. This would seem to suggest that the sub-contractor i.e M/s Radhe Construction was aware that further sub-contracting this work would be appropriately leviable to GST @18% and not eligible for the concessional rate of GST@12% - the contention of the appellant that they are covered under the provisions 3(iii) and 3(ix) of the amended Notification No. 11/2017-CT(Rate) is highly misplaced. The contention of the appellant need not be agreed that they are eligible for the concessional rate of GST @12% in terms of Notification No. 20/2017-CT(Rate) dated 22.08.2017 and Notification No. 1/2018-CT(R) dated 25.01.2018 as the activity undertaken by the appellant is not covered Sr. No. 3(iii) or under 3(ix) of the Notification No. 11/2017-CT(R) as amended and agree with the findings of the Gujarat Authority for Advance Ruling that the supply made by the appellant is not covered under entry No. 3(iii) or 3(ix) of Notification No. 11/2017-CT(R) dated 28.06.2017, as amended. The appellant is liable to discharge tax rate CGST @9% and GGST@9% under Entry No 3(ii) of Notification No. 11/2017-CT(R) dated 28.06.2017 further amended vide Entry No.3(xii) of Notification ibid as amended. Appeal rejected.
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2023 (4) TMI 301
Scope of Advance Ruling application - application of GST exemption notification No. 12/2017 dated 28.6.2017 - section 98(2) of the CGST Act, 2017 read with sections 95(a), (c) and 103 of the CGST Act, 2017 - HELD THAT:- A conjoint reading of the sections 95(a) and (c), 97 and 103 of the CGST Act, 2017, depicts that advance ruling means a decision by the AAR to an applicant on matters or on questions specified under 97(2) ibid in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; that an applicant, means any person registered or desirous of obtaining registration under this Act; that such an applicant, may make an application in the prescribed form with appropriate fee, stating the question on which the said ruling is sought. This application, is not filed by M/s. Khanepe Hungermall LLP, but by the Chartered Accountant in his own name. Since the person who has applied [M/s. Kalepsh Dineshbhai Patel] is not the person who proposes to undertake the supply, question of giving an advance ruling in the matter simply does not arise. Secondly, the ruling, even if given to the person who has filed the application, will not be binding on M/s. Khanepe in terms of section 103, ibid. Thirdly, it is also found that the application is not accompanied by the requisite fee in terms of section 97(1), ibid read with Rule 104 of the CGST Rules, 2017. On being pointed out during the course of personal hearing, the applicant had admitted that he has in fact filed the application in his name seeking advance ruling and that he is not the actual service provider. It was further admitted that the application was not accompanied by the requisite fee.
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2023 (4) TMI 300
Scope of supply - one time premium from the lessee - The applicant wishes to allot developed units to prospective buyers on a long term lease basis for a period of 90 years. - HELD THAT:- The agreement made between the applicant, GSRTC, Hubtown and the lessee for 90 years can by no stretch of imagination be termed as a sale but in fact is a lease, as the nomenclature suggest with many restrictions though with a right to further sublet in favour of third parties, for residue period of lease only in the manner set out in the lease deed subject further to the condition that in case there is violation of any condition by lessee, the lease deed will automatically be treated as cancelled. Whereas, in ordinary course assuming that a person purchases a commercial plot/unit, he becomes an absolute owner of the plot/unit and there is sale deed between seller and purchaser- in the present case, the lessee has to pay to the lessor ie GSRTC, advance annual lease rental of Re 1/- per square metre for the built up area of the leased premises for the first three years and thereafter the same shall be enhanced by 200% for every subsequent block of 10 years or part thereof. The lease of plot for 90 years by the applicant is not sale of land but is a lease and therefore, does not fall within the ambit of clause 5 of Schedule III of CGST Act, 2017. Hence, it is concluded that this activity i.e. lease of commercial units on payment of one time lease premium and annual premium is a supply falling within the ambit of section 7(1) of CGST Act, 2017, which defines supply as all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business read with clause 2 of Schedule II of CGST Act, 2017, which specifies that lease of a land or building as a supply. The one time premium received by the applicant on allotment of completed commercial units/building is taxable supply in terms of section 7 of the CGST/GGST Act, 2017 - the supply of the applicant is classified under SAC 9972 and would be leviable to tax at the rate of 18% (i.e. 9% CGST and 9% SGST) in terms of notification No. 11/2017-CT(Rate) dated 28.6.2017.
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2023 (4) TMI 299
Maintainability of advance ruling application - Levy of GST - leviability of GST on the supply made by the developer - Input Tax Credit in respect of the supply received by the applicant - HELD THAT:- A conjoint reading of the sections 95(a) and (c), 97 and 103 of the CGST Act, 2017, depicts that advance ruling means a decision by the AAR to an applicant on matters or on questions specified under 97(2) ibid in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; that an applicant, means any person registered or desirous of obtaining registration under this Act; that such an applicant, may make an application in the prescribed form with appropriate fee, stating the question on which the said ruling is sought. The questions on which the ruling is sought is however, restricted to the 7[seven] issues listed in section 97(2), ibid. Further, in terms of section 103, such a ruling shall be binding only on the applicant and on the concerned officer or the jurisdictional officer, in respect of the applicant. The aforementioned application stands rejected in terms of section 98(2) of the CGST Act, 2017 read with sections 95(a), (c), and 103 of the CGST Act, 2017.
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2023 (4) TMI 298
Scope of supply - whether the subsidized deduction made by the applicant from the employees who are availing food in the factory/corporate office would be considered as a 'supply' under the provisions of section 7 of the CGST Act, 2017? - Circular No. 172/04/2022-GST - HELD THAT:- It is evident that [a] the canteen facility is provided by the applicant to the full time employees of its corporate office as mandated in Section 23 of the Gujarat Shops and Establishment (Regulation of Employment and Condition of Service) Act, 2019, is concerned; and [b] the applicant has provided [one page] a copy of the agreement for cafeteria /canteen services to employees. Hence, in terms of the clarification issued by the Board vide Circular No. 172/04/2022-GST, at para 5, we hold that the subsidized deduction made by the applicant from the employees who are availing food in the Corporate Office would not be considered as a 'supply'' under the provisions of section 7 of the CGST Act, 2017. Whether Input Tax Credit of GST charged by the CSP would be eligible for availment by the applicant? - HELD THAT:- Input Tax Credit will be available to the appellant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 and Gujarat Shops and Establishment (Regulation of Employment and Condition of Service) Act, 2019 as far as provision of canteen service for full time/direct employees working on permanent basis at the factory/corporate office is concerned. It is further held that the ITC on GST charged by the canteen service provider will be restricted to the extent of cost borne by the appellant only.
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2023 (4) TMI 297
Supply or not - subsidized deduction made by the applicant from the employees, who are availing food in the factory - Input Tax Credit of GST charged by the CSP for the canteen services for its employees where the canteen facility is mandatory in terms of Section 46 of the Factories Act, 1948. Whether the subsidized deduction made by the applicant from the employees, who are availing food in the factory would be considered as a 'supply' under the provisions of section 7 of the CGST Act, 2017? - HELD THAT:- In terms of Section 7 ibid, supply means all forms of 'supply' of goods/services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. The exception being Schedule I, which include the activities made or agreed to be made without a consideration and Schedule III, which includes activities which shall be treated neither as a supply of goods or services. The applicant's case is that they employ more than 250 persons who are full time employees and who have been provided with canteen facility in terms of section 46 of the Factories Act, 1948 read with Gujarat Factories Rules, 1963 - Now in terms of Circular No. 172/04/2022-GST, it is clarified that perquisites provided by the 'employer' to the 'employee' in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee. Thus, the subsidized deduction made by the applicant from the employees who are availing food in the factory would not be considered as a 'supply; under the provisions of section 7 of the CGST Act, 2017. Whether Input Tax Credit of GST charged by the CSP for the canteen services for its employees where the canteen facility is mandatory in terms of Section 46 of the Factories Act, 1948 read with Gujarat Factories Rules, 1963? - HELD THAT:- Input Tax Credit will be available to the appellant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 as far as provision of canteen service for full time/direct employees working on permanent basis at the factory is concerned. It is further held that the ITC on GST charged by the canteen service provider will be restricted to the extent of cost borne by the appellant only.
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Income Tax
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2023 (4) TMI 312
Deemed rent u/s. 23(4) - rent on unsold flats - deemed rent in respect of unsold units be brought to tax under the head Income from house property - assessee is a company engaged in the business of property development - As explained that the 15 unsold flats cumulatively admeasuring 17341 sq. ft. were not sold during the year under consideration and they were treated as closing stock - HELD THAT:- We note that the assessee treated the same as 15 unsold flats as stock-in-trade which means that the profits on its sale would be offered as business income and no rental income received by the assessee from such 15 unsold flats. Therefore, facts in the case of Gundecha Builders [ 2019 (1) TMI 112 - BOMBAY HIGH COURT] are different from the facts of the present case in hand. Thus, we reject the arguments of ld. DR of applicability of observation in the case of Gundecha Builders (supra). This Tribunal in the case of Sai Spacecon India Pvt. Ltd. [ 2022 (1) TMI 1361 - ITAT PUNE] held no addition on account of deemed rent on unsold flats could be made in the hands of the assessee. We hold that the order of CIT(A) is not justified in confirming the view of AO in levying deemed rent u/s. 23(4) of the Act on account of income from house property. Grounds raised by the assessee are allowed.
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2023 (4) TMI 296
Scope of amendment brought to Section 153C introduced vide Finance Act, 2015 w.e.f. 01.06.2015 - Whether amendment brought to Section 153C vide Finance Act, 2015 would be applicable to searches conducted u/s 132 of the Act, 1961 before 01.06.2015, i.e., the date of amendment? - HELD THAT:- As per the proviso to Section 153C as inserted vide Finance Act, 2005, and the effect of the said proviso is that it creates a deeming fiction wherein any reference made to the date of initiation of search is deemed to be a reference made to the date when the AO of the non-searched person receives the books of account or documents or assets seized etc. Thus, in the present case, even though the search u/s 132 was initiated prior to the amendment to Section 153C w.e.f. 01.06.2015, the books of account or documents or assets were seized by the Assessing Officer of the non-searched person only on 25.04.2017, which is subsequent to the amendment, therefore, when the notice under Section 153C was issued on 04.05.2018, the provision of the law existing as on that date, i.e., the amended Section 153C shall be applicable. Section 153C has been amended by way of substitution whereby the words belongs or belong to have been substituted by the words pertains or pertain to . As observed and held by this Court in the case of Shamrao V. Parulekar [ 1952 (5) TMI 12 - SUPREME COURT] that amendment by substitution has the effect of wiping the earlier provision from the statute book and replacing it with the amended provision as if the unamended provision never existed. The primary and foremost task of a court in interpreting a statute is to ascertain the intention of the legislature, actual or imputed. Having ascertained the intention, the Court must then strive to so interpret the statute as to promote or advance the object and purpose of the enactment. It is further observed that the ascertainment of the legislative intent is a basic rule of statutory construction and that a rule of construction should be preferred which advances the purpose and object of a legislation and that though the construction, according to the plain language, should ordinarily be adopted, such a construction should not be adopted where it leads to anomalies, injustices or absurdities. See GIRDHARI LAL AND SONS VERSUS BALBIR NATH MATHUR AND OTHERS [ 1986 (2) TMI 253 - SUPREME COURT] As observed hereinabove, any interpretation, which may frustrate the very object and purpose of the Act / Statute shall be avoided by the Court. If the interpretation as canvassed on behalf of the respective respondents is accepted, in that case, even the object and purpose of Section 153C namely, for assessment of income of any other person (other than the searched person) shall be frustrated. Thus the impugned common judgment and order passed by the High Court is held to be unsustainable and the question, i.e., Whether the amendment brought to Section 153C of the Income Tax Act, 1961 vide Finance Act, 2015 would be applicable to searches conducted under Section 132 of the Act, 1961 before 01.06.2015, i.e., the date of amendment? , is answered in favour of the Revenue and against the assessees and is answered accordingly. Thus the amendment brought to Section 153C of the Act, 1961 vide Finance Act, 2015 shall be applicable to searches conducted under Section 132 of the Act, 1961 before 01.06.2015, i.e., the date of the amendment. The impugned common judgment and order passed by the High Court, therefore, deserves to be quashed and set aside.
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2023 (4) TMI 295
Revision u/s 263 by CIT - deduction claimed by the assessee as cost of improvement while computing long term capital gains - What can be said to be prejudicial to the interest of the Revenue? - According to the Commissioner, the expenses claimed by the assessee neither constituted expenditure that is capital in nature nor resulted in any additions or alterations that provide an enhanced value of an enduring nature to the capital asset - Whether order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue? - HELD THAT:- As decided in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue - also observed that if due to an erroneous order of the ITO, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. Only in a case where two views are possible and the Assessing Officer has adopted one view, such a decision, which might be plausible and it has resulted in loss of Revenue, such an order is not revisable u/s 263. Applying the law laid down by this Court in the case of Malabar Industrial Co. Ltd. (supra) to the facts of the case on hand and even as observed by the Commissioner, the order passed by the Assessing Officer is erroneous as well as prejudicial to the interest of the Revenue. Assessment order was not only erroneous but prejudicial to the interest of the Revenue also. In the facts and circumstances of the case, it cannot be said that the Commissioner exercised the jurisdiction u/s 263 not vested in it. The erroneous assessment order has resulted into loss of the Revenue in the form of tax. High Court has committed a very serious error in setting aside the order passed by the Commissioner passed in exercise of powers under Section 263 of the Income Tax Act. Thus order passed by the High Court is hereby quashed and set aside and that the order passed by the Commissioner passed in exercise of powers under Section 263 of the Income Tax Act is hereby restored.
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2023 (4) TMI 294
Ex-parte order passed by CIT(A), NFAC - Deduction u/s. 57 denied - interest paid to Bank on overdraft facility - HELD THAT:- As contention of the ld. DR is correct that by and large the conduct of the assessee was of utmost recklessness and approach towards the proceedings has also been very casual. All the same, assessee should be given an opportunity to explain and demonstrate with evidence as to how the impugned amount is deductable u/s. 57 - restore the file to the office of the AO to decide the issue afresh after giving adequate opportunity to the assessee to explain and substantiate his case. Appeal of the assessee stands allowed for statistical purposes.
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2023 (4) TMI 293
Disallowance of expenditure on account of accumulated service tax of rent - Addition on the ground that the reply of the assessee found to be not satisfactory - HELD THAT:- The service tax is an indirect tax wherein the supplier of the services collects the tax from the recipient of the services and deposits the same with Revenue authorities. Even the levy on the renting of immovable property wherein the service tax has to be borne by the lessee but the same has to be collected by the landlord who is under obligation to perform the function of facilities or wherein he collect the tax and deposits the same with the Revenue authorities. Liability of service tax on the rent is always passed on the recipient of the service. The reasoning given by the Revenue authorities in the present case are grossly erroneous. The allow-ability of rent paid for the purpose of business of assessee is covered under section 30 of the act. As regards service tax of rent, the same takes the character of the rent itself, as a result, the same should be allowed under section 30. Considering documents produced by the assessee before us, we deem it fit to remand the issue to the file of the AO and examine the submission and the documents produced thereon and pass appropriate order in accordance with law after providing adequate opportunity of being heard to the assessee. Ground No. 1 of the assessee is allowed, for statistical purposes. Disallowance of payment of rent - no lease agreement and the assessee has not submitted any document to prove that the said premises has been used for business purpose - assessee entered into lease agreement in writing and the same has been renewed orally - HELD THAT:- Though the lease agreement need not be in writing and the tenancy can be oral, but to prove the tenancy the assessee could have produced the owner before the Assessing Officer in support of his claim and the burden cast upon the assessee to substantiate the claim that the premises has been used for Business Purposes . We deem it fit to remand the matter to the file of the AO with a direction to the assessee to prove the oral tenancy and also to prove that the premises has been used for the business purpose and the AO is directed to decide the matter afresh after providing adequate opportunity of hearing to the assessee. Ground of the assessee is allowed for statistical purposes.
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2023 (4) TMI 292
Assessment u/s 153A - incriminating material found or not? - HELD THAT:- The undisputed fact is that all the assessment years are completed assessments. It is not disputed that the impugned additions are de void of any incriminating material whatsoever found during the course of search. There is no mentioning of incriminating material found at the time of search on the basis of which the addition has been made. The ratio laid down by case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] squarely apply on the facts of the case. Appeal of assessee allowed.
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2023 (4) TMI 291
Deduction u/s 54F - investment in the purchase of new property - AO negatived the assessee s claim as entire payment towards purchase of the new property was not made by the assessee alone. Other family members, i.e. her husband, his HUF and son of the assessee also made payments towards purchase of the new property - Whether assessee did not utilise the sale consideration of the old property towards purchase of the new property? - HELD THAT:- Where investment made by the assessee, although not entirely sourced from capital gain, but was within stipulated time and more than capital gain earned by him, the assessee was entitled to exemption under section 54F. The assessee brought on record evidence to show that the family members paid the amounts from their respective bank accounts to meet the cost of the new property purchased by the assessee. In Sunil Sachdeva s case [ 2013 (10) TMI 746 - ITAT DELHI] held that section 54F does not require one to one co-relation between capital gain arising out of transfer of long term capital asset and utilisation thereof for purchase /construction of residential house. Therefore, the argument of the Ld. DR and objection of the Ld. AO that sale consideration obtained from the old property has not been utilised by the assessee has no legal basis and cannot be a hindrance to the assessee for claiming exemption under section 54F of the Act. Decided in favour of assessee. Surrendered income - Surrender by the son of the assessee during the course of survey - difference of stock and unexplained cash found during survey - Whether surrender was voluntary ? - Surrender was made on 30.05.2018 and the assessee retracted on 05.01.2021 - CIT-A deleted the addition - HELD THAT:- The difference of stock mentioned by the AO was only due to the fact that the approved valuer valued the stock on the basis of market price whereas the assessee had valued the closing stock as per accounting policy, namely cost or realisable value whichever is lower which method the assessee had followed year after year consistently. Since it is not a case where excess stock in quantity was found in survey, difference on account of valuation cannot form the basis of any addition. The assessee had produced before the Ld. AO all the bills which constituted the stock as on the date of survey which has not been considered and reliance was placed on the value adopted by the approved valuer as prevailing on the date of survey. This approach is not correct. CIT(A) considered the statement of the son of the assessee recorded during survey and noticed that he had explained that the shortage in cash and cash found at the time of survey was due to the fact that all the entries in the account books were not written up to date. To our mind, the delay in retraction by the assessee as pointed out by the Ld. AO cannot be of much significance when admittedly the assessee did not declare the surrendered amount in the return filed by her on 31.10.2018 just after a few months of the survey. This is also indicative of the fact that the surrender was not voluntary and with the consent of the assessee. The CBDT circulars mentioned by the Ld. CIT(A) his appellate order emphasise that there should be no coercion to admit undisclosed income and that admissions should be backed by credible evidence. Facts reveal that during survey, element of coercion cannot be ruled out and credible evidence to support the surrender was also lacking. We, therefore, concur with the findings of the Ld. CIT(A) and reject ground No. 2.
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2023 (4) TMI 290
Nature or receipt - Addition u/s 28(1) or 28(IV) or capital receipt - consideration received for exclusive arrangement and goodwill for closing down own hospital - consideration(s) towards non-compete fee(s) doubted or held as artificial - Doctor moving her medical practice and associated goodwill to the Company - assessee, an individual, is a renowned doctor specializing in the field of IVF, who was running as proprietary nursing home under the name and style of mother Child , since last 40 years and entered into a Service Agreement with an independent/unrelated company Nova specializing in the field of IVF, whereby Nova agreed to engaged the assessee as consultant for rendering exclusive services to it, in the lieu of consideration - whether CIT (A) has grossly erred in Law in holding that amount received by the assessee consideration for not carrying out independently the professional activities in future which is exempt u/s 28(IVA ) of Income Tax Act, 1961 as a professional income and is taxable U/s 28(1) of Income Tax Act, 1961 HELD THAT:- There is a proper agreement which provides for the non-compete fee/goodwill. The agreement has been turned down by the authorities below as it is colorable device. This observation is not backed by any proper reasoning. The case laws relating to the proposition is that the Revenue should only look at the agreement and not look through the binding agreements between the parties. For this, the reliance on case laws as mentioned above, which are referred by the ld. Counsel for the assessee is germane and supports the case of the assessee. The various case laws and proposition relied upon by the ld. Counsel for the assessee also supports the case of the assessee. AO has made addition u/s 28(va) - The amendment to bring profession also, into the said clause was brought in w.e.f. AY 2017- 18. Hence, non-compete fee related to profession is made taxable only w.e.f. AY 2017-18 and the non-compete fee in relation to profession for period prior to AY 2017-18 would be treated as capital receipt. Furthermore, the ld. CIT(A) has changed the section from 28(va) to section 28(1) of the Act without confronting the assessee. This is a fatal mistake. The reasoning of the ld. CIT(A) that since the name of the new entity is different than the assessee s clinic called Mother and Child, the agreement is not to be believed. It is noted that it is the doctor and the skill which has got reputation and not the name board of the said clinic. Hence, the ld. CIT(A) s finding fault in the non-user of assessee s own clinic name is not sustainable. Assessee deserves to succeed also on the principle of consistency in as much as for Assessment Years 2013-14, 2015-16 and 2016-17, the same was treated as capital receipt and the same had been accepted by the Revenue. The reference to the decision of Excel Industries [ 2013 (10) TMI 324 - SUPREME COURT] and Radhasoami Satsang Saomi Bagh [ 1991 (11) TMI 2 - SUPREME COURT] is also germane and supports the case of the assessee. A sum received towards undertaking restrictive covenant of non imparting service to any other person and not to share associated goodwill of medical practice being in the nature of non compete fee is a capital receipt and not taxable under provision of the Act. Hence, assessment by the AO u/s 28(va) as noted above is not sustainable and similarly the order of the Ld. CIT(A) whereby he changed the head from section 28(va) to section 28(1) without confronting the assessee is also not sustainable and the ld. CIT(A) s view that the same is taxable under the normal professional income is also not sustainable in the background of the aforesaid discussion, the agreement and the case law referred above. In these circumstances, in the background of aforesaid discussion and precedent, we set-aside the orders of the authorities below and delete the addition. Appeal of the assessee stands allowed.
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2023 (4) TMI 289
Revision u/s 263 - initiation of penalty proceedings u/s.270A and source for FDs with bank, on which, interest income earned by the assessee - HELD THAT:- As per reasons given by the PCIT in the order we find that the AO has issued notice u/s.274 r.w.s.270A of the Act, on 13.12.2019 and called upon the assessee to explain as to why penalty should not be levied for under reporting of income. From the notice itself it can be ascertained that the AO has satisfied that he has proceeded with initiation of penalty proceedings for under reporting of income - PCIT is completely erred in coming to the conclusion that the AO has not initiated penalty proceedings u/s.270A with a proper satisfaction. Thus, on this issue, the assumption of jurisdiction by the PCIT fails. Source for FDs with two banks - The issue of FDs with two banks was in the knowledge of the AO. Although, the AO specifically did not discuss the issue of source for FDs, but, after considering the explanation of the assessee that source for FDs is out of sale proceeds of a property in the capacity of power of attorney holder and said sale of property was assessable in the hands of the original owners of the property, the AO has accepted the claim of the assessee and completed the assessment, which is evident from the fact that the AO has made additions towards interest income from very same FD, but does not made any addition towards source for said deposit - Thus the assumption of jurisdictional by the PCIT fails. AO made necessary enquiries and has taken a view. The assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue. PCIT without satisfying as to how why the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue, invoked jurisdiction u/s.263 of the Act, and set aside the assessment order - Appeal filed by the assessee is allowed.
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2023 (4) TMI 288
Belated remittance of employee s contribution towards PF ESI - HELD THAT:- We find that the issue is squarely covered in favour of the revenue by the decision of Hon ble Supreme Court in the case of Checkmate Services P Ltd [ 2022 (10) TMI 617 - SUPREME COURT] Adjustments' u/s 143(1)(a)(ii) - Since, the deduction claimed by the assessee towards belated remittance of PF ESI is contrary to provisions of section 36(1)(va) r.w.s. 2(24)(x) and 43B of the Act, in our considered view, said claim comes under sub clause (ii) of section 143(1) which says that incorrect claim, if such incorrect claim is apparent from any information in the return, it needs to be adjusted while computing income u/s. 143(1)(a) of the Act. Therefore, we reject the argument of the assessee. Disallowance of deduction u/s. 80JJAA - return is filed beyond the due date of filing return of income u/s. 139(1) - HELD THAT:- As up to assessment year 2020-21, there is no provisions u/s. 143(1)(a) of the Act to make any adjustments towards Chapter VI-A deductions while processing return of income u/s. 143(1)(a) of the Act. Therefore, we are of the considered view that even if assessee does not file return of income on or before due date prescribed u/s. 139(1) then no adjustment can be made towards Chapter VI-A deductions under the head C-deductions in respect of certain income. Since, deduction u/s. 80JJAA comes under Chapter VI-A under the head C, in our considered view, while processing return of income for the assessment year 2018-19, the AO cannot make any adjustments while processing return of income u/s. 143(1)(a) - AO is erred in making additions towards deduction claimed u/s. 80JJAA of the Act, while processing return of income u/s. 143(1)(a) of the Act, and thus, we direct the AO to delete additions made towards deduction claimed u/s. 80JJAA of the Act. Decided in favour of assessee.
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2023 (4) TMI 287
Deduction u/s. 80IA - Disallowance of deduction as assessee did not file Form No. 10CCB along with return of income filed for the relevant assessment year - HELD THAT:- As in the case of CIT vs Ramani Realtors P Ltd [ 2015 (1) TMI 395 - MADRAS HIGH COURT] where it has been held that filing of audit report is directory in nature, but not mandatory and thus, when such audit report was made available to the Assessing Officer before completion of assessment, the AO ought to have allowed deduction claimed by the assessee. Thus as relying above AO and CIT(A) were erred in not allowing deduction claimed u/s. 80IA of the Act for non-filing of Form no. 10CCB along with return of income filed by the assessee for the relevant assessment year. Thus, we direct the AO to allow deduction claimed u/s. 80IA of the Act. Decided in favour of assessee.
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2023 (4) TMI 286
Penalty levied u/s 271(1)(c) - charge of furnishing inaccurate particulars of income - HELD THAT:- Penalty proceedings are independent and distinct to assessment proceedings/quantum proceeding. Any addition or disallowance made under quantum proceeding does not ipso facto empower the revenue authority to levy penalty under section 271(1)(c) of the Act. In the penalty proceeding, it must be proved by the revenue based on cogent material that the assessee has either concealed income or furnished inaccurate particulars of income. Basis adopted during the assessment proceedings cannot be used in the penalty proceedings without following the due process. As such, to levy penalty under section 271(1)(c) of the Act, the revenue has to reach to unambiguous finding that the income assessed in the hand of the assessee represent actual income which has been either concealed or inaccurate particular has been furnished with regard to such income. See National Textiles vs. CIT [ 2000 (10) TMI 19 - GUJARAT HIGH COURT ] Penalty cannot be imposed upon the assessee merely on the reasoning that a particular amount assessed as income in the hand the assessee. As in case on hand the assessee in the original return of income filed under section 139 of the Act claimed exempted long-term capital which has been withdrawn in the return filed in response to notice under section 148 of the Act and due taxes on the same was deposited. The returned income was accepted by the Revenue in the assessment order finalized under section 143(3) r.w.s. 147 of the Act without being any further addition/disallowance. As relying on Kulwant Singh case [ 2019 (4) TMI 1287 - ITAT CHANDIGARH ] we set aside the finding of the learned CIT(A) and direct the AO to delete the penalty levied by him under the provisions of section 271(1)(c) - Decided in favour of assessee.
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2023 (4) TMI 285
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - initiation of penalty is one limb and the levy of penalty is on other limb - HELD THAT:- In the penalty order passed AO has levied the penalty for concealment of income. It is a settled law that while levying penalty the AO has to record satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c) - The first step is to record satisfaction while completing the assessment as to whether the assessee had concealed the income or furnished inaccurate particulars of income. Notice u/s 274 read with Section 271(l)(c) of the Act is to be issued to the assessee. AO thereafter has to levy penalty u/s 271(1)(c) for non-satisfaction of either of the limbs. While completing the assessment, the AO has to come to a finding as to whether the assessee has concealed the income or furnished inaccurate particulars of income. As in CIT vs. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] has held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty. We are of the view that in the present case, the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power of AO. Appeal of assessee allowed.
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2023 (4) TMI 284
TP Adjustment - Price Penetration Adjustment carried out by the assessee itself in the TP accommodation - challenge to ad-hoc adjustment made by the TPO - TPO had accepted the methods and margin however, treated price penetration adjustment claimed by the assessee as income of the assessee - HELD THAT:- As decided in judicial pronouncements it has been held that any ad-hoc determination of Arms Length Price by the TPO u/s 92 de-hors Section 92C(1) of the Act, hence, will be unsustainable in law. See Sun Pharmaceuticals Industries Ltd [ 2016 (8) TMI 815 - GUJARAT HIGH COURT ], SI Group-India Ltd. [ 2019 (6) TMI 443 - BOMBAY HIGH COURT ], Lever India Exports Limited, Johnson Johnson Ltd. [ 2017 (3) TMI 1520 - BOMBAY HIGH COURT ] DR neither disputed the above table submitted by the assessee demonstrating outcome of the bench marking with or without adjustment made by the assessee nor brought any material against the assessee to the notice of the Bench. Thus, it is clear that that margin of the assessee are at Arm s Length without the price penetration adjustment and ad-hoc adjustment made by the TPO on account of price penetration is without jurisdiction of the TPO as held in the above case laws. Assessee appeal allowed.
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2023 (4) TMI 283
Disallowance in regard to late deposit of employees contribution to PF beyond the due date - HELD THAT:- As after the judgment of Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] the issue is no more res integra and settled against the assessee. Accordingly this ground is decided against the assessee. Deduction u/s 35(2AB) disallowed - expenditure incurred on in house research facility - assessee company has not provided any details/documentary evidences of any revenue capital expenditure on in house R D for claiming deduction u/s 35(2AB) - CIT(A) has deleted the addition - HELD THAT:- The bench is of considered opinion that the period mentioned in the approval is not relevant and would relate back to the beginning of financial year in which the application is filed. In the case in hand the Form 3CM application once filed on 29/3/12 then for the FY 2011-12 assessee will be entitled to weighted deduction for AY 2012-13. Ld. CIT(A) has rightly relied the judgment of Maruti Suzuki India Ltd [ 2017 (8) TMI 248 - DELHI HIGH COURT ] and Sandan Vikas (India) Ltd [ 2011 (2) TMI 66 - DELHI HIGH COURT ] and Claris Life Sciences [ 2008 (8) TMI 579 - GUJARAT HIGH COURT ] There is no justification with the Revenue to support the findings of Ld. AO that assessee has failed to justify its claim on account of above mentioned expenses and failed to produce copy of any ledger account of the said expenses etc. while assessee in its submission as reproduced in the order of ld. CIT given the submissions along with details / ledger of R D expenditure - Thus, the bench is inclined to accept the findings of Ld. CIT(A) on facts also that before it the assessee had justified the expenses on the basis of ledger accounts etc. There is no error in the findings of Ld. CIT(A) requiring interference. Decided against revenue.
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2023 (4) TMI 282
Deduction u/s 80P - interest income accruing to the assessee on account of investments with scheduled bank - HELD THAT:- We find in assessee s appeal, the Tribunal [ 2023 (4) TMI 209 - ITAT BANGALORE] has confirmed the disallowance claimed u/s 80P(2)(d) of the I.T.Act. However, the Tribunal by following the judgment of the Hon ble jurisdictional High Court in the case of Totgars Co-operative Sale Society Ltd. [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] restored the matter to the A.O.Tribunal directed the A.O. to examine whether the assessee had incurred any expenses for earning the said interest income, which was being assessed as income from other sources u/s 56 of the I.T.Act, and if so, such expenditure ought to be allowed as a deduction u/s 57 . Matter restored to the files of the A.O. The A.O. is directed to consider the issue afresh Receipts from e-stamping eligible for deduction u/s 80P - The assessee submits that it had not claimed the receipts from e-stamping as a deduction u/s 80P and therefore, this ground does not survive. We restore the issue raised in ground No.2 to the files of the A.O. A.O. is directed to examine whether the assessee had claimed deduction with respect to the receipts from e-stamping and decide the matter in accordance with law. Benefit of section 80P with regard to credit facilities provided to the nominal members - Tribunal in assessee s appeal (supra) had restored the matter to the A.O as held in section 80P(2)(a)(i), the assessee is entitled to deduction related interest earned from nominal member. The verification is required related to investment to nominal members as per the activity of the trust in purview of Karnataka Co-op Society Act. Appeal filed by the Revenue is allowed for statistical purposes.
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2023 (4) TMI 281
Estimation of income - Bogus purchases - AO rejected the books of accounts of the assessee u/s. 145(3) - HELD THAT:- Admittedly the addition in the hands of the assessee is liable to be restricted only to the extent of the profit which the assessee would have made by procuring the goods at a discounted value from the open/grey market as against the inflated value at which the same were booked on the basis of the bogus bills in its books of account. Quantification of profit which the assessee would have made by procuring the goods in question from the open/grey market - Hon'ble High Court of Bombay in the case of Pr. Commissioner of Income Tax-17 Vs. M/s. Mohhomad Haji Adam Company [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] while upholding the order of the Tribunal, had observed, that the addition in the hands of the assessee as regards the bogus/unproved purchases was to be made to the extent of bringing the G.P rate of such purchases at the same rate of other genuine purchases. Thus profit made by the assessee in the case before us by procuring the goods at a discounted value from the open/grey market can safely be determined by bringing the G.P rate of such bogus purchases at the same rate as that of the other genuine purchases. Restore the matter to the file of the A.O, with a direction to him to restrict the addition in the hands of the assessee qua the impugned bogus/unverified purchases by bringing the GP rate of such bogus purchases at the same rate as that of the other genuine purchases.
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2023 (4) TMI 280
Revision u/s 263 - Allowability of claim u/s. 35(2AB) - PCIT observed that the assessee did not submit the necessary documentary evidences i.e. Form 3CL issued by the prescribed authority (DSIR, New Delhi) - HELD THAT:- The assessee had filed copy of recognition of the in house R D facility dated 25-08-2014 during the course of assessment. Assessee had also filed copy of approval of the in house R D facility dated 07-10-2015 in Form 3CM during the course of assessment, with regard to computation of deduction u/s. 35(2AB), the assessee had filed certificate of the auditor certifying the expenditure during the course of assessment. With respect to Form 3CL, we observe that the Form 3CL was issued by prescribed authority on 20-07-2021 after passing of the assessment order u/s. 143(3) of the Act on 17-01-2020. Approval of the R D facility in Form 3CM was duly filed by the assessee during the course of assessment vide letter dated 09-12-2019. Once the assessee files Form 3CM certifying that the research and development facility has been approved by the prescribed authority in proper Format, merely because the said authority failed to send intimation to the Department in form 3CL, would not be reason enough to deprive assessee s claim of deduction u/s. 35(2AB) of the Act. Assessment order was passed by the ld. Assessing Officer after making due inquiry regarding the claim of deduction u/s. 35(2AB) of the Act is, not erroneous and prejudicial to the interest of the Revenue - order passed by ld. PCIT u/s. 263 dismissed. - Decided in favour of assessee.
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2023 (4) TMI 279
Revision u/s 263 by CIT - Estimation of income - bogus purchases - HELD THAT:- As per the provisions of section 263(1), Explanation 1(c) of the I.T. Act, inter alia, where any order referred to in section 263(1) of the I.T. Act, and passed by the AO, had been the subject matter of any appeal filed before 1.6.1988, the powers of the PCIT or Commissioner under section 263(1) shall extend to such matters as had not been considered and decided in such appeal. In the case at hand, addition made by the AO by applying the GP rate, had been challenged by the assessee by way of appeal. The purchases qua which such addition had been made were, therefore, subject matter of appeal before the ld. CIT(A) and the ld. CIT(A) had passed his order on 15.4.2021. The show cause notice under section 263 of the I.T. Act had, on the other hand, been issued only on 17.3.2022, i.e., almost a year later. That being so, given the provisions of Explanation 1(c) to section 263(1) of the I.T. Act, the revisional jurisdiction under section 263 of the I.T. Act, by issuance of such show cause notice, could not have been assumed. CIT vs. Bholenath Poly Feb Pvt. Ltd. [ 2013 (10) TMI 933 - GUJARAT HIGH COURT] and PCIT vs. Rishabhdev Technocable Ltd. [ 2020 (2) TMI 662 - BOMBAY HIGH COURT] are eloquent in this regard. The view taken by the Assessing Officer was a possible view, due to which, invocation of powers under section 263 of the I.T. Act could not have been done. Appeal of the assessee is allowed. 22. We find that the Assessing Officer, therefore, had carried out a thorough enquiry and examination of the purchases in question and it was only after such enquiry and examination that the addition was made by the Assessing Officer, by applying GP rate. Appeal of the assessee is allowed.
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2023 (4) TMI 278
Revision u/s 263 by CIT - high value receipt of cash shown from third parties in response to data and payment of tax in cash during demonization period during the year - certain receipts during pre-demonetization period were high, whereas, the number of entries during demonetization period and post-demonization period were comparatively less - HELD THAT:- Assessee furnished the cash book and even also explained that as per the Circular/ Notification issued by the Government, the Nursing Homes were authorised by the Govt. of India to accept old currency during the demonization period. Assessee has given the details of the receipts - PCIT has not compared such receipts with any previous year or subsequent year's receipts. PCIT in this case has exercised his revisionary jurisdiction merely on the basis of the assumption and presumption without pointing out as to what fault or defect was there in the explanation given by the Assessee vis-a-vis the details of the receipts shown by the Assessee and the cash book maintained by the Assessee. Assessee during the year had shown total profession receipts of approx. Rs. 3.45 crores, out of which, the Assessee has returned the income of Rs. 1.59 cores, which seems to be quite reasonable. PCIT has failed to point out any discrepancy in the accounts of the Assessee, but only suspected the genuineness of the cash book by bifurcating the receipts between the different period of years, which, in our view, cannot be held to be justified for exercise of revisionary jurisdiction u/s 263 and thereby subjecting the Assessee to de novo assessment. Certain increase in the salary of two employees and having made certain payments to DLF for office space at Delhi, disallowance use u/s 36(1)((iii) of the Act etc. - As we find that the case of the Assessee was not selected for scrutiny on these issues. The only issue for which the case of the Assessee was selected for scrutiny u/s 143(3) of the Act was in respect of 'the high value receipt of cash shown from third parties in response to data and payment of tax in cash during demonization period' Since the case was not selected for scrutiny on these issues, therefore, it cannot be said to be any error in the order of the AO has occurred, even if the said issues in the opinion of the Ld. PCIT were not thoroughly examined as of the selection of the case was for limited scrutiny. AO, otherwise, was not supposed to go into these issues. In view of this, it cannot be said that there was any error in the order of the AO on these issues, therefore, the exercise of revisionary jurisdiction of the Ld. PCIT in respect of the aforesaid issues cannot be held to be justified. The exercise of revision jurisdiction by the Ld. PCIT in the above case is bad in law - Decided in favour of assessee.
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2023 (4) TMI 277
Reopening of assessment u/s 147 - Mistakes in reason to believe - Non disposal of objections raised against reopening - HELD THAT:-The mistake was done in the recorded reason as the assessee was treated as non filler of ITR, whereas the assessee had filed the income tax return during his assessment year. Assessee had filed objection against the recorded reason before the Ld. AO which was not disposed off during the assessment proceeding. Both objections are duly clarified by the Ld. CIT(A) in the appeal order. But the assessee was wrongly treated as non-filer of return for impugned assessment year which is not correct observation - There is no such proper adjudication in the order of the Ld. CIT(A) related to the assessee's claim in the factual grounds. The observation of the CIT(A) was not duly rebutted by the assessee in his submission. All the issues, legal factual should be disposed off in proper manner by the Ld. AO by allowing the assessee a reasonable opportunity of hearing.
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2023 (4) TMI 276
Reopening of assessment u/s 147 - assessee is not holding any agricultural property but credited the agricultural income in the books of account - also share capital and share premium and current liabilities are remained unexplained and unverified before the Ld. AO - HELD THAT:- The reopening was made on basis of the information. The assessing authority also completed the verification before come to the conclusion for reopening the case of the assessee. The entire issue was dealt by the Ld. AO very carefully and also the prior approval was obtained from the Ld. PCIT, Bathinda. Assessee was unable to produce any contrary view or any judgment against the observation made by the Ld. AO in recorded reasons. The issue was dealt by the CIT(A) but the assessee was unable to sustain its claim. We find no infirmity in the recorded reason. AO had made the reopening within his jurisdiction. Decided against assessee. Inguine agriculture income - We find that the assessee was unable to substantiate its claim through the evidence in ITAT. Several opportunities were allowed to the assessee but assessee was remained unsuccessful for providing any documents in favour of its claim. The assessee did not possess any agricultural land or property for generating the revenue against this asset. Related to paid up share capital, share premium and current liability and provisions was remained unexplained and unverified. In the hearing before the ITAT the assessee was remained unsuccessful to submit any documents or evidence in its favour. We find no infirmity in the order of the Ld. CIT(A) and Ld. AO. Decided against assessee. Disallowance of Lease money rebate on account of liability created by the SEBI which the assessee company booked as expenses - AO added back the same - CIT(A) had dealt the issue in his order - HELD THAT:- CIT(A) has not erred in law as well as on the facts by not allowing the rebate on account of liability created by the SEBI on account of lease money shown as income by the assessee company - We find no infirmity in the order of the Ld. CIT(A).
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2023 (4) TMI 275
Deduction u/s.80IA - computation of eligible profit for the purpose of deduction - AO has allowed deduction u/s.80IA by setting off loss of one eligible unit to profit of another eligible unit and quantified net profit eligible for deduction - HELD THAT:- We find that this issue is squarely covered by the decision of Yakogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT] as held that while computing the quantum of deduction u/s.80IA(6) AO, no doubt, has to treat the profits derived from an industrial undertaking as the only source of income in order to arrive at deduction under Chapter VI of the Act. For the purpose of calculating deduction, loss sustained in one of the units is not to be taken into account, because, sub-section (6) contemplates that only the profit shall be taken into account as if it was the only source of income. The stage of deduction of profits gains of the business of an eligible undertaking has to be made independently, and therefore, immediately after the stage of determination of profits gains, and therefore, AO the Ld.CIT(A) completely erred in re-computing deduction u/s.80IA by setting off loss of one eligible unit to profit of another eligible unit. We direct the AO to allow deduction claimed u/s.80IA without setting off loss of another eligible unit. Appeal filed by the assessee is allowed.
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2023 (4) TMI 274
TDS u/s 194C - disallowance of expenditure u/s. 40(a)(ia) - payments made towards CFS charges for non-deduction of TDS - Scope of amendment to section 40(a)(ia) by the Finance Act, 2014 - Assessee alternate plea in light of case of CIT vs Calcutta Export Company [ 2018 (5) TMI 356 - SUPREME COURT] directed the AO to disallow 30% of expenses incurred by the assessee without deducting TDS u/s. 40(a)(ia) by considering amendment made by the Finance Act, 2010 to provisions of section 40(a)(ia) - HELD THAT:- The assessment year involved in present appeals are assessment year 2009-10 2010-11, which are prior to amendment to section 40(a)(ia) of the Act by the Finance Act, 2014 w.e.f. 01.04.2015 and thus, the assessee is not entitled for 30% disallowance towards expenditure incurred without deduction of tax at source, as held in SHREE CHOUDHARY TRANSPORT COMPANY VERSUS INCOME TAX OFFICER [ 2020 (8) TMI 23 - SUPREME COURT] . Therefore, we are of the considered view that, there is no merit in the alternate plea taken by the assessee for disallowance of 30% of expenditure in light of amended provisions of section 40(a)(ia) of the Act by the Finance Act, 2014 w.e.f. 01.04.2015 and thus rejected. Yet another alternate plea of the assessee in light of second proviso to section 40(a)(ia) of the Act inserted by the Finance (no.2) Act, 2019 w.e.f. 01.04.2020, we find that the assessee could not justify its arguments in light of necessary evidences including declaration of income by the payee in the return of income and consequent certificate from the Accountant as prescribed under the law. Therefore, we are of the considered view that, alternate plea of the assessee in light of second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2019 w.e.f. 01.04.2020 cannot be accepted and thus, rejected. We are of the considered view that there is no error in the reasons given by the CIT(A) to sustain additions made by the AO towards disallowance of expenditure u/s. 40(a)(ia) of the Act for non-deduction of TDS u/s. 194C of the Act. Thus, we are inclined to uphold the findings of the ld. CIT(A) and reject alternate plea taken by the assessee. Decided against assessee.
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2023 (4) TMI 273
Royalty - Income taxable in India or not - access to online database of journals and books - PE in India - addition u/s 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of India United States of America (USA) DTAA - assessee is a non-resident corporate entity incorporated in USA - HELD THAT:- Assessee has not transferred right to use of any industrial, commercial, or scientific equipment as the subscriber are only granted access to online database. Various law journals have created online database by collating judgments/orders of courts, tribunals etc. and access is allowed to subscribers upon payment of subscription. However, by allowing such access there is no transfer of right to use of any copyright. Terms of the agreement, as discussed earlier, restricts the subscribers from exploiting or modifying the contents. Thus, it is very much clear, only limited right of access to the database was granted to customers on subscription basis. Therefore, in our view, the amount received will not fall within the ambit of royalty as defined under Article 12(3) of the tax treaty. Thus we hold that the amount received by the assessee, being not in the nature of royalty under Article 12(3) of the treaty, cannot be brought to tax in India in absence of a Permanent Establishment. Accordingly, we direct the AO to delete the addition. Appeal of assessee allowed.
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2023 (4) TMI 272
Bogus purchases - bogus or contrived transaction - addition of net result of purchase and sale and not the entire sales as per CIT - HELD THAT:- CIT(A) has come to a conclusion to sustain the addition of the net result of purchase and sale and not the entire sale and thus, deleted the addition made by the Ld. AO. However, while dealing with ground no. 10 in para 5, Ld. CIT(A) has held the commodity profit to be bogus. We note that while holding so, CIT(A) has not given his explanations, reasoning and the basis for arriving at such a conclusion. From these findings given in two paragraphs by the CIT(A) it is not discernible as to how and on what basis, Ld. CIT(A) has arrived at this conclusion. CIT(A) has merely extracted the observations of the Ld. AO and the submission of the assessee without dealing with them objectively and analytically. Accordingly, to meet the ends of justice and fair play, we find it proper to remit the matter back to the file of Ld. CIT(A) with a direction to pass a speaking order by considering the material placed on record and available through the enquiries made by the Ld. AO, by affording reasonable opportunity of hearing to the assessee. Both the appeal of the revenue and the Cross objection of the assessee are allowed for statistical purposes.
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2023 (4) TMI 271
Disallowance for purchase from three parties - as the notices sent u/s 133(6) to the parties were not served and the assessee submitted the ledger accounts which were not signed - CIT- A deleted addition - HELD THAT:- During the course of appellate proceedings, the assessee submitted the signed ledger confirmation of all the parties that showed the details of purchases and mode of payment, the copies of the bills raised by these parties were also produced along with permanent account number of the supplier entities. All the suppliers also submitted an affidavit that they had supplied material to the assessee and his proprietary concerns. These details were sent by the CIT (A) for the examination to the learned Assessing Officer and assessee was asked to reconcile the corresponding sales against the purchases. Assessee submitted such detail and based on this, CIT (A) deleted the addition with respect to the above three parties. With respect to VA Inamdar, the Assessing Officer did not give any adverse comment. With respect to Geetesh Co., the proprietor of the firm appeared before the AO and confirmed the supply of goods. Similar is the case with respect to Lucky Enterprises. CIT (A) noted that when there are sales, purchases are bound to be there and therefore, it cannot be disallowed. No infirmity in the order of the learned CIT (A) to that extent. Accordingly, ground no.1.1 and 1.2 of the appeal deserves to be dismissed. CIT (A) enhanced the addition by invoking the provision of Section 40A(3) - CIT (A) noted that though the purchases are genuine, however, the payments for such purchases have been made in violation of Section 40A (3) - We find that even in the genuine purchase if it violates the Provisions of Section 40A (3) separate disallowance can be made despite allowing the deduction of purchase. We do not find any infirmity in the order of the learned CIT (A) in invoking the provision of Section 40A (3) of the Act despite deleting the disallowance with respect to unverified purchases. Power of CIT for enhancement u/s 251 - Enhancement of income by CIT-A - Addition u/s 40A (3) and cash transportation expenses - Addition for cash payment in transportation expenditure which is not in violation of the provisions of section 40A (3) of the act but the payment are made in cash and the learned CIT A has disallowed 25% of such expenses - Receipt from Lodha dwellers private limited - Addition u/s 68 - Undisclosed income from luster engineering company - Enhancement based on personal balance sheet and profit and loss account filed during the course of appellate proceedings - HELD THAT:- As powers under section 251 are, indeed, very wide ; but, wide as they are, they do not go to the extent of displacing powers under, say, sections 147, 148, and 263 of the Act. In the present case, the issues on which notice u/s 251 is issued were not at all before ld AO or in Assessment proceedings or were part of Assessment order. The only sum in these proceeding was the addition on account of Lodha Dwellers Pvt Ltd where in we have already upheld the powers of the ld CIT (A) u/s 251 of the Act, as it was part of the Assessment order itself. Therefore, those items, which were not part of the ROI, Assessment proceedings or Assessment order, cannot be considered by the ld CIT (A) for enhancement. Right course would have been to intimate ld AO to issue notice u/s 148 of the Act or to propose revision u/s 263 of the Act. In view of the above , we quash the enhancement to the extent other issues other than income from Lodha Dwellers Pvt Ltd [ Not find that the whole of the sum received by the assessee from Lodha dwellers is chargeable to tax in the hands of the assessee because, there were many encroachers who have confirmed received payment for removing such encroachment. Accordingly, we find that the sum of 20% added in the hands of the assessee is sufficient to be taxed in the hands of the assessee] . Accordingly this ground of appeal is allowed
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2023 (4) TMI 270
TP Adjustment - comparable selection - HELD THAT: - Infobeans Technologies Ltd. (Infobeans) cannot be treated as comparable to the assessee as it is not functionally similar. Accordingly, we direct the AO to exclude this company from the list of comparables. Cybercom Datamatics Information Solutions Ltd. (Cybercom) company is engaged into diversified activities, including provision of software services. However, the segmental details relating to various segments are not available in public domain. Further, unlike this company, the assessee is not providing technical services. Thus , we direct the Assessing Officer to exclude this company as a comparable. Octaware Technologies Limited (Octaware) - Revenue earned during the years is from software development services. There is no other stream of revenue reported by the company. Thus, the contention of learned counsel for the assessee that the company is having more than one segment and is into development of products is not borne out from record. Further, it is relevant to observe, TNMM makes room for broad comparability. Considering the fact that this company is earning revenue from only one segment, viz., software services, we hold that it can be treated as a comparable to the assessee. Therefore, we do not find merit in the submissions of the assessee. Infosys BPO cannot be treated as comparable to the assessee.Undisputedly, the assessee is a purely captive service provider and minimal risk bearing entity. Whereas, Infosys BPO is a risk bearing entity having diversified activities. It has the advantage of Infosys brand name and has established itself as a front runner in the BPO sector - turnover of Rs.2323 crores reported by Infosys BPO compared to turnover of Rs.96 crores reported by the assessee makes the assessee a pigmy qua Infosys BPO. MPS Limited (MPS) - No doubt, this company forms part of the list of comparables selected by the assessee in its TP study report - in course of the proceedings before learned DRP, the assessee in its submissions has sought exclusion of this company citing various reasons. As could be seen from the directions of learned DRP, no discussion has been made on acceptability or otherwise of this company as comparable. We are inclined to restore this issue to the Assessing Officer to examine assessee s claim that the company cannot be treated as comparable. The assessee must be provided reasonable opportunity of being heard on the issue. TP adjustment - imputing interest on outstanding receivables - HELD THAT:- As decided in assessee own case [ 2021 (11) TMI 1148 - ITAT DELHI] assessee is a debt free company and has no claim of interest payable. Hence, in the specific financial conditions of the assessee, we hold that no adjustment is required on this ground. We restore this issue to the AO for verifying assessee s claim, keeping in view the decision of the Tribunal in assessment year 2015-16 (supra) after providing reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes.
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2023 (4) TMI 269
Unexplained cash deposits into bank accounts during demonetization period - unexplained money u/s 69A - benefit of Section 10(26AAA) available to the assessee - assessee has failed to substantiate the source of deposit - HELD THAT:- The assessee after availing exemption u/s 10(26AAA) reported Nil income.Assessee has submitted that the cash deposits in the various bank accounts were out of sales made in the proprietary business carried on under the name and style Royal Demazong and also out of realization from business debtors. Total cash deposits in the banks were to the tune of Rs. 20,10,000/- while the assessee made a turnover of Rs. 73,01,166/- during the year. In our opinion, the assessee has discharged his onus by placing the facts before the authorities below that the cash deposits were out of cash sales and realization from the sundry debtors from the proprietary business carried on by the assessee for which the license has been issued by the Municipal Corporation, Deorali, Sikkim. If we consider the quantum of cash deposits into bank accounts of the assessee and the quantum of the business of the assessee, then the explanation of the assessee seems to be reasonable and deserves to be accepted. Accordingly we reverse the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.
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2023 (4) TMI 268
Penalty u/s 271(1)(c) - difference between the amounts available in the return filed originally, vis-a-vis return filed in response to notice under section 153A - case of the Revenue is that had the search not carried out, then the assessee would have not disclosed the income, which has been disclosed under section 153A - HELD THAT:- We have noticed break-up of the amounts disclosed by the assessee in the return filed under section 139, vis-a-vis in re sponse to notice 153A. We have also taken note of the income disclosed under section 132(4) - Assessee has made disclosure under section 132(4) that does not mean some money, bullion, jewellery or valuable was found and seized. The extra income disclosed has not been demonstrated as representing that money, bullion or jewellery. The case of the assessee that Explanation 5A to section 271(1)(c) could only be invoked if during the course of search, any money bullion, jewellery or document, notings found during the course of search on the basis of which addition in the hands of the assessee are being made is correct. If an assessee enhanced his income voluntarily, then no penalty would be imposed upon the assessee. Assessee has relied upon the decision of Neeraj Jindal [ 2017 (2) TMI 1002 - DELHI HIGH COURT] has also considered the scope of Explanation 5A and held that unless money, bullion, jewellery or asset found during the course of search representing the extra income disclosed by an assessee in response to section 153A, vis-a-vis the income filed under section 139(1), the assessee cannot be visited with penalty. We allow all these appeals of the assessee and delete the penalties.
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Customs
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2023 (4) TMI 267
Classification of imported goods - Cotton Knitted Sorted Rags - to be classified under Customs Tariff Heading (CTH) 63109020 or under CTH 60062200 - misdeclaration of value or not - Circular No. 20/2011-Cus. dated 15.4.2011 - HELD THAT:- As regards the requirement of an import license it is seen that on examination of the goods in BE 5550200 dated 23.12.2011, it was found to be fabric waste and cutting of factory textiles in torn and dirty condition in various sizes and width more than ten inches. Some pieces were in continuous length and some were in small length. In the case of Bill of Entry No. 6068307 dated 22.2.2012, the goods were found to be sorted fabric cotton knitted clips in small cut pieces of various sizes / length . Goods were cutting waste/ mutilated woven worn-out garments found not to be completely in running length, they were cut into small pieces which could not be used in the manufacture of chindi rugs and also for pulling of fabrics. They hence do not come under the purview of Boards circular 20/11-cus dated 15.04.2011. Such goods which are totally unserviceable and beyond repair, are classifiable under CTH 63109020 and can be imported only under a license from DGFT. The issue regarding cut fabrics which are not in continuous length with a maximum width restriction of 10 inches not being given the benefit of Circular No. 20/2011-Cus. dated 15.4.2011 was decided in Revenue s favour by the Hon ble Tribunal in M/S. ANISHA IMPEX VERSUS COMMISSIONER OF CUSTOMS, TUTICORIN [ 2015 (3) TMI 164 - CESTAT CHENNAI ]. The redemption fine and penalty in the facts and circumstances found to be excessive and modify the same to Rs 2,00,000/- (two lakhs) fine and Rs 1,00,000/- (one lakh) penalty - appeal allowed in part.
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Insolvency & Bankruptcy
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2023 (4) TMI 266
Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantor - existence of debt and dispute or not - whether the applications filed by the Appellant under Section 95 of the I B Code against the Personal Guarantors,Respondents was maintainable or not maintainable? - HELD THAT:- The I B Code is founded on the premise that delay in the insolvency process shall diminish the value of the Corporate Debtor, hence, it should be done with fast speed to maximize the value and to protect the value of the Corporate Debtor. After noticing the above objective of the I B Code, if the submission of learned counsel for the Respondent is accepted, that after commencement of the insolvency process if the value of Corporate Debtor reduced down, the whole process will go out of the jurisdiction of the Adjudicating Authority, the said submission runs contrary to the whole object and purpose of the I B Code - The devaluation of assets of a Corporate Debtor by passing time is well accepted phenomena. The I B Code, thus, provide for strict timeline to resolve insolvency with speed. To accept the submission that Corporate Debtor who is in red and further deteriorate by passing of time be taken out of insolvency process is to completely act against the statutory scheme. Since the asset size of JFIL became less than Rs.500 Crore as on 31.03.2021, the Adjudicating Authority shall lose jurisdiction to proceed further and this Tribunal shall also have no jurisdiction to proceed in the matter, cannot be accepted. Jurisdiction will be there with the Adjudicating Authority, as per Notification dated 18.11.2019, which has to exercise on the date when application can be filed against the Financial Service Provider for insolvency. As a corollary, an application under section 95 can be filed against the Personal Guarantor only when on the same date insolvency can be commenced against the Financial Service Provider. On the date when application was filed under Section 95 by the Financial Creditor against the Personal Guarantor an application could have filed against the Financial Service Provider on the basis of last Balance Sheet which had asset size of more than Rs.500, the application filed by the Financial Creditor against the Personal Guarantor was fully maintainable - the Adjudicating Authority has committed error in allowing the applications filed by the Personal Guarantors and dismissing the Company Petitions. Appeal allowed.
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PMLA
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2023 (4) TMI 265
Seeking grant of bail - Money Laundering - proceeds of crime - mandatory twin conditions u/s 45 of the PMLA satisfied or not - HELD THAT:- Section 3 (ii) of PMLA provides that the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. Bare perusal of the definition of beneficial owner as provided under Section 2 (1) (fa) of the Act makes it clear that it includes a person who exercises ultimate effective control over a juridical person. In the case of Vijay Madanlal Choudhary and others vs. Union of India [ 2022 (7) TMI 1316 - SUPREME COURT ] it was inter alia held that offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. It was further held that the process or activity can be in any form be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Therefore, involvement in any one such process or activity connected with the proceeds of crime would constitute offence of money-laundering. Thus, this offence has nothing to do with the criminal activity relating to a scheduled offence except that the proceeds of crime derived or obtained as a result of that crime - The intention of the legislature in enacting the PMLA is that money laundering poses a serious threat not only to the financial systems of countries but also to their integrity and sovereignty and, therefore, the legislature thought it fit to provide a comprehensive legislation for this purpose. Thus the courts while dealing with matters under PMLA have to take into account the object and purpose of legislation. The statements made under Section 50 of PMLA have been held to be an admissible piece of evidence. The term admissible evidence means that such evidence can be considered by the court at the time of appreciation of evidence. A statement recorded under Section 161 Cr.P.C. is not an admissible piece of evidence and can be used only for the limited purpose as provided under Section 162 Cr.P.C. - statements under Section 50 of PMLA carry much more weight than a statement recorded under Section 161 Cr.P.C. These are specific legislations enacted to handle specific crimes. The rejection of MOU by the learned trial court cannot be faulted as it has admittedly been never presented before any authority and moreover it is a self serving document. The petitioners took a plea that the companies were doing business but even a shred of document has not even been shown to reflect any business being undertaken by them - the constant changing pattern of the shareholding in the companies clearly indicates that Sh. Satyendar Kumar Jain was indirectly controlling the affairs of the companies. The evidence on record though speaks in volumes but has not been discussed or examined in detail so as to not cause prejudice to the petitioner. The order rejecting the bail applications are well-reasoned orders based on material on record - the bail applications are rejected.
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2023 (4) TMI 264
Validity of search - Money Laundering - scheduled offences - purchase of gold bullion under the Buyer s Credit Scheme which resulted in wrongful loss to MMTC - reasons to believe - Section 120-B read with Section 420 IPC and Section 13 of the PC Act - HELD THAT:- Sub-section (1) of Section 17 of PMLA deals with two stages: one is at the stage of pre-authorisation and the next is the stage of post-authorisation. In the first stage, the Director or any other officer authorised by him not below the rank of Deputy Director must have in his possession certain information; on the basis of such information in his possession, he must form reason to believe which must be recorded in writing that any person has committed any act of money laundering etc. Therefore, the information in his possession must have a causal relation with the recording of reasons which in turn must be the basis for forming the belief that any person has committed an act which constitutes money laundering - possession of information, derivation of reason from such information and thereafter formation of belief on the basis of the reasons that any person has committed an act which constitutes money laundering etc., are the sine qua non or conditions precedent for invoking the power under sub-section (1) of Section 17 of PMLA. Insofar the second stage is concerned, once the Director or the authorised officer has come to the above conclusion, he may authorise any officer subordinate to him to enter and search any building etc., where he has reason to suspect that records or proceeds of crime are kept; break open the lock of any door etc; seize any record or property found as a result of such search etc. Insofar the second stage is concerned, the authorised officer must have reason to suspect that in any building etc., records relating to money laundering or proceeds of crime are kept etc.; he can enter and search such building and seize any record or property found as a result of such search - It is recorded that there is suspicion that the accused persons are in possession of documents and properties related to the scheduled offence. It is likely that if summoned, the suspects would not disclose the documents and may take steps to further conceal the trail of documents and other evidence. Therefore, it was necessary to conduct search under Section 17 of PMLA in the premises mentioned in the note; to identify and seize available incriminating record/documents relating to the predicate offence and to the offence of money laundering; relating to the whereabouts of the proceeds of crime; to identify and trace the proceeds of crime; to recover incriminating documents relating to commission of the offence of money laundering. The learned Single Judge had erred in holding that no reasons to believe were recorded by the Additional Director which vitiated the search action carried out in the premises of respondents No.1 to 4 on 17.10.2022 and in setting aside the search action including the search warrant/ authorisation dated 17.10.2022, further directing the appellants to release the seized jewellery, cash etc., to respondents No.1 to 4. Appeal allowed.
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2023 (4) TMI 263
Money Laundering - proceeds of crime - criminal activity or property arising from criminal activity, or not - Whether an outstanding arising out of any agreement or condition in MOU between the parties with respect to forex fluctuation amounts to proceeds of crime - not an FIR registered under Section 154 of Cr.P.C. - HELD THAT:- To prosecute under Section 3 of the Act, a person has to be actually involved in any process or activity connected with Proceeds of Crime. Proceeds of Crime is defined under Section 2(1)(u) of the said Act, defining that proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property; or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. - It is specifically stated that any property derived or obtained by any person as a result of criminal activity relating to a scheduled offence would amount to Proceeds of Crime. Every commercial activity where an outstanding arises would not fall within the ambit of Section 3 of the Act. It is not merely criminal activity relating to commission of a predicate offence but property has to be derived directly or indirectly as a result of such criminal activity to be tried and prosecuted under Section 3 of the Act - In the present case, no such property is derived or obtained either directly or indirectly by the petitioner herein either involving in criminal activity or handling any such property derived as a result of criminal activity. The question of concealing or being in possession or acquiring such property does not arise. The amount accrued as discussed earlier is on account of dollar- rupee fluctuation and it cannot in any manner be held that the petitioner had derived or obtained any property. Though, it was agreed that differential amount of rupee dollar fluctuation would be paid, at most it can be termed as an outstanding which can be recovered in a civil suit and by no stretch of imagination can it be called as Proceeds of Crime or the outstanding amount can be called as property as defined under Section 2(1)(v) of the Act. When there is no criminal activity nor any property which is derived as a consequence of criminal activity, it is opined that the proceedings cannot be permitted to continue. Criminal petition allowed.
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Service Tax
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2023 (4) TMI 262
Levy of service tax - renting of property jointly owned by five persons - each appellant became an independent service provider in respect of renting of immovable property - whether appellants are liable to service tax by clubbing of all five persons or otherwise? - no legal entity like Body Corporate or Association of Persons - total rent falls below the threshold limit of exemption under Notification No. 6/2005-ST dated 01.05.2005 or not - HELD THAT:- Clubbing the property as co-owned by the persons, five appellants own equal share. All the appellants entered into lease agreement with Reliance Industries Limited and for this, each appellant became an independent service provider in respect of renting of immovable property. As per facts, there is no legal entity such as Association of Persons of Body Corporate, each person owns the property. As per lease agreement, every individual is independent owner of his share. The rent is also paid by the service recipient to each individual. In such case, every individual become a separate service provider hence, if at all service tax arises, it needs to be assessed in respect of every individual. Further, the rent received by the individual is well within the threshold limit provided for exemption under Notification No. 6/2005-ST dated 01.05.2005. Therefore, there is no service tax liability on any of the appellant. Identical issue has been considered by this Tribunal in the case of M/S NEENABEN R DOSHI, MANJU MUKESH GARG GUNJAN PARVESH GARG, RITABEN PIYUSHKUMAR DOSHI, KISHORBHAI PRANJIVANDAS MANDALIA, VIPULKUMAR ZAVERILAL MANDALIA, PRANJIVANDAS MANDALIA, CHANDRESHBHAI ZAVERILAL MANDALIA, BHANUBEN PRANJIVANDAS MANDALIA, PRAFULLABEN ZAVERILAL MANDALIA, FENNY CHANDRESH MANDALIA, SMT. ARUNA KISHOR MANDALIA, SHRI SHEKHAR KANAIYALAL SHAH, BHANUBEN PRANJIVANDAS MANDALIA, DAKSHA BHARATKUMAR MANDALIA, MRUDULA KANAIYALAL SHAH, SUJATA SHEKHAR SHAH, HEMALI VIPUL MANDALIA, ZAVERILAL VIRJIBHAI MANDALIA VERSUS C.S.T. S.T. - AHMEDABAD [ 2019 (5) TMI 1485 - CESTAT AHMEDABAD] where it was held that receipt of rental income by every individual is only subject to liability of service tax. If the value is below thresh-hold exemption limit in case of any individual, the same will not be taxable being exempted under Notification No. 06/05-ST dated 01.03.2005. At the same time in case of any individual person if the thresh-hold limit exceed in financial year, the same will be liable for service tax. T he issue is no longer res-integra - Appeal allowed.
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2023 (4) TMI 261
Levy of penalty - Classification of services - coaching service - franchise service - business in imparting education and training in general spoken English, business English for corporate communication, professional English (i.e., English for Engineers and MBA, etc.), foreign languages, call centre grooming, voice and accent, presentation skills, interview skills, group discussion, preparation test and entrance exams, etc. - demand alongwith interest and penalty - HELD THAT:- Sub-Rule (5) of Rule 4 of the Service Tax Rules (supra) categorically state that if the registration certificate is not granted within a period of 7 days of receipt of application, then the said registration is deemed to have been granted. Once the registration was not granted even after the lapse of 7 days, it is seen that the assessee did not make a single attempt for more than a year to seek clarification. It is evident that the assessee in the meantime was collecting service tax from his students for the services being extended by them. So it is apparent that the assessee was very much aware that service tax was liable to be paid but they did not deposit the said amount so collected to the Government exchequer nor did they file their ST 3 returns. Penalty under section 78 upheld by Commissioner (Appeals) is correct - Appeal dismissed.
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2023 (4) TMI 260
Refund claim - time limitation - rejection of refund claim on the ground of the same being filed belatedly - HELD THAT:- The President s assent to the Finance Bill was received on 15/5/2016. Hence the Refund Claim was required to be filed on or before 14/11/2016. When the statute itself specifies the time limit for such refund claims, which is six months in this case, if the same is filed after six months, the same cannot be entertained by the Adjudicating Authority. Therefore, the Adjudicating Authority has correctly rejected their Refund Claim vide OIO dated 31.01.2017. After rejection of Refund Claim by the Adjudicating Authority on the ground of limitation, the Appellant cannot take the stand that the same refund should be granted to them without any time limit on the ground that Section 11B is not applicable to them, as has been done by them in their second Refund Claim. As the refund claim is specifically covered by the Clauses of Section 102(3) of the Finance Bill 2016, and was rejected once, the Appellant s attempt to get the same refund under a general category by concealing the facts is illegal - there are no merits in the Appeal filed by the Appellant and the same is dismissed. These facts show that the Appellant has concealed the facts before the Commissioner (Appeals) as well as before the Tribunal, trying to mislead them which might have resulted in an erroneous Order being passed. Considering the seriousness of the acts of the Appellant, it is deemed a fit case for imposing a cost of Rs.10,000/- on the Appellant, to be deposited in the Prime Minister Relief Fund. Copy of such Deposit is to be furnished to CESTAT Registry by 30/04/2023 - appeal disposed off.
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Central Excise
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2023 (4) TMI 311
CENVAT Credit - Process amounting to manufacture or not - receipt of unprocessed Ferro Silicon cake on payment of central Excise duty and carrying out the activities of grinding, sizing and packing, in the factory - It is the allegation of the Revenue that since these processes of grinding, sizing and packing of Ferro Silicon cakes does not amount to manufacture - HELD THAT:- Section 2(f) of the Central Excise Act,1944 (CEA) defines manufacture as: manufacture includes any process: (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act . Thus any process undertaken on an input to make it marketable amounts to manufacture as per section 2 (f) of the CETA1944 - In the present case, the ferro silicon cake received in the factory were bigger size . Without undertaking the processes of sizing, grinding and packaging they cannot be marketed as such. The customers may require it in different sizes. Hence sizing of the Ferro Silicon cake according to the requirement of each customer is an activity amounting to manufacture as per section 2 (f) of CETA, 1944. The processes of grinding, sizing and packaging undertaken by the Appellant on the inputs namely ferro silicon cake, in their factory amounts to manufacture as they are all essential processes for making the goods marketable, as per Section 2(f) of the CETA 1944 - there is no infirmity in the availment of CENVAT credit on the inputs received by the Appellant - Appeal allowed.
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2023 (4) TMI 259
Area Based Exemption - Inclusion of the commodities produced by it i.e. kraft paper (4804.90) and printing and writing paper (4802.90) in negative list vide Notification dated 27.6.2008 - whether the products manufactured by petitioner were included in the negative list right from the inception and if not so, whether the benefits of fiscal incentives could be denied to the petitioner by giving retrospective effect to notification dated 27.06.2008 issued by respondent No.1? - entire thrust of attack in the petition is on the amendment carried in the negative list by respondent No.1 by way of amending notification dated 27.06.2008. HELD THAT:- The negative list made specific inclusion of products by their excise classifications. The products of kraft paper and printing and writing paper included in negative list had their particular species, which definitely did not include product as manufactured by the petitioner. This action becomes evident from the fact that respondent No.1 had to include the remaining types of kraft papers as well as printing and writing paper in the category of Others under excise classifications 4802.90 and 4804.90 by amending Office Memorandum dated 07.01.2003, firstly by bringing out Office Memorandum dated 21.06.2005 and thereafter by way of impugned notification dated 27.06.2008. The fact of the matter is that Office Memorandum dated 07.01.2003 had been followed by notification dated 08.01.2003 extending benefit of subsidy in capital investment and further notifications No.49 and 59 dated 10.06.2003, whereby the benefit of exemption or payment of excise duty was extended. All these notifications had appended or annexed a negative list each with them. These negative lists were in identical terms as Office Memorandum dated 07.01.2003. These notifications were not amended. Similarly, appendice attached to said notifications specifically the negative lists remained the same. Thus, the benefit extended by these notification(s) remained available to all eligible industrial units save and except those mentioned in the negative list - the products manufactured by the petitioner were not mentioned in the negative list(s) annexed with all these notifications. The entire thrust of attack in the petition is on the amendment carried in the negative list by respondent No.1 by way of amending notification dated 27.06.2008. There is not even a whisper that petitioner had ever made any claim to the respondents under the notifications dated 08.01.2003 and 10.06.2003 and the respondents had denied such claim(s). In the absence of such averments, the petitioner cannot be held to have made out a case for itself to seek indulgence of this Court. This petition is disposed off by holding that the petitioner has failed to make out any cause of action for seeking reliefs as prayed by way of instant petition.
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2023 (4) TMI 258
Valuation - price based on Import Parity Price can be expected as a transaction value for indigenously manufactured petroleum product or not - Place of sale or delivery was factory i.e. refinery gate and not depot of OCMs - respondent sold to OOMCs refinery gate adopting IPP as transaction value under Section 4(1)(a) of CEA - HELD THAT:- Though this Tribunal ordered for sine die adjournment but on pointing out by the learned counsel for respondent, it is found that firstly the appeal is of 2005, the issue is settled as of now by various decisions of the Tribunal. Though the revenue s appeals are pending before the Hon ble Supreme Court but in none of the appeal there is any stay. In this position, the wheel of justice should not stop, accordingly we take up this appeal for disposal. As of now the issue is no longer res integra as in the majority of decisions cited by the respondent, it has been held that even though there is a difference of price between sale made through OMC on depot and in case of sale made to OMC even though at lower price, the same has been held under Section 4(1)(a) as transaction value and the demand of duty has been dropped. Though the revenue is in appeal before the Hon ble Supreme Court but no stay has been obtained as per available records. There is no infirmity in the impugned order hence, the same is upheld, revenue s appeal is dismissed.
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2023 (4) TMI 257
Exemption to new Industrial Unit - Benefit of N/N. 20/2007-CE dated 25.04.2007 - commencement of commercial production on 31.03.2017, or not - the investigation concluded that the Appellant was not a new industrial unit as per the said Notification and not eligible for availing exemption under N/N. 20/2007 dated 25.04.2007 as amended - tow units with same partners in the same premises - HELD THAT:- The documentary evidences submitted by the Appellant listed in para 4 above clearly indicate that they have commenced production of their finished goods as on 31.03.2017. The Appellant has installed machinery for manufacturing MS Bolt prior to 31.03.2017 and intimated the Department also. In fact, they have started procuring the machineries from 2016 itself. They have submitted invoices for the procurement of their main raw materials and the machineries required for manufacturing of their finished products namely MS Nut and MS Bolt. The commencement of commercial production on 31.03.2017 was also intimated to the Range Office vide letter dated 31.03.2017. However, there was no verification appears to have been done by the Range Officer immediately on receipt of the letter to check the correctness of the claim made by the Appellant. The doubt was raised by the department for the first time on 22.12.2017 when the appellant was asked to explain why the date of Central Excise Registration and the date of commencement of commercial production were the same. The non availability of Invoices for the procurement of the raw material Hexagonal bar for the manufacture of M S Bolt alone cannot be a reason for denying the benefit of Notification No.20/2007.The Department could have verified the correctness of their claim of commencement of commercial production on 31/03/2007 by immediate verification when they gave the Intimation letter on 31/03/2007. Having not done the verification immediately after 31/03/2007, their claim of commencement of commercial production cannot be questioned later when they provided all documentary evidence to support their claim for commencement of commercial production on 31/03/2017 - the Department of Industries has given a certificate to the Appellant that they have commenced commercial production as on 31.03.2017 based on the documents submitted by them. The other documents submitted by the Appellant also indicate that they have commenced commercial production on 31.03.2017 and effected clearances of 500 kgs. each of MS Bolt and MS Nut on payment of duty and filed ER 1 returns for the respective periods. These evidences clearly establish that the Appellant has in fact commenced commercial production as on 31.03.2017. The allegations of the Department that all the partners of the erstwhile Satyam Alloys are partners of the new unit M/S Sriram Fastners and its functioning in the same premises where M/S Satyam Alloys was functioning earlier are not sufficient grounds to deny the benefit of the exemption Notification available to a new industrial unit. As per the Notification if the evidences available on record indicate that the new industrial unit has been established prior to 31.03.2017 and commenced commercial production prior to 31/03/2017, they will be eligible for the benefit of the Notification No.20/2007 - from the documents submitted by the Appellant, it is clearly established that the Appellant has established a new industrial unit and commenced production prior to 31.03.2017. The Appellant are eligible for the benefit of the Notification No.20/2007 dated 25.04.2007 - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (4) TMI 310
Rejection of option for settling arrears of sales tax under the Amnesty Scheme - petitioners assail the order of the Lok Ayukta on merits and on the ground of jurisdictional infirmity - HELD THAT:- Section 7 of the Lok Ayukta Act provides for matters which may be investigated by the Lok Ayukta and provides that, subject to the provisions of the Act, the Lok Ayukta may investigate any action which is taken by or with the general or specific approval of the persons specified therein, in any case where a complaint involving a ''grievance'' or an ''allegation'' is made in respect of such action. Going by the definition of 'maladministration', only unreasonable, unjust, oppressive or improperly discriminating action taken or purporting to have been taken in exercise of administrative functions would amount to maladministration. The power exercised by the Sales Tax Officer in rejecting the application of the complainants opting for the Amnesty Scheme-2020 is a quasi judicial function and a hierarchy of remedies is provided against the said order under Chapter-VII of the KGST Act apart from the remedy available before this Court under Article 226 of the Constitution in appropriate cases - It cannot assume any jurisdiction otherwise confirmed by the Lok Ayukta Act. This Court, in John Joseph [ 2011 (5) TMI 1141 - KERALA HIGH COURT ], observed that, if the authority does not have the requisite jurisdiction to adjudicate the dispute brought before it, permitting such an examination would only create chaos in the administration. Ext. P1 complaint before the Lok Ayukta does not reveal any allegation or grievance in consequence of maladministration. Therefore, Ext. P1 complaint, is not maintainable before the Lok Ayukta and the Lok Ayukta has no jurisdiction to decide the correctness of the order rejecting the option for settling the arrears under the Amnesty Scheme-2020. Accordingly, Ext.P3 report of the Lok Ayukta is set aside. If orders passed by quasi-judicial functionaries exercising powers under a statute are for any reason untenable in law, resort must be had to the remedies under the statute and the complainants cannot bypass the procedure and approach the Lok Ayukta. This Court has not adjudicated the correctness or otherwise of the order of the assessing authority rejecting the application opting for Amnesty Scheme- 2020, but only the jurisdiction of the Lok Ayukta in entertaining Ext. P1 complaint - Petition allowed.
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2023 (4) TMI 256
Levy of tax - labour and service charges involved in the works contract executed between the Petitioner and the Railways - tax on transportation charges, which was separately charged - transportation charges shown separately is deductible from the GTO as per section 5(2)(A)(a)(ii) of the OST Act - Chips and ballast exigible to tax @4% being minor minerals covered under the Mines Act, 1952 read with Mines and Mineral Development Act, 1957 as well as Odisha Minor Minerals Concession Rules, 2004 - ballast comes under Entry 117 of List C of the Rate Chart under the OST Act and exigible to tax @4% being minor minerals or not. HELD THAT:- The learned Tribunal observed that the goods, viz. ballasts and chips in question fall within the scope of Entry 189 of scheduled goods declared taxable under the OST Act and the transportation of such goods being pre-sale event falling within the ambit of Section 5(2)(iii) read with Section 2(h), the charges relating thereto would form part of taxable turnover. Since no written replies are forthcoming from the side of the Revenue, and the matter is of the year 2015, this Court proceeded to hear the matter on merits on the basis of available material and arguments advanced by respective counsel for the parties - This Court, on perusal of record, finds that the factual position obtained in STATE OF ORISSA REPRESENTED BY COMMISSIONER OF SALES TAX, ORISSA, M/S. SRIRAM MINERALS M/S. HINDUSTAN MINERALS M/S. ESSKAY STONE VERSUS M/S. D.K. CONSTRUCTION, M/S. MAHASHAKTI GRANITE CRUSHER PRIVATE LIMITED, M/S. SHIVA MINERALS, M/S. HINDUSTAN MINERALS, M/S. C.C. SAHU SONS (CONSTRUCTION) PRIVATE LIMITED, M/S. KHUSHRAJ ENTERPRISES, M/S. NARAYANI TRADERS [ 2017 (3) TMI 535 - ORISSA HIGH COURT ] is identical to the present case and similar questions of law as posed in the present revision petition are decided in favour of the petitioner-assessee and against the revenue. The Assessing Authority is directed to re-compute the tax liability as per observation made and taking into consideration the Judgment of this Court - the revision petition is allowed.
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2023 (4) TMI 255
Levy of Entry Tax - stainless steel scrap was a ferrous metal and alloy - liable to be taxed at the rate of 2% under the Himachal Pradesh Tax on Entry of Goods into Local Area Act, 2010 - HELD THAT:- The clear mandate of law, thus, is that this Court can exercise revisional jurisdiction under Section 48 of the Act only against the orders passed by Tax Tribunal either under Section 45(2) or Section 46(3) of the VAT Act. Such jurisdiction can be exercised if the person aggrieved applies to this Court within 90 days of the communication of the order and also if the involvement of any question of law arising out of erroneous decision of law or failure to decide a question of law is found to exist - The impugned order passed by the Tax Tribunal in rectification application filed by the petitioners under Section 47 of the VAT Act is not open to challenge by the petitioners before this Court under Section 48 of the VAT Act. Petitioners can also not be allowed to assail the order dated 20.6.2017, passed by the Tax Tribunal being clearly beyond the period of limitation, as prescribed under Section 48 of the Act. There is no denial to the fact that no distinction has been made in the Entry Tax Act between ferrous metal and alloys and non ferrous metal and alloys. The Tax Tribunal has rightly interpreted the terms of the Entry Tax Act as decipherable from its provision and entries in the Schedule appended thereto. The alloys have been included in Entry 19(b) of Schedule-II to the Entry Tax Act, which has been declared to be taxed at the rate of 0.25%. The Tax Tribunal had rightly interpreted the terms of Schedule-II appended to Entry Tax Act by holding that the tax statutes have to be read as it is without inferring anything extra. There are no erroneous decision of law or failure to decide a question of law in the impugned order dated 20.6.2017 passed by the Tax Tribunal, therefore, no question of law has arisen for consideration of this Court - the petition fails and the same is dismissed.
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