Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 11, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
GST - States
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15/2022 - State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 12/2017-State Tax(Rate), No F-10- 43/2017/CT/V(80), dated the 29th June, 2017
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14/2022 - State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 04/2017—State Tax(Rate), dated the 29th June, 2017
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13/2022 - State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 02/2017-State Tax (Rate), dated the 28th June, 2017
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12/2022 – State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 01/2017-State Tax(Rate), dated the 28th June, 2017
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04/2023 – State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 2/2017-State Tax (Rate), dated the 28th June, 2017
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03/2023 – State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 01/2017-State Tax (Rate), dated the 28th June, 2017
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02/2023 - State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 13/2017-State Tax (Rate), dated the 28th June, 2017
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01/2023 – State Tax (Rate) - dated
23-3-2023
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Chhattisgarh SGST
Amendment in Notification No. 12/2017-State Tax (Rate), dated the 28th June, 2017
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking grant of bail - the alleged manner and method of commission of offence involving such huge amount of tax evasion by way of issuing fake invoices and availing input tax credit without physical purchase and supply of goods in the guise of business of non-existing entities with existing and non-existing companies and thereby, resulting in defraud of State Exchequer for such a huge amount, would by itself constitute prima facie materials against the petitioners for not considering their bail applications positively. - HC
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Cancellation of registration of petitioner - since the provision is beneficial in nature and appears to ameliorate the difficulty faced by such registered persons whose GST registration stood cancelled, the writ petition is disposed of with a direction to the petitioner to approach the proper officer with an application for revocation of cancellation of registration by 30th June 2023, as per the Notification dated 31.03.2023 after complying with the conditions prescribed thereunder. - HC
Income Tax
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Petitioner seeking to rectify its Income Tax return qua the TDS now being reflected under the correct PAN - with the expiry of limitation, the law bars the remedy even if the right is not extinguished. Therefore, the right of the petitioner, to avail of the remedy of rectification, stood barred by the law of limitation. The petitioner has only itself to blame for not availing of the remedy available to it within the period of limitation, or even within the period during which the application for condonation of delay could be entertained. - HC
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Allowable deduction in computing the capital gains - Expenditure wholly and exclusively in connection with the transfer of the property - There was no mentioning of any value of the building in the schedule of the fixed assets and now assessee again says that sale of land also includes the sale of building so as to claim deduction towards cost of building from the sale value of the land, actually it was not so. - Claim of assessee rejected - AT
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Addition u/s 68 - unexpalined share capital - the evidences furnished by the assessee did not establish the creditworthiness of the parties to make the impugned investment in share capital, and the genuineness of the transactions therefore remained unproved. Decided against assessee.- AT
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Capital gain computation - Exemption u/s 54 - The claim of the assessee is supported by the agreement, receipt and name appearing in the bank statement of the contractor. CIT(A) merely stated his comments and there is no controverted finding on the documents in the remand report and the contentions raised by the CIT(A) were not verified by the ld. AO nor the finding is appearing in the order of the CIT(A) that the ld. AO has commented on these documents. The assessee was not given an opportunity to refuted these allegations so made. - Claim of the assessee for an amount cannot be disbelieved - AT
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Deduction u/s. 80JJAA - claim made was disallowed to the assessee because it was not included in the return of income filed by the assessee - Assessee did not have the opportunity to raise the contention before the AO as its return was processed by CPC, Bangalore and intimation was issued u/s. 143(1) and, therefore, the assessee had no opportunity to make a fresh claim by way of filing a revised return before the CPC, Bangalore since the process is completed. The claim made by the assessee at the first appellate stage is an allowable claim. - AT
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Addition u/s 40A - genuineness commission expenses - The assessee has not produced a single document evidencing the distributorship work done by these agents. Not a single document evidencing work done by the distributors for procuring and enhancing sale of the assessee. Not even the statement showing the amounts of sales procured by these parties for the assessee from their respective regions, correlated with the accounts of the assessee, as mentioned in the agreements, has been filed - Additions confirmed - AT
Customs
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Revocation of customs Broker License - The appellant has verified all the documents such as IEC, GSTIN, Aadhar, PAN etc. submitted by the exporters before processing their shipping bills. Later if they were not found to be existing in the said addresses, the appellant cannot be held responsible for that as held by the principal bench in the case of Anax Air Services, under similar facts and circumstances. - AT
Indian Laws
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Unilateral appointment of the Arbitrator, without express agreement - The present award is liable to be set aside on the ground of unilateral appointment of arbitrator. Further in the present case, it appears that the award has been passed without giving any opportunity to the petitioners and therefore, the award is suffered with the violation of Principles of Natural Justice also. - HC
Service Tax
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Valuation - As per Section 67 of Finance Act, 1994 only that value which is charged by the service provider to the service recipient shall be considered the gross value. Value of the material supplied by the service recipient since not charged by the service provider, cannot be included in the gross value of the service. - AT
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Levy of Service Tax - license fee paid by the appellant to the Railways - the act of granting license is taxable only after 01.04.2016. Therefore, the grant of license is clearly not exigible to service tax before 01.04.2016 and has to be set aside. - AT
Case Laws:
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GST
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2023 (4) TMI 343
Seeking grant of bail - wrongfully claiming, utilizing and passing bogus input tax credit on the strength of forged documents purportedly issued in th - e name of non-existent and ghost business entities created and operated by them - whether there exists any prima facie materials or accusations against the accused person and the accused has otherwise made out a case for grant of bail in his favour? - HELD THAT:- There is prima facie allegations against these three petitioners and other for operating numbers of fictitious and ghost business entities for fake transaction with existing companies as well as non-existing company and by means of fake invoices, allegedly availed crores of input tax credit without physical purchase and supply of goods, which according to the GST Department has resulted fraud upon the State Exchequer to the tune of Rs.316 crores and some odd which is a serious allegation against these petitioners for commission of economic offences. It is true that the petitioners are in custody for little more than seven months and charge sheet has already been filed in the meantime, but considering the allegation of huge amount of financial fraud being leveled against the petitioners by itself in the facts and circumstance of the case not entitle them for grant bail at this stage. Besides, the alleged manner and method of commission of offence involving such huge amount of tax evasion by way of issuing fake invoices and availing input tax credit without physical purchase and supply of goods in the guise of business of non-existing entities with existing and non-existing companies and thereby, resulting in defraud of State Exchequer for such a huge amount, would by itself constitute prima facie materials against the petitioners for not considering their bail applications positively. In such circumstance and taking into consideration the availability of prima facie allegations against the petitioners for their involvement in commission of economic offences to the tune of Rs.316 crores and some odd and keeping in mind the fact that some of the co-accused are still at large avoiding their apprehension, this Court does not consider it proper to extend the benefit of bail to the petitioners. The bail applications of the petitioners stand rejected.
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2023 (4) TMI 342
Cancellation of registration of petitioner - appeal has been rejected as time barred under section 107(1) and (4) of the CGST Act - HELD THAT:- Apparently, notification appears to be beneficial in nature as it provides a window of opportunity to all such registered persons whose registration were cancelled for non-compliance of the provisions of Section 29(2) (b) and (c) of CGST Act, 2017. Such registered persons may apply for revocation of cancellation of registration up to 30th June 2023, subject to filing of returns due upto the effective date of cancellation of registration and payment of any amount due as tax along with interest, penalty and late fee in respect of such returns. It is also made clear that no further extension of time period for filing application for revocation of cancellation of registration shall be available in such cases. The Explanation to the notification also indicates that the notification shall cover not only those persons who failed to apply for revocation of cancellation of registration within the time specified in Section 30 of the Act, but also those whose appeal against the order of cancellation of registration under Section 107 of the Act stood rejected or they failed to adhere to the time limit specified under sub-section (1) of Section 30 of the said Act to approach the Appellate Authority against the order rejecting application for revocation of cancellation of registration under section 107 of the Act. The petitioner falls in the category of cases where the appeal preferred against the cancellation of GST registration has been rejected under Section 107(1) and (4) of CGST Act as time barred. However, since the provision is beneficial in nature and appears to ameliorate the difficulty faced by such registered persons whose GST registration stood cancelled, the writ petition is disposed of with a direction to the petitioner to approach the proper officer with an application for revocation of cancellation of registration by 30th June 2023, as per the Notification dated 31.03.2023 after complying with the conditions prescribed thereunder. The impugned order of cancellation of registration and affirmed by order in appeal, shall not come into the way of the proper officer to consider the prayer for revocation of cancellation of registration in terms of the Notification No. 03/2023 - Petition disposed off.
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2023 (4) TMI 341
Application seeking rectification of TRAN I - HELD THAT:- The petitioner has taken the benefit of judgment of the Hon'ble Supreme Court in the case of Union of India vs Filco Trade Centre (P) Ltd [ 2022 (7) TMI 1232 - SC ORDER ] and has filed an application seeking rectification of TRAN I under ARA AC 330922054 389B on 30.11.2022 - With this, he does not pursue this writ petition any further. Since he has no instructions as on date as to whether the application has been disposed and rectified, he only seeks a direction to the respondents to do needful, if not already done. Request is acceded to and the respondents are directed to do the needful in respect of the aforesaid application in light of the judgment of the Hon'ble Supreme Court as aforesaid if not already done. Writ petition is disposed.
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Income Tax
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2023 (4) TMI 340
Rectification of the Assessment Order u/s 143A - whether application for rectification had been filed beyond the period of limitation ? - action for reflection of the TDS deducted against the new PAN Number obtained by the petitioner - Application for granting permission u/s 119(2)(b) - issuance of new pan - TDS deductions not reflected in Form 26AS - Petitioner seeking to rectify its Income Tax return qua the TDS now being reflected under the correct PAN - Income Tax Authorities have also reflected the TDS amount of old PAN against the new PAN Number of the petitioner, as an Association of Persons - petitioner seeking condonation of delay beyond the period of six years from the end of the Assessment Year - HELD THAT:- When Section 119(2)(b) of the Income Tax Act authorizes the Board to issue instructions, directions or orders to the Income Tax Authorities to admit an application, or claim for any exemption, deduction, refund, or any other relief under the Act after the expiry of the period of limitation specified by or under the Act, along with the said power goes the power to prescribe the conditions, upon which such delayed applications may be entertained. Since the petitioner sought condonation of delay by resort of the very same Circular No. 9/2015, the petitioner has to accept the conditions prescribed in the said circular for entertainment of application seeking condonation of delay. Therefore, it is not correct for the petitioner to contend that the Board has no power to lay down an outer-limit of limitation, during which period an application for condonation of delay may be entertained. Rectification application could be filed by the petitioner within four years of the expiry of the Assessment Year. Admittedly, the petitioner did not do so. By resorting to Clause 3 of Circular No. 9/2015, the petitioner could have sought condonation of delay, in moving the rectification application by another two years. The petitioner did not file the rectification application either within the period of limitation, or even within the period for which the delay could be condoned, i.e. up to six years. The petitioner moved the rectification application only in the year 2021, i.e. after over 12 years. It is well settled that, with the expiry of limitation, the law bars the remedy even if the right is not extinguished. Therefore, the right of the petitioner, to avail of the remedy of rectification, stood barred by the law of limitation. The petitioner has only itself to blame for not availing of the remedy available to it within the period of limitation, or even within the period during which the application for condonation of delay could be entertained.
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2023 (4) TMI 339
Allowable deduction in computing the capital gains - Expenditure wholly and exclusively in connection with the transfer of the property - DR submitted that expenditure incurred in connection with encumbrance/mortgage is not an allowable expenditure u/s.48(l)(i) - whether e interest paid for mortgage is not eligible expenditure u/s.48(l)(i) - assessee claimed deduction towards sales expenses related to Cancellation of JDA, Cancellation of purchase agreement and Cancellation of purchase agreement - HELD THAT:- The sale consideration received by assessee is only with regard to sale of land. It is not relating to the sale of any building thereon. The building cost of acquisition claimed by assessee has not at all transferred by assessee vide sale deed dated 23.1.2014. The assessee all along claiming the cost of building, which is not at all transferred by assessee as such the cost of such building cannot be allowed out of the sale consideration of the land as a deduction. The claim of assessee that the building is already existing in the said land and it has been let out to M/s. Edutech NTTF Pvt. Ltd and the rental income of said building has been offered for taxation from year to year. On this basis assessee is claiming cost of building as a deduction out of the sale consideration received from M/s. Titan Company Ltd. The assessee ought to have claimed this deduction only if the sale consideration received by the assessee includes the sale value of the said building in the total sale consideration received by the assessee. In the absence of such and there was no transfer of building to M/s. Titan Company Ltd., said deduction could not be allowed. As in the present case on hand, there was no iota of evidence shown by the assessee with regard to the transfer of the building in the sale deed entered by the assessee with M/s. Titan Company Ltd. and also the balance sheet of the assessee as on 31.3.2013 have no reference of building and it shows only the land-electronic city. There was no mentioning of any value of the building in the schedule of the fixed assets and now assessee again says that sale of land also includes the sale of building so as to claim deduction towards cost of building from the sale value of the land, actually it was not so. Accordingly, this ground of appeal of revenue is allowed.
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2023 (4) TMI 338
Revision u/s 263 by CIT - Allowability of bad debts (debit balances written off) - As per CIT no verification of the bad debts written off was done by the AO during the course of assessment proceedings to verify whether the claim is in accordance of the provisions of section 36(2) of the Act which shows that the Assessing Officer has not applied his mind to the facts of the case - HELD THAT:- During the course of original assessment proceedings, the assessee had given all details of debts and steps were taken by the assessee for recovery of those amounts, which he ultimately failed to recover. AO allowed the deduction after taking into consideration the details filed by the assessee. CIT initiated 263 proceedings on the ground that the claim was not allowable u/s. 36(2) of the Act. In appeal before Tribunal, the ITAT [ 2007 (3) TMI 313 - ITAT HYDERABAD-A] held that the assessee had categorically submitted the details of bad debts before the Assessing Officer during the course of assessment proceedings and the same were considered by the Assessing Officer. Accordingly, the ITAT set aside the 263 order passed by the PCIT. In further appeal to the High Court by the Department, the High Court [ 2011 (4) TMI 805 - DELHI HIGH COURT] held that the PCIT in the instant facts was not justified in setting aside the order of the Assessing Officer and invoking revisional power u/s. 263 of the Act. Thus we are of the considered view that the ld. PCIT has erred in facts and in law in holding that the order passed by the ld. Assessing Officer is erroneous and prejudicial to the interest of revenue - Decided in favour of assessee.
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2023 (4) TMI 337
Estimation of income - Bogus purchases - CIT(A) held that genuineness of impugned purchases cannot be accepted as the assessee failed to discharge its onus fully but entire gross amount of purchase also cannot be disallowed, thus ddition to extent of 10% of alleged bogus purchases - HELD THAT:- As entire amount of bogus purchases shown by the assessee cannot be treated as income of the assessee. What best can be added in the given facts and circumstances is the profit embedded in such transaction of bogus purchases. To determine the profit embedded in such bogus purchases, there is no standard formula prescribed under the provisions of law. However, we note that, the different Hon ble Court in such facts and circumstances have adopted the basis of estimating the income based on some percentage. In the case on hand, the learned CIT(A) after referring to the judgment of Gurubachhan Singh J Juneja [ 2008 (2) TMI 177 - GUJARAT HIGH COURT] and CIT vs. Bholanath Poly Fab. Pvt. Ltd. [ 2013 (10) TMI 933 - GUJARAT HIGH COURT] estimated the profit embedded in alleged bogus purchases @ 10% of such purchases. The learned DR before us has not brought any contrary material against the finding of the learned CIT(A). Decided against revenue.
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2023 (4) TMI 336
Revision u/s 263 - bad debt on account of supply to the government department - Principal CIT held the assessment framed u/s 143(3) as erroneous insofar prejudicial to the interest of Revenue - As the assessee was merely an agent working on commission and therefore in terms of section 36(2) assessee was not entitled for such deduction on account of bad debts - HELD THAT:- As it is not the case that the AO has not made any enquiry. Indeed, the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of bad debts. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. As per CIT there were certain necessary enquiries which should have been made by the AO during the assessment proceedings but not conducted by him, thus making the order of the AO erroneous insofar prejudicial to the interest of revenue - We make our observation that the learned PCIT has not invoked the explanation 2 of section 263 of the Act in the show cause notice about the same. Therefore, the opportunity with respect to the explanation 2 of section 263 of the Act was not afforded to the assessee. Thus, on this count the learned PCIT erred in taking the course of such provisions while deciding the issue against the assessee. Secondly, the learned PCIT has also not specified the nature and the manner in which the enquiries which should have been conducted by the AO in the assessment proceedings. Thus, in the absence of any specific finding of the learned PCIT with respect to the enquiries which should have been made, we are not convinced by his order passed under section 263 - Decided in favour of assessee.
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2023 (4) TMI 335
Gain on sale of property - status of the assessee - assessee s individual capacity or in the capacity of proprietary firm - as per AO capital gain arising out of sale of said land was not shown by the assessee - property in question was mortgaged with Punjab National Bank as security and Lakhia Brothers failed to pay the loan, bank initiated recovery proceedings and Debt Recovery Tribunal ordered to cancel the auction and allow the property to sale with the condition that the entire amount received in respect of the sale of the property will be deposited in the Punjab National Bank - HELD THAT:- It is pertinent to note that in assessee s return of income for A.Y. 2009-10 the assets of the assessee is individual but in verification the assessee has signed in the capacity of proprietor of M/s. Lakhia Brothers. From the perusal of the sale deed it appears that M/s. Lakhia Brothers was a partnership firm and therefore, the land was sold by the partnership firm and not by the assessee in his individual capacity or as the proprietor of M/s. Lakhia Brothers. In fact, debt recovery proceedings also give the direction was given against the partnership firm M/s. Lakhia Brothers by the Debt Recovery Tribunal. Contention of the assessee that the status of the assessee was not correctly taken into account by the AO while making the addition appears to be correct. Besides this the assessee has rightly not indicated Long Term Capital Gain as it was not in assessee s individual capacity or in the capacity of proprietary firm that the assessee has made sale considerationin respect of sale of the property. Assessing Officer as well as the CIT(A) has not taken cognizance of the same and not taken a proper facts on record. Hence, the appeal of the assessee is allowed.
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2023 (4) TMI 334
Addition u/s 14A - disallowance of administrative expenditure - CIT-A directed the Assessing Officer to take 0.5% thereby invoking the said rule - submissions made by the Ld. AR that current liabilities and provisions should not be reduced from the opening and closing stock of current assets should have been taken into account by the AO - HELD THAT:- We direct AO to look into the said aspect and verify the same to the extent of the contentions of the revenue that the borrowings were used for the purpose of the business as well as the investment was from assessee s own fund for earning exempt income. Thus, we remand back this issue to the file of the Assessing Officer for proper verification and the adjudication. Ground no.2 of the assessee s appeal is partly allowed for statistical purpose. Nature of expenses - repairs and maintenance expenses - AR said that entire expenditure is in the nature of current repairs and no new enduring benefit has come into existence and, therefore, the expenditure not being in the nature of capital expenditure are allowable under the provisions of the Section 31 - HELD THAT:- From the perusal of the documents, it can be seen that these expenditures were not totally on the replacement but replacement of part of machinery/plant which in totality cannot be treated at par with the repairs and maintenance that of entire Plant Machinery. The pipelines and duel fuel burner system are forming some part of entire plant and machinery and both these parts do not function independently or used independently for the projects of the assessee company. CIT(A) was not right in confirming the addition. In fact, these expenditures are revenue in nature. Ground no.3 of assessee s appeal is allowed. Disallowance of contribution to Sardar Vallabhbhai Patel Rashtriya Ekta Trust - AR submitted that for an expenditure to be eligible as business expenditure, merely the Trust is registered under Section 80G would not debar the expenditure, provided it satisfies the test of business expenditure - HELD THAT:- It is pertinent to note that the Agro Products of the assessee company are sold under the brand name Sardar which is very popular amongst the farming community since more than four decades. It was an apprehension of the assessee that the construction of a statue of Sardar Vallabhbhai Paltel would significantly enhance the value of the brand name under which the assessee carries on its business. This would help enhance sales as well as exports of the company s agro products and would as a corollary enhance the brand value of other products of the company. Thus, the contention of the Ld. AR that the expenditure was incurred wholly and exclusively for the purpose of business on account of commercial expediency and accordingly is allowable under Section 37 of the Act, appears to be genuine. The funding was for State Government. The decision of Gujarat Narmada Valley Fertilisers Co Ltd. [ 2013 (5) TMI 759 - GUJARAT HIGH COURT] under identical facts held that, the said expenditures were allowed related to deduction under Section 37 of the Act. - Decided in favour of assessee. Business expenditure incurred for the purpose of setting up of projects which were abandoned - DR submitted that no evidence as to abandoned project relating to the business of the assessee was produced before the Assessing Officer by the assessee - HELD THAT:- Abandoned project was part of the business of manufacturing of chemicals and once the said plant if would have been a possibility, then the business expenditure of the assessee would have been much more. Therefore, the expenditure written off by the assessee has to be considered as business revenue expenditure. Therefore, ground of the assessee s appeal is allowed. Disallowance of expenditure incurred for obtaining land on lease for a period of 20 years - contentions of the Ld. AR that the expenditure is in nature of expenditure on facilitation of lease land and other expenditure necessary for identification and development of land and is not in the nature of cost of land or premium for acquiring land on lease appears to be not correct - HELD THAT:- As from the perusal of the record it appears that the expenditure is for the purpose of preparation of land and make it suitable for installation of windmill. Therefore it will be appropriate to remand back this issue to the file of the AO for proper verification and adjudication and if the said expenditure appears to be cost of plant and machinery (windmill) and then accordingly the Assessing Officer may allow depreciation in respect of the same. Ground partly allowed for statistical purpose. Book profit u/s 115JB in respect of expenditure disallowable under Rule 8D read with Section 14A(2) - HELD THAT:- This ground is in consonance Vireet Investment [ 2017 (6) TMI 1124 - ITAT DELHI] and the provisions relating to Section 115JB relating to exempt income we direct the Assessing Officer to verify the same and adjudicate the same as per law. Prior period expenses - cristalisation of expenses - HELD THAT:- CIT(A) has rightly observed that the assessee established that these expenses were crystallised during the current F.Y. and accordingly are eligible for deduction while computing total income of the assessee. There is no need to interfere with the same. Hence, ground no.3 of Revenue s appeal is dismissed.
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2023 (4) TMI 333
Addition u/s 68 - unexpalined share capital - genuineness of the transactions not proved - HELD THAT:- A perusal of the order of the Ld.CIT(A) reveals that the assessee had furnished only the name, address and PAN of the aforesaid two parties to evidence the genuineness of the transactions. Nothing was filed to prove the creditworthiness. CIT(A) has held that the above, therefore, was insufficient for discharging the onus to prove the creditworthiness and genuineness of the said transaction. In the absence of any submissions made on behalf of the assessee before us controverting the aforestated facts as noted by the CIT(A), we see no reason to interfere in the order of CIT(A) who has rightly held that the evidences furnished by the assessee did not establish the creditworthiness of the parties to make the impugned investment in share capital, and the genuineness of the transactions therefore remained unproved. Decided against assessee. Unexplained investment - HELD THAT:- As addition has been made on account of cash payment noted to have been made by the assessee for investment in land; the source of which was not explained. No evidences were filed to the Assessing Officer, nor to the learned CIT(A)explaining the source of investment. CIT(A) has recorded a finding to this effect that the assessee has failed to prove the source of investment in cash in the land purchased. Even additional evidences filed by the assessee were considered by the Ld.CIT(A) and found to be of no relevance - Decided against assessee. Disallowance of employee benefit expenses and other expenses in the absence of any evidence filed by the assessee to substantiate its claim - HELD THAT:- In the absence of representation of the assessee before us, the findings of the Ld.CIT(A) remain un controverted upholding the disallowances - Decided against assessee.
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2023 (4) TMI 332
Late remittance of employees' contribution to P.P. E.S.LC. u/s. 36(l)(va) r.w.s. 2(24(x) - disallowance under section 143(1)(a) - HELD THAT:- ITAT held that disallowance under section 143(1)(a) was valid in view of Supreme Court's decision in case of Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] and the assessee will not be entitled to deduction of belated payment of ESI and PF of employees' share of contribution as per provisions of section 36(1)(va) - jurisdictional High Court decision in case of Gujarat State Road Transportation Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] wherein it was held that where assessee did not deposit employees' contribution to employees' account in relevant fund before due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B of the Act - Decided against assessee.
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2023 (4) TMI 331
Addition u/s 41 (1) - remission or cessation of trading liability - admission of additional evidences - assessee submitted that there were some genuine reasons because of which documents and replies could not be submitted to the AO and assessee was suffering from failure of kidney. In this regard, medical prescription has also been attached - HELD THAT:- As in the interest of justice, we agree that there was reasonable cause of ailment that prevented the assessee to supply the documents and replies to the AO. Hence, we direct that the additional evidences and submissions made before the ld. CIT (A) be accepted by the ld. CIT (A). After going through the submissions and additional evidences, ld. CIT (A) shall pass an order as per law. Needless to add, assessee should be granted adequate opportunity of being heard. Appeal of the assessee stands allowed for statistical purposes.
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2023 (4) TMI 330
Penalty u/s.271(1)(c) - addition towards unexplained credit u/s.68 and addition u/s.56(2)(viib) - HELD THAT:- As the very basis for imposing penalty in the hands of the assessee company u/s.271(1)(c) had been vacated by the Tribunal, therefore, the penalty imposed by the A.O u/s.271(1)(c) of the Act cannot be sustained and has to meet the same fate. In terms of our aforesaid observations, vacate the penalty imposed by the A.O u/s.271(1)(c) - Appeal of assessee allowed.
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2023 (4) TMI 329
Penalty u/s 271(1)(c) - Invalid notice u/s 274 - Non specification of clear charge - addition being the 25% of the bogus purchases - HELD THAT:- Bare perusal of the notice issued in this case by the AO goes to prove that the AO at the time of issuing the notice was not satisfied if he was initiating the penalty against the assessee for concealing particulars of his income or for furnishing inaccurate particulars of such income. This issue has been decided in Md. Farhan A Sheikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] and held that penalty under section 271(1)(c) of the Act is not leviable when invalid notice as in the instant case has been issued to the assessee. Since the AO has failed to initiate the penalty proceedings under section 271(1)(c) of the Act by issuing the valid notice, penalty levied by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law as the assessee has never been informed about the charges framed to initiate the penalty proceedings through statutory notice. Decided in favour of assessee.
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2023 (4) TMI 328
Capital gain computation - Disallowance of relief claimed u/s 54 - disbelieving on a payment made to the contractor for acquisition/development of house property - contractor not found on the address by the inspector and thus the deduction was not considered - HELD THAT:- We believe that once the name of the payee is appearing in the bank statement the identity of the payee is established at the time of payment. Merely, at the time of assessment the inspector did not find the payee on the address cannot be reason to disbelieve the claim of expenditure which are based on the independent evidence and the veracity of the same is not doubted by the revenue but there are certain observations of ld. CIT(A) The claim of the assessee is supported by the agreement, receipt and name appearing in the bank statement of the contractor. CIT(A) merely stated his comments and there is no controverted finding on the documents in the remand report and the contentions raised by the CIT(A) were not verified by the ld. AO nor the finding is appearing in the order of the CIT(A) that the ld. AO has commented on these documents. The assessee was not given an opportunity to refuted these allegations so made. Before us also except the findings of the CIT(A) there is no comment on the documents and its veracity of these documents and merely based on surmised and conjecture the claim which is supported by documents and the source of the payment made is not disbelieved the claim of the assessee cannot be disbelieved on the reason that as on the date of inspector visit during the pendency of the assessment at the given address the person not found. The reasons canvassed cannot be a base to disbelieve the claim which is supported by the various evidence placed on record - Claim of the assessee for an amount cannot be disbelieved and thus, we hold that the revenue has erred in not allowing the claim of the assessee and therefore, we direct the ld. AO to allow the claim of the assessee to the extent of the share of the assessee in this payment - Decided in favour of assessee. Not allowing the benefit paid for acquiring title in the land sold resulting into charging of capital gain at very high figure i.e. the substitution of stamp duty valuation - Considering the wider scope of section 48 while computing the capital gain the payment made in relation the property if at the first instance be considered as additional consideration and at the same the payment of the said amount to settle the property dispute be considered as the payment which is absolutely necessary to affect the transfer made by the assessee and shall be considered as expenditure to which is covered by the provision of section 48 and the judicial decision as cited above. In terms of these observations the ground no. 3 raised by the assessee is allowed.
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2023 (4) TMI 327
Deduction u/s. 80JJAA - claim made was disallowed to the assessee because it was not included in the return of income filed by the assessee - HELD THAT:- We note that it is a case where a return has been processed u/s. 143(1) vide issuance of intimation. At the first appellate stage, assessee has claimed a deduction u/s. 80JJAA by raising an additional ground which the Ld. CIT(A) has not admitted - As decided in Goetz (India) P. Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] even if a claim is not made before the AO, it can be made before the appellate authority and in the said judgment, the jurisdiction of appellate authority to entertain such a claim has not been negatived. Assessee did not have the opportunity to raise the contention before the AO as its return was processed by CPC, Bangalore and intimation was issued u/s. 143(1) and, therefore, the assessee had no opportunity to make a fresh claim by way of filing a revised return before the CPC, Bangalore since the process is completed. The claim made by the assessee at the first appellate stage is an allowable claim. Decision of Hon ble Supreme Court in the case of Wipro Ltd. [ 2022 (7) TMI 560 - SUPREME COURT ] has observed a distinction between the claim made under Chapter-III and that made under Chapter-VIA and, therefore, is not applicable in the present case as it is a claim made u/s. 80JJAA of the Act falling under Chapter VIA of the Act. Assessee has been claiming a deduction for the preceding as well as subsequent assessment year i.e. AYs 2018-19 and 2020-21 which has been allowed by the Ld. CIT(A) at the appellate stage. The facts relevant to the claim of deduction made by the assessee were placed before the Ld. CIT(A). Also, the submissions made before the Ld. CIT(A) in respect of the claim of deduction made by the assessee are placed on record in the paper book. Thus no hesitation in allowing the admission of additional ground raised by the assessee in respect of claim of deduction u/s. 80JJAA of the Act which has been raised at the first appellate stage. Accordingly, grounds raised by the assessee in this respect are allowed.
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2023 (4) TMI 326
Addition u/s.69C - unexplained expenditure In housing project - HELD THAT:- We find that there are two-set of work being carried out. One relates to regular kitchen work as part of the arrangement between the assessee and the customers and secondly, where there is requirement of any additional or specific kitchen work to be done as so required by the customers. The regular kitchen work was done by the assessee through Koncept Kitchen and Decorators, and the specific kitchen work was got done by the respective customers through M/s Mehak Enterprises which the assessee might have facilitated. The affidavit of partner of M/s Mehak Enterprises where he admits this fact and also the contents of the paper which has been found and impounded and the fact that the payments have been made directly by the Customers. Nothing has been brought on record to rebut the same. Though the paper has been found from the premises of the assessee, where the assessee has given an explanation that the work has been got done by the customers through M/s Mehak Enterprises which is corroborated by the affidavit of Shri Sanjeev Angra, the same cannot be held against the assessee and thus, the addition cannot be made in the hands of the assessee. In the result, the ground of appeal is allowed. Addition made on estimate basis for enhancing the N.P. rate - Admittedly, the facts and circumstances of the case are identical to A.Y 2009-10 as can be seen from the order of the lower authorities, therefore, the order and the findings of the Coordinate Bench in assessee s own case for A.Y 2009-10 [ 2016 (12) TMI 747 - ITAT CHANDIGARH] the addition so made by estimating a higher NP rate is directed to be deleted. The ground of appeal is thus allowed in favour of the assessee. Addition u/s 68 - addition on the basis of seized documents - HELD THAT:- On perusal of records, we find that the payment of Rs 9,30,000/- relates to sale of flats which have been sold by the assessee to Goyal brothers. The sale deeds in respect of these flats were registered on 24/08/2007 and all the payments totaling to 59,30,000/- including the payment of 9,30,000/- was received prior to registration of the sale deed. Therefore, we agree with the contention of the ld AR that the payment of Rs. 9,30,000/- can only be considered in A.Y 2008-09 and not in the impugned assessment year 2010-11. The addition so made in the impugned assessment year is therefore directed to be deleted.
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2023 (4) TMI 325
Refund of DDT in respect of payments made to non-resident shareholders - levy of Dividend Distribution Tax ('DOT') liability by considering the benefit of applicable DTM between India - Netherlands and India - Germany respectively qua the rate of tax (i.e. 10%) towards payment of dividend to the non-resident shareholders - HELD THAT:- We find that the issue relating to claim of refund of DDT in respect of payments made to non-resident shareholders has been dealt in the case of Reckit Benkiser India Pvt. Ltd. [ 2020 (6) TMI 474 - ITAT KOLKATA ] wherein it was set aside to the file of Ld. AO for factual verification in the light of an agreement and other relevant documents and the provisions of DTAA. Thus we are unable to lay our hands on this submission - remit the matter back to the file of AO for verification of the amount of dividend paid relating to DDT deposited by the assessee, relevant agreement and documents in respect of non-resident shareholding and the DTAAs of the respective countries of the non resident shareholders and thereafter consider granting of refund of the DDT so claimed by deciding the issue in accordance with law. Deduction towards education cess paid on income-tax and DDT as allowable expenditure u/s. 37(1) - HELD THAT:- The issue is no longer res integra as the coordinate bench in the case of Kanoria Chemicals Industries Ltd. [ 2021 (10) TMI 1153 - ITAT KOLKATA ] has held that it is not an allowable expenditure u/s. 37(1) of the Act which has been adequately affirmed by the subsequent amendment vide Finance Act, 2021 with retrospective effect. Accordingly, additional ground raised by the assessee for claim of deduction of education cess as allowable expenditure are admitted and dismissed in terms of observations hereinabove. Disallowance of royalty u/s 40(a)(ia) - payment to Kolkata Port Trust ('KOPT') due to non-deduction of tax at source - HELD THAT:- We find it proper to remit the matter back to the file of Ld. AO for the limited purpose of verification of discharging of tax liability by KOPT on the impugned amount of royalty payable by the assessee to KOPT - In this respect, we also direct the Ld. AO to exercise his powers available under the Act to call for the relevant information from KOPT for the factual verification and confronting the same to the assessee for its reply, if so desired - ground taken in this respect is allowed for statistical purposes. Disallowance u/s. 14A r.w.r. 8D(2)(iii) - investment made by assessee in shares which yielded dividend - HELD THAT:- By placing reliance on the decision in the case of REI Agro Ltd. [ 2013 (9) TMI 156 - ITAT KOLKATA ] and in view of the above findings of the coordinate bench of ITAT, Kolkata in assessee's own case [ 2021 (4) TMI 239 - ITAT KOLKATA ] CIT(A) correctly directed the Ld. AO to verify and re-compute the disallowance @ 0.5% of the average value of those investment which resulted in exempted income.
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2023 (4) TMI 314
Addition u/s 40A - genuineness commission expenses - factum of services rendered by the distributors to the assessee for the allowability of claim of commission - as per DR no evidence of rendering any service by the agents was filed by the assessee - HELD THAT:- As communication inter se between the assessee and the agents who at the cost of repetition we may point out are related to the assessee being persons specified u/s. 40A(2)(b) - There is not a single third party communication or correspondence evidencing any work done by these parties as distributors or executors of job work in the case of Parul Traders for the assessee. Even otherwise the evidences to the effect of communications with the agents regarding Obtaining C-forms or depositing cheques, does not show that these agents were acting as distributors of the assessee. The assessee has not produced a single document evidencing the distributorship work done by these agents. Not a single document evidencing work done by the distributors for procuring and enhancing sale of the assessee. Not even the statement showing the amounts of sales procured by these parties for the assessee from their respective regions, correlated with the accounts of the assessee, as mentioned in the agreements, has been filed, When as per the agreement this is an internal document which could have been easily available with the assessee. We therefore find that the evidences filed by the assessee were not sufficient to demonstrate the rendering of services by these distributors to the assessee. We therefore concur with the authorities below that the factum of any services rendered by the distributors/agents has not been established by the assessee at all, the evidences furnished by the assessee we hold are not sufficient to establish the said fact as dealt with by us. The contention of the ld. Counsel for the assessee therefore that the burden of proof shifted to the revenue does not merit consideration. Having found the evidences to be insufficient to prove the claim of the assessee, there was no need for the revenue to have made any enquiry with regards to the same and the onus rested on the assessee only to prove its claim. Principle of res judicata - Contention of the assessee that the claim having never been disallowed in the past or succeeding years, following the principle of consistency, the settled and accepted position ought not to have been distributed - The principle of res judicata does not apply to Income Tax proceedings and the facts of each year have to be considered and merely because the claim has been allowed all these years without being examined, does not make the claim legitimate despite evidences on record proving to the contrary. The case laws relied by the Ld. Counsel for the assessee in this regard, are all distinguishable on facts. Therefore, this contention of the ld. Counsel for the assessee that following the principle of consistency the claim ought to have been allowed in those years is also rejected. Disallowance in any case could not have been made u/s. 40A(2)(b) of the Act where the genuineness cannot be brought into question and only the fair market value of the transaction with specified persons can be determined and the excess paid over it be disallowed, we find merits no consideration also - A.O. has not invoked Section 40A(2)(b) for the purposes of making the disallowance. The A.O. we find has only referred to the Section for pointing out that the agents were closely related to the assessee qualifying as specified persons as per the said section and the disallowance has been made finding the claim to be ingenuine in terms of Section 37(1) of the Act. Therefore this contention of the assessee is also rejected. As for the contention of the Ld.Counsel for the assessee that the disallowance even if made would be a tax neutral exercise since the commission agents have paid taxes on the same in their hands, the same merits no consideration since the expenses have been found to be in-genuine and no shelter under the tax neutrality principle can be given to such cases of claims found to be not genuine. Thus disallowance of commission expenses upheld - Decided against assessee.
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2023 (4) TMI 313
Claim of expenses pertaining to abandoned project - demonstrate incurrence of the expenditure itself - Second round of proecedings before ITAT - HELD THAT:- ITAT in the first round held that the claim of expenditure incurred by the assessee on the abandoned project, was allowable to it subject to the assessee demonstrating the fact that it had incurred the expenditure itself, and not through Gujarat Acrylics Ltd., an Joint Venture entity of the assessee and others. This fact, we find, has been suitably demonstrated by the assessee, by pointing out that the Shareholders agreement between the JV partners entered on 06/01/1995 required the respective parties to the JV to bear costs upto 31-12-1994 and the assessee had till then incurred this cost of 20.51 lacs. As per the terms of agreement between the JV partners costs incurred upto 31-12 -1994 was to be borne by the partners themselves. There was no question therefore of the JV company, i.e Gujarat Acrylics Ltd, bearing any expenditure upto 31-12-1994 . The impugned expenses incurred by the assessee of 20.51 lacs have been suitably demonstrated as incurred upto 31-12-1994. Revenue does not dispute this fact - no doubt in the fact that the said expenses have been incurred by the assessee itself, the Shareholders agreement ruling out in clear terms the JV company from bearing these expenses. Assessee had established clearly that this expenditure had been incurred by the assessee itself. We find that the assessee had sufficiently demonstrated compliance with the conditions stipulated by the ITAT for theallowance of the claim, and we hold that the assessee is entitled to the said claim of project expenses in terms of the direction of the ITAT in the first round. Basis of the Revenue for rejecting the claim missed the crux and contents of the directions of the Tribunal, which was simply to the effect that the assessee had to demonstrate incurrence of the expenditure itself, and for the said purpose, the Tribunal had gone to the extent of directing assessee to demonstrate mode of payment and details of payment etc. Facts demonstrated by the assessee clearly showed that the expenditure had been incurred by the assessee itself. There is no question of denial of claim to the assessee. Thus, ground no.2 and 2.1 are allowed. Claim of wage settlement - in first round directions of the ITAT were to allow claim of wage settlement on thefinal settlement of the wages and on its actual payment. It was on the fulfillment of both the conditions that claim was to be allowed to the assessee - AO in the second round denied the claim finding that the same was not settled by the assessee in the impugned year - HELD THAT:- As assessee was unable to controvert the factual finding that to the extent of the claim of wages was not settled in the impugned year. Inviewof the same, we see no reason to interfere in the order of the ld.CIT(A) disallowing the claim of wages to the extent of Rs.81 lakhs. At the time same, we agree with the contentions of the assessee that the said claim be allowed in the year in which it is actually paid by the assessee. With this direction to the AO, ground of appeal are allowed in the above terms.
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Customs
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2023 (4) TMI 324
Revocation of customs Broker License - forfeiture of security deposit - levy of penalty - non-verification of various documents - allegation against the appellant is based on the reports of the jurisdictional officers in respect of the three RUDs attached to the DGARM Report - violation of Regulation 10(n) of CBLR, 2018 - HELD THAT:- It is found that physical verification of the business premises is not an obligation cast upon the CB, under Rule 10(n) of CBLR, 2018. Decision in the case of Tribunal is squarely applicable in this case - In the present case also, the original Offence report was based on the DGARM Report, as in the case of M/S ANAX AIR SERVICES PVT. LIMITED VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI (AIRPORT AND GENERAL) [ 2022 (1) TMI 115 - CESTAT NEW DELHI] - In the present case also, as per DGARM Report, the 10 exporters facilitated by the appellant were later found to be non-existent during subsequent verification by the department. The appellant has verified all the documents such as IEC, GSTIN, Aadhar, PAN etc. submitted by the exporters before processing their shipping bills. Later if they were not found to be existing in the said addresses, the appellant cannot be held responsible for that as held by the principal bench in the case of Anax Air Services, under similar facts and circumstances. The only allegation against the appellant in the impugned order is that it violated Regulation 10 (n) which is not true. The Ld. Principal Commissioner was not correct in holding that the appellant Customs Broker has violated Regulation 10(n) of CBLR, 2018 - Appeal allowed - decided in favour of appellant.
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Service Tax
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2023 (4) TMI 323
Valuation - Erection, Installation and Commissioning service or Construction Service? - non-inclusion of value of material supplied by their clients in the gross value of the service for payment of service tax - applicability of N/N. 19/2003-ST dated 21.08.2003, N/N. 15/2004-ST dated 10.09.2004 and N/N. 1/2006-ST dated 01.03.2006 - HELD THAT:- This issue now is no longer res-integra as in the various judgments including the judgment of BHAYANA BUILDERS [[ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] ], the Tribunal has held that for availing abatement under notifications 19/2003-ST dated 21.08.2003, 15/2004-ST dated 10.09.2004 and Notification No. 1/2006-ST dated 01.03.2006, the value of the material provided by the service recipient to the service provider shall not be included in the gross value for the purpose of charging service tax - The said Larger Bench decision of Bhayana Builders (P) Limited has been upheld by the Hon ble Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] . As per Section 67 of Finance Act, 1994 only that value which is charged by the service provider to the service recipient shall be considered the gross value. Value of the material supplied by the service recipient since not charged by the service provider, cannot be included in the gross value of the service. In view of the settled legal position by the Apex Court, charge of the department clearly fails and on that basis exemption cannot be denied. Charge of mis-declaration of classification - HELD THAT:- Whether the service classified under Construction Service as claimed by the appellant or under Erection, Commissioning or Installation service as held by the Revenue, the abatement of 67% is available in both the categories therefore, the misclassification of service does not have any revenue implications. It is observed that the appellant have rented out Hydra Crane also however, there is no separate working of service tax on the said element. The Adjudicating Authority need to re-quantify the service tax if any arises after allowing the abatement in respect of services of Erection, Commissioning or Installation - the impugned order is set-aside - Appeal allowed by way of remand.
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2023 (4) TMI 322
Levy of Service Tax - license fee paid by the appellant to the Railways under section 73(2) of the Finance Act, 1994 along with consequential interest under section 75 of the Finance Act and 100% penalty under section 78 of the Finance Act - differential service tax due on the difference in value of catering service as declared in balance sheet and ST-3 returns - HELD THAT:- The period under dispute can be broken in two different sub-periods since an amendment was made w.e.f 01.04.2016. The taxability of the activity of providing licenses has been clarified by the CBIC Circular dated 11.10.2019. It states that the act of granting license is taxable only after 01.04.2016. Therefore, the grant of license is clearly not exigible to service tax before 01.04.2016 and has to be set aside. If the demand is set aside for the period prior to 01.04.2016, then in effect the entire demand for extended period will be set aside and a partial demand of Rs. 4,56,73,377/- for the normal period will also be set aside, leaving an amount of Rs. 2,91,82,900/- - In the instant case, the show cause notice in paragraph 15 (ii), demanded service tax amounting to Rs. 11,15,69,363/- during the period 01.04.2013 to 31.03.2017, not paid by the appellant on the services described in paragraphs 5 and 6 and paragraph 6.2A concludes that the Indian Railways provided support services to the appellant and would be taxable on a reverse charge, as it is not covered in the negative list of service provided under section 66D of the Finance Act. Whether the activity identified in the show cause notice qualifies to be a taxable service for which the license fee is said to be the consideration? - HELD THAT:- The license fee is the consideration paid for the grant of license . It is pertinent to note that the words license fee is defined the Oxford Dictionary to mean a fee paid to an organization for permission to own, use or do something. The Supreme Court in STATE OF ORISSA ORS. VERSUS NARAIN PRASAD ORS., ETC. ETC. [ 1996 (9) TMI 599 - SUPREME COURT] explained the meaning of expression Privilege and held that Privilege really means the license or permit granted by the State - In the instant case, the license fee paid by the appellant to Railways is the consideration for the privilege to be the sole catering agent on board the trains for which a license was issued. This grant of license/privilege is the service which was taxable and the value of this service is equal to the license fee which is the consideration paid for this service. The show cause notice has not identified this service. To tax this service would, therefore, result in going beyond the scope to the show cause notice. There is merit in the contention advanced by the learned counsel for the appellant that the consideration paid by the appellant as license fee cannot be subjected to levy of service tax. The other two demands proposed in the show cause notice and confirmed by the adjudicating authority have not been contested by the appellant. The impugned order dated 15.10.2018 in so far as it confirms the demand of service tax on the license fee paid by the appellant to the Railways with interest and penalty is set aside - Appeal allowed.
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Central Excise
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2023 (4) TMI 321
CENVAT Credit - capital goods - structures which are fabricated from the subject goods - assessee failed to prove that structures fabricated from the subject goods satisfy the description or classification prescribed in the definition of capital goods in Rule 2(a) of the CENVAT Credit Rules - present dispute pertains to 2005-06 to August 2008 - HELD THAT:- From the perusal of the circulars dated 2-4-2012 and 18-5-2012, it comes out that these circulars have been issued in the changed context of the definition of [Rule] 2(k) of Cenvat Credit Rules, 2004 and both circulars have no concern for the period in issue. Thus, we find that the reliance placed by the Revenue in this regard has no substance. The Madras High Court in THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. INDIA CEMENTS LIMITED OTHERS [ 2011 (8) TMI 399 - MADRAS HIGH COURT] noticed VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] but relied upon the Apex Court judgment in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] , wherein the Apex Court has considered an issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set and after considering it, the Apex Court allowed the Cenvet credit on MS Rod, sheets, MS Channel, MS Plate, etc., used for fabrication of structures to support various machines/capital goods. In M/S. THIRU AROORAN SUGARS, M/S. DALMIA CEMENTS (BHARAT) LTD. VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [ 2017 (7) TMI 524 - MADRAS HIGH COURT] , a Division Bench of the Madras High Court specifically considered as to whether MS structural, (which support plant and machinery), cement and steel (which are used in erecting foundations to hold plant and machinery) are integral part of capital goods eligible for Cenvat credit under the Cenvat Credit Rules, 2004 prior to the amendment of Explanation 2 to Rule 2(k) by notification dated 7-7-2009. The Madras High Court has held that irrespective of whether user test is test applied, or the test that they are an integral part of the capital goods is applied, all such items fell within the scope and ambit of both Rule 2(a)(A) and 2(k) and, therefore, Cenvat credit was to be allowed on such goods. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.
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2023 (4) TMI 320
Confiscation of the excess stock, with redemption fine and penalty - serious discrepancy in the so called stock taking the appellant have requested for cross-examination of panchas - gross violation of principles of natural justice - HELD THAT:- As per the investigating officer excess stock of 32.15 MT was alleged as against the total stock recorded in RG-1 register of 625.710MT. The appellant have vehemently objected on this difference in the stock merely on the ground that no physical stock taking was conducted and methodology of the stock taking was not disclosed. The Learned Counsel, is agreed upon that the adjudicating authority was supposed to give the details of methodology in stock taking and also allowed the cross-examination of panchas. In this fact, the matter needs to be remanded to the adjudication authority for reconsideration after allowing the cross examination of panchas. It is settled law that once the penalty is imposed on the partnership firm it s partner cannot be imposed penalty separately. This issue has been considered and settled by the Hon ble Gujarat High Court in the case COMMISSIONER OF CENTRAL EXCISE VERSUS JAI PRAKASH MOTWANI [ 2009 (1) TMI 501 - GUJARAT HIGH COURT] . No penalty is imposable on Shri. Amit Gupta - Appeal is allowed by way of remand to adjudicating authority.
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CST, VAT & Sales Tax
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2023 (4) TMI 319
Reassessment where original assessment is sought to be superseded on the ground that it was erroneous - change of opinion on the basis of subsequent decision, where different view adopted - taxability of sale of mobile phones in the state of Uttar Pradesh - It was held by HC [ 2016 (12) TMI 630 - ALLAHABAD HIGH COURT] where it was held that This writ petition has to be allowed with cost as law is well settled that assessment once having become final should not have been reopened on the basis of judgment of the Apex Court which has no applicability to the facts of this case and is in ignorance of factual position as is very clear from facts - HELD THAT:- The SLP is dismissed. Seeking withdrawal of petition - seeking appellate remedies available in law in respect of the re-assessment order - HC [ 2019 (9) TMI 1153 - RAJASTHAN HIGH COURT] held that It certainly cannot be said to be a case of inherent lack of jurisdiction. Aside of the fact whether or not the re-assessment order could have been legally passed, the appellants cannot be allowed to contend that such orders have been passed dehors the principles of natural justice - HELD THAT:- The special leave petition is dismissed as withdrawn. List [ 2015 (12) TMI 239 - PUNJAB AND HARYANA HIGH COURT] and [ 2016 (12) TMI 1897 - PATNA HIGH COURT] along with these petitions subject to orders of Hon ble the Chief Justice of India as it is submitted that the same questions of law arise.
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2023 (4) TMI 318
Inclusion of value of damaged and obsolete/ unsaleable goods from previous assessment years in the assessable value (disallowance of deduction) - Form 53 not uploaded, which was a necessary pre-requisite to claiming such deduction - HELD THAT:- The assessing authority has now accepted that the documents produced by the petitioner are reliable, and that the only reason for disallowing the claim of the assessee was the non-production of those documents along with Form 13 audit report, Form 13A audited Balance Sheet and the audited Profit and Loss Account for the year ended 31.03.2012, the said technical reasons need not be a reason to deny the petitioner the substantive benefit of deduction of the amounts from the taxable turnover for the year. Matter remanded back to the assessing authority for passing a fresh assessment order, taking into consideration the documents now produced by the petitioner before the assessing authority, and which were found as acceptable by the assessing authority, for the limited purposes of passing a revised assessment order.
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2023 (4) TMI 317
Violation of principles of natural justice (audi alterem partem) - assessment orders were passed without affording a reasonable opportunity to the appellant company - HELD THAT:- It is a fact that the judgment of the learned Single Judge in ATLAS JEWELLERY [P] LTD., VERSUS THE DEPUTY COMMISSIONER, SPECIAL CIRCLE, STATE GOODS AND SERVICE TAX (FORMERLY ASSISTANT COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, KERALA). THE JOINT COMMISSIONER, STATE GOODS AND SERVICES TAX DEPARTMENT, STATE TAX, THE COMMISSIONER OF STATE TAX, THIRUVANANTHAPURAM [ 2022 (3) TMI 268 - KERALA HIGH COURT ] pertained to a sister company of the appellant that was functioning with the same management. It follows, therefore, that the difficulties that were faced by the said sister company were identical to those faced by the appellant as narrated in the statement of facts in the Writ Appeal. Taking note of the said circumstances and finding the reasons for non-appearance of the appellant before the Assessing Officer in response to the notice for hearing to be genuine, thus a similar treatment, as extended to the petitioner in WP(C).No.21798 of 2021, can be extended to the appellant herein as well. The impugned judgment of the learned Single Judge in the Writ Petition, as also the order in the Review Petition, to the limited extent that it does not set aside the assessment orders impugned in the Writ Petition, set aside - appeal disposed off.
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2023 (4) TMI 316
Rejection of petitioner s applications for grant of stay order under Section 31 (3) (a) of AP VAT Act - rejection on the ground that there is no prima facie case made out to grant stay on collection of the tax demands - HELD THAT:- Once the appeal has been admitted, application for stay ought not to have been rejected on the ground, it has been so rejected. Rejection of the stay application by observing that on the grounds of appeal, prima facie case for stay is not made out, in an admitted appeal, does not appeal. In MOOL CHAND YADAV AND ANR. VERSUS RAZA BULAND SUGAR COMPANY [ 1982 (10) TMI 209 - SUPREME COURT ] the Hon ble Apex Court held that the judicial approach requires that during the pendency of the appeal the operation of an order having serious civil consequences must be suspended. More so when appeal is admitted. The Act provides for grant of stay in admitted appeal subject to the conditions as under Section 31 (3) (a) of the Act, and consequently, the 1st respondent while considering the stay application in an admitted appeal ought to have decided the same by such judicial approach. The 1st respondent shall make endeavour to decide the appeals expeditiously and within the statutory period - the disputed tax under the orders under challenge in the appeals before the 1st respondent shall not be collected from the petitioner, subject to the condition that the petitioner deposits 25% of the disputed amount, in every appeal, within a period of six weeks from the date of receipt of a copy of this order. Writ petition is disposed off.
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Indian Laws
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2023 (4) TMI 315
Unilateral appointment of the Arbitrator, without express agreement - Whether the petitioners participated in the arbitral proceedings or after having the knowledge of the appointment of the sole Arbitrator, failed to challenge the said appointment in terms of Section 13 of the Act, and whether the same would deprive the rights of the petitioners to challenge the said appointment of the Arbitrator in terms of the provisions of Section 34 of the Act for the violation of provisions of Section 12(5) of the Act? HELD THAT:- The answer is no. The petitioners can certainly entitled to challenge under Section 34 of the Act, if there is any violation of the provisions of the Act. Even though, the petitioners have not challenged the unilateral appointment of the sole Arbitrator under Section 13 of the Act, it would not take away the rights of the petitioners to challenge under Section 34 of the Act. Even if there is any participation by the petitioners in the arbitral proceedings, the petitioners still have the right to challenge about the violations of the provisions of Section 12(5) of the Act under Section 34 of the Act. Any violation of provisions of the Act, is amount to against the public policy of India. In the present case, apart from appointing the Arbitrator unilaterally by the respondent, the Arbitrator had also failed to send any notice about the hearing to the petitioners and the respondent had also failed to furnish the claim statement to the petitioners. Therefore, the petitioners did not have any opportunity to file the counter and contest the matter. Even if the petitioners have filed the counter and considered, the present award is liable to be set aside for the violations of the provisions of Section 12(5) of the Act. The present award is liable to be set aside on the ground of unilateral appointment of arbitrator. Further in the present case, it appears that the award has been passed without giving any opportunity to the petitioners and therefore, the award is suffered with the violation of Principles of Natural Justice also. This Court is of the view that the present award is not sustainable under law and the same is liable to be set aside and it is against the public policy of India as it violates the principles of natural justice - the Award dated 30.08.2021 is set aside. This Arbitration Original Petition is allowed.
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