TMI Tax Updates - e-Newsletter
April 10, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Gaining knowledge on the differences between the Holding and the Auxiliary companies:

   By: Ishita Ramani

2. CONFLICTING DECISIONS OF CIVILL COURT AND CRIMINAL COURT

   By: DR.MARIAPPAN GOVINDARAJAN

3. Assessee is entitled to Interest immediately after the expiry of sixty days from date of refund applications till date on which refund was credited to bank account

   By: Bimal jain

4. Agricultural Produce under GST Law and services associated with it

   By: ADITYA SINHAL

5. GST shall be levied on payment of lump sum upfront premium as transfer charges of leasehold rights

   By: Bimal jain

News

1. Advisory on Reset and Re-filing of GSTR-3B of some taxpayers

2. Evolution of financial markets in India: Charting the Future (Keynote Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - April 8, 2024 - at the FIMMDA-PDAI Annual Conference, Barcelona)

3. Indo-Pacific Economic Framework for Prosperity (IPEF) to organise Clean Economy Investor Forum in Singapore

4. CBDT clarifies on media reports claiming special drive to reopen cases with reference to HRA claims

Notifications

GST

1. 07/2024 - dated 8-4-2024 - CGST

Waiver of the interest levied on late filling of GST return for the specified (four) registered person.

GST - States

2. S.R.O. No. 379/2024 - dated 8-4-2024 - Kerala SGST

Kerala Goods and Services Tax (Amendment) Rules, 2024

3. 193731/2023/02(120)/XXVII(8)/2023/CTR-17 - dated 27-2-2024 - Uttarakhand SGST

Amendment in Notification No. 514/2017/9(120)/XXVII(8)/2017 dated the 29th June, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/SECFATF/P/CIR/2024/21 - dated 5-4-2024

Entities allowed to use e-KYC Aadhaar Authentication services of UIDAI in Securities Market as sub-KUA

DGFT

2. 01/2024 - dated 9-4-2024

Modification of SION E-124 for export of refined Sunflower Oil (Edible Grade)

Highlights / Catch Notes

GST

• Interest Waiver Granted for Late GST Returns by Four Entities; No Penalties for Specific Non-Compliance Periods.

  Notifications : Waiver of the interest levied on late filling of GST return for the specified (four) registered person. - The table provided in the notification delineates the class of registered persons, the respective months of non-compliance, and the period for which interest is to be 'Nil'. Noteworthy is the meticulous detailing, specifying the GSTINs of the registered persons affected along with the months and periods concerned.
  Visit to Get Source

  ---

• Court Orders Interest on Delayed Tax Refunds, Citing Breach of Duty and Strict Interpretation of Fiscal Laws.

  Case-Laws - HC : Interest on Delayed Refund of Input Tax Credit - Proviso to Section 56 specified increased interest rates for refunds arising from orders of adjudicating or appellate authorities. - The High court observed that the provision for interest in tax statutes is beneficial and non-discriminatory. - Non-granting of interest would constitute a failure to fulfill statutory obligation by the refund sanctioning authority. - The High Court highlighted the principle of strict construction of fiscal legislation and the necessity for interest payment. - Ultimately, the court directed the respondents to pay interest on the delayed refunds to the petitioners.
  Visit to Get Source

  ---

• Court Annuls Tax Demands on GST Discrepancies, Cess, Scrips, and CSR Activities; Case Sent Back for Review.

  Case-Laws - HC : Validity of order in original and Demand of GST - These issues included discrepancies in GST returns, imposition of cess, treatment of scrips, and taxation of corporate social responsibility activities. The Court found that the tax demands related to discrepancies in GST returns and imposition of cess were unjustified. Additionally, the treatment of scrips and taxation of corporate social responsibility activities were deemed unsustainable due to procedural shortcomings and the nature of the activities involved. Consequently, the impugned order was set aside, and the matter was remanded to the respondent for reconsideration.
  Visit to Get Source

  ---

• Court Nullifies Tax Order Over Discrepancies in GSTR 3B and Form 26AS, Allows Re-submission with New Evidence.

  Case-Laws - HC : Validity Of Order - Tax demand based on Audit observations - variation between the GSTR 3B return and Form 26AS - The High Court observed that there could be duplication between the issue of turnover reconciliation and the differences between the GSTR 3B return and Form 26AS. - The High Court noted the lack of documentation regarding turnover from Tamil Nadu but acknowledged potential duplication in the issues raised. Consequently, the Court set aside the impugned order and provided specific terms for further proceedings, including allowing the petitioner to file a reply with supporting documents and directing a fresh order within a specified timeframe.
  Visit to Get Source

  ---

• Technical Errors Cause Duplicate E-way Bills; Court Allows Appeal with 15% Tax Payment for Delay.

  Case-Laws - HC : Generation of Duplicate / multiple E-way Bills - Delay in filing of Appeal before the Appellate Authority - The petitioner argued that these duplicates were the result of technical mistakes made by a new employee. Although multiple E-way bills were generated for the same invoices, only one consignment was actually dispatched, with the GST collected duly paid to the department and reflected in the returns. The High Court, acknowledging the technical nature of the error and the rectification attempts by the petitioner, concluded that no tax demand was justified. However, the Court noted a delay in filing the appeal beyond the prescribed time frame and directed the petitioner to pay 15% of the disputed tax. - Petitioner permitted to file an appeal within two weeks.
  Visit to Get Source

  ---

• Classification of Clear Float Glass: Naturally Occurring Tin Layer Not Considered Functional Coating Under Tariff Heading 7005 10.

  Case-Laws - AAAR : Classification of imported and traded goods - clear float glass - The Appellate Authority for Advance Ruling highlighted that the presence of a tin layer is a natural outcome of the float glass manufacturing process and does not equate to an applied absorbent layer intended for specific functionalities like infrared light absorption or enhancing reflective qualities. - AAAR concluded that for a product to be classified under 7005 10 (which pertains to glass having an absorbent, reflecting, or non-reflecting layer), there must be a deliberate application of such a layer, distinguishing it from products falling under 7005 29, classified as "other" non-wired glass without specific functional coatings. - Ultimately, the Authority sided with the AAR's classification of the clear float glass under 7005 2990, underscoring the legislative intent and industry standards which differentiate between naturally occurring tin layers and specifically applied absorbent or reflective coatings.
  Visit to Get Source

  ---

• GST Applies to Total Income of Manpower Agencies, Including Salaries and Wages, Says Authority.

  Case-Laws - AAR : Valuation - Manpower supply agency - Whether GST is payable only on the service charges / commission or Income received by whichever name by the Agency Supplying Manpower and not on the salary / wages and related payments made to the Employees - The Authority referenced Section 2(31) and Section 15 of the CGST Act, 2017, which define consideration and the value of taxable supply, respectively. They concluded that the entire payment received by the applicant constitutes consideration, and therefore GST is payable on the total amount received for the provision of services, including salaries/wages and related payments to employees.
  Visit to Get Source

  ---

Income Tax

• New Rule Clarifies 30-Day Verification Deadline for Income Tax Returns Post-Upload in India; Avoid Invalid Returns.

  Notifications : The Corrigendum to Notification No. 02 of 2024, issued by the Directorate of Systems under the Ministry of Finance, Government of India, addresses a clarification regarding the time limit for verification of Income Tax Returns (ITRs) after uploading. - Paragraph 5 of the original notification is amended to specify that returns must be verified within 30 days from the date of uploading or until the due date for furnishing the return of income as per the Income-tax Act, 1961—whichever is later. Failure to verify within this timeframe will result in the return being treated as invalid.
  Visit to Get Source

  ---

• Court Rules No TDS Needed for Payments to Calcutta Dock Board Due to Statutory Wage Requirement, Not Labor Contract.

  Case-Laws - HC : TDS u/s 194C - addition u/s 40(a)(ia) - Payments made to Calcutta Dock Labour Board - The High Court observed that the employment of dock workers and their conditions of service, including wage payments, were stringently regulated under the Act and the Scheme. It was noted that the appellant's obligation to deposit wages with the Board was a statutory requirement for the disbursement of wages to the dock workers, negating the existence of a contract for labor supply between the appellant and the Board. - The court underscored that there was no contract of supply of labor between the Board and the appellant; thus, the appellant was not obligated to deduct tax at source under Section 194C.
  Visit to Get Source

  ---

• Loan Waiver Not Taxable: High Court Rules Section 41(1) Inapplicable Due to Absence of Prior Deduction for Interest Liability.

  Case-Laws - HC : Addition u/s 41(1) - interest waived by the Bank - The appellant contended that the waiver of liability by the bank should not be chargeable to tax under Section 41(1) of the Act. The High Court examined the provisions of Section 41(1) and emphasized that for it to apply, there must have been an allowance or deduction made in the assessment for the loss or expenditure incurred by the assessee. In this case, no such allowance or deduction had been made. Additionally, the Court concluded that the waiver of the loan amounted to the cessation of a liability other than trading liability, making Section 41(1) inapplicable. Consequently, the High Court ruled in favor of the assessee.
  Visit to Get Source

  ---

• Court Denies Priority for Appeal Amid Backlog; Advises Stay Application to Halt Recovery Actions Temporarily.

  Case-Laws - HC : Priority/out of turn hearing of the appeals pending with CsIT (AU) and/or CIT(A) - The judgment by the Madras High Court addressed the petitioner's grievance regarding the rejection of their appeal against an assessment order. Despite acknowledging the genuine hardship faced by the petitioner, the Court declined to prioritize their case due to the backlog of appeals before the Appellate Commissioner. Instead, it advised the petitioner to file an application for a stay of recovery proceedings, granting them four weeks to do so. The respondents were directed to suspend all recovery proceedings until the application is resolved.
  Visit to Get Source

  ---

• Tribunal Supports Assessee's Rectification Request, Examines Tax Benefits Under Income Tax Act Amendment.

  Case-Laws - AT : Application u/s 154 - benefit of the second proviso to Section 40(a)(ia), introduced by the Finance Act, 2012, with effect from 01.04.2013 - This proviso allows relief if the payee has paid taxes on the receipts, even if the tax deduction at source was not made by the payer. - The Tribunal rules in favor of the assessee, holding that the rectification sought u/s 154 is maintainable. It directs the issue back to the Assessing Officer for consideration on merits regarding the quantum of benefit allowable to the assessee under the second proviso to Section 40(a)(ia) of the Act.
  Visit to Get Source

  ---

• Appellate Tribunal overturns income addition, ruling funds were for ultimate beneficiary, not the assessee, based on evidence.

  Case-Laws - AT : Accrual of income - Addition made to the income of the assessee received by the assessee from “JDS” and its associates, treated as own income of the assessee - Despite the Department's awareness of the true nature of the transactions, the addition was confirmed by the lower authorities based on certain factors, including the deletion of similar additions in the case of the ultimate beneficiary and the appellant's previous assessment. However, the Appellate Tribunal, relying on legal precedents and the evidence presented, concluded that the funds received by the appellant were not their own income but were meant for the ultimate beneficiary. - Additions deleted.
  Visit to Get Source

  ---

• Tribunal Partially Allows Appeal on Cash Deposits During Demonetization; Reduces Addition, Upholds Interest, Halts Penalty.

  Case-Laws - AT : Addition u/s 69A - Addition of cash deposits made by the assessee during the demonetization period - The Tribunal examined the legality of the assessment order, the justification for the cash deposits, and the imposition of interest and penalty. It found the assessment order to be valid but disagreed with the A.O's reasoning for the cash deposit addition. The Tribunal partially allowed the appeal, reducing the addition amount based on the assessee's available cash and savings. It upheld the charging of interest but deemed the initiation of penalty proceedings premature.
  Visit to Get Source

  ---

• Tribunal Rules Original Tax Assessment Valid; Criticizes CIT's Reliance on Audit Objections for Unexplained Credit Revision.

  Case-Laws - AT : Revision u/s 263 by CIT - Addition u/s 68 - unexplained credit - The Tribunal meticulously examined the submissions, the audit objections, and the law's provisions. It observed that the appellant had indeed furnished comprehensive details during the original assessment proceedings. Notably, the Tribunal found that the Pr.CIT's reliance on audit objections and the subsequent show cause notice under Section 263 lacked independent application of mind. - The Tribunal held that the original assessment order made after due inquiries by the AO, which included scrutiny of unsecured loans and trade payables, could not be deemed erroneous merely because the Pr.CIT had a different view.
  Visit to Get Source

  ---

• Tribunal Affirms No Undisclosed Income Without Corroborative Evidence; Highlights Role of Sworn Statements and Retractions.

  Case-Laws - AT : Assessment u/s 153C - undisclosed receipts as allegedly received by the assessee - reliance on the statement of persons (from whose possession the material was seized) - The Tribunal agreed with the CIT(A) that the seized material did not directly link the assessee to the undocumented income without corroborative evidence. It emphasized the need for corroborative evidence to attribute the entries in the seized documents to the assessee and noted the lack thereof. - The Tribunal acknowledged the importance of sworn statements under section 132(4) but also recognized the significant impact of their retraction, especially when the retraction claims coercion or pressure. It concurred that statements retracted should not be solely relied upon without corroborative evidence.
  Visit to Get Source

  ---

• Investment Allowance Granted as ITAT Recognizes Lubricant Oil Blending as "Manufacture," Aligns with Legislative Intent.

  Case-Laws - AT : Investment allowance u/s 32AC - claim disallowed as assessee do not fulfill the requisite condition - The ITAT sided with the assessee, affirming that the activities of blending lubricant oil qualified as "manufacture" or "production", thus making them eligible for investment allowance under Section 32AC. The Tribunal found the Revenue's interpretation of the term "manufacture" too narrow and not in line with the legislative intent or judicial precedents that recognize a broader understanding of "production".
  Visit to Get Source

  ---

• Appellate Tribunal Invalidates Reassessment Due to Lack of New Evidence, Upholds CIT(A)'s Decision Against Revenue's Claims.

  Case-Laws - AT : Validity of reopening of assessment u/s 147 - Reason to believe - The Appellate Tribunal observed that the reassessment proceedings were initiated solely based on the information available in Form 26AS, without any fresh material or tangible evidence. The Tribunal agreed with the CIT(A)'s conclusion that the AO did not have sufficient grounds to form a belief that income had escaped assessment. Therefore, the Tribunal dismissed the revenue's contention and upheld the CIT(A)'s decision to quash the reassessment proceedings.
  Visit to Get Source

  ---

• Tribunal Orders Reassessment of Transfer Pricing Dispute Over Notional Interest on Delayed Export Payments.

  Case-Laws - AT : Transfer Pricing Adjustment on Delayed Receipt of Export Proceeds - notional interest - The Appellate Tribunal found that the CIT(A) had dismissed the new contention of treating receivables from AEs and non-AEs equally without proper examination, relying on a judgment that didn't restrict the assessee from raising new arguments. Noting that the previous judgment cited by the CIT(A) was not applicable in the current case, the Tribunal deemed the dismissal unjustified. Consequently, the matter was remanded back to the CIT(A) for a fresh examination, allowing the assessee to present all relevant contentions and evidence.
  Visit to Get Source

  ---

• Late Filing of Form 67 Doesn't Bar FTC Claims if Substantive Rights Supported; DTAA Provisions Take Precedence.

  Case-Laws - AT : Denial of Foreign Tax Credit (FTC) - being Form 67 was not filed along with the ITR before the time limit u/s 139 (1) - The use of the word "shall" in the rule indicates the mandatory nature of this requirement. - The Tribunal referred to a precedent set by the Mumbai Bench of the ITAT in the case of Rohini Hattangadi vs. CIT (A), where it was held that the delay in filing Form 67 should not disentitle the assessee from claiming FTC. The decision emphasized that procedural law should not be construed as mandatory if it aids the claim of substantive right. - Furthermore, the Tribunal considered various decisions stating that provisions of Double Taxation Avoidance Agreements (DTAA) override the provisions of the Act if they are beneficial to the assessee.
  Visit to Get Source

  ---

• Tribunal Rules Google India's Payments to Google Ireland Not 'Royalty' or FTS; No Withholding Tax Required.

  Case-Laws - AT : Income taxable in India - Royalty or FTS - PE in India or not? - Assessment of payments made by Google India Pvt. Ltd. (Payer) to Google Ireland Limited (payee) for online advertisement services. - The Tribunal observed that the services provided by the payee did not involve the transfer of any rights in or the right to use any copyright of literary, artistic, or scientific works, including software. It also noted that the services did not entail the transfer of any secret formula, process, or industrial, commercial, or scientific equipment. - The ITAT Bangalore decided in favor of the payer, stating that the payments made to the payee for online advertisement services could not be classified as 'royalty' or FTS under the Income Tax Act or the DTAA. Therefore, the payer was not liable for withholding tax on these payments.
  Visit to Get Source

  ---

• Tribunal Rules in Favor of Appellant: Share Premium Addition u/s 56(2)(viib) Invalid Due to Improper Valuation.

  Case-Laws - AT : Addition u/s 56(2)(viib) - Method of Valuation - share premium receipts - The Tribunal noted that the appellant had obtained a valuation report from a registered valuer, considering both movable and immovable properties owned by the assessee. This valuation was deemed appropriate and in compliance with recognized methods. - The Tribunal criticized the AO's method of valuing the equity shares based solely on the book value, disregarding the registered valuer's report. Additionally, the AO did not refer the issue to a valuation expert, which was considered unacceptable. - Given the discrepancies in the AO's approach and the validity of the valuation report provided by the appellant, the Tribunal ruled in favor of the appellant. The addition of share premium to the assessee's income was deemed unwarranted, and the Tribunal directed the AO to delete the addition.
  Visit to Get Source

  ---

Customs

• Customs Notification Extends Deadline for Import Exemptions on Yellow Peas from April 30 to June 30, 2024.

  Notifications : Notification No. 23/2024-Customs amends the original Notification No. 64/2023-Customs by substituting the deadline mentioned in Column (4) of the Table against S. No. 1. Instead of the previous date of "30th day of April, 2024," the new deadline is extended to "30th day of June, 2024." This extension provides importers with additional time to comply with the conditions for availing exemptions on specified goods, particularly Yellow Peas.
  Visit to Get Source

  ---

• Court Orders Return of Seized Gold Bangle Due to Delay in Show Cause Notice Under Customs Act.

  Case-Laws - HC : Seeking release/return of gold bangle- Issuance of SCN after 3 months of seizure - The High Court of Meghalaya heard a case regarding the seizure of a gold bangle under the Customs Act. The petitioner sought the return of the seized item due to a delay in receiving the show cause notice, which violated the statutory provisions. Despite attempts to justify the delay, the court ruled in favor of the petitioner, emphasizing the mandatory nature of the notice period and the need for compliance with legal provisions. The court's decision highlighted the independence of Sections 110 and 124 of the Customs Act and their respective implications.
  Visit to Get Source

  ---

• Court Orders Reassessment of Summons in Customs Duty Case; Petitioners Cleared by Prior Order Exempted from Appearance.

  Case-Laws - HC : Validity of criminal complaint and related summons issued by the ACMM, New Delhi - Liability to pay differential customs duty with penalty - The High Court acknowledged the merits of the petitioners' contentions, noting that the summons appeared to have been issued without proper consideration of the order dated 15.09.2023 passed by the Principal Commissioner of Customs. The Court directed that the factual position be brought to the attention of the ACMM for reconsideration. If the ACMM deemed the summons to be in accordance with the law, the petitioners were granted liberty to challenge the summoning order afresh, considering the previous order clearing them of charges. The Court also exempted the presence of the petitioners before the ACMM for the scheduled date.
  Visit to Get Source

  ---

• Appellate Tribunal Rules Timely Relinquishment of Warehouse Goods Title; No Additional Penalties Imposed.

  Case-Laws - AT : Denial of relinquishment of title of part (balance) goods lying in the warehouse - Section 68 of the Customs Act, 1962 - The Appellate Tribunal notes the appellant's financial difficulties and their request for an extension of the warehousing period. Despite these challenges, the goods remained uncleared beyond the initial warehousing period. - The CESTAT determines that the appellant's relinquishment of title was made within the permissible timeframe, as no order for clearance of goods for home consumption had been issued. - Regarding penalties: the Tribunal observes that the appellant had already been penalized under section 117 of the Customs Act. Considering this penalty and the circumstances of the case, it refrains from imposing any further penalties on the appellant.
  Visit to Get Source

  ---

• Appellate Tribunal Overturns Decision: Imported Medical Devices Not Classified as E-Waste Due to Invalid Show Cause Notice.

  Case-Laws - AT : Seeking clearance of imported goods - e-waste/hazardous waste - imported medical devices - The Appellate Tribunal found in favor of the appellant on all grounds. They held that the absence of a valid SCN deprived the Adjudicating Authority of jurisdiction to pass the order. Additionally, considering the evidence presented, including certification by a Chartered Engineer, the Tribunal concluded that the imported goods did not qualify as waste under the relevant rules. The certification of the goods' residual life further supported this finding.
  Visit to Get Source

  ---

DGFT

• Temporary Policy Shift: Melon Seeds Import Moves to 'Free' Status for Processors from May to June 2024.

  Notifications : The notification introduces a temporary shift from a 'Restricted' to a 'Free' import policy for melon seeds, effective from May 1, 2024, to June 30, 2024. This transition facilitates a smoother import process for a specified period, aiming to potentially stabilize market prices or meet domestic demand surges. - Notably, the 'Free' status is conditioned upon the imports being on an 'Actual User' basis, exclusively permitting processors of melon seeds to import. Importers must adhere to stringent regulatory requirements, including possession of a valid FSSAI Manufacturer Licence specifically for melon seeds, in alignment with the FSSAI Order dated March 15, 2024.
  Visit to Get Source

  ---

• Yellow Peas Import Deadline Extended to June 2024; Restrictions Apply for Later Shipments.

  Notifications : The period within which Yellow Peas can be imported freely, without the Minimum Import Price (MIP) condition and without port restrictions, has been extended from 30th April 2024 to 30th June 2024 for consignments with Bills of Lading issued on or before the latter date. - Import consignments where the Bill of Lading is issued after 30th June 2024 will be subjected to the 'Restricted' category. The associated import policy conditions that were in place before the issuance of DGFT Notification No. 50/2023 dated 08.12.2023 will be reinstated.
  Visit to Get Source

  ---

• India Approves Export of Essential Commodities to Maldives for 2024-25, Emphasizing Sustainable Trade Practices.

  Notifications : DGFT Notification No. 03/2023, issued on April 5, 2024, facilitates the export of essential commodities to the Republic of Maldives under a bilateral trade agreement for FY 2024-25. The commodities include Eggs, Potatoes, Onions, Rice, Wheat Flour, Sugar, Dal, Stone Aggregate, and River Sand. The notification exempts these exports from future restrictions, emphasizing India's commitment to supporting the Maldives. It also mandates environmental and regulatory compliance for the export of River Sand and Stone Aggregate, reflecting a commitment to sustainable and responsible trade practices.
  Visit to Get Source

  ---

Indian Laws

• India Updates Foreign Contribution Rules: Higher Reporting Threshold, Extended Deadlines, Electronic Reporting Formalized.

  Notifications : The Ministry of Home Affairs issued the Foreign Contribution (Regulation) Amendment Rules, 2022, on 1st July 2022, introducing several key amendments to the Foreign Contribution (Regulation) Rules, 2011. These amendments include a tenfold increase in the financial threshold for reporting foreign contributions, extended compliance deadlines for reporting, the omission of a specific clause under rule 13, and a formalization of reporting mechanisms to include electronic submissions. These changes are indicative of a move towards a more streamlined and possibly more digital framework for the regulation of foreign contributions in India, balancing between easing operational burdens on organizations and maintaining adequate regulatory oversight.
  Visit to Get Source

  ---

• Court Allows Limited Account Access for Org Under Financial Probe; Essential Payments Approved with Strict Oversight.

  Case-Laws - SC : Freezing of Bank Accounts - investigation under the FCRA - Seeking to continue utilising their accounts for payment of salary and institutional expenses - Section 37 of the Foreign Contribution (Regulation) Act 2010 - The Supreme Court addressed a case involving the freezing of accounts of an organization under investigation for alleged financial irregularities under the FCRA. While allowing the organization to utilize its accounts for essential expenses, the Court imposed strict conditions on maintaining and auditing accounts, with regular reporting to investigating authorities or the trial court. The Court refrained from making any findings on the allegations of contempt, emphasizing that the order aimed to facilitate the continued operation of the numerous institutions run by the petitioners.
  Visit to Get Source

  ---

IBC

• Tribunal Rejects Objection to Company Amalgamation Due to Lack of Creditor Standing; Appellant Not Listed in Financials.

  Case-Laws - AT : Locus of appellant - The NCLT's decision dismissed the Appellant's objections to a scheme of amalgamation involving two companies - Appellant contended that they were a creditor based on previous agreements and royalty payments related to copyright material, thus entitled to object to the scheme and access scheme documents. - The Tribunal found no merit in the Appellant's arguments, affirming that the legal criteria for a creditor's locus standi in objecting to a scheme were not met by the Appellant. The NCLAT underscored that the Appellant's name was not listed in the audited financial statements nor among the unsecured creditors of either respondent company. This fact was pivotal in determining the Appellant's lack of standing to object to the scheme.
  Visit to Get Source

  ---

• Appellate Tribunal Confirms Compliance with Resolution Plan Conditions; Denies Liquidation Request Under Insolvency Code.

  Case-Laws - AT : Non-compliance of conditions of the Approved Resolution Plan by the Successful Resolution Applicant (SRA) - The Appellate Tribunal found that as per the order dated January 13, 2023, by the Adjudicating Authority, all conditions precedent as required under the approved Resolution Plan were fulfilled by the SRA by May 20, 2022. This included the validation of the Air Operator Certificate, submission and approval of the business plan, slots allotment approval, international traffic rights clearance, and the demerger of ground handling business into AGSL. - The Tribunal acknowledged the extensions and exclusions granted by the Adjudicating Authority for fulfilling the conditions precedent and for the infusion of the first tranche of funds. - The Tribunal did not grant the appellants' request for the liquidation of the corporate debtor under Section 33(3) of the IBC.
  Visit to Get Source

  ---

VAT

• Secured Creditors' Rights Upheld: Court Affirms Priority Over Government in Asset Sale Proceeds Dispute.

  Case-Laws - HC : Review of the order - Recovery of dues - priority of charges - secured creditor have a prior right over the relevant Department of the Government to appropriate the amount realized by the sale of a secured asset - The High court agreed with the submissions made by Ms. Jeejeebhoy (for Revenue) that the discovery of new particulars would not assist the petitioner in the review proceedings. The court emphasized that the findings in paragraph 237, which referred to paragraph 154 of the judgment, were crucial in determining the outcome of the case. Paragraph 154 underscored the significance of following legal procedures, particularly regarding the attachment and proclamation of the defaulter's property. - The court affirmed that the respondent, the Sales Tax Department, had adhered to the legal procedures, as observed and accepted by the court.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2024 (4) TMI 367
  Validity Of show cause notice and unsigned assessment order - Unsinged order either digitally or physically as is otherwise required under Rule 26 of the Central Goods and Services Taxes Rules ( CGST ) - HELD THAT:- We are of the considered opinion that the impugned order in the instant case also since it an un-signed document which lose its efficacy in the light of requirement of Rule 26(3) of the CGST Rules 2017 and also under the TGST Act and Rules 2017. The show cause notice as also the impugned order both would not be sustainable and the same deserves to be and is accordingly set aside/quashed. However, the right of the respondents would stand reserved to take appropriate steps strictly in accordance with law governing the field. Accordingly, this Writ Petition stands allowed. No order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed.

  ---

• 2024 (4) TMI 365
  Interest on Delayed Refund - Entitlement for interest u/s 54 of the Central Goods and Services Tax Act, 2017 on the delayed granting of refund of Input Tax Credit - HELD THAT:- There is a catena of decisions of the Hon ble Supreme Court and also practically of every High Court wherein it has been consistently held that in the event of there being a delay on the part of the Department in making necessary refund as quantified by the Department themselves within a stipulated period or within a reasonable period of time, the said amount shall carry interest. Such decisions have been passed even under the other statutes dealing with tax. As regards the issue whether for differing the payment of interest or for delaying the period from which interest would become applicable deficiencies memos being issued, it would be relevant to take note of a decision of the Delhi High Court in the case of Jian International vs. Commissioner of Delhi Goods and Services Tax [ 2020 (7) TMI 611 - DELHI HIGH COURT] wherein it was held that To allow the respondent to issue a deficiency memo today would amount to enabling the Respondent to process the refund application beyond the statutory timelines as provided under Rule 90 of the CGST Rules, referred above. This could then also be construed as rejection of the petitioner s initial application for refund as the petitioner would thereafter have to file a fresh refund application after rectifying the alleged deficiencies. The respondents are directed to forthwith take steps for payment of interest on the delayed refund of ITC released to the petitioners in terms of sub-section (1) of Section 56 and the proviso thereto - petition allowed.

  ---

• 2024 (4) TMI 364
  Validity of order in original - rejecting the rectification petition - discrepancies between the GSTR 3B return and the auto-populated GSTR 2A return - imposition of cess - receipt of scrips - No opportunity to show cause/ personal hearing - HELD THAT:- Out of the total tax liability, it appears that almost Rs. 5.17 crores pertains to the discrepancies between the GSTR 3B and GSTR 2A returns. Even from the intimation issued on 31.05.2023, it is evident that the amount reflected in the GSTR 2A auto-populated return is in excess of the ITC availed of and reflected in the petitioner s GSTR 3B returns. In those circumstances, imposition of GST on the excess amount reflected in the GSTR 2A return appears prima facie untenable. As regards the issue relating to cess, the petitioner has stated clearly that cess was paid in May 2018 by enclosing the relevant GSTR 3B return. In spite of that, the impugned order imposed liability with regard to cess. As regards the liability imposed with regard to scrips, the show cause notice called upon the petitioner to show cause as to why ITC should not be reversed in relation to the duty credit scrips. By contrast, in the impugned order, the said amount has been treated as a turnover from scrips. Since the petitioner was not provided an opportunity to show cause with regard to treating the value of scrips as turnover, the findings in relation thereto also cannot be sustained. Thus, the impugned order dated 3012.2023 is unsustainable. As a consequence, such order is set aside in relation to the issues forming the subject of the writ petition and the matter is remanded to the respondent for reconsideration. Since the petitioner was not provided an opportunity to show cause with regard to the scrips, the petitioner is permitted to file a reply in relation thereto within two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the respondent is directed to provide a reasonable opportunity, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner s reply. These Writ Petitions are disposed of on the above terms. There shall be no order as to costs. Consequently, connected miscellaneous petitions are also closed.

  ---

• 2024 (4) TMI 363
  Validity Of Order - Tax demand based on Audit observations - show cause notice replied to, seeking further time up - turnover reconciliation and variation between the GSTR 3B return and Form 26AS - HELD THAT:- In the impugned order, the respondents recorded that the petitioner did not place on record documents pertaining to the turnover from Tamil Nadu. This conclusion cannot be completely disregarded in as much as the petitioner should have placed on record the trial-balance relating to Tamil Nadu and supported it with a certificate from a Chartered Accountant. However, it appears prima facie that the tax demand was confirmed against the petitioner by taking into account the total turnover from the petitioner s profit and loss account. It also appears prima faci e that there could be duplication as between the head relating to turnover and the head relating to the differences between the GSTR 3B return and Form 26AS. Thus, it is just and appropriate that the petitioner be provided another opportunity, albeit by putting the petitioner on terms. Thus, the impugned order is set aside on the following terms: (i) As agreed to by the petitioner, the respondents are permitted to appropriate 10% of the disputed tax demand relating to all heads of demand, other than turnover reconciliation and difference between the GSTR 3B return and Form 26AS, from the bank account of the petitioner, which was attached. As regards the tax demand relating to turnover reconciliation and difference between GSTR 3B returns and Form 26AS, the respondents are permitted to appropriate 5% of the tax demand from the aforesaid bank account. (ii) Upon realisation of the above amounts, which shall be retained subject to the outcome of the remanded proceedings, the attachment of the bank account shall stand raised. W.P. is disposed of on the above terms without any order as to costs.

  ---

• 2024 (4) TMI 362
  Violation of principles of natural justice - objections raised in the reply were not considered - validity of assessment order - HELD THAT:- On examining the impugned assessment order, it is noticeable that such order refers to the tax payer s reply but does not discuss such reply or record any findings in relation thereto. In the reply, the petitioner/tax payer contended that the audit report issued on 21.02.2022 is beyond the period of limitation prescribed in sub-section (4) of Section 65. This contention and other contentions raised in such reply were completely disregarded in the impugned assessment order and no findings were recorded in relation thereto. Without expressing any opinion on the merits of such contentions, in view of the fact that no findings were recorded in relation thereto, the impugned assessment order calls for interference. It should also be noticed in this regard that the petitioner remitted 10% of the disputed tax demand. The impugned assessment order is quashed and the matter is remanded for reconsideration. The assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh speaking assessment order after duly taking note of all the contentions of the petitioner. Petition disposed off by way of remand.

  ---

• 2024 (4) TMI 361
  Generation of Duplicate / multiple E-way Bills - Delay in filing of Appeal before the Appellate Authority - Petition to quash the order reducing the interest and rectification order - limitation period - intimation of discrepancies in the return after scrutiny - multiple E-way bills for the same invoice number and date, same invoice value and the same consignee - HELD THAT:-In the instant case, the person in charge of generating E-way bills is new to handling the generation of E-way bills. The said person generated two E-way bills for the same invoice applicable to the same consignee with GSTIN number. In fact, even though duplicate E-way bills were generated, only one consignment was sent to the consignee with one E-way bill. The total number of E-way bills mentioned by the respondent was 12. This means there are 6 original E-way bills and 6 E-way bills issued for the same invoice. Admittedly, only 6 consignments with 6 E-way bills were sent and invoices were sent to the consignee and the GST collected under the said invoices was paid to the department and mentioned in the returns filed by the petitioner during the period. By inadvertence, the person who handled the generation of E-way bills generated 2 EWB for each invoice, which is only a technical mistake in the portal at the relevant time. The petitioner has not preferred the appeal challenging the order passed by the respondent dated 09.06.2023 and the limitation period for filing the same is 3 months plus 1 month which expired in October 2023. Hence, there is a delay of more than 4 months to prefer the appeal before the respondent. Thus, this Court is of the considered view that the petitioner shall be directed to pay 15% of the disputed tax on or before 25.03.2024 and on payment of the same, the petitioner may prefer the appeal before the respondent / The Assistant Commissioner (ST) Chennai, within a period of two weeks thereof and it is made clear that the Appellate Authority shall not insist on the limitation period and is directed to entertain the appeal if it is filed by the petitioner within the period of two weeks and the same is in order. In the result, the writ petition stands disposed of with the above observation and direction.

  ---

• 2024 (4) TMI 360
  Maintainability of petition - non-constitution of Tribunal - HELD THAT:- The controversy raised in the instant writ application stands resolved in view of the adjudication made by a Division Bench of this Hon ble Court in M/S SHREE DEV NARAYAN MARBLE VERSUS STATE OF RAJASTHAN, THROUGH PRINCIPAL SECRETARY, FINANCE DEPARTMENT (TAX DIVISION) , SECRETARIAT, JAIPUR., COMMISSIONER, RAJASTHAN STATE GST DEPARTMENT, JAIPUR, ASSISTANT COMMISSIONER, ASSISTANT COMMISSIONER, CIRCLE RAJSAMAND, WARD 1, BHILWARA, RAJASTHAN AND ADDITIONAL COMMISSIONER, APPELLATE AUTHORITY, STATE TAXES, UDAIPUR. [ 2024 (4) TMI 297 - RAJASTHAN HIGH COURT] holding that this petition, at this stage, is disposed off with a direction that in case petitioner makes payment as per provisions contained in Sub-section(8) of Section 112 of the Act, further proceedings shall not be drawn for recovery of the balance amount, provided that the petitioner avails statutory remedy of appeal within a period of three months from the date of the constitution of the Tribunal. This writ petition is also disposed of in the light of the decision rendered in M/s. Shree Dev Narayan Marble s case on the same terms.

  ---

• 2024 (4) TMI 359
  Classification of imported and traded goods - clear float glass - classifiable under the CTH 7005 29 or under CTH 7005 10 of the Customs Tariff Act, 1975? - Country of origin - HELD THAT:- In order to merit classification under 7005 10, the float glass should be non-wired and should have an absorbent layer, and in order to merit classification under 7005 29, the float glass should be non-wired and that the same should not be coloured . Clear Float Glass , as the name suggests, are supposed to be colourless, and are admittedly non-wired. Once these aspects are taken out of equation, we are left with the term an absorbent layer which becomes the crucial difference between the chapter sub-headings 7005 10 and 7005 29, and accordingly, the discussion on the said absorbent layer assumes immense significance in determining the classification in the instant case. On scrutiny of the sample test report dated 04.02.2019 of CGCRI, Kolkata pertaining to this appellant, it is observed that the report mentions about the presence of An absorbent layer (Tin) is observed on one side of the glass which is fluorescent under UV illumination for both the glasses . At the same time, it is observed that the test report does not say that the glass has undergone any coating process. This Tin layer on one side which fluoresce under UV illumination is not the result of applying any coating on clear float glass, but actually inherent to the production of Float Glass - the write-up on float process by Sir Alastair Pilkington states that modified properties are produced by means of surface coatings whereby a microscopically thin coating on glass is applied by chemical vapour deposition technology; the write-up under UQG Optics refers to application of secondary process of laminating, tempering, coating, etc., to meet specific optical requirements; the write-up under FOSG suggests adding colour to the glass during the manufacturing process to achieve tint and solar radiation absorption properties. As the said test report does not mention that the glass has undergone any such coating, the glass does not have an absorbent, reflecting or non-reflecting layer. When the Country of Origin Certificate issued by MITT, Malaysia which was carrying the classification code as 7005 10 90 hitherto, is reported to have changed the classification code, of late, as 7005 29 90, we feel that it is made with a sense of purpose, and that it cannot be considered as an erroneous mention, or as an entry due to oversight. The mention of CTH 7005 2990 was made with a conscious effort to set right the anomaly that existed earlier in respect of the exports received, of late from Malaysia, the country of origin. Clear float glass means CLEAR as understood by those using the product and not COATED . Clear float glass are transparent and colourless and allow visible light to pass through it. It is also apparent that Clear Float Glass neither possess an absorbent, reflecting or non-reflecting layer to absorb or improve the reflecting qualities of the glass nor are coloured throughout the mass (body tinted), opacified, flashed or surface ground and therefore, same are excluded from the purview of classification under CTH 70051090 or CTH 700521. Further, the Clear Float Glass are not wired glass and as such do not merit classification under CTH 700530. In view of the aforesaid position, the subject goods are rightly classifiable under Customs Tariff Heading 70052990 of the Customs Tariff Act, 1975.

  ---

• 2024 (4) TMI 358
  Valuation - Advance ruling application for determination of the liability to Pay tax on Service - Supply of Labour / Employees to others (Principal Employer) to work under the direct supervision and control of the Principal Employer - Payment to employees - Whether GST is payable only on the service charges / commission or Income received by whichever name by the Agency Supplying Manpower and not on the salary / wages and related payments made to the Employees - Admissibility of the application - HELD THAT:- We find that it is imperative to mention here that the labour / employee supplied by the applicant are the employees of the applicant and the employee employer relation as put forth in Schedule III of the CGST Act, 2017 is between the applicant and the labour / employee supplied by him and not between the principal employer and the labour / employee supplied by the applicant. As per the sample work order submitted by the applicant it is seen that the applicant is responsible for paying the salary, and depositing the EPF, ESIC etc pertaining to the labour / employee supplied by him to the principal employers. The applicant through the labour / employee is supplying security service, cleaning service etc to the recipients of services as per their requirement and hence the total consideration charged by the supplier of labour shall be the taxable value for the purpose of GST. Further with regard to the applicant s submission that the payment to these employees is only routed through them and does not constitute to their income, we find that the applicants understanding is misplaced. Unlike Income Tax which is a direct tax levied on the income of the individuals and business, GST is an indirect tax applicable to the supply of goods and services and is leviable on the consideration in relation to the supply of goods or services or both. As can be seen from Section 15 of the CGST Act, 2017., there is intent to include even all taxes, duties, cesses, fees and all charges, including the amount that the supplier is liable to pay in relation to such supply, but which has been incurred by the recipient of supply, in the value of supply. Hence it can be seen that applying the interpretation as put forth by the applicant i.e the salary / wages and related payments made to the employees do not form part of the taxable value, leads to undervaluation of supplies made by the applicant and short payment of GST. Admissibility of the application - Proceedings is not defined under CGST Act. In the absence of statutory definition, the term proceedings shall be accorded a literal interpretation. The term proceedings has been used in various Sections of the Act under different context and one such mention is made in the Form DRC-01A. The subject of Form DRC-01-A mentions Case proceedings reference no and the body of the form starts with Please refer to case proceedings. In this regard the amount of tax, interest, penalty payable . . Hence, it is clear that proceedings is said to have been pending in as much as the investigation had commenced much before the filing of the advance ruling application by the applicant. Therefore the appellants contention that the proceedings comes to play only when the question as to the service rendered by the contract employees is taxable service or not is decided is not correct. On considering the first proviso to section 98(2) of the Act comprehensively, It is apparent that the first proviso covers any proceedings in the case of an applicant under any of the provisions of the Act including Section 67 and Section 74 of the Act, under which investigation was conducted by the Headquarter Preventive Unit, Trichy GST Commissionerate. In the instant case the applicant has submitted that the proceeding commenced by the authorized officer is not directly related to the issue upon which Advance Ruling is sought for, however we find that neither during the personal hearing nor till date the applicant has differentiated the question on which advance ruling is asked and the issues covered in the show cause notice issued to the applicant, particularly with regard to short payment of GST. Hence, as the proceedings had commenced much before the filing of advance ruling application, we hold that the subject application is liable to be rejected under first proviso to Section 98(2) of the Act. Thus, we order as under; The advance ruling application is rejected for the reasons discussed.

  ---

• Income Tax

• 2024 (4) TMI 357
  TDS u/s 194C - addition u/s 40(a)(ia) - Payments made to Calcutta Dock Labour Board by the appellant in terms of provisions of clauses 41(5) and 56(1) of the Dock Workers (Regulation of Employment) Scheme, 1970 framed under the Dock Workers (Regulation of Employment) Act, 1948 - HELD THAT:- As decided in SRI TARSEM SINGH VERSUS SRI SUKHMINDER SINGH [ 1998 (2) TMI 596 - SUPREME COURT] and VIZAGAPATAM DOCK LABOUR BOARD VERSUS STEVEDORES ASSOCIATION, VISHAKHAPATNAM ORS. [ 1969 (9) TMI 118 - SUPREME COURT] as well as specific provisions of the Act, 1948 and the Regulation Scheme, 1970, we are of the firm view that the contract of employment is between the appellant and the dock workers and not between the appellant and the Board. The Board has merely discharged its statutory obligation with regard to regulation of dock workers. As we find that Section 194C of the Act, 1961 has no application on facts of the present case with regard to payment of wages by the appellant/assessee to the dock workers through the Administrative Committee/Board. There is no contract of supply of labour between the Board/Administrative Committee and the appellant/assessee i.e., the registered employer. The appellant/assessee was not liable to deduct tax at source u/s 194C while making payment of wages to its employees i.e. the dock workers through the Administrative Committee/Board constituted under the Act, 1948 read with Regulation Scheme, 1970. Consequently, the provisions of Section 40(a)(ia) of the Act, 1961 would also not come into play. The impugned order of the Tribunal deserves to be set aside. Decided in favour of assessee.

  ---

• 2024 (4) TMI 356
  Addition u/s 41(1) - interest waived by the Bank - HELD THAT:- The object and purpose of Section 41(1) of the Act, 1961 is to ensure that an assessee does not get away with a double benefit once by way of deduction and another by not being taxed on the benefit received by him in the later year; vide Commissioner vs. Mahindra And Mahindra [ 2018 (5) TMI 358 - SUPREME COURT] ITAT has allowed the appeal of the Revenue merely on an observation in paragraph 8 of the impugned order that once the assessee has debited interest in the profit and loss account, then the assessee has already taken benefit of interest in its account, whether he has taken the benefit of the Income Tax Act is not the relevant issue for consideration. This finding of the Tribunal is totally misconceived and is in complete ignorance of the express provisions of Section 41(1)(a). The first requirement of Section 41(1) is that the allowance or deduction is made in respect of the loss, expenditure or a trading liability incurred by the assessee. The other requirement is that the assessee has subsequently obtained any amount in respect of such loss or expenditure or obtained a benefit in respect of such trading liability by way of a remission or cessation thereof. Even if for argument sake it is assumed that the aforesaid first requirement is satisfied, yet the other requirement in assessee s case is not satisfied as the appellant assessee has neither subsequently obtained any amount in respect of the bank interest debited in his books of account in the A.Y. 1991-92, 1992-93 and 1993-94 nor waiver of interest on bank loan in the A.Y. 2003-04 is remission or cessation of a trading liability. Law laid down in Mahindra And Mahindra (Supra) is applicable on facts of the present case that waiver of loan amounts to cessation of liability other than trading liability. Hence Section 41(1)(a) of the Act, 1961 is not attracted on facts of the present case. Thus Tribunal has committed manifest error of law to hold that the interest waived by the bank was chargeable to tax in the hands of the appellant assessee for the assessment year 2003-04 u/s 41(1). Consequently, the impugned order of the ITAT deserves to be set aside and the order of the CIT(A) deserves to be affirmed - Decided in favour of assessee.

  ---

• 2024 (4) TMI 355
  Priority/out of turn hearing of the appeals pending with CsIT (AU) and/or CIT(A) - Stay of demand - Rejection of Application for hearing of the Appeal against the Assessment order on the ground of law, pendency of large number of high pitch cases before the Appellate Commissioner - as submitted that though the amount involved is more than a crores and the petitioner is being subjected to genuine hardship, the petitioner s appeal has not be taken up disposal HELD THAT:- There are several high pitched appeals are pending along with the regular appeals before the Appellate Commissioner. It would be humanly impossible to the Appellate Commissioner to take up the petitioner s appeal against the Assessment order dated 21.03.2022. It would be unfair if the petitioner s case is taken up out of turn overlooking the other pending appeals of other assessees. Considering the above, Court is inclined to give liberty to file appropriate application to stay recovery proceedings. In case, the petitioner moves such application within a period of four weeks from the date of receipt of a copy of this order, such application may be considered and disposed of the same on merits and in accordance with law by the appropriate Authority. Pending such exercise, the respondent shall keep all recovery proceedings in abeyance.

  ---

• 2024 (4) TMI 354
  Principal of res-judicata application to the income tax proceedings - CIT(A) directing the AO to charge commission @ 0.5% of the total deposits on the basis of next year assessment - addition as undisclosed income of the assessee in the assessment framed u/s 143(3)/147 - HELD THAT:- We observe from the appellate order that the CIT(A) has noted in the appellate order for AY 2011-12 under similar facts commission @0.25% of the total in the books and assessee was added to the income of the assessee on the ground that the assessee was an entry provider and allowed his bank accounts to be used by other persons in lieu of commission at 0.25% of the deposits. Having observed so the CIT(A) applied @.5% of the total deposits on the same reasoning in the current year as well which we do not find in any way to be wrong and in consistence with the facts of the case. Accordingly we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.

  ---

• 2024 (4) TMI 353
  Application u/s 154 - benefit of the second proviso to Section 40(a)(ia) - seeking rectification to the effect that the disallowance u/s 40(a)(ia) on payment made without deduction of tax at source be allowed in terms of the second proviso to Section 40(a)(ia) which proviso undeniably was brought on the statute much after the impugned assessment year before us - HELD THAT:- Assessee has demonstrated before us that the in the case of Arvind Lifestyle Brands Ltd. [ 2018 (8) TMI 1714 - ITAT AHMEDABAD] had categorically held that the said amendment/second proviso to Section 40(a)(ia) to have retrospective effect, finding it to be curative in nature. The Revenue has not controverted this position of law as laid down by the Hon ble jurisdictional High Court. The law as interpreted by the Hon ble High court has binding force within its jurisdiction and is the final word on law in its particular jurisdiction until overturned by a contrary decision of the hon ble apex court. Therefore, the decision of the Hon ble jurisdictional High Court in the case of Arvind Lifestyle Brands Ltd. (supra), holding second proviso to Section 40(a)(ia) of the Act to have retrospective effect, was the interpretation of law in the jurisdiction of Gujarat as it always was. The assessee was well within its right to have sought the benefit of this second proviso for the impugned year, i.e. AY 2005-06 as it was applicable for the impugned year also as per the decision of the Hon ble jurisdictional High Court. The application, therefore, filed by the assessee seeking the benefit of the second proviso, therefore, clearly pointed out a mistake which was apparent from record on account of the denial of benefit of the said proviso to the assessee. As rightly pointed out by assessee, courts have repeatedly held that if an assessee under a mistake/misconception is over-assessed, the authorities under the Act are required to assist him and ensure that only the legitimate taxes due are collected, S.R Koshti [ 2004 (12) TMI 62 - GUJARAT HIGH COURT] - The application, therefore, filed by the assessee u/s 154 of the Act seeking the benefit of the second proviso to Section 40(a)(ia) of the Act, needed to be entertained and allowed since the assessee had pointed out a mistake apparent from record. As relying on Jigna Construction [ 2016 (10) TMI 169 - GUJARAT HIGH COURT] we hold the application filed by the assessee is maintainable u/s 154 of the Act and restore the issue back to the AO to consider the same on merits regarding the quantum of the benefit allowable to the assessee under the second proviso to Section 40(a)(ia) of the Act. Decided in favour of assessee.

  ---

• 2024 (4) TMI 352
  Accrual of income - Addition made to the income of the assessee received by the assessee from JDS and its associates, treated as own income of the assessee - HELD THAT:- We fail to understand, how the funds received by the assessee from JDS can be treated as its own funds when the money trail unravelled by the Department itself clearly revealed the ultimate beneficiary to be VMS Industries. There can be no other conclusion drawn from the facts before the department but that of VMS Industries being the ultimate beneficiary of the transactions, and the assessee only being intermediary in the entire process. AO of VMS Industries and the AO SCMPL have also admitted to this fact. Even the AO of VMS Industries agreed with the same while taxing the entire share capital received in it , in its hands. Thus there appears to be clear unanimity between the AO s of all the three entities that the money brought into assessee and SCMPL was only as intermediary, with M/s VMS being the ultimate beneficiary of the same. Coming to the fact that the addition made in the hands of the VMS Industries of these funds stood deleted by the ld.CIT(A), we have been informed that the Department had gone in appeal against the order of the ld.CIT(A), but during the pendency of the appeal, the assessee settled the dispute under VSVS scheme. Therefore, no benefit can be derived from the appellate order passed in the case of VMS industries. Ignoring thus the appellate order passed in the case of M/s VMS Industries and considering the entire facts and circumstances of the case, which had been extracted from the inquiry from the Department itself, by conducting survey on all the persons concerned in the money trail including the ultimate beneficiary and intermediary i.e. the assessee and the SCMPL , the preponderance of probability is to the effect that the money introduced to the assessee-company from JDS Industries was not its own income. For this proposition, we heavily rely on the decision of Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT ] The addition made in the present case is held to be not sustainable and is directed to be deleted. Decided in favour of assessee.

  ---

• 2024 (4) TMI 351
  Addition u/s 69A - Addition of cash deposits made by the assessee during the demonetization period - observation of the A.O. based on the statement of the assessee recorded u/s. 131 as regards the availability of cash in hand - HELD THAT:- We are unable to persuade myself to subscribe to the view taken by the A.O. who had restricted the availability of cash in hand with the assessee (out of his accumulated savings) at Rs. 1 lac. As stated by the assessee in his reply he had started working way back in F.Y.2001-02 and had thereafter been regularly filing his return of income from A.Y. 2002-03 onwards. Thus it can safely be concluded that cash-in-hand of Rs. 2 lac sourced out of the accumulated savings of the assessee garnered over the preceding years, i.e A.Y 2002-03 to A.Y 2013-14 would have been available with him for funding the cash deposits in his bank accounts during the subject year. Accordingly, based on the methodology adopted by the A.O. for determining the availability of cash in hand (liquidity) with the assessee during the year under consideration, the same as per our aforesaid deliberations can safely be estimated at Rs. 6,58,443/- [Rs. 4,58,443/- (+) Rs. 2 lac] thus, in terms of my aforesaid observations, scale down the addition sustained by the CIT(Appeals) to an amount of Rs. 8,41,557/- [ Rs. 15 lacs (-) Rs. 6,58,443/-] and modify the order of the CIT(Appeals) accordingly. Appeal of the assessee is partly allowed

  ---

• 2024 (4) TMI 350
  Addition u/s 68 - share premium receipts - no basis for valuation of the shares of loss making company at such a high premium of Rs. 40/- per shares (face value is Rs. 10/-) - during the course of assessment the assessee has failed to submit or explain the basis of arriving at the said premium, without which is was not possible to ascertain the genuineness of claim of transaction - CIT(A) deleted addition - HELD THAT:- The expression the assessee offers no explanation means assessee offers no proper, reasonable and acceptable explanation as regards sums found credited in the books maintained by the assessee. The opinion of the AO is required to be formed objectively with reference to the material on record. Application of mind is a sine qua non for forming the opinion. The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and the attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature. The identities of the creditors are clearly established in case of the appellant because the sum credited in the books of the assessee as share capital and share premium have been subscribed by the Future group and Godrej group, which are the holding company and other major shareholder of the appellant company. The creditworthiness has also not been questioned by the AO. The only reason why the AO made addition u/s 68 of the Act is that there is no basis for valuation of the shares of loss making company at such a high premium of Rs. 40/- per shares (face value is Rs. 10/-). The company has been consistently incurring losses and the assessee failed to furnish any valuation report before the AO for the subject assessment year. Moreover, if AO does not doubt the transaction and creditworthiness or the genuineness, then how can addition be made on valuation of premium paid on shares on the ground that valuation is higher according to him. AO can examine the nature and source of credit and once the nature and source has been proved which is not doubted by him and then how addition can be made under section 68 for treating the premium amount as unexplained on the reason that premium amount is not justified. To tax such such premium amount on account of valuation more that the fair market value statute has brought section 56(2)(viia)/(viib) from A.Y.2013-14. Thus such an addition cannot be made u/s 68 of the Act. The valuation report for issue of share was prepared prior to notification of Rule 11UA of the Income-tax Rules, 1942. We find that the valuation report was prepared for A.Y. 2010-11. Though, no fresh valuation report has been prepared, there are no substantial changes in the projections made in the said report. The Valuer has adopted DCF method which takes into account the future business prospect of the company. It uses the concept of the time value of money. All cash flows expected at a particular point of time are estimated and discounted by using cost of capital to determine its present value. The appellant has argued that the IT Act itself gives option to the assessee to determine the value of its share u/s 56(2)(viib) and the same cannot be rejected merely on the ground that actual result or profit does not tally with the projected result. We agree that valuation of shares is a commercial decision between the investors and investees and once both the parties agree on a price of the subject shares, then questioning the same by the AO would be beyond the scope of section 68 of the Act. Even the decision in the case of SLS Energy (P) Ltd. [ 2023 (7) TMI 88 - BOMBAY HIGH COURT] is directly on the issue and is in favour of the assessee. In the said case, security premium of Rs.6,79,32,00,000/- was stated to be unjustified on the ground of intrinsic valuation of shares . However, the Hon ble High Court held that the very basis for reopening was misconceived as receipt of premium on issuance of shares was not receipt of income , but it was a capital receipt . The Hon ble High Court held that the receipt of share capital including share premium was on capital account and gave rise to no income. The facts of the present case are similar to the facts of the decision cited supra and therefore, on this ground also, the appellant is liable to succeed. In the result, the grounds of appeal of the revenue are dismissed. Disallowance of interest paid on ICDS - CIT(A) allowed the ground Perusal of the Tax Audit Report reveals that interest paid on ICDS to Future Venture India Ltd. - HELD THAT:- Once the assessee has taken ICD s and that ICD s has been taken in the earlier year then payment of interest cannot be disallowed on the ground that assessee has incurred loss during the year. Thus, we do not find any infirmity in the order of the CIT (A) when the interest has been paid on the ICD s to Future Venture India Ltd. Accordingly, the ground is dismissed. In the result, the appeal filed by the revenue is dismissed. Reopening of assessment u/s 147 - share capital and share premium questioned - HELD THAT:- As AR contended that the AO had asked for all details regarding receipt of share process during the year in the original assessment proceedings. The same were supplied to the AO and the assessment order was passed after considering the explanation and details furnished before the AO. We find that no addition has been made by the AO in the assessment order u/s 143(3) except a small disallowance u/s 36(1) of the Act.. Therefore, it cannot be said that the AO has not applied his mind to impugned issue regarding share capital and share premium. CIT(DR) has not placed any evidence or material before us to counter the argument of the Ld. AR that the details regarding impugned issue were not provided to the AO and the same was not considered by the AO. Therefore, reopening is based on mere change of opinion on the same set of facts and the same issue already considered by the AO in the original proceedings u/s 143(3) of the Act. The reopening is based on mere change of opinion, which is not permissible, as held in the case of Kelivintor of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] We also filed that the decision of Godrej Projects Development Pvt. Ltd. [ 2024 (2) TMI 166 - BOMBAY HIGH COURT] supports the case of the appellant. Under similar facts and circumstances of the case, the Hon ble Court held that the reopening is based on mere change of opinion and would amount to review of the assessment order, which is not permissible. It also held that receipt of share premium does not competitive income charged to tax under the Act. The case of the appellant is covered by the above decision. In view of the facts and the precedents discussed above. Therefore, the ground of the appellant is allowed. Addition u/s 56(2)(viib) - share premium receipt - HELD THAT:- As clear from reading of section 56(2)(viib) of the Act that mischief of the said section is not attracted to a company in which public are substantially interested. The provisions of section 2(8)(b)(B) of the Act defines a company in which public are substantially interested . After careful consideration of the facts of the case in the light of the above statutory provisions, it is clear that the case of the appellant is not covered under the provisions of section 56(2)(viib) of the Act. We also find that the assessee covered by the clause (b) (B)(c) of the subsection (18) of section 2 of the Act because the share holding in the appellant s company is as follows:(1) Future Venture India Ltd. (now known as Future Consumer Ltd.) 70%, (2) Godrej Agrovet Ltd. 19% and (3) Others 11%. Thus, appellant is a subsidiary of Future Venture India Ltd. Shares held by the Future group are not entitled to a fixed dividend whether with or without a further right to participate in profits. Clause (b) of section 2(18) applies to the said company since it satisfies the condition in clause (b)(A). The shares of Future Consumers Ltd. are listed on BSE and NSE since 10th May 2011. In view of the facts it is a company in which public are substantially interested and the appellant is deemed to be a company in which the public are substantially interested within the meaning of section 2(18) of the Act. It is thus evidently clear that provisions of section 56(2)(viib) are not applicable to the appellant company. Regarding valuation of shares, we are of the considered view that it was a commercial decision by the promoters of two companies who had agreed to rely on the valuation report which was relied upon while subscribing to the shares of the assessee company in FY 2009-10. In this regard, the appellant has relied upon the decision of the ITAT, Mumbai in the case of Green Infra Ltd [ 2013 (12) TMI 949 - ITAT MUMBAI] where a newly created company had issued shares of Rs. 10 each at premium of Rs. 490 per share. During the assessment proceedings, the AO had observed that own funds were introduced by the assessee through shareholders under guise of revenue. The AO also questioned the authenticity of the valuation report. In the first appeal, the Ld. CIT(A) confirmed the addition. However, the ITAT decided the issue in favour of the assessee.

  ---

• 2024 (4) TMI 349
  Revision u/s 263 by CIT - Addition u/s 68 - unexplained credit - as per CIT no documentary evidence and confirmation of lender was submitted by the assessee - HELD THAT:- In order to exercise power under section 263(1) there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue and that it must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in undue haste. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. In the present case, the audit objection was raised. It seems that on the basis of audit objection with regard to unsecured loan, the revision was proposed. In fact there is no audit objection with regard to trade payables. We find that in the case of Pr.CIT Vs Shreeji Prints (Pvt.) Ltd. [ 2021 (9) TMI 108 - SUPREME COURT] held that when AO made enquiries in detail and accepted the genuineness of loan received by assessee, such view of AOwas a plausible view and cannot be considered to be erroneous or prejudicial to the interest of revenue. We also find force in the submission of assesse that language of Section 68 itself give discretion to the Assessing Officer about nature and source of explanation to the satisfaction of AO. We find that the AO on unsecured loan as well as on trade payables has taken a reasonable, plausible and legally sustainable view. Hon ble Jurisdictional High Court in Aryan Arcade Ltd. [ 2018 (9) TMI 427 - GUJARAT HIGH COURT] held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid. By following the aforesaid decisions of Superior Courts, the combination of this bench also took similar view in S.U. Enterprises [ 2022 (11) TMI 670 - ITAT SURAT] in our view, a mere observation of the PCIT that no proper details, with regards to the issues identified by him, were obtained by the assessing officer and has not made inquiries which ought to have made in the present case cannot be a sufficient basis for exercising his jurisdiction. Thus, order of ld PCIT is quashed - Decided in favour of assessee.

  ---

• 2024 (4) TMI 348
  Assessment u/s 153C - undisclosed receipts as allegedly received by the assessee - addition made towards undisclosed income based on the seized materials and Sworn statement of persons (from whose possession the material was seized) with regard to the contents of the said seized material - evidentiary value of statement recorded in search - CIT(A) deleted addition - HELD THAT:- As seized material was in the nature of dumb document which did not contain complete and unambiguous information to arrive at such a conclusion that the assessee was in receipt of the payments found noted therein against the name OPS Ramesh . There was no corroborative evidence to support and supplement the details in the seized material to conclusively establish that the name OPS Ramesh found in the seized material refers to the assessee only. There was no corroborative evidence to prove that the payments noted in the seized material have actually materialized and transfer of money has actually taken place between the concerned parties. In view of all these reasons, the addition of alleged receipts by the assessee from M/s SRS Mining has rightly been deleted by Ld. CIT(A). We endorse the view of Ld. CIT(A), in this regard. Upon perusal of the contents of the aforesaid seized material, it could be noted that the name of the assessee did not appear in any of the relevant loose sheets taken into consideration by the AO while drawing such an inference.Though the name of the assessee was not found noted in any of the relevant seized loose sheets and the names of OPS Ramesh or Ramesh were found noted only in some of the seized loose sheets, AO held that the entries in the said seized loose sheets reflected the transactions of the assessee only by giving the reasoning that the assessee was able to earn money on account of his official position as PWD Minister and distributed the same through M/s SRS Mining for political gain on account of the control exercised by the PWD department over sand quarry mining activity in the State of Tamilnadu and in view of the fact that M/s SRS Mining controlled the entire sand mining activities in the state. The reasoning given by the AO only tantamount to a wild allegations and a sweeping statement which is not substantiated by any evidence. There is no place for such surmises and conjectures in making an assessment. The above factual findings remain uncontroverted before us and therefore, we concur with aforesaid factual findings of Ld. CIT(A). So far as the statement of Shri. K. Srinivasulu recorded u/s 132(4) is concerned, he merely stated that OPS Ramesh found in the seized notebook denotes PA to OPS . However, Shri K. Srinivasulu did not explain or elaborate in the said statement regarding what the acronym OPS stands for. Further, this statement was a retracted statement. Considering the observation of Hon ble High Court of Madras in Writ Petition of Shri P. Rama Mohan Rao [ 2018 (12) TMI 1990 - MADRAS HIGH COURT] his statement, on standalone basis, would have no evidentiary value. If AO was to rely on this statement, he was to let in other reliable evidence to corroborate the same. As in statement of Shri. T. Shanmugasundaram (accountant of M/s SRS Mining), did not make any reference to the name of the assessee in his answers. In fact, Shri T. Shanmugasundaram did not speak anything about the source of the amount which was distributed to various constituencies. It was, therefore, clear that AO could not have drawn any support from the statement of Shri. T. Shanmugasundaram for arriving at such an adverse inference against the assessee. Another fact is that this statement has also been retracted and the retraction has been reiterated by Shri T. Shanmugasundaram in summons issued by Ld. AO u/s 131 during the course of assessment proceedings. Therefore, entire discussion made by the AO in the assessment order regarding the subsequent retraction of the said statement and the reference made to an independent professional forensic expert for the purpose of establishing that the said retraction is factually incorrect, would have no relevance to the issue under consideration. AO issued summons to Shri. S. Ramesh, the then PA to the assessee and recorded his statement u/s 131 - AO did not make any mention in the assessment order regarding the fact of recording the statement of Shri Ramesh during the assessment proceedings and the contents of the said statement. In the absence of any attempt to discredit the said statement with cogent evidences in the assessment order, the said statement could not be disregarded in appreciating the evidences on record while adjudicating the issue under consideration. The said fact favors the case of the assessee. Material has been seized from a third-party and the presumption of Sec.132(4A) r.w.s. 292C would arise qua the searched person or qua the person who was found in the possession or control of such documents. Such a presumption was not applicable to a person other than the searched persons as held by Hon ble Bombay High Court in the case of ACIT vs. Latha Mangeshkar [ 1973 (6) TMI 13 - BOMBAY HIGH COURT] There is a statutory presumption with regard to books of accounts, documents, money, bullion, jewellery or other valuable article or thing found in possession or control in the course of the search that the same belong to such person. It is quite clear that the presumption of Sec. 132(4A) would arise only against the person making the said statement and in whose possession such incrimination material or books of accounts have been found. This presumption would not arise against third parties unless the same is supported by corroborative evidences. As decided V.C. Shukla [ 1998 (3) TMI 675 - SUPREME COURT] an independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case We endorse the findings of Ld. CIT(A). In the result, both the appeals of the revenue stand dismissed.

  ---

• 2024 (4) TMI 347
  Investment allowance u/s 32AC - claim disallowed as assessee do not fulfill the requisite condition - CIT(A) deleted addition as business activity of the assessee is manufacturing as per the Central Excise Act and that the assessee had acquired installed the new assets during the period 01.04.2013 to 31.03.2014 - HELD THAT:- The key word for consideration is that the assessee should be a company who should be engaged in the business of manufacture or production of any article or thing and installs new assets after 31st day of March, 2013 but before the 01st day of April, 2015 and aggregate amount of actual cost of such new assets exceeds INR 100 crores. The term new asset has been defined in sub-clause (4) of section 32AC of the Act which defines new asset means any new plant machinery (other than ship or aircraft). In the present case, the assessee is a company and claims to be engaged in the business of manufacture or production of lube oil. The assessee claims that blending of lube oil tantamount to manufacture or production as contemplated u/s 32AC of the Act. The opinion of the AO that the assessee is not engaged in the manufacturing or production activity, is contrary to the judgement of the Hon ble Supreme Court in Hindustan Petroleum Corporation Ltd [ 2017 (8) TMI 197 - SUPREME COURT] - As the provision is not restricted to manufacturing activity and it also has production in its ambit. We therefore, do not find any merit in the findings of AO. Reliance placed by Ld. DR for the Revenue during the course of hearing in the case of Commissioner of Trade Tax vs M/s. Kumar Paints Mill Stores through its Proprietor [ 2023 (3) TMI 943 - SUPREME COURT] would not help the Revenue as referred judgement decided the dispute under U.P. Trade Tax Act, 1948. Objection of the AO was regarding investment made by the assessee, did not meet threshold limit - Figures submitted by the assessee are self-explanatory. Revenue has not brought any contrary material to controvert the claim of the assessee that it had made investment exceeding the threshold limit. In the absence of such material, we do not see any infirmity in the finding of CIT(A). CIT(A) has given a finding on fact regarding installation of plant machinery and as categorically recorded that it has been clarified beyond doubt that deduction is allowable in the year of installation and not in the year of acquisition. The fact that installation of the plant machinery has been completed during the year under consideration is not in the dispute at all. CIT(A) has pointed out that it is only in the Assessment Year 2014-15, the assets has actually been capitalized in the books of the assessee. It is only in the year under consideration that such assets were put to use for production of lubricant oil on which normal claim of depreciation has been allowed by the assessee. This finding is not controverted by the Revenue. Ground No.1 raised by the Revenue is accordingly, dismissed. Denial of additional depreciation claimed u/s 32(1)(iia) - The issue whether the assessee is engaged in the manufacturing or production activity, has been elaborately discussed while deciding the Ground No.1, we have affirmed the view of Ld.CIT(A). The assessee in our considered view, would be entitled for additional depreciation under the facts of the present case. Therefore, we do not see any infirmity in the finding of CIT(A), the same is hereby affirmed.

  ---

• 2024 (4) TMI 346
  Validity of reopening of assessment u/s 147 - Reason to believe - perusal of the Form 26AS initiating reassessment proceedings - as per DR there was no need for any tangible material for the ld AO to reopen the proceedings u/s 147 of the Act when the assessment was completed originally u/s 143(1) - CIT(A) quashed reassessment proceedings HELD THAT:- We are unable to accept DR proposition as the existence of tangible material is prerequisite for reopening of an assessment and that tangible material should have live link or nexus with formation of belief for the ld AO to conclude that income of the assessee had escaped assessment. Under these circumstances alone, the assessment could be reopened by the ld AO. This view of ours is fortified by the decision of Kelvinator of India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] . Admittedly, in the instant case, the reopening has been triggered only on reappraisal and re-verification of Form 26AS of the assessee which was very much available before the ld AO during the course of original assessment proceedings itself and there was absolutely no fresh information or tangible material that had come into the possession of the ld AO subsequent to conclusion of original assessment u/s 143(1) - Grounds raised by the revenue are dismissed.

  ---

• 2024 (4) TMI 345
  Disallowance u/s. 14A r.w. Rule 8D - expenditure related to the earning of exempted income - investment made in securities - as argued no direct or indirect expenditure in relation to investment in securities has been claimed or debited in the Profit and Loss Account by the appellant - HELD THAT:- As decided in assessee own case [ 2015 (3) TMI 1334 - ITAT DELHI] the expenditure related to the earning of exempted income like STT and brokerage were shown in the withdrawals. The assessee is also having personal drawings for the year under consideration. All these facts show that the assessee is not debiting the expenditure related to the exempted income in its Income Expenditure account and the revenue has failed to pinpoint any specific instance in this regard. Therefore, as following the same we allow this ground of assessee s appeal.

  ---

• 2024 (4) TMI 344
  TP Adjustment - notional interest towards delayed receipt of export proceeds from its Associated Enterprises (AEs) - whether international transactions u/s 92CA of the Act? - HELD THAT:- In the instant case, the assessee has merely raised a new facet of argument to support its plea on lack of justifiable grounds for impugned Transfer Pricing Adjustment on account of short delays in receipt of export receivables. Hon ble Supreme Court in Goetze India [ 2006 (3) TMI 75 - SUPREME COURT] has not put any restrictions or fetters upon the assessee to raise a new plea on the subject matter of dispute before the appellate authorities including CIT(A). Thus, non-consideration of the new facet of contentions raised before the CIT(A) does not appear justified. Hence, without going into merits of the correctness of additions made by the AO, we consider it expedient to restore the matter back to the file of the CIT(A) for fresh examination of the issue in accordance with law. Appeal of the assessee is allowed for statistical purposes. Disallowance of depreciation on account of exchange fluctuations in respect of assets acquired in India utilizing the funds raised through foreign currency convertible bonds (FCCBs) - HELD THAT:- The facts in the present Assessment Year i.e. 2012-13 [ 2021 (8) TMI 1414 - ITAT DELHI] are also identical and no distinguishing facts were pointed out by the DR. Assessee has attributed the liability in the present Assessment Year to the fixed assets which were acquired in India out of foreign currency loan. Since the fixed asset was acquired by utilizing foreign currency loan and on account of currency fluctuation, the loan liability was added to the fixed assets. Thus, the assessee is entitled to depreciation on exchange loss. Therefore, we direct the AO to allow the depreciation attributable to capitalization of exchange rate fluctuation loss. Thus, the appeal of the assessee is allowed.

  ---

• 2024 (4) TMI 343
  Denial of Foreign Tax Credit (FTC) - being Form 67 was not filed along with the ITR before the time limit u/s 139 (1) but was submitted subsequent to the issue of notice u/s 250 - HELD THAT:- Identical issue was considered by the ITAT, Mumbai Bench in the case of Rohini Hattangadi [ 2023 (1) TMI 1070 - ITAT MUMBAI] wherein as held that provisions of DTAA override the provisions of the Act, as far as it is beneficial to the assessee. The Tribunal has held that delay in filing Form No. 67 should not by, in anyway, deny the claim of FTC enumerated in the DTAA and the intention of the legislation in the said case has to be construed in a manner which benefits the assessee. The A.O. is hereby directed to allow the FTC claim of the assessee and to grant refund in accordance with the law. Appeal filed by the assessee is allowed.

  ---

• 2024 (4) TMI 342
  Income taxable in India - Royalty or FTS - PE in India or not? - taxability of payments received by the assessee from GIPL as per terms of Reseller Agreements - HELD THAT:- As decided in own case [ 2023 (3) TMI 1304 - ITAT BENGALURU] for AY 2007-08 in terms of the international guidance as stated herein, the position regarding taxability of receipts from sale of online advertisement space is clear. Unless the non-resident, who is engaged in sale of online advertisement space, has a PE in India, no portion of receipts earned by it from sale of online advertisement space in India can be brought to tax in India as Act read with the relevant DTAA. The above view is also supported by insertion of provisions related to Equalisation Levy (EL) by Finance Act, 2016. The root for the emergence of the EL can be traced to the dynamic business models that have the ability to transcend the link between an income producing activity and a specific location since these business are carried in the cyber place. The PE definition presently is based upon the physical presence criteria. Income from sale of advertisement space on a website is not taxable in India if there is no PE of the foreign enterprise in India. It was held that such income is not to be regarded as royalty or FTS. Such tax challenges is addressed by the introduction of EL. Section 165 of the Finance Act, 2016 provides for charge of EL at 6% on consideration for specified services. Section 164(i) of Finance Act, 2016 provides that specified service means online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government in this behalf. Thus, online advertisement is now covered under EL. If online advertisement was already covered under definition of royalty, then bringing it as part of EL scheme would not arise. Thus we hold that the impugned payment cannot be characterized as royalty under the India-Ireland DTAA. Payment made by the payer (GIPL) to the assessee (GIL) is not in the nature of royalty or FTS and consequently it cannot be brought to tax in the hands of the assessee - Decided in favour of assessee.

  ---

• 2024 (4) TMI 341
  Addition u/s 56(2)(viib) - share premium receipts - Correct method of calculating the fair market value - as per AO fair market value of unquoted shares has not been determined by a merchant banker or by accountant as per the discounted free cash flow method and noted that the valuation of fair market value of the shares was done by the Govt. registered valuer which is contradictory to the provisions of the Act - HELD THAT:- We note that the assessee s balance sheet is comprised of both movable and immovable properties. We note that immovable property comprised of land and building which houses the rice mill. As is apparent from the AO as well as Ld. CIT(A) orders that both the authorities have failed to point out any defect in the valuation report furnished by the assessee. We note that the AO has valued the fair market value of the equity shares based on the book value which is totally incorrect and erroneous method of calculating the fair market value as the assessee owns movable as well as immovable properties valuing the equity share at Rs. 23.20 per share whereas the fair market value of the equity share was much higher. AO has not referred the issue to valuation expert and therefore the said act of AO is not acceptable as the assessee has furnished valuation before the AO which was done by registered valuer. The valuer is also registered with the Department as valuer. While contrary to this even the immovable properties were valued at book value by the AO which is blatantly anomalous. Under the circumstances we are not in an agreement with the conclusion drawn by the authorities below for the reasons that valuation obtained by the assessee from a registered valuer cannot be brushed aside by simply citing technical reasons without pointing out any discrepancy or defect in the said valuation. Thus assessees case deserves to be treated with leniency and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.

  ---

• Customs

• 2024 (4) TMI 340
  Seeking release/return of gold bangle to the petitioner under the provisions of Section 110(2) read with Section 124 of the Customs Act, 1962 - SCN issued after mandatory period - HELD THAT:- In the instant case, it is not disputed that the seizure was made on 04.04.2023, which meant that the notice should have been issued prior to 03.10.2023, which however, was not the case, as the show cause notice was sent by speed post on 05.10.2023, after the mandatory period as per Section 110(2) had lapsed. The proviso allowing for extension of time was also not resorted to by the respondents. Section 124 as can be seen from above, prohibits the confiscation of any goods or imposing any penalty unless the owner of the goods or such person is given a notice and an opportunity of making a representation and also of being heard. The issuance of a show cause on time therefore, being fundamental in such matters, and the same having not been complied with by the respondents, is thus hit by Section 110(2) of the Act. The relevance of the judgment PURUSHOTTAM JAJODIA, AMIT KUMAR, KM. UDYOG VERSUS DIRECTORATE OF REVENUE INTELLIGENCE AND ANOTHER [ 2014 (8) TMI 771 - DELHI HIGH COURT] , cited by the petitioner is noted, as it essentially covers the case with regard to the sanctity of the 6(six) month period of show cause, and as such, no further discussion is required on the same. The respondents are directed to release the gold bangle seized from the petitioner forthwith - Petition allowed.

  ---

• 2024 (4) TMI 339
  Validity of criminal complaint and related summons issued by the ACMM, New Delhi - Liability to pay differential customs duty with penalty - Violation of principles of natural justice - grievance of the petitioners is that without taking the cognizance or passing any specific orders for issuance of the summons and without taking into consideration the order passed by Principal Commissioner of Customs (Import), ICD, the petitioners have been wrongly summoned - HELD THAT:- Prima facie, the contentions raised by the learned counsel for the petitioners, on the basis of orders placed on record, appear to be of considerable merit. Considering the facts and circumstances of the case, it shall be appropriate that the aforesaid factual position is brought to the notice of the learned ACMM by the petitioners for consideration as the summons could not have been issued without any specific orders/directions for summoning the petitioners. However, in case the learned ACMM is of the opinion that the summons have been issued in accordance with law, petitioners shall be at liberty to file the proceedings afresh, challenging the summoning order in view of order dated 15.09.2023 passed by Principal Commissioner of Customs (Import), ICD. Learned ACMM shall also be at liberty to consider the order dated 15.09.2023 passed by Principal Commissioner of Customs (Import), ICD, which has been brought to the notice of this Court. Also, the presence of the petitioners be exempted before the learned ACMM for 08.04.2024 on an application being preferred in this regard through counsel. Petition disposed off.

  ---

• 2024 (4) TMI 338
  Denial of relinquishment of title of part (balance) goods lying in the warehouse - HELD THAT:- The Commissioner (Appeals) have erred by not taking notice of the subsequent amendments made in section 68 wherein proviso was inserted by Finance Act 2003 w.e.f. 14.05.2003 - The words of rent, interest, other charges and penalties appearing in the aforementioned proviso, before penalties were omitted by Finance Act 2016 dt.14.05.2016. Upon careful reading of section 68, as amended by the provision for relinquishment of title to warehoused goods inserted w.e.f. 14.05.2003 and the subsequent amendment made in the year 2016 to remove other charges and fees from its provisions, it is clear that the said proviso has extended the time available to the owner/importer of warehoused goods for relinquishment of title till or before an order for clearance of such goods for home consumption, as mentioned in clause (c) of section 68, has been made by the proper officer. In the facts of the present case, the relinquishment of title was made by the appellant well in time, as permitted by the Statute as no order for clearance of goods for home consumption was made till that date - the issuance of SCN under section 72(1)(b) for warehoused goods cannot stop the time running and available to the owner to relinquish the title before the order for clearance of such goods for home consumption, as stipulated in section 77 read with section 68, is made. The appellant has rightly relinquished the title to the goods during the pendency of the proceedings under section 72(1)(b) of the Act. It is further found that on the date of such relinquishment, no case of any offence committed by the appellant under this Act or any other Act for the time being in force is made out in the facts and circumstances - the appellant is entitled to the benefit of relinquishment of title as provided under section 68 of the Customs Act read with proviso. It is further found that appellant has already been imposed penalty of Rs.20,000/- under section 117 of the Act and the same has already been deposited vide CM No.109 dt.06.09.2019. The impugned order is set aside - appeal allowed.

  ---

• 2024 (4) TMI 337
  Seeking clearance of imported goods - (second hand/used) viz., Puritan Bennett 7200 series ventilator, Drager Medical Babylag 2000 Neonatal Ventilator, Fresenius Medical 5008 Cordiax Dialysis Machines and Taema Alys Ventilator - prohibited goods or not - e-waste/hazardous waste - HELD THAT:- Admittedly, the goods, used medical devices, were found to be in good working condition having minimum residual life of 5 years or more as certified by the Chartered Engineer. Accordingly, in view of such admitted facts, the goods under import do not qualify in the definition of waste as defined under Rule 3(38) of Hazardous and Other Waste Management Rules, 2016. It is further found that the impugned order is vitiated for lack of jurisdiction, which is a primary requirement and it is held that the Adjudicating Authority lacks jurisdiction to pass the order, as admittedly no SCN was served in accordance with section 124 of the Customs Act. The impugned order is set aside - appeal allowed.

  ---

• Insolvency & Bankruptcy

• 2024 (4) TMI 336
  Violation of principles of natural justice - opportunity of being Heard not provided - Abrogation of valuable right of appellant - Locus of appellant - Applicant is neither a Creditor nor a Shareholder of the First Respondent - It is the stand of the Appellant that the Tribunal, had not taken into consideration of the statutory force, establishing Appellant s right, under the Copyright Act, 1957 - HELD THAT:- As far as the present case is concerned, the Respondents do not consider the Appellant / IPRS, as its Creditor and have consistently and seriously disputed the Appellant s Alleged Claims. Indeed, the Appellant, was not recognised as Creditor in the Financial Statements of both the Respondents. Added further, once a Claim, is Disputed, and the Claimant, is not reflected as a Creditor, in the Audited Financial Statements, such Claimant, is disentitled to Intervene, demand Documents or Object, to a Scheme, and it is outside to the purview of Section 230 233 of the Companies Act, 2013, before the Tribunal, to enter into the Merits of the Dispute. This Tribunal, on a careful consideration of respective contentions, advanced on either side, taking note of the surrounding facts and circumstances of the instant Appeal, especially, in the teeth of the Appellant / Petitioner, not figuring as a Creditor of the Respondents, in terms of its Audited Financial Statement, and the List of its Unsecured Creditors, being duly authenticated, of course, based on verification, by the Statutory Auditor, this Tribunal, comes to a consequent conclusion, that the Impugned Order, dated 09.02.2024, passed by the National Company Law Tribunal, Court No. V, Mumbai Bench, by making an observation that the Appellant, is not a Creditor of the Respondent Nos. 1 2, and as such, has no Locus, to object to the process of the Scheme, is free from any legal infirmities. Appeal dismissed.

  ---

• 2024 (4) TMI 335
  Approval of Resolution Plan - completion of condition precedents provided in Clause 7.6.1 of the Resolution Plan or not - sufficient grounds have been made by the Appellant to set aside the order or not - lapse of Air Operation Certificate granted by DGCA on 20.05.2022 - sufficient grounds have been made out to direct for liquidation of the Corporate Debtor or not - way forward towards implementation of the Resolution Plan. Whether on 20.05.2022 the Successful Resolution Applicant has completed all the condition precedents provided in Clause 7.6.1 of the Resolution Plan? - Whether condition precedents as under Clause 7.6.1 of the Resolution Plan were not achieved by the Successful Resolution Applicant as contended by the Appellant? - Whether the order dated 13.01.2023 passed by the Adjudicating Authority is unsustainable and sufficient grounds have been made by the Appellant to set aside the order? - Whether due to lapse of Air Operation Certificate granted by DGCA on 20.05.2022, as on date the Successful Resolution Applicant cannot implement the Resolution Plan? - HELD THAT:- The Air Operation Certificate was very well in operation on the date when implementation application was filed by the SRA before the Adjudicating Authority as well as on the date when order was passed by the Adjudicating Authority i.e. 13th January, 2023 hence no infirmity can be found in the findings of the Adjudicating Authority that condition 7.6.1(d) was fulfilled. The Air Operation Certificate was operative and granted till 19th May, 2023 and during this period SRA was not permitted to commence his operations because of challenge by the Appellant to fulfilment of the conditions precedent. The Order dated 13th January, 2023 passed by the Adjudicating Authority upholding the fulfilment of conditions precedent has been challenged by the Appellant in these Appeals and during pendency of these Appeals, MC Lenders did not take any steps nor discharge their part of obligation under the resolution plan hence it cannot be said that it was due to lapse of SRA that Air Operation Certificate could not be operationalised. SRA was always ready to operationalise its air operations but was not permitted by the Appellant. The submission of the Appellant cannot be accepted that due to lapse of air operation certificate during pendency of these Appeals before this Tribunal, it can be held that conditions precedent as required under 7.6.1.(a) was not fulfilled. There is no infirmity in the order dated 13th January, 2023 passed by the Adjudicating Authority holding that conditions precedent for commencement of the air operation by the SRA were fulfilled. Whether direction of the Hon ble Supreme Court permitting the Successful Resolution Applicant to infuse Rs.150 crore by 31.01.2024 was in reference to the offer made by the Appellant vide Affidavit dated 16.08.2023? - Whether the Successful Resolution Applicant having not been able to infuse Rs. 150 Crores by 31.01.2024 as directed by the Hon ble Supreme Court vide its judgment dated 18.01.2024, the plan has failed and cannot be implemented by the Successful Resolution Applicant? - Whether sufficient grounds have been made out to direct for liquidation of the Corporate Debtor under Section 33 Sub-clause (3) in these Appeals? - HELD THAT:- The direction to deposit INR 150 crores by 31.01.2024 was only in relation to offer submitted by the Appellant by affidavit dated 16.08.2023. The learned Counsel for the Appellant Shri N. Venkataraman, ASG as well as Shri Tushar Mehta, SG have contended that SRA having failed to deposit INR 150 crores, there is breach committed by SRA to the Resolution Plan and this Tribunal may pass an order for liquidation of the Corporate Debtor under Section 33, sub-section (3) of the IBC. The consequence of non-deposit of INR 150 crores by the SRA by 31.01.2024, is that SRA was not entitled to take any benefit of the offer, which was given by the Appellant by affidavit dated 16.08.2023. Hence, the undertaking given by the Appellant to withdraw Company Appeal in STATE BANK OF INDIA ORS. VERSUS THE CONSORTIUM OF MURARI LAL JALAN AND MR. FLORIAN FRITSCH ANR. [ 2023 (5) TMI 1084 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] as well as Appeal STATE BANK OF INDIA AND ORS. JC FLOWERS ASSET RECONSTRUCTION PRIVATE LTD. AND PUNJAB NATIONAL BANK VERSUS THE CONSORTIUM OF MR MURARI LAL JALAN AND MR FLORIAN FRITSCH AND ANR [ 2024 (1) TMI 1021 - SUPREME COURT ] was not to happen. On failure to comply with the offer made by Appellant by affidavit dated 16.08.2023, both the Appeals pending in this Tribunal are now to be decided on merits. The submission of the Appellant that non-deposit of INR 150 crores leads to failure of Resolution Plan, cannot be accepted. The consequence of non-deposit of INR 150 crores is that these Appeals have to be heard on merits and the question, which has arisen in the Appeal has to be decided regarding compliance of conditions precedent by the SRA by 20.05.2022 - Further submission of the Appellant that this Tribunal may exercise jurisdiction under Section 33, sub-section (3) in directing liquidation of the Corporate Debtor due to non-compliance of deposit of INR 150 crores also cannot be accepted. For passing an order under Section 33, sub-section (3), there has to be adjudication that Resolution Plan approved by the Adjudicating Authority has been contravened by the Successful Resolution Applicant. The direction of Hon ble Supreme Court permitting the Successful Resolution Applicant to infuse INR 150 crores by 31.01.2024 was in reference to offer made by Appellant in affidavit dated 16.08.2023 - The Successful Resolution Applicant having not been able to infuse funds by 31.01.2024 as directed by Hon ble Supreme Court vide its judgment dated 18.01.2024, it cannot be held that Resolution Plan has failed and cannot be implemented by the SRA - No grounds have been made out to direct the liquidation of Corporate Debtor under Section 33, sub-section (3) in these Appeals. What are the way forward towards implementation of the Resolution Plan? - HELD THAT:- The implementation of Plan and revival of the business of the Corporate Debtor does not only generate revenue for making of the payments as contemplated in Resolution Plan, but is important for making payments to workers and employees. The workers and employees are waiting for their payments of provident fund, gratuity and other dues as per the Resolution Plan for last more than three years. Non-implementation of the Plan shall have direct effect on the dues of workers and employees, which need to be avoided. The implementation of Resolution Plan is a collaborative process, which require positive action from all the parties, including the MC Lenders. The implementation of the Resolution Plan not only revives the Corporate Debtor, but it brings along with revival, new employment, generation of revenues etc. By non-implementation of the Plan, direct sufferers are the workers and employees, who have not received the payments. It is true that Lenders are entitled to take steps for protection of their amount, but that is not the only object of the IBC. The Lenders to protect their own financial interest cannot ignore the primary object of revival of the Corporate Debtor and payments to other stake holders, including workmen and employees, who are entitled for their payments along with Financial Creditors. The Lenders by not taking positive steps for implementation of the Plan have not only adversely affected the interest of the SRA, but have also created circumstances, so that workmen and employees be not paid. The impugned order passed by Adjudicating Authority is upheld - Monitoring Committee and MC Lenders as well as SRA are directed to take steps for creation of charge over the Dubai Property No.1, Dubai Property No.2 and Dubai Property No.3 within a period of 30 days from today. The SRA to bear all necessary expenses for creation of necessary charge - Performance Bank Guarantee of INR 150 crores, which is lying with the Monitoring Committee/ MC Lenders, shall be adjusted towards the first tranche payment of INR 350 crores as INR 200 crores have already been paid by the SRA. By adjustment of PBG as per the Resolution Plan, the first tranche of payment of INR 350 crores shall be completed - Steps shall be taken for re-constitution of the shares as per the Resolution Plan forthwith. (5) Out of the first tranche payment of INR 350 crores, payments shall be made to the workmen and employees and the creditors as per the Resolution Plan, including the payment of CIRP cost as per the Resolution Plan, which payment shall be completed within 60 days from the date of this judgment - The SRA shall submit an Application for re-issue of Air Operation Certificate which may be obtained within 90 days from the date of this judgment - closing date shall be 90th day from the date of this judgment, on which date, handing over of the Corporate Debtor to the SRA by the Monitoring Committee shall be completed. Application disposed off.

  ---

• Service Tax

• 2024 (4) TMI 334
  Time limitation - Construction of Residential Complex - Construction of Villas - suppression of facts or not - construction of complexes other than Villas for the period of 01.04.2011 to 31.03.2012 - Consulting Engineer s Service - waiver of penalty u/s 78 - HELD THAT:- Considering the aspect of suppression the Appellate Tribunal has noticed that the assessee was issued with show cause notice dated 02.07.2007 for the period 16.06.2005 to 31.12.2006. The said show cause notice was confirmed by order in original Sl. No. 3/2011 dated 31.01.2011. Vide M/S. ADARSH DEVELOPERS VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX BANGALORE SERVICE TAX- I, COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH [ 2018 (8) TMI 1009 - CESTAT BANGALORE ], the Appellate Tribunal decided in favour of the Respondent/Assessee and held the Respondent was not required to pay service tax for construction service before 01.07.2010. The appellant has failed in demonstrating that the said finding recorded by the Appellate Tribunal is contrary to any specific material on record. The Appellate Tribunal has considered the aspect of suppression from the proper perspective and noticing the settled position of law, has rightly held that the aspect of suppression cannot be attributed to the Assessee. The substantial questions of law are answered in the affirmative i.e., in favour of the Assessee and against the Revenue - appeal dismissed.

  ---

• 2024 (4) TMI 331
  Refund of Service tax paid - construction of residential complex/apartment - it is the case of the revenue that plan approval having been obtained on 04.03.2013 and the construction activity having been commenced from 31.06.2013, explanation inserted to tax works contract service with effect from 01.07.2010 was very much applicable to the case of the appellant - HELD THAT:- There is no dispute that only four residential units / flats were constructed in this case on hand and hence, by virtue of this alone the case of the appellant does not get covered under the definition of residential units since the definition covers any complex of a building or buildings, having more than twelve residential units. Secondly, going by the ruling of the coordinate Hyderabad Bench in VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST [ 2018 (5) TMI 889 - CESTAT HYDERABAD] , it is held there was no tax liability on the appellant for the impugned flats constructed prior to 01.07.2010, having less than 12 units / flats and hence, the refund claimed by the appellant was very much in order; the revenue has erred in rejecting the valid refund claim and consequently, the impugned order cannot sustain. The impugned order is set aside - appeal allowed.

  ---

• 2024 (4) TMI 330
  Classification of services - taxability - management, maintenance or repair services - renting of immovable property service - Supply of tangible goods service - Extended period of limitation - penalty. Management, maintenance or repair services - pipes laid down by the appellant for DJB for water supply and sewage - HELD THAT:- Laying of pipelines or part thereof or maintaining such pipelines clearly falls under the head commercial or industrial construction service provided the service recipient is a commercial organization or the service was rendered it for a commercial purpose. DJB is a statutory body of the Delhi Government with the mandate to supply water and maintain sewage lines. Clearly, these are not commercial activities nor is DJB a commercial entity. Therefore, the services rendered by the appellant to DJB cannot be charged to service tax. The impugned order has clearly erred in confirming the demand under management, maintenance or repair service. The demand of Rs. 1,28,72,584/- under this head needs to be set aside. Renting of immovable property service - HELD THAT:- It is found that renting of immovable property was chargeable to service tax under section 65 (105) (zzzz) during the relevant period except where such renting of property was for residential purposes. According to the appellant itself, it had rented its property to run a hostel and it had not rented it to somebody to stay. What is taxable under section 65 (105) (zzzz) is a service rendered by any person by renting of immovable property or any other service in relation to such renting for use in the course of or for furtherance of business or commerce. Clearly, renting of the property for running a hostel is a commercial activity, therefore, the amount received for such renting was clearly exigible to service tax under section 65 (105) (zzzz). The demand of Rs. 8,33,522/-, therefore, needs to be upheld. Supply of tangible goods service - HELD THAT:- The appellant does not dispute that it received the hiring charges nor does it indicate what goods it had supplied and on what terms and to whom. All that the appellant is saying is that since the department is not able to establish that it had rendered supply on tangible goods service service tax cannot be fastened on it - When hiring charges were received by the appellant and the appellant neither disclosed what it had supplied nor the contracts to establish if the supply falls under the category of supply of tangible goods service or otherwise, it was fair on the part of the adjudicating authority to presume that the receipts on this count were for supply of tangible goods chargeable to service tax under section 65 (105) (zzzj). The demand on this count needs to be upheld. Extended period of limitation - Penalty - HELD THAT:- In this case, the information had to be gathered from various records and the service tax had to be assessed based on best judgment assessment. In respect of certain receipts, such as, the hiring charges, the appellant did not disclose as to what was given on hire by it and on what terms. The appellant cannot profit from its own actions and inactions by not disclosing the information. Similarly, the appellant did not disclose that it was renting of immovable property to be used as a hostel, which was clearly a commercial activity. Under these circumstances, it is found that the department was justified in invoking extended period of limitation of 5 years. For the same reason, the department is also correct in imposing the penalty under section 78. The appeal is partly allowed and the impugned order is modified to the extent of setting aside the demand of Rs. 1,28,72,584/- under the head management, maintenance or repair service along with interest on such amount and upholding the rest of the demand with interest. The amounts of penalty under section 78 also stands reduced proportionately.

  ---

• 2024 (4) TMI 329
  Invocation of Extended period of Limitation - willful mis-statement or suppression of facts or not - levy of penalty under section 78 of FA - renting of immovable property service - contract for supply, erection, commissioning and installation of retail visual identity signages elements - abatement claim - receipts towards works related to signages at roads and airports - sales declared in the balance sheet - reverse charge mechanism for legal and professional services. Extended period of Limitation - HELD THAT:- It is a well settled legal position that although every service tax assessee operates under self-assessment, extended period of limitation cannot be invoked unless one of the five elements essential for invoking extended period of limitation is established. It is also a well settled legal position that suppression of facts does not mean mere omission but the suppression with an intent to evade. Admittedly, the Commissioner invoked extended period of limitation and imposed penalties under section 78 under the wrong understanding of law that the intent to evade is not necessary to invoke extended period of limitation and to impose penalty under section 78. Therefore, the entire demand beyond the normal period of limitation of 18 months during the relevant period cannot be sustained and needs to be set aside regardless of the merits of the case - the penalty imposed under section 78 also needs to be set aside. Demand of service tax on the services provided to M/s Indra Systems India Pvt. Ltd. and M/s Poonam Hasija Neha Hasija was dropped by the Commissioner giving an abatement towards the cost of the material from the gross receipts - HELD THAT:- The Commissioner recorded that there were three purchase orders and after examining the purchase orders came to the conclusion that the appellant had correctly claimed abatement of 60% towards the value of the goods and promptly discharged the service tax liability. Therefore, he dropped the demand. Revenue is only aggrieved by the fact that his findings were not the same as the allegations in the SCN. The Commissioner was correct in considering both the allegations in the SCN and also the submissions made by the assessee in defence and arriving at a conclusion. Nothing is in the appeal by the Revenue to substantiate that the Commissioner had either not read the contracts or read them wrongly. There are no reason to interfere with the findings of the Commissioner and reject the Revenue s appeal on this ground. Demand of service tax towards the signboards installed by the assessee on the roads and airports - HELD THAT:- Revenue is asked to supply copies of the documents related to the VCES Scheme so that this contention could be examined. Learned authorized representative has placed on record a letter dated 06.10.2023 from the Assistant Commissioner confirming that neither the VCES application nor any documents could be found despite sincere and rigorous efforts. In view of this, the Revenue s appeal on this ground cannot be entertained because the very basis was that some declaration was made under the VCES which declaration is not available at all. Service tax on signages installed by the assessee at roads - HELD THAT:- The service tax has to be levied as per the Finance Act, 1994 and the definitions therein and as per the common understanding in India. OECD stands for organization for Economic Corporation and Development which is a group of some developed countries. Their laws or regulations or guidelines do not form law in India just as Indian laws do not apply in those countries. In works contract service, the exception for payment of service tax is made for work related to construction of roads and it cannot be extended to other things, such as, road signages. It is found that the assessee s appeal on this ground needs to be rejected and the impugned order should be upheld. Demand of service tax on the sales declared in the balance sheet was dropped by the Commissioner holding that this income was entirely from sales receipts - HELD THAT:- It needs to be pointed out that for service tax to be levied three things are essential namely : (a) the service provider must provide a service to the service recipient; (b) the service so provided must be a taxable service during the relevant period; and (c) a consideration must have been received for providing the taxable service. Unless all these three elements are established, no service tax can be charged. Merely because any amount has been received in the accounts of any person, service tax cannot be charged unless the amounts so received were a consideration for providing taxable services. The burden of proving any fact rests on the person whose case fails, if no evidence is presented by either side. In the case of SCNs, if no evidence is presented by either side, the allegations in the SCN fail and, therefore, it is for the Revenue to provide evidence that taxable services were rendered and consideration has been received. There is nothing in the appeal of the Revenue to establish that the amount received were not for sale of goods, but were received for providing the taxable services. In view of the above, the appeal by the Revenue on this count also needs to be rejected. The matter is remanded to the Commissioner for the limited purpose of calculation of the amount of service tax within the normal period - Appeal disposed off.

  ---

• 2024 (4) TMI 328
  Recovery of CENVAT Credit - Cenvat Credit availed in excess of 20% of the amount payable on taxable output service in respect of services provided by them to SEZ, in terms of Rule 6 of CCR, 2002/2004 - extended period of limitation - demand of interest - HELD THAT:- The issue is no longer res integra in view of the retrospective amendment, vide Finance Act 2012, to the effect that Rules 6 (1), (2) and (3) do not apply to Services provided to SEZ. Tribunal held in the case of TATA CONSULTING ENGINEERS LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2013 (9) TMI 183 - CESTAT MUMBAI] held that appellants are rightly entitled to Cenvat credit on the inputs and input services used in or in relation to rendering of output services to a unit in SEZ or to a SEZ developer. Demand on the basis of the advances received by the appellants for rendering the services - HELD THAT:- The demand is raised and confirmed on the basis of figures reflected in balance sheet without causing any enquiry as to whether the services in question were rendered or otherwise. It is not correct to confirm the demand just on the basis of balance sheet without identifying the service provider, service receiver and the consideration received thereof. Moreover, the appellant submits that most of the advances have been since returned to the respective parties as no services could be provided or the same were adjusted against services exported - Tribunal held in the case of M/S GO BINDAS ENTERTAINMENT PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, (NOIDA) [ 2019 (5) TMI 1487 - CESTAT ALLAHABAD] that it is well settled law that no demand can be confirmed by comparing the ST-3 return figures with balance sheet figures, in the absence of any evidence to the contrary that income in the balance sheet, if excess, reflects the providing of taxable services. Appellants have received services from their associated enterprise for which expense was booked but remittance has not been made - HELD THAT:- The appellant submitted that out of a total expense of 2.53 Cr under dispute, they have already paid 2.20 Cr and the Service Tax of the same has been also paid - Tribunal in the case of SIFY TECHNOLOGIES LTD. VERSUS LTU, CHENNAI [ 2012 (5) TMI 376 - CESTAT, CHENNAI] held in the instant case, there was no provision either in Section 67 of the Finance Act or Rule 6 of the Service Tax Rules to suggest that in the case of transactions between associated enterprises, service tax has to be paid immediately on entry of the transaction in the books of account. Extended period of Limitation - HELD THAT:- Department has not made out any case for extended period in view of the facts of the case - Extended period cannot be invoked. Demand of interest - HELD THAT:- The appellants have paid the Service Tax of Rs. 2,60,783/- along with interest before the issuance of show cause notice. Therefore, demand cannot be sustained in view of the provisions of Law. When the main demand itself is held to be not sustainable the question of penalty does not arise. In view of the above, nothing survives in the impugned order and therefore, the same is liable to be set aside. Appeal allowed.

  ---

• 2024 (4) TMI 327
  Non-payment of service tax - work undertaken for the main contractor - Construction service - Site formation, Clearance, Excavation and Earth moving and demolition services - Erection, Commissioning and Installation Service - CBEC Circular No. 147/16/2011-Service Tax dated 21.10.2011 - HELD THAT:- The work undertaken by the appellant for the main contractor namely M/s. KP Buildcom was for construction of boundary wall for Pipavav port, within the port area and civil work for erection of tower - It can be seen from N/N. 25/2007-ST dated 22.05.2007 provides that activities pertaining to construction of Port are exempted by the above mentioned exemption notification. Since the construction of boundary wall and tower within the port area are very much part of the port area therefore, the provisions of Notification No. 25/2007-ST dated 22.05.2007 will certainly be applicable to the appellant being sub-contractor of the main contractor and therefore appellant shall not be liable to pay any service tax on such activity. As regards to the construction activity undertaken by the appellant for M/s. Dhenu Developers, the same was for construction of drainage pipe line for Rajkot Municipal Corporation - Hon ble Supreme Court in its decision in COMMISSIONER VERSUS INDIAN HUME PIPES CO. LTD. [ 2016 (4) TMI 1465 - SC ORDER] has held assessee is engaged in laying of long distance pipelines to enable State Water Supply and Drainage Board to supply water in public interest and to take care of civil amenities. Tribunal order that aforesaid activity is a part of construction activity not commercial in nature and accordingly not covered under erection, commissioning or installation service is accordingly agreed with. Assessee not liable to pay Service Tax. Since the activity of construction of drainage pipeline for Municipal Corporation is not for commercial purpose and therefore, the construction activity pertaining to construction of drainage pipeline for Rajkot Municipal Corporation is not liable to service tax by virtue of the fact that same is not in the nature of commercial activity and therefore same is also not liable to service tax. The impugned order-in-appeal is without any merit - appeal allowed.

  ---

• 2024 (4) TMI 326
  Classification of service - Management, Maintenance and Repair Service - Erection, Commissioning and Installation Service - providing the work of fire prevention and safety services - HELD THAT:- In the impugned order Commissioner has discussed that the services provided by the appellant could not be classified under works contract service. He relied upon decision of the Hon ble Supreme Court in the case of M/S. KONE ELEVATOR INDIA PVT. LTD. VERSUS STATE OF TAMIL NADU AND OTHERS [ 2014 (5) TMI 265 - SUPREME COURT ] and concluded that the argument made by the appellant vis- -vis classification under works contract services cannot be upheld. However, the entire order is silent with regards to the determination of the value of the services after alleging abatement of the material. In terms of the case of SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2017 (1) TMI 1110 - SUPREME COURT ] and Notification No 12/2003-ST as amended, the value of the material consumed in provision of the service needs to be excluded and the demand needs to be re-quantified. For the purpose of re-quantification of demand after excluding the value of the material consumed the matter needs to be remanded back to the Original Authority for determination of correct taxable value and service tax payable thereon. Other determination vis- -vis interest and penalty will depend upon the taxable value determined and the service tax short paid if any, under the category of management, maintenance and repair service. Matter is remanded back to the Original Authority - appeal allowed by way of remand.

  ---

• Central Excise

• 2024 (4) TMI 325
  Valuation - inclusion of freight/insurance charges for delivery at buyer s place in the transaction value - HELD THAT:- It is found that freight/insurance have been charged separately and received separately. It is also noticed that the buyers of the goods Indian Oil Corporation Ltd. and Hindustan Petroleum Corp. Ltd. have issued purchase order specifying the price for the goods separately and also specifying the transportation cost for the supply of goods. Accordingly, appellant have supplied the goods and raised invoices for the price of goods and the transportation. Thus, it amounts to showing the cost of transport separately in the invoices. On perusal of copies of the purchase contract placed by the Indian Oil Corporation Ltd and Hindustan Petroleum Corp. Ltd. and invoices issued by the Appellant. From the invoices, it is seen that the freight/insurance shown in the invoices is in addition to basic price of the goods. It is clear from the terms of the purchase contract that basic price and other components have to be indicated separately. Therefore, there is no dispute that basic price and the freight/insurance components are clearly indicated separately in the invoices and therefore criterion i.e. cost of transportation should be in addition to the basic price of the goods stand fulfilled. There are no valid reason for disallowing the deduction for the freight/insurance paid inasmuch as the sales are FOR destination. It is also found that a coordinate Bench of CESTAT in the case of STERLITE OPTICAL TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AURANGABAD [ 2015 (9) TMI 1023 - CESTAT MUMBAI] has taken a view in identical facts that freight/insurance will be allowable as a deduction from the composite price. Thus, the contention of the Department to include the freight/insurance amount in the assessable value does not meet the test of law and hence not legally sustainable. Hence, there are no merit in order passed by the appellate authority. Thus, freight/insurance amount is not includable in the assessable value of the goods for charging excise duty. The impugned order is set aside - appeal allowed.

  ---

• 2024 (4) TMI 324
  Denial of CENVAT Credit - recovery of the differential central excise duty - appellant has discharged appropriate duty on the body building activity on the duty paid chassis supplied free of cost by M/s ALL during the period 2006-07 2007-08 or not - entitlement to avail cenvat credit of the duty paid on the chassis supplied free by M/s ALL - Sl.No.41(1)(ii) of N/N. 6/2006-CE - Extended period of Limitation - HELD THAT:- It is found that from the very beginning of the proceeding, in their reply to the internal audit, the appellants have categorically submitted that they have not opted for the exemption under Notification No.6/2006-CE dated 01.3.2006, hence, not required to comply with the conditions prescribed under the said notification. They have informed that by availing cenvat credit on the duty paid chassis and after undertaking the activity of body building on the Chassis, which amounts to manufacture, they had cleared the Vehicle applying the normal tariff rate as applicable from time to time. The approach of the Department is fallacious from the very beginning. Assuming that the conditions of the notification 06/2006-CE have not been complied with, by availing CENVAT credit on the duty paid chassis, the appellant would not have been eligible to the benefit of the notification and the manufactured goods would be assessed in accordance with the normal provisions. Secondly, Explanation appended Sl.No.41(1)(ii) provides that the value of the manufactured vehicle shall be the value of the vehicle excluding the value of the chassis used in such vehicle, whereas, in the present case, the appellant has added the body building charges and the value of the chassis supplied free of cost in computing the assessable value for the purpose of payment of duty for the year 2006-07 and 2007-08; hence it is incorrect to allege that the appellant had availed the benefit of the said Notification - the appellants are entitled to avail cenvat credit on the duty paid chassis supplied free of cost by M/s. ALL to the appellant. Valuation and differential duty - HELD THAT:- The period involved in the present demand notice involves 2006-07 to 2007-08. Rule 10A has been inserted to the Central Excise Valuation Rules, 2000 w.e.f. 01/04/2007. Consequently, the valuation of the body built vehicles has to be arrived at following Rule 10A from 01/04/2007 by adopting the price at which the body built vehicles are sold by the supplier M/s. ALL. For the period prior to that, the valuation has to be carried out by adopting the formula laid down by the Hon ble Supreme Court in UJAGAR PRINTS, ETC. ETC. VERSUS UNION OF INDIA AND OTHERS [ 1988 (11) TMI 106 - SUPREME COURT] . Time Limitation - HELD THAT:- The present demand is relating to differential duty on the recalculated assessable value as alleged by the Revenue. There are force in the contention of the learned advocate for the appellant as the appellant was following the method of computation of assessable value adopting the principle in Ujagar Print s case and discharging duty by disclosing all the facts; hence invocation of extended period demanding differential duty on the redetermined value by the Revenue, in absence of suppression of facts or mis-declaration, cannot be sustained. Accordingly, the differential duty of Rs.9,51,837/- demanded for the period 2006-07 and 2007-08 is barred by limitation. The impugned order is set aside - Appeal allowed.

  ---

• 2024 (4) TMI 323
  Reversal of Cenvat Credit - Ammonium Sulphate - by-product or not - applicability of provisions of rule 6(3)(1) of the Cenvat Credit Rules, 2004 or not - HELD THAT:- The matter has been decided by this Tribunal in appellant s own case M/S HINDUSTAN CHEMICAL COMPANY VERSUS C.C.E. S.T. SURAT-II [ 2021 (12) TMI 1495 - CESTAT AHMEDABAD] where it was held that since the issue has been settled that Ammonium Sulphate being a by-product arising in the course of manufacture of final product, the demand under Rule 6(3) is not applicable. Accordingly, In the present case also being a similar issue, demand is not sustainable. There are no merit in the impugned order and same is set aside - appeal allowed.

  ---

• CST, VAT & Sales Tax

• 2024 (4) TMI 333
  Reversal of Input Tax Credit - genuine transactions or not - deregistered firm or not - validity of assessment order. Transactions not genuine - HELD THAT:- It is recorded that assessee, M/s. Chimco had declared purchase of coffee seeds from M/s.SLN Coffee Pvt. Ltd., and an output tax of Rs. 78,86,156/- has been paid. The assessment has been made by the Additional Commissioner of Commercial Taxes. The document speaks for itself that so far as petitioner was concerned, the tax amount was paid. M/s. Chimco was deregistered - HELD THAT:- The document (Annexure-M) filed by the assessee shows that deregistration has been approved on 16.07.2011 and the effective date of deregistration mentioned therein is from 01.06.2006. The assessment year is 2009-10. As on that date, the said firm was not deregistered and it is only on 16.07.2011, deregistration has been retrospectively made. Assessment order - M/s. Chimco does not exist - HELD THAT:- The assessment order and deregistration order clearly show that said private limited company was registered with Commercial Tax Department and the assessment has been made by an officer of the rank of Commercial Tax Officer. Once movement of goods is accepted and in the assessment order of M/s. Chimco, the Assessing Officer has noted payment of output tax in a sum of Rs. 78,86,156/-, the contentions urged on behalf of the Revenue are untenable and liable to be rejected. The order passed by the full Bench of the Karnataka Appellate Tribunal, Bengaluru, is set-aside - revision petition is allowed.

  ---

• 2024 (4) TMI 322
  Review of the order - Recovery of dues - priority of charges - secured creditor have a prior right over the relevant Department of the Government to appropriate the amount realized by the sale of a secured asset - HELD THAT:- Considering the clear findings as recorded by the Court, in which the Court has clearly observed that the situation would be governed by the determination in paragraph 154 therein as there is material to indicate that the action of sale proclamation initiated by the respondents was preceded by notice under Section 178 of the MLR Code, warrant of attachment under Section 267(3), order of attachment in Form 4 and auction proclamation notice in Form 7 under the MRLR Rules. It is thus clear that the entire procedure as known to law has been followed by the respondent/Sales Tax Department as observed and accepted by the Court. More so having already taken a chance to argue the case in the alternative, based on the provisions of Section 31B of the Recovery of Debts And Bankruptcy Act, 1993, the petitioners cannot be permitted to have a second round of arguments on the same issues under the garb of a review petition. The principles on the exercise of the review jurisdiction are well settled. The Supreme Court in THE STATE OF WEST BENGAL VERSUS KAMAL SENGUPTA AND ANOTHER [ 2008 (6) TMI 578 - SUPREME COURT] has clearly held that a review cannot be sought on the ground of discovery of new matter or evidence. Such matter or evidence would be relevant and must be of such a character that if the same has been produced, it might have altered the judgment. It was thus observed that the mere discovery of new or important matter or evidence is not a sufficient ground for review ex debito justitiae. It was further held that parties seeking review also need to show that such additional matter or evidence was not within its knowledge and even after the exercise of due diligence, the same could not be produced before the court earlier. There is no mistake or error apparent on the face of the judgment rendered by this Court. In fact, accepting the argument of petitioner involves the exercise of re-scrutiny and reconsideration of the facts and legal position, which stands already considered and concluded in the judgment under review. In the light of the above discussion, it is opined that the review petition is devoid of any merit. Review petition dismissed.

  ---

• Indian Laws

• 2024 (4) TMI 366
  Bills of Exchange - Discounting of bill or Document Collection Method - appellant would vehemently contend that the learned Trial Judge was not right in treating the transaction as a Bill Discounting Transaction where the appellant had assured payment - HELD THAT:- Though appellant would contend that there was no underlying LC or BG or an OCC limit in favour of the first defendant to support these transactions, we are unable to accept his contention as the arrangement between the first and second defendants are exclusively within their knowledge and the presence or absence of LC or BG or an OCC limit will not affect the liability of the second defendant as against third parties more so when the Bank has chosen to issue a SFMS message confirming that the bill will be cleared on 22.08.2017. This is also confirmed by the e-mail dated 06.06.2017 wherein there is a clear and categorical undertaking by the appellant / Bank to pay the bill amount on the due date. A similar question was considered by a Single Judge of this Court in REVATHI C.P. EQUIPMENTS LTD. VS. SANGEETHA TUBEWELL CORPORATION, MADRAS [ 1988 (10) TMI 289 - MADRAS HIGH COURT] wherein the impact of Sections 32 and 37 of the Negotiable Instruments Act, 1881, was considered. This Court ultimately concluded that if the Bill of Exchange is accepted by a Bank that by itself confirmed a separate and independent contract. Once the Bill of Exchange is accepted by the Bank, the Banker would be liable as an acceptor under Section 37 of the Act. There are no reason to interfere with the judgment of the learned Single Judge and the appeal fails and the same is dismissed.

  ---

• 2024 (4) TMI 332
  Freezing of Bank Accounts - investigation under the FCRA - Seeking to continue utilising their accounts for payment of salary and institutional expenses - Section 37 of the Foreign Contribution (Regulation) Act 2010 - Contempt petition - HELD THAT:- The petitioner had taken the Court through various documents to show that actually there was no contempt and whatever amount had been withdrawn was within the permissible limits depending upon the expenses incurred in the previous years and the allegations of any withdrawal from the accounts for purposes other than the salary and institutional expenses, is not correct. The petitions disposed off making the interim order dated 7th April, 2021 absolute, however, with a rider that the petitioners would not only maintain proper and complete statement of accounts but would also get the same audited by a Chartered Accountant and provide quarterly statements of the same to the Investigating Officer or to the Trial Court on regular basis. The pending proceedings before all other forums to continue in accordance with law where it would be open for all the parties concerned to raise all such contentions as may be available under law. The contempt petition stand disposed of.

  ---