TMI Tax Updates - e-Newsletter
April 13, 2022

Case Laws in this Newsletter:

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

Articles

1. Writ Petition before High Court – should be filed only in appropriate cases and not just to take a chance.

   By: DEVKUMAR KOTHARI

2. TAXABILITY OF COOPERATIVE SOCIETIES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Edited Transcript of Reserve Bank of India’s Monetary Policy Press Conference: April 08, 2022

2. ADB Financing to Support Urban Development in Nagaland

3. Shri Piyush Goyal takes comprehensive review on the progress of the National Industrial Corridor Development Program NICDC

4. Trade Agreements signed with Australia and UAE will open infinite opportunities for Indian Textiles - Shri Piyush Goyal

5. For the first time in 11 years, the number of domestic patent filing surpasses the number of international patent filing in India during Jan-Mar 2022

6. CBIC Chairman releases National Time Release Study, 2022

Notifications

GST - States

1. 38/1/2017-Fin(R&C)(225)/189 - dated 31-3-2022 - Goa SGST

Seeks to amend Notification No. 38/1/2017-Fin(R&C)(97), dated the 8th March, 2019

2. 38/1/2017-Fin(R&C)(224)/188 - dated 31-3-2022 - Goa SGST

Seeks to amend Notification No. 38/1/2017- Fin(R&C)(95) dated the 8th March, 2019

3. 38/1/2017-Fin(R&C)(01/2022-Rate)/191 - dated 31-3-2022 - Goa SGST

Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC

4. 38/1/2017-Fin(R&C)(01/2022-Rate)/190 - dated 31-3-2022 - Goa SGST

Seeks to amend Notification No. 38/1/2017- Fin (R&C)(1/2017-Rate) dated 30th June, 2017

5. 2/2022-State Tax (Rate) - dated 5-4-2022 - Mizoram SGST

Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC

6. 1/2022-State Tax (Rate) - dated 5-4-2022 - Mizoram SGST

Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 7th July, 2017

7. 22/2021–State Tax (Rate) - dated 17-1-2022 - Mizoram SGST

Seeks to supersede Notification No. 15/2021 – State Tax(Rate), dated the 30th November, 2021 and amend Notification No. 11/2017- State Tax (Rate), dated the 7th July, 2017

8. 21/2021 – State Tax (Rate) - dated 17-1-2022 - Mizoram SGST

Seeks to supersede No.14/2021-State Tax (Rate), dated the 30th November, 2021 and amend Notification No.01/2017- State Tax (Rate), dated the 7th July, 2017

9. 02/2022– State Tax (Rate) - dated 1-4-2022 - Tripura SGST

Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC

10. 01/2022– State Tax (Rate) - dated 1-4-2022 - Tripura SGST

Amendment in Notification no. 1/2017-Stare Tax (Rate), dated the 29th June, 2017

Income Tax

11. 30/2022 - dated 11-4-2022 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies , ‘Rajasthan Electricity Regulatory Commission’ a Commission constituted by the state Government of Rajasthan

12. 29/2022 - dated 11-4-2022 - IT

Central Government hereby notifies notifies “The Somnath Temple managed by Shree Somnath Trust"

SEBI

13. SEBI/LAD-NRO/GN/2022/79 - dated 11-4-2022 - SEBI

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2022

14. SEBI/LAD-NRO/GN/2022/78 - dated 11-4-2022 - SEBI

Securities and Exchange Board of India (Debenture Trustees) (Amendment) Regulations, 2022

15. SEBI/LAD-NRO/GN/2022/77 - dated 11-4-2022 - SEBI

Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) (Amendment) Regulations, 2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD/CDMRD_DRM/P/CIR/2022/50 - dated 11-4-2022

Comprehensive Risk Management Framework for Electronic Gold Receipts (EGR) segment

GST - States

2. 03/WBGST/PRO/2022 - dated 23-2-2022

Extension of period for completion of Audit as per the proviso to sub-section (4) of section 65 of the WBGST Act, 2017 for the period starting on or after 1st day of July, 2017 and ending on or before 31st day of March, 2018 in cases where audit has commenced within 31st day of December, 2021

3. 02/WBGST/PRO/2022 - dated 21-2-2022

Authorisation of officers to undertake Audit under section 65(1) of WBGST Act, 2017

Highlights / Catch Notes

GST

• No Violation of Section 171(1) CGST Act: No Input Tax Credit Benefit Required for Post-GST Home Project.

  Case-Laws - NAPA : Profiteering - benefit of additional input tax credit had not been passed on to the home buyers or not - period from July 2017 to September, 2020 - As project was launched after implementation of the GST w.e.f. 01.07.2017, apparently there was no pre-GST tax rate or input tax credit availability that could be compared with the post-GST tax rate and the input tax credit, to determine whether there was any benefit that was required to be passed on by way of reduced prices. Phase III of the project it is yet to be launched and had not been registered with RERA till date. - the Respondent has not contravened the provisions of Section 171 (1) of the CGST Act, 2017 - NAPA
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Income Tax

• Assessee Challenges TDS Deduction u/s 194C; CIT(A) Finds No Tax Liability for Contractors Over Rs. 5,00,000.

  Case-Laws - AT : TDS u/s 194C - Addition u/s 201/201(1A) - TDS not deducted from the payments made to contractors under various schemes - The proviso clearly states that nothing contained in subsection (5A)and (5B) shall be applied to a person whose total income is not chargeable to income tax and who does not obtain PAN under any provision of the Act. - the assessee has segregated the contractual payments more than ₹ 5,00,000/- and less than ₹ 5,00,000/- and submitted a statement - CIT(A), in his findings also has observed that where the receipts are more than ₹ 5,00,000/-, the contractors have submitted their returns disclosing the receipts and paid the taxes on the same and hence, it cannot be taxed in the hands of the assessee. - AT
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• Rectification u/s 154: Taxpayer Must Verify Tax Credits for Advance, TDS, and Self-Assessment with Assessing Officer.

  Case-Laws - AT : Withdrawing the excess tax credit for advance tax and self-assessment tax - Rectification u/s 154 - The assessee has to furnish details of different payments of tax by way of advance tax, TDS and self-assessment tax to the AO. The AO after verifying the same showing the various payments of tax by the assessee has to give due credit to those payments relating to the assessee’s account and pass fresh order in accordance with law, after giving opportunity of being heard to the assessee. - AT
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• Assessment Invalid: Section 153C Lacks Proper Satisfaction Note, No Mention of Seized Material or Undisclosed Income.

  Case-Laws - AT : Validity of Assessment u/s 153C - whether AO of the searched person has not recorded satisfaction note that the books of accounts/material belongs to the assessee ? - In the present case satisfaction note recorded by the AO there was no mention that he was satisfied about the undisclosed income belonging to the assessee on the basis of seized material - Merely on the basis of the order sheet entry, the assessment of present assessee has been reopened so as to frame the assessment u/s. 143(3) r.w.s. 153C - Being so, the requirement of section 153C of the Act has not been fulfilled. - AT
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• Section 234C: Interest Recalculation Based on Returned Income for Shortfall in Advance Tax Payments.

  Case-Laws - AT : Levy of interest under section 234C - It is pertinent to note that provisions of section 234C of the Act refers to the term “returned income” in comparison to the provisions of section 234B of the Act which refers to the term “assessed income” for imposing interest. The Assessing Officer is directed to re–compute the interest under section 234C of the Act on the basis of “returned income” in case there is default / short fall in payment of advance tax as compared to tax due on returned income. - AT
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• Court Upholds Deduction for Sales Tax Liability u/s 43B for AY 2013-14 Despite Prior Period Dispute.

  Case-Laws - AT : Disallowance of sales tax liability - Prior-period item - the year under appeal is AY 2013-14. The alleged amount pertains to AY 2005-06 and AY 2010-11 and such liability did not exist at that point of time and, therefore, there was no possibility to make the payment during the relevant assessment year or before the due date of filing of return of income for such assessment year. - provisions of Section 43B of the Act are squarely applicable on the alleged sum and the assessee as rightly claimed it as deduction against income for AY 2013-14. - AT
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• Court Rules Cash Deposits from Sales During Demonetization Justified; Additions by Tax Authorities Overturned.

  Case-Laws - AT : Unexplained cash deposits - Deposits in regular bank account of the assessee, during demonetization period - the assessee was maintaining complete stock tally, the sales were recorded in the regular books of accounts and the amount was deposited in the bank account out of the sale proceeds - Sales made by the assessee to cover the cash deposited in the bank post demonetization, was sufficient source of the cash deposited i.e; the sales from the existing stock available with the assessee and was well explained, therefore, the addition made by the AO and sustained by the Ld. CIT(A) was not justified. - AT
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• Intellectual Property Rights Assignment Deemed Taxable; Assessee's Claim of Capital Receipt Dismissed by Court.

  Case-Laws - AT : Revenue Recognition - gain on sale / Assignment of Intellectual Property Rights (IPR) - The assessee did not receive the sum in question for giving up any source of income as the assessee was free to exploit independently owned IPR as well as Foreground information and therefore the argument that the sum received is capial receipt for losing a source of income and therefore not chargeable to tax, is devoid of any merits. - AT
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• Reassessment Invalidated: Improper Notice Service u/s 282(1)(b) Invalidates Section 147 Order Due to Wrong Address.

  Case-Laws - AT : Reopening of assessment u/s 147 - Mode and manner of service of notice as contemplated in Sec. 282(1)(b) - affixed the notice at an address where the assessee was not residing - the A.O. had invalidly assumed jurisdiction for reopening the concluded assessment of the assessee company and passed the reassessment order u/s. 148 r.w.s. 143(3), dated 30.03.2016 - AT
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• Entity's Section 11 Exemption Revoked; Section 12AA(3) Registration Canceled Due to Non-Genuine Activities Since April 1, 2014.

  Case-Laws - AT : Exemption u/s 11 - registration invoking section 12AA(3) w.e.f. 01.04.2014 cancelled - Allen Group has made DDPS (assesee) - subservient to their coaching programme - Incriminating evidences have been gathered during search action - the ld. CIT has passed a speaking and well reasoned order discussing all the details of the case of the assessee - since the activities of the trust are not genuine and are not being carried out in accordance with its objects, registration was rightly cancelled - AT
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Customs

• Circular Trading Allegations in Sports Goods Lacks Proof; Appellants' Argument on Goods Nature Accepted.

  Case-Laws - AT : Duty Drawback - circular trading of footballs and other sports items - It is clear that the case of the department is based on assumption and the investigation is not complete and conclusive. The case of circular trading is setup based on assumption and not proved definitively - It is constrained to observe that the contention of the Appellants that the goods imported and exported are different, deserves acceptance on merits. - AT
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Indian Laws

• Court Upholds Validity of Complaint on Second Cheque Presentation After Initial Dishonor Without Statutory Notice.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - second and successive presentation of a cheque - The Court in the present case finds that OP No.1 did not send any statutory notice after the cheque was dishonoured in the month of May, 2010 but once again presented it within the validity period of the cheque and thereafter, issued the statutory notice as required under law and under such circumstances, it cannot be said that the complaint is invalid - HC
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IBC

• Corporate Insolvency Resolution Process Considered; Adjudicating Authority Doesn't Determine Debt Amount at Section 7 Application Stage.

  Case-Laws - AT : Initiation of CIRP - time limitation - assignment of debt - it is clear that the debt has been assigned to the first Respondent and as on the date of the assignment it is stated that an amount of ₹ 79,66,21,750/- is ‘due and payable’ by the ‘Corporate Debtor’. Be that as it may, it is not within the domain of the Adjudicating Authority to decide the ‘amount of debt’ at the stage of admission of Section 7 Application. - AT
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• CIRP begins only with undisputed debt; post-demand mismanagement claims without prior action are invalid. Goods unused is no dispute.

  Case-Laws - Tri : Initiation of CIRP - existence of debt and pre-existing dispute or not - When no action is initiated in respect of the said mismanagement, projecting the mismanagement as the preexisting dispute, only when a demand is raised by the Operational Creditor, cannot be considered as a pre-existing dispute. When the amount due is not disputed and when it is not disputed that the goods under the invoices were delivered to the Corporate Debtor, the contention that they are lying idle on their site cannot be given weight. - Tri
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Service Tax

• Service Tax Not Applicable on Fees Paid to State Excise for Alcohol: No Reverse Charge Mechanism Enforced.

  Case-Laws - AT : Levy of Service tax - various fees paid by the appellant to the State Excise Department or to the Government or Government agencies during their business of manufacture, import and sale of alcoholic beverages for human consumption - applicability of reverse charge mechanism - the fees paid by the appellant to the State Government during the course of manufacture and trading of alcoholic beverages does not amount to provision of any service - no service tax can be demanded - AT
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Central Excise

• Appeal Delay Condoned: Incorrect Address Led to Erroneous Service Presumption; Filed Timely u/s 35 of Central Excise Act.

  Case-Laws - AT : Condonation of delay in filing appeal - appeal have been filed after 505 days from the date of despatch - address has been mentioned wrongly for despatch - presumption of service - the presumption drawn by the learned Commissioner (Appeals) is wholly erroneous and against all canons of justice. In this view of the matter, the appellant have received the order-in- original only on 28.07.2020, and thus they have filed the appeal within the prescribed time as allowable under Section 35 of the Central Excise Act. - AT
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VAT

• Re-assessment Invalid: Courts Rule Completed Tax Assessments Can't Be Reopened Due to New Judgments.

  Case-Laws - HC : Initiation of re-assessment proceeding on the basis of subsequent judgement - Classification of goods - The proceeding of re-assessment has been initiated against the applicant on the basis of subsequent judgement. The Apex Court as well as this Court, time and again, have held that completed assessment should and must not be re-opened on the basis of subsequent judgment - HC
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Case Laws:

• GST

• 2022 (4) TMI 552
  Profiteering - benefit of additional input tax credit had not been passed on to the home buyers or not - period from July 2017 to September, 2020 - violation of the provisions of Section 171 (1) of the CGST Act, 2017 or not - time limitation - HELD THAT:- The service rendered by the Respondent by way of construction and development of the project was not in existence during the pre-GST regime. Also the Phase III of the project is it yet to be launched and has not been registered with RERA till date - In the present case for Phase II the draw of lots, allotment of units and receipt of payments has taken place in the post-GST era. It is also apparent from the record that the Respondent has received the Environment Clearance from the State Environment Impact Assessment Authority Haryana on 02.05.2019 before which he could not have started the execution of the project. On the basis of the sequence of the events it could be safely concluded that the above project has been started after coming in to force of the GST w.e.f. 01.07.2017. It is also clear that the homebuyers were allotted flats only after coming in to force of the GST w.e.f. 01.07.2017. As project was launched after implementation of the GST w.e.f. 01.07.2017, apparently there was no pre-GST tax rate or input tax credit availability that could be compared with the post-GST tax rate and the input tax credit, to determine whether there was any benefit that was required to be passed on by way of reduced prices. Phase III of the project it is yet to be launched and had not been registered with RERA till date. Thus, it is established that the Respondent has not contravened the provisions of Section 171 (1) of the CGST Act, 2017 and there are no merit in the instant case and the same is accordingly dismissed. Time Limitation - Rule 133(1) of the CGST Rules, 2017 - HELD THAT:- The quasi-judicial proceedings in the matter could not be completed by the Authority due to lack of required quorum of members in the Authority during the period 29.04.2021 till 23.02.2022, and that the minimum quorum was restored only w.e.f. 23.02.2022 and hence the matter was taken up for quasi-judicial proceedings vide Order dated 23.03.2022 and the Applicant No. 1 was given one more opportunity to file written submissions against the DGAP s Report. However, the Applicant No. 1 vide his email dated 29.03.2022 reiterated his earlier submissions made via email dated 13.12.2020 - this Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.

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• Income Tax

• 2022 (4) TMI 551
  Delayed payment of employees contribution towards provident fund contribution and ESI contribution - HELD THAT:- Tribunal has consistently viewed that the employees contribution to PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income. In the case of EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD [ 2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] considering the decision of Essae Teraoka (P) Ltd. [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] and the decision of coordinate bench in the case of Tetra Soft (India) Pvt. Ltd. [ 2015 (10) TMI 1601 - ITAT HYDERABAD] and also taking support from the decision in the case of CIT Vs. M/s Vegetables Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] decided the issue in favour of the assessee.

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• 2022 (4) TMI 550
  Exemption u/s 11 - grant of Registration U/s. 12A denied as the objects of the Trust were not charitable in nature - HELD THAT:- It is noted that the main aim of forming the Trust is for complying with the CSR requirements. Accordingly, if a Trust is formed for the purposes of carrying out the CSR activities, the registration U/s 12AA cannot be denied. The Ministry of Corporate Affairs in the Rules framed for the purpose of CSR has implicitly provided for forming the dedicated Trust under sub-rule 2 to Rule 4. Just because the Trust has been formed for complying CSR requirements, it cannot per se be the reason for denying registration U/s. 12AA of the Act. At the same time, on examining the aims and objects of the assessee s Trust which was created in order to eradicate extreme hunger and poverty, infrastructure development, ensuring environmental sustainability, drinking water facility, healthcare, community development, skill development etc., in India and abroad which certainly falls under charitable activity under section 2 clause (15). The Ld. CIT(E) was only required to firstly find out whether the Trust has been established for charitable activities and whether its activities are genuine for grant of registration u/s. 12AA. In the present case on hand, the Ld. CIT(E) has rejected registration U/s. 12AA of the Act on the ground that the assessee has claimed exemption U/s. 11 for the AYs 2018-19 and 2019-20 without having registration U/s. 12AA of the Act. The Ld. CIT(E) also observed that w.e.f 1/9/2019, compliance of law for the time being in force by the Trust is mandatory. In our opinion, the Ld. CIT(E) has not looked into the objectives of the society but relied on the wrong claim made in earlier years by the assessee. It is clear from the plain reading of section 12A and section 12AA of the Act is only registration simpliciter of the entity of a Trust / Society. The rest of factors like suspicion and apprehension raised by the Revenue can be taken by the Ld. Revenue Authorities at the time of framing the assessment. We find that the assessee s objects are charitable in nature and fall within the definition of section 2(15) of the Act thereby entitling the assessee Trust for registration U/s. 12AA of the Act. Therefore, we hereby direct the Ld. CIT(Exemptions) to provide registration U/s. 12AA of the Act to the assessee Trust. - Assessee appeal allowed.

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• 2022 (4) TMI 549
  TDS u/s 194C - Addition u/s 201/201(1A) - TDS not deducted from the payments made to contractors under various schemes - payments made to contractors as below the taxable limits - HELD THAT:- We find from the records submitted by the assessee and the payments made to contractors are below the taxable limits and there is no requirement of PAN and consequently, no deduction of tax is envisaged u/s 194C. The proviso clearly states that nothing contained in subsection (5A)and (5B) shall be applied to a person whose total income is not chargeable to income tax and who does not obtain PAN under any provision of the Act. The very intent of section 201(1A) makes it conditional for every person who wish to have a transaction invariably to have PAN, is contrary to provisions of 139(5A) which was introduced by the legislature. The persons whose income is below the taxable limits need not have PAN, nor they need not furnish any income declaration return is not disputed. We also note that in terms of section 139A(5A) of the Act, every person receiving any sum or income or amount from which tax has been deducted under the provisions of Chapter XVIIB, shall intimate his permanent account number to the person responsible for deducting such tax under that Chapter. However the second Proviso exempts certain categories of persons from the applicability of section 139(5A) 139(5B). We also find from the records that the assessee has segregated the contractual payments more than Rs. 5,00,000/- and less than Rs. 5,00,000/- and submitted a statement before us. CIT(A), in his findings also has observed that where the receipts are more than Rs. 5,00,000/-, the contractors have submitted their returns disclosing the receipts and paid the taxes on the same and hence, it cannot be taxed in the hands of the assessee. We also find from the RTI application filed by the assessee that the judgement of Hon ble High Court of Karnataka in the case of Smt.A.Kowsalya Bai [ 2012 (6) TMI 451 - KARNATAKA HIGH COURT] has not been challenged before higher forum. We, therefore, find no infirmity in the order passed by the Ld.CIT(A) and no interference is required. In the result, appeal of the revenue is dismissed.

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• 2022 (4) TMI 548
  Withdrawing the excess tax credit for advance tax and self-assessment tax - Rectification u/s 154 - HELD THAT:- CIT(Appeals) observed that as regards the jurisdiction of the AO at Bangalore to issue notice under Section 154 of the Act, there isn t any merit in the arguments of the appellant. There is no such requirement of the Act. The Income-tax authority passing the order as referred to in Section 154 is the one which is having jurisdiction over the assessee in whose case the order is sought to be rectified. So on change in jurisdiction, the new jurisdictional AO can do this and in case of transfer the successor AO can do so. The assessee has to furnish details of different payments of tax by way of advance tax, TDS and self-assessment tax to the AO. The AO after verifying the same showing the various payments of tax by the assessee has to give due credit to those payments relating to the assessee s account and pass fresh order in accordance with law, after giving opportunity of being heard to the assessee. Accordingly, the issue in dispute is remitted to the Assessing Officer for fresh decision. Appeal by the assessee is partly allowed.

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• 2022 (4) TMI 547
  Maintainability of appeal against Disallowance on sale of shares - monetary limit fixed for filing appeal before ITAT/HC SLPs/Appeals before SC - Special Order of cases involving bogus Long Term Capital Gains (LTCG)/Short Term Capital Loss (STCL) through penny stocks from monetary limits Specified in any Circular issued under Section 268A - whether monetary limit issued vide Circular No. 23/2019 along with office memorandum dated 16.09.2016 are not applicable because in the case of the assessee, no long term capital gain/short term capital loss was claimed from impugned shares transactions? - HELD THAT:- As categorically specified in the office memorandum that monetary limit fixed for filing appeal before ITAT/HC SLPs/Appeals before SC shall not apply in case of assessee claiming Long Term Capital Gain/Short Term Capital Loss through penny stocks and appeals/SLPs in such cases shall be filed on merit. Since, in the case of the assessee it is undisputed fact that assessee has shown Short Term Capital Gain of Rs. 1,95,500/- on total sale consideration of Rs. 6,97,000/- on the sale of 50,000 shares during the year under consideration and assessee has not claimed any Short Term Capital Loss, therefore we find merit in the submission of the assessee that this case of the assessee is not covered by the office memorandum dated 16.09.2019 which is specifically pertained to Short Term Capital Loss. Therefore, we don t find any merit in appeal of the revenue and the same stand dismissed. Appeal of the revenue is dismissed.

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• 2022 (4) TMI 546
  Validity of Assessment u/s 153C - whether AO of the searched person has not recorded satisfaction note that the books of accounts/material belongs to the assessee ? - Whether seizure of incriminating material is not a pre-condition for assumption of jurisdiction u/s.153C? - HELD THAT:- From a bare reading of the provisions of sec.153C, it is crystal clear that the condition precedent for issue of notice u/s 153C is that money, bullion, jewellery or other valuable article or thing or books of account or document seized or requisitioned should belong to such person. If this requirement is not satisfied, recourse cannot be had to the provisions of sec.153C. Unless revenue establishes that the assessee is the owner of the seized documents, provisions of sec.153C cannot be invoked. Even the Hon ble Delhi High Court as well as the Hon ble Gujarat High Courts held that merely because there is a reference to the name of the assessee in the seized documents, it does not mean that the assessee is the owner of those documents. In the satisfactory note recorded by the AO there should be something to indicate that the searched person had disclaimed those documents and therefore, AO of the searched person reached a conclusion or satisfaction that the documents do not belong to the searched person but other third person. The High Courts, even went to the extent of holding that possession of documents and possession of photo copies of documents are two separate things. It may be quite possible that photo copies may be belonging to the searched person and whereas the original may be owned by some other person. In the present case satisfaction note recorded by the AO there was no mention that he was satisfied about the undisclosed income belonging to the assessee on the basis of seized material as held by the Supreme Court in the case of Super Malls Pvt. Ltd.[ 2020 (3) TMI 361 - SUPREME COURT] in terms of section 153C of the Act that where the AO of the searched person and the third person is the same, it is sufficient by the AO to record in the satisfaction note that the documents seized from the searched person belonged to other person and there is no requirement of transmitting documents so seized from searched person. There is no satisfaction recorded by the AO of the searched person to indicate that the searched person had disclaimed the seized document as it belonged to him before reaching the conclusion/satisfaction that document did not belong to searched person, but to other third person i.e., the present assessee. More so, in the present case, it is also brought on record by the assessee that the impugned addition was already subject matter of assessment in the case of Sri B. Sreeramulu and the expenditure relating to assessee s marriage has been disclosed in his capital account for the period ending 31.3.2010, copy of which is kept on record filed before this Tribunal on 3.3.2022. Hence, on the basis of the above order sheet entry, the assessment of present assessee has been reopened so as to frame the assessment u/s. 143(3) r.w.s. 153C. AO who searched the premises of B. Nagendra on whose case warrant u/s. 132 was issued, has not recorded his satisfaction that documents found in the course of search of the premises of present assessee viz., T.H. Suresh Babu belonged to present assessee and AO has not recorded his satisfaction in his order sheet entry to this effect. As such, the mandatory requirement u/s. 153C of the Act in the facts and circumstances of the case have not been complied with. The satisfaction note in the form of order sheet entry by the AO of Sri B. Nagendra who was searched has not recorded the finding that the document seized belonged to Shri T.H. Suresh Babu. Being so, the requirement of section 153C of the Act has not been fulfilled. On these facts, we are in clear agreement with the view taken by the CIT(Appeals) in quashing the assessment framed u/s. 143(3) r.w.s. 153C of the Act and accordingly uphold the order of the ld. CIT(Appeals). The grounds taken by the revenue are dismissed.

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• 2022 (4) TMI 545
  Revision u/s 263 by CIT - service tax and VAT were not routed through profit and loss account as mentioned in item no. 21 (ii) of Form No. 3CD, the sales shown the assessee were exclusive of these items - HELD THAT:- Such method is regularly followed by the assessee. This fact is not disputed by ld Pr CIT, despite bringing this fact to his notice that assessment order for AY 2010-11 2012-13 was passed under section 143(3) and inclusive method was accepted by assessing officer in those years. Even otherwise, inclusive method and exclusive method both are revenue neutral. We further find that the ld. Pr.CIT in his order has not made any comment over the reply furnished by the assessee. Thus, we are of the view that reference in the audit report was a clerical mistake by the auditor of the assessee which was admitted by the auditor by giving his certificate in writing and on verification. As noted above that indirect taxes are routed through profit and loss account and in accordance with inclusive method of accounting. Therefore, the assessment order on second issue is not erroneous or prejudicial to the interests of the revenue. Difference in receipt vis a vis TDS reflected in 26AS - sales were exceeding Rs. 10.00 lacs as reflected in Form 26AS which was not shown in the list of the details of the sales exceeding Rs. 10 lacs during the assessment proceedings - Assessee furnished reconciliation of Form No. 26AS and sales in tabular form, even during the course of assessment proceedings, the assessee reconciled the same with reference to the credit in the bank accounts. The assessee again explained in respect of first three parties viz. Weal Developers, Synergy Developers and Sar Infracon, the advances were received on which the TDS was made for which the sales was accounted in succeeding years in respect of the advances. For the fourth party i.e. Gaurang Yogeshbhai Shah, it was submitted that no advances were received and therefore the sales were shown in the list of sales exceeding Rs. 10 lacs. The fourth party i.e Gaurang Yogeshbhai Shah, who is the proprietor of Tejasvi Construction and the sales were shown in the name of Tejasvi Construction (Gaurang Shah) in the list. The allegation of the ld. Pr.CIT that the sales in respect of Gaurang Yogeshbhai Shah were not shown in the list was wrong. For fifth party i.e. Hazira Lng Pvt. Ltd. the assessee stated that the sales were less than Rs. 10 lacs and therefore were not shown in the list. The amount of Rs. 6,45,286/- as referred by the ld. Pr.CIT in his show cause notice was in respect of Adani Hazira Port Pvt. Ltd. and therefore it was a clerical mistake committed by the ld. Pr.CIT. We find that the assessee has also explained the facts before assessing officer. In our view, the assessing officer after considering the reply of assessee has adopted a reasonable, plausible and legally sustainable view. An assessment order cannot incorporate reasons for making/granting a claim of deduction. If it does so, an assessment order would cease to be an order and become an epic some. The reasons are not far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limitation within which an order is required to be made; and, secondly, the order is an appealable order. An appeal lies, would be filed, only against disallowances which an assessee feels aggrieved with. In view of the aforesaid factual and legal discussion, we are of the view that the assessment order passed by the AO on the first issue identified by the ld. Pr.CIT is reasonable, plausible and legally sustainable order. In our view, the twin condition as prescribed under Section 263 of the Act has not meet out on the first issue. - Assessee appeal allowed.

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• 2022 (4) TMI 544
  TDS u/s 195 - disallowance of State taxes paid overseas under section 40(a)(ii) - eligibility to relief under section 90 - HELD THAT:- As relying on own case [ 2019 (11) TMI 408 - ITAT MUMBAI] we direct the Assessing Officer to verify as to whether the State Tax paid by the assessee overseas are eligible for any relief under section 90 of the Act and if it is not found to be so, the assessee s claim of deduction should be allowed. Accordingly, ground no.2 raised in assessee s appeal is allowed for statistical purpose. Expenditure incurred on import of software - Addition under section 40(a)(i) as tax at source was not deducted from the payments made to overseas vendors - assessee submitted that there was no withholding tax obligation on the assessee on the payments made to the non residents as no income was chargeable to tax in India - HELD THAT:- No factual verification vis-a-vis relevant clauses of agreements entered into by the assessee for import of software was done by the Assessing Officer or the DRP. There is no iota of doubt that payment for transfer of copyrighted article as against the payment for transfer of copyright does not qualify as royalty and thus the same is not taxable in India in the absence of PE of the seller. However, each case is decided on its own facts. It is also pertinent to note that the conclusion in favour of the taxpayer in Engineering Analysis Centre for Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] was also reached after considering relevant clauses of End User License Agreement. However, in the present case as is evident from the orders passed by the Assessing Officer and DRP, such factual aspects were not considered and claim of the assessee was denied merely by referring to judicial precedents and CBDT circular. In view of the above we deem it appropriate to restore this issue to the file of AO for de novo adjudication after examination of the agreements entered into by the assessee for import of software - In view of the above, ground no. 3 raised in assessee s appeal is allowed for statistical purpose. Disallowance made under section 14A of the Act by applying provisions of rule 8D - HELD THAT:- From the facts available on record, it is evident that the Revenue has merely treated the expenditure offered for disallowance as meager in nature and proceeded to make further disallowance by treating 0.5% of average value of investment income as expenditure towards earning the exempt income on ad hoc basis. The Revenue has also not discharged its onus that the claim made by the assessee is incorrect and there exist a direct nexus between the expenditure disallowed under section 14A and the exempt income earned by the assessee - we direct the Assessing Officer to delete the disallowance of expenditure and accept the suo motu disallowance offered by the assessee under section 14A. MAT computation - Assessing Officer is also directed to delete the addition of disallowance under section 14A r/w Rule 8D while computing Book Profit under section 115JB Disallowance of advertisement expenditure - expenditures were incurred by the assessee for advertisement in newspaper, marketing of its products, etc., in respect of its on going business - HELD THAT:- As relying on own case [ 2019 (11) TMI 408 - ITAT MUMBAI] reasoning of the Assessing Officer that the expenditure was incurred for brand building is without any basis. It is to be noted, before the Departmental Authorities the assessee had demonstrated that in no way it is connected with development of Tata brand. The details of expenditure incurred clearly demonstrate that they were basically for the purpose of advertising assessee s products in print media or through seminar, conferences, etc. As rightly observed by learned Commissioner (Appeals), the Assessing Officer has brought no material on record to establish that the expenditure is for brand building. As observed earlier, the expenditure relates to advertisement in newspaper, magazine, events, seminars, conferences, exhibitions, etc. Thus, the nature of expenditure incurred by the assessee clearly indicates that it was for promoting its own business. Further, considering the turnover of the assessee, the expenditure incurred on advertisement does not appear to be unusually high. That being the case, the expenditure incurred on advertisement cannot be treated to be in the nature of capital expenditure and amortized over a period of five years. Disallowance of payment towards Tata Brand Equity subscription - HELD THAT:- As per the Tata Brand Equity and Business Promotion Agreement , the assessee was under contractual obligation to make annual payment towards the subscription fees. According to assessee, in consideration of this subscription fees, Tata Sons Limited was, inter-alia, responsible for organising corporate identity and brand promotional activities and campaigns, engage professional consultants, make available a pool of sharable resources of the Tata Group to the assessee and provide assistance in accessing the network of domestic and international business contacts and also permit the assessee to use the business name. All the activities were predominantly the activities carried out or to be carried out by Tata Sons Limited to enhance the value of TATA Brand, which is owned by Tata Sons Limited and for same expenses were incurred by Tata Sons Limited and accounted in its books of account. In the present case, nothing has been brought on record to suggest that the subscription fee paid by the assessee to Tata Sons Limited under the Tata Brand Equity and Business Promotion Agreement is different in nature from the one considered in aforesaid decisions. Thus, we direct the Assessing Officer to delete the disallowance on account of subscription fees paid by the assessee to Tata Sons Limited. Accordingly, ground no. 6 raised in assessee s appeal is allowed. Disallowance of commission paid to non resident under section 40(a)(i) - HELD THAT:- As relying on own case [ 2019 (11) TMI 408 - ITAT MUMBAI] we direct the Assessing Officer to delete the disallowance made under section 40(a)(i) of the Act in respect of commission paid by assessee to non resident agents - we direct the Assessing Officer to delete the disallowance made under section 40(a)(i) of the Act in respect of commission paid by assessee to non resident agents. Additional reduction from Export and Total Turnover of foreign currency communication expenses included in proportionate expenses excluded by the Assessing Officer - HELD THAT:- As per the assessee, foreign currency communication expenses have been reduced twice from Export and Total Turnover. Thus, we direct the Assessing Officer to conduct necessary verification and delete the additional/double reduction of foreign currency communication expenses if any, from Export and Total Turnover as per law. As a result, ground no.8 raised in assessee s appeal is allowed for statistical purpose.d Deduction under section 10AA in respect of SEZ units of the assessee which commenced its operations during earlier years - fifth year of deduction claimed on SEZ unit under section 10AA - HELD THAT:- Once the first set of conditions is established in the initial year, these should not be examined in subsequent assessment years. We are of the view that provisions of section 10AA(4) of the Act lay down the first set of conditions which is to be satisfied in the initial year of operation and should not be examined in the subsequent years. As the CIT(A) has already allowed the deduction under section 10AA of the Act in respect of SEZ units for assessment years 2008 09, 2009 10 and 2010 11 and no further appeal has been filed by the Revenue against the same, which has also not been controverted by the learned Departmental Representative nor any facts contrary to the same has been adduced. Thus, as the deduction under section 10AA of the Act has already been allowed to the assessee in respect of SEZ units for the assessment years 2008 09, 2009 10 and 2010 11, we find no reason to deny the same in the relevant assessment year which is the fifth year of deduction claimed on SEZ unit under section 10AA of the Act. Thus, to this extent, we endorse the conclusion of the DRP and accordingly the Assessing Officer is directed to allow the deduction under section 10AA of the Act in respect of SEZ units commenced during the assessment years 2008 09, 2009 10 and 2010 11 as the same has already been allowed in the preceding assessment years. Thus, grounds no.9 and 10, raised in assessee s appeal are allowed. Grant of foreign tax credit as per the provisions of section 90(1)(a) read with provisions of the applicable Double Taxation Avoidance Agreement ( DTAA ) for taxed paid overseas in relation to income eligible for deduction under section 10A/10AA - HELD THAT:- As relying on own case [ 2019 (11) TMI 408 - ITAT MUMBAI] where the respective tax treaty provides for benefit for foreign tax paid even in respect of income on which the assessee has not paid tax in India, still, it would be eligible for tax credit under section 90 of the Act. Like Article 25 of the Indo USA treaty, treaties with various other countries such as Indo Denmark, Indo Hungary, Indo Norway, Indo Oman, Indo US, Indo Saudi Arabia, Indo Taiwan also have similar provision providing for benefit of foreign tax credit even in respect of income not subjected to tax in India. However, Indo Canada and Indo Finland treaties do not provide for such benefit unless the income is subjected to tax in both the countries. Therefore, the foreign tax credit would be available to the assessee in all cases except the foreign tax paid in Finland and Canada. The Assessing Officer is directed to grant credit accordingly - ground is allowed for statistical purpose. Short credit for tax deducted at source - HELD THAT:- We direct the Assessing Officer to verify the claim of the assessee and grant credit for tax deducted at source after necessary verification and in accordance with law. Deduction on education cess paid by the assessee - HELD THAT:- We deem it appropriate to direct the Assessing Officer to decide the issue of allowability of education cess, as per law. Consequently, the first issue raised by way of additional ground of appeal is allowed for statistical purpose. Claim of deduction under section 10AA of the Act on the basis of commercial profit instead of income from business or profession - HELD THAT:- We find that the issue raised by the assessee by way of additional ground of appeal is squarely covered in favour of the assessee by the aforesaid order passed by the Co ordinate Bench of the Tribunal in Reliance Industries Ltd. [ 2020 (12) TMI 165 - ITAT MUMBAI] and the law laid down in Vijay Industries [ 2019 (3) TMI 652 - SC ORDER] - DR could not show us any reason to deviate from it. In view of the above, respectfully following the aforesaid judicial precedence, we direct the Assessing Officer to allow the deduction under section 10AA of the Act on Commercial Profit instead of Income From Business And Profession . Consequently, the second issue raised by way of additional ground of appeal is allowed. Transfer pricing adjustment - International transaction pertaining to provision of software consultancy services - HELD THAT:- As in assessee s own case [ 2020 (11) TMI 36 - ITAT MUMBAI] the order of the TPO and DRP on the issue of transfer pricing adjustment in respect of provision of software consultancy services cannot sustain and are accordingly set aside to this extent - TPO/ Assessing Officer is directed to conduct the benchmarking of the international transaction of provision of software consultancy services as per the findings of the Tribunal referred above. The TPO/Assessing Officer is also directed to consider the comparables selected by the CIT(A) in previous assessment years, for North American Region, APAC Region and Europe Region, for the purpose of benchmarking after necessary verification. Further, any transfer pricing adjustment should be restricted to the international transactions undertaken by the assessee. In view of the above, ground no.17 in assessee s appeal is allowed for statistical purpose. Transfer pricing adjustment in respect of provision of guarantee - HELD THAT:- As relying on own case [ 2019 (11) TMI 408 - ITAT MUMBAI] Following the decision in CIT v/s Everest Canto Cylinders Ltd.[ 2015 (5) TMI 395 - BOMBAY HIGH COURT] directed the Assessing Officer to charge guarantee commission @ 0.5% per annum. Deduction u/s 10A - Reduction of expenses incurred in foreign exchange from both export turnover and total turnover while computing the deduction under section 10A - HELD THAT:- We find that this issue is no longer res integra and has been decided in favour of the taxpayer by the Hon ble Supreme Court in CIT v/s HCL Technologies Ltd., [ 2018 (5) TMI 357 - SUPREME COURT] Wherein the Hon ble Court held that the expenditure excluded from the export turnover while computing the deduction under section 10A of the Act should also be reduced from the total turnover - Decided against revenue. Charging of interest on loans provided to A.Es. - HELD THAT:- It is pertinent to note that while charging mark up, over and above the interest rate paid by the assessee on borrowed funds, for computation of adjustment the TPO held that the mark up of 3% will cover various risks factors like exchange rate fluctuation risk, entity risk, country specific risk. Thus, when TPO itself had applied a mark-up of 3%, interest charged by assessee in the range of 4% to 5% by applying the principle of LIBOR plus 300 to 400 basis points cannot be find fault with and to this extent we do not find any infirmity in the directions issued by the DRP. As a result, ground no. 3 raised in Revenue s appeal is dismissed. Disallowance of interest / penalty for delayed overseas return filing and delayed payment of overseas advance tax - HELD THAT:- As we have restored the issue arising in ground no.1, in the present appeal for the assessment year 2006 07 to the Assessing Officer, with similar directions the present issue is also restored to the file of the Assessing Officer for necessary verification as to whether the interest / penalty paid by the assessee overseas is eligible for any relief under section 90 of the Act and if it is not found to be so, the assessee s claim should be allowed. Accordingly, ground no.2, raised in assessee s appeal is allowed for statistical purpose. Set off of loss of the STP units against the taxable business income - HELD THAT:- It is now settled by Hon ble Supreme Court in Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT] that after amendment by Finance Act 2000 with effect from 1-4-2001, section 10A has become a provision for deduction. Thus,Assessing Officer is directed to allow set off of losses of STP units eligible under section 10A of the Act against the taxable business income. Accordingly, the ground no. 5(a) raised in assessee s appeal is allowed. Claim of deduction under section 10A in respect of units on which deduction under section 80HHE of the Act was availed in past - only basis for denying the claim of the assessee is that deduction under section 80HHE was previously claimed in respect of such units - HELD THAT:- We find that on identical issue in assessee s own case [ 2019 (11) TMI 408 - ITAT MUMBAI] held that old unit of assessee on which deduction under section 80HHE was claimed is entitled to claim deduction under section 10A of the Act from the profits of its units. TP Adjustment - adjustment in respect of loan to A.Es - HELD THAT:- Adjustment made by TPO by adopting rate of interest of 6% based on loan given by the assessee itself to another A.E. is not a valid CUP as the transaction is also between the related parties, thus to this extent order passed by the TPO and upheld by the DRP is set aside. Further, as we have already upheld the benchmarking of this transaction of loan to the A.Es., inter-alia, for the purpose of acquisition of downstream subsidiaries, for assessment year 2011-12 by applying the principle of LIBOR plus 300 to 400 basis points, we direct the TPO / Assessing Officer to compute the adjustment in respect of loan to A.Es. for the relevant assessment year by applying rate of interest of LIBOR, which will further be marked up with basis points. We further direct that the quantification of markup shall be done by the TPO / Assessing Officer after hearing the assessee. As a result, ground no.11 raised in assessee s appeal is allowed for statistical purpose.

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• 2022 (4) TMI 543
  Computation of interest on share application money paid to the Associated Enterprises ( A.Es ) - HELD THAT:- As in assessee s own case we direct the Assessing Officer / TPO to delete the adjustment towards notional interest on share application money for delayed allotment of shares. Computation of interest on advance recoverable - HELD THAT:- We direct the Assessing Officer / TPO to consider LIBOR plus 300 basis point to compute the interest on advances recoverable from the A.Es. We further direct that while computing the interest, the credit period allowed by the A.Es to be considered and only on net credit period interest needs to be charged. Accordingly, ground no.3, raised in assessee s appeal is allowed for statistical purpose. Disallowance u/s 14A of the Act r/w rule 8D - HELD THAT:- We find that while making a further disallowance under section 14A of the Act, over and above suo motu disallowance offered by the assessee, the Assessing Officer has not considered any of the submissions made by the assessee which have bearing on the issue. We also noticed that the Co ordinate Bench in assessee s own case [ 2016 (4) TMI 1316 - ITAT MUMBAI ] restored the issue to the file of the Assessing Officer observing only those investments which yield exempt income needs to be considered for computation of average value of investments. In this case, we notice that the Assessee has himself disallowed an amount owhich has not been found to be accepted by the AO or the DRP - total investments and investments which yield exempt income is not readily available before us. We, therefore, are of the considered view that ends of justice would be met if the disallowance is made after re-computing average value of investment by considering only those investments which yield exempt income - thus we deem it appropriate to restore this issue to the file of the Assessing Officer for denovo adjudication in accordance with the directions of the Co ordinate Bench of the Tribunal in the order cited supra. Re computation of book profit under section 115JB by making addition towards expenditure incurred for earning exempt income under section 14A - HELD THAT:- We direct the Assessing Officer to delete the addition of disallowance under section 14A while computing book profit under section 115JB Non grant of foreign tax credit with respect to the dividend income earned - HELD THAT:- As respectfully following the order passed by the Co ordinate Bench of the Tribunal in assessee s own case we direct the Assessing Officer to allow the foreign tax credit with respect to dividend income earned in terms of Article 25(4) of the Indo Cyprus DTAA. Accordingly, ground no.7, raised in assessee s appeal is allowed. Levy of interest under section 234A - HELD THAT:- As per the assessee, the return of income was filed on 27.11.2015, i.e., before the statutory due date for filing the return of income and thus interest under section 234A of the Act has been erroneously levied by the Revenue. In view of the above, we deem ITAppropriate to direct the Assessing Officer to verify the date of filing of return of income and in case it is found that the return of income has been filed belatedly, the interest may be charged as per law. Levy of interest under section 234C - A.R. submitted that the interest under section 234C only be charged on the basis of tax due on the returned income - AO has charged interest u/s 234C on the basis of tax computed on the assessed income - HELD THAT:- As per the provisions of section 234C of the Act, interest is levied either on failure to pay advance tax by the assessee or on short fall in payment of advance tax as compared to tax due on returned income. In the present case, the dispute is whether the interest under section 234C of the Act would be calculated on returned income or on assessed income . It is pertinent to note that provisions of section 234C of the Act refers to the term returned income in comparison to the provisions of section 234B of the Act which refers to the term assessed income for imposing interest. The Assessing Officer is directed to re compute the interest under section 234C of the Act on the basis of returned income in case there is default / short fall in payment of advance tax as compared to tax due on returned income. Accordingly, ground no.11, is allowed for statistical purpose.

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• 2022 (4) TMI 542
  Addition u/s 69 - unaccounted advances given to Sh. Vikas Sharma on the basis of blank receipt found in search - addition based on undated cheques and receipts found in search - HELD THAT:- Shri Vikas Sharma is the Managing Director of M/s Royal Terrace Hotels Pvt. Ltd. Sh. Manaswi Gautam, son of the assessee has made investment in the share capital of the company. As Vikas Sharma was in need of funds for construction of hotel, he approached Manaswi Gautam, son of the assessee to provide funds and for such arrangement he was required to give blank receipts and unnamed undated cheques. However, the funds could not be arranged. The cheques and the receipts were to be returned back to Shri Vikas Sharma but at that point of time they were misplaced and could not be traced. Therefore, Shri Vikas Sharma, in order to safeguard his interest obtained a cancellation receipt from the assessee on stamp paper where it was stated that cheques and receipts has been misplaced, the same has not been used, no transaction was carried out on the basis of these cheques and receipts and if the same is found it will be returned back to him. It is for this reason that in search cancellation receipt was not found from the assessee as it was given to Vikas Sharma but the cheques and receipts which were misplaced could be located by the search party in course of search. As in search of assessee no other material was found to indicate that he or any of his family members has given any cash advance to Vikas Sharma except that his son Manaswi Gautam has made investment of Rs. 1.21 cr. by cheque in M/s Royal Terrace Hotel Private Limited. Thus, when no transaction took place against the above undated cheques and receipts it cannot be presumed that the assessee has provided cash loan to Shri Vikas Sharma - Thus we direct to delete the addition made and sustained qua this issue - Decided in favour of assessee.

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• 2022 (4) TMI 541
  Revision u/s 263 - estimation of income on bogus purchases - HELD THAT:- As per the provisions of section 263 of the Act, the ld. PCIT, either can modify the assessment order, enhance the assessment or may set aside the assessment for a fresh assessment, as he may deem fit, as per facts and circumstances of the case. It is a well-settled law that the appellate authority under the Act, has inherent powers as that of the lower authorities, which can be well exercised in the interest of justice. Considering the facts and circumstances of the case, as suggested by both the ld. representatives of the parties and since the ld. AR has also agreed that the net profit rate of the assessee may be reasonably enhanced so as to prevent the assessee for another round of litigation and for the purpose of finality of the proceedings, which has not been objected by the ld. DR, we direct the Assessing Officer to assess the net profit rate of the assessee @2% of the alleged bogus purchases. The order of ld. PCIT is modified accordingly. The directions given by the ld. PCIT for assessment afresh are set aside.

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• 2022 (4) TMI 540
  Disallowance of sales tax liability - Prior-period item - claim under the provisions of Section 43B - HELD THAT:- As per Section 43B of the Act such sum as mentioned in Clause- a of Section 43B of the Act shall be allowed as a deduction only during the previous year in which such sum is actually paid. Irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed. Only exception to this is the payments which have not been paid during a particular financial year but paid before the due date of furnishing the return of income u/s 139(1) of the Act and in such cases the amount paid can be claimed as expenditure in the income tax return. Now, going through the facts of the case, we find that the year under appeal is AY 2013-14. The alleged amount pertains to AY 2005-06 and AY 2010-11 and such liability did not exist at that point of time and, therefore, there was no possibility to make the payment during the relevant assessment year or before the due date of filing of return of income for such assessment year. The fact is that the liability of sales tax payment crystallized during the AY 2013-14 post sales tax assessment completion/sales tax proceedings. The assessee made the payment during the year which is not in dispute. Therefore, in our considered view provisions of Section 43B of the Act are squarely applicable on the alleged sum and the assessee as rightly claimed it as deduction against income for AY 2013-14. CIT(A) erred in sustaining the disallowance made by the AO, as the alleged sum of Rs. 12,32,290/- is eligible as a deduction against the income for AY 2013-14 as per provisions of Section 43B of the Act. The addition so made by the AO stands deleted and ground nos. 1 to 4 raised by the assessee in the instant appeal are allowed.

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• 2022 (4) TMI 539
  Unverifiable creditors - case of the assessee that the assessee tried his best to persuade the aforesaid creditors to appear before the Assessing Officer and verify the aforesaid credits - HELD THAT:- Assessee was not having control over the aforesaid creditors to compel their appearance before the Assessing Officer. On the other hand, AO had wide powers to compel the appearance of the aforesaid creditors before him but he failed to exercise that power. Counsel has also submitted that out of total addition on account of unverifiable creditors, an amount is pertaining to the earlier assessment year which has been brought forward as opening balance of the credits, which otherwise cannot be added back during the assessment year under consideration. Counsel has also relied upon the bank statements and copy of the ledger in the name of the assessee in the books of accounts of the aforesaid creditors and has further submitted that the assessee will produce the aforesaid two creditors before the AO. In our view, the interest of justice will be well-serve if the assessee is given an opportunity to produce the necessary evidences/creditors for the verification of the transaction in question. Impugned order of the ld. CIT(A) is set aside on this limited issue with a direction that the ld. CIT(A) will give an opportunity to the assessee to produce the evidences/creditors, if so required for the purpose of verification of genuineness of the transaction and creditworthiness of the creditors, thereafter the ld. CIT(A) will decide the issue afresh in accordance with law. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2022 (4) TMI 538
  Revision u/s 263 by CIT - Low profit before interest and tax (PBIT) shown AND Low net profit or loss shown from large gross receipt - HELD THAT:- A perusal of the relevant paras of the impugned order reveals that the ld. PCIT has not pointed out any error, discrepancy or otherwise any incriminating material justifying his exercise of revision jurisdiction u/s 263 relating to the aforesaid two issues. The only issue raised by the ld. PCIT in para 6 of the impugned order is relating to non-deduction of TDS by the assessee on carriage inward loading and unloading expenses, however, while setting aside the assessment order, PCIT has not directed to the AO to examine the aforesaid issue of non-deduction of TDS. He has directed the AO to examine the aforesaid two issues relating to low profit before interest and tax shown and low net profit or loss shown from large gross receipts. PCIT himself has not given any finding relating to the aforesaid issues. PCIT must have some basis to form the opinion that the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue and that basis should have been pointed out in the impugned order by the ld. PCIT. The assessment records were available to the ld. PCIT but he failed to point out any defect or discrepancy in the accounts of the assessee. In view of this, we do not find any justification on the part of the ld. PCIT in passing the impugned order u/s 263 of the Act and the same is therefore, quashed. - Appeal of assessee allowed.

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• 2022 (4) TMI 537
  Unexplained cash deposits - Deposits in regular bank account of the assessee, during demonetization period - difference in the cash sales - AO observed that the books of accounts of the assessee were not correct and complete and did not depict the real statement of affairs - Assessee s business was a going regular partnership concern caring on the jewellery business for the past 70 years - as during the course of search at the residential premises of one Shri Naveen Goyal (who was engaged as a part time Accountant with the assessee) entries relating to the assessee were found in his computer as well as pen drive. However when the entries in computer were compared with that of pen drive there was difference in the sales figures of October 2016 - HELD THAT:- In the present case the Department has not brought any material on record to substantiate that the amount received by the assessee by selling the jewellery / goods out of the opening stock and the purchases was utilized elsewhere and not for depositing in the Bank Account. In the instant case the opening stock, purchases and the closing stock has not been doubted, no inflated purchases were found or suppressed sales were noticed during the course of search held on 12/04/2017 i.e; just after the closing year relevant to the assessment year under consideration. It is also not a case that the assessee was not selling the stock/jewellery through exhibition which is clear from the figures given in para 18 of the impugned order which revealed that the percentage increase in sales in the month of exhibition as compared to the preceding month was 114.99% and 118.26% in the month of March 2014 and July 2015 respectively while in the year under consideration the percentage increase was only 62.88% in the month of October 2016. The assessee explained before the Ld. CIT(A) and furnished the chart for various assessment years which had been reproduced at page no. 65 to 67 of the impugned order, in the said chart it has been shown that the cash sales in the month of October 2016 i.e; period under consideration was 92% while in the preceding year it was 95% in April 2014, 93% in May 2015, 94% in June 2015, 93% in July 2015, 92% in July 2016. So it is not a case that in the month of October 2016 only the cash sales were more. It is also noticed that the GP rate shown by the assessee for the year under consideration was 12.21% which was comparable with the preceding year 2016-17 at 12.72% which shows that there was a small decline in the GP rate for the year under consideration in comparison to the earlier year, however in the assessment year 2014-15 and 2015-16 the G.P. rate was at 16.62% and 13.47% respectively which shows that there was a consistent declining trend in the G.P. rate which occurred due to increase in the sales which were at Rs. 3.04 crores, Rs. 9.46 crores, Rs. 10.68 crores and Rs. 12.83 crores for the A.Y. 2014-15, 2015-16, 2016-17 and 2017-18 respectively which also shows that due to increase in turnover the G.P rate declined, so, it cannot be said that the cash sales made by the assessee during the pre demonetization period i.e; October 2016 resulted in extraordinary fall in the G.P. rate. In the instant case the assessee maintained the proper books of account in regular course of business which were duly audited by the independent Chartered Accountant under section 44AB of the Act, all the sales purchases and stocks were recorded in the books of account which had not been doubted by the AO. The sales shown by the assessee had been accepted by VAT/ Sales Tax Department, the book result shown by the assesee were in the same line as had been accepted by the Department in the preceding years, the cash sales made by the assessee had been credited in the books of account and reduction in the stock has not been doubted, even during the course of search just after the closing of the year under consideration, neither excess nor shortage of stock was found in the stock register maintained by the assessee, the identity of the purchasers to whom cash sales had been made was disclosed in the sale bills where the name, address and PAN was mentioned. It is also not a case that there was sudden spurt in the sale only in the month of October 2016 as the chart furnished by the assessee before the Ld. CIT(A) clearly revealed that the cash sales were on higher side in another months of different preceding years. AO made the addition on the basis of difference in the cash sales from 01/10/2016 to 29/10/2016, only on this basis that the said difference was there in the computer and the pen-drive found from the residential premises of the part time accountant of the assessee but no opportunity to cross examine the said accountant was given to the assessee and moreover, no specific defect was pointed out in the proper books of account maintained by the assessee in the regular course of business and nothing is brought on record to substantiate that the sales from 01/10/2016 to 29/10/2016 were not made, out of the existing stock available with the assessee. In the present case the assessee explained that the exhibitions were held in every year and the sales were normally higher in certain month and that in the month of October 2016 the cash sales was on the higher side as lots of festivals like Diwali, Dhanteras, Bhaiya Duj and Karwa Chauth etc. fell in that period. The said explanation cannot be brushed aside considering the trend of the society in India wherein people make the purchases of jewellery during the festive season. Thus the assessee was maintaining complete stock tally, the sales were recorded in the regular books of accounts and the amount was deposited in the bank account out of the sale proceeds, therefore, the addition made by the AO and sustained by the Ld. CIT(A) was not justified. Sales made by the assessee to cover the cash deposited in the bank post demonetization, was sufficient source of the cash deposited i.e; the sales from the existing stock available with the assessee and was well explained, therefore, the addition made by the AO and sustained by the Ld. CIT(A) was not justified. - Decided in favour of assessee. Addition made on account of unexplained investment in the construction of the showroom - difference in the cost of construction as estimated by the departmental valuer and as shown by the assessee in the books of account - HELD THAT:- In the present case the assessee asked for the benefit of 10 to 15% on account of self supervision but the valuation officer had given a benefit of only 3.75% and even the valuation officer applied the CPWD rates instead of local PWD rates. The CPWD rates were higher than the PWD rates. As regard to the application of the rates while valuing the property the Hon ble Apex Court in the case of Smt. Sunita Mansingha [ 2017 (4) TMI 303 - SUPREME COURT] Valuation Officer ought to have applied the local PWD rates instead of CPWD rates which were on the higher side. In the present case it is also noticed that the total investment in the building was to the tune of Rs. 1,12,33,334/- which is evident from Sub Para 2 of para B at page no. 11 of the assessment order dt. 27/03/2019 and the DVO estimated the total cost of construction of showroom at Rs. 1,32,24,900/-. Finally the AO came to the conclusion that overall difference in the A.Y. 2017-18 and 2018-19 was at Rs. 18,71,975/-. The DVO while working out the valuation of the showroom had given benefits of self supervision @ 3.75% which the assessee claimed at 10% and if the PWD rates are applied instead of CPWD rates and the benefit @10% is given for self supervision the difference in the valuation as worked out by the DVO and shown by the assessee in the books of account would be less than 10%. In those circumstances no addition should have been made since valuation is a matter of opinion / estimation. On the similar issue, various Benches of the ITAT has taken a consistent view that when the difference in valuation shown by the assessee and estimated by the DVO is less than 10% then the AO was not justified in substantiating the valuation determined by the DVO for the cost shown by the assessee. Thus mpugned addition made by the AO and sustained by the Ld. CIT(A) on account of difference in valuation of the showroom owned by the assessee alongwith another co-owner M/s Kalaneedhi Jeweller LLP, is deleted. - Decided in favour of assessee.

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• 2022 (4) TMI 536
  Addition in respect of write off on deferred sales treated as contingent liability on account of bank guarantee - AO held that this amount in question was nothing but a contingent liability based on Auditors observations given in Form 3CD - HELD THAT:- We find that the AO and the CIT(A) both have proceeded with wrong observations of the tax auditor given in the TAR (Tax Audit Report), which when corroborated with the claim made in the audited financial statement deserves to be deleted. The correct position on the claim made by the assessee is reflected in the audited financial statement forming part of the paper book, wherein it has claimed it as write off in respect of deferred sales relating to retention money on the invoices raised by it on various electricity companies. It is not the case of claim of contingent liability debited to the P L account as held by the authorities below. In view of appraisal of correct facts as oozing out from the material on record, we are inclined to delete the disallowance made by the ld. AO and confirmed by the ld. CIT(A). Accordingly, the appeal of assessee is allowed.

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• 2022 (4) TMI 535
  Revision u/s 263 - A.O. has completed the assessment estimating the gross income @ 9.50% of the turnover and allowed deduction of depreciation and interest - as per CIT AO in granting depreciation and interest expenditure as deduction is not in accordance with provisions of section 44AD(2) - Also dropping of penalty proceeding initiated u/s 271A of the Act was clearly on wrong appreciation of the judgement of the Court - HELD THAT:- A.O. has applied his mind on the impugned issue and has taken a conscious decision to allow deduction of depreciation and interest after estimating gross income @ 9.50% of the gross receipts. We find merit in the contentions of the assessee that the AO has taken a plausible view in this matter and hence it cannot be considered to be prejudicial to the interest of the revenue. We notice that the above said contentions of the assessee finds support from the decision rendered by Hon ble High Court of Karnataka in the case of CIT Vs. P. Sudhakar [ 2015 (1) TMI 1473 - KARNATAKA HIGH COURT] In the instant case, there are two views possible with regard to estimation of income from civil contract works and the assessing officer has taken a plausible view. Accordingly, we are of the view that the revision order passed by Ld. PCIT on this issue cannot be sustained. Accordingly, we set aside his order in directing the A.O. to do de-novo assessment. With regard to the observation of Ld. PCIT that the dropping of penalty u/s 271A of the Act was on wrong appreciation of the judgement of the High Court, the Ld. A.R. contended that the Ld. PCIT should have passed separate order on this issue. However, the Ld. A.R. did not cite any authority in support of his contentions. In any case we notice that the Ld. PCIT has given opportunity to the assessee in this regard. Accordingly, we do not find it necessary to interfere with observations made by Ld. PCIT on the second issue. Appeal filed by the assessee is partly allowed

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• 2022 (4) TMI 534
  Exemption u/s 11 - not granting the Registration u/s 12A - CIT(E) rejected the application on the ground that the society has not incurred any expenditure on objects of the trust, appellant has earned surplus which explains that activities are not charitable in nature and the society has not utilized the surplus towards the objects of the society - HELD THAT:- The plain reading of Section 12AA explains that the Pr.CIT or Commissioner has to satisfy himself regarding genuineness of the activities of the trust. He has also to satisfy himself about genuineness of the object of the trust. Thus, there will be two situations, first situation is that a trust has applied for registration U/s 12AA, within a short period of formation of the trust. Therefore, naturally, in such newly formed trust, there will not be any activity. In such situation, the CIT(E) has to verify the objects of the trust vis a vis Section 2(15) of the Act. The second situation will be a trust which is in existence for a long time. In this situation, the CIT(E) has to verify whether activities of the trust are charitable or not, he has to also verify the objects of the trust. The appellant before us is existing since 2001. However, as demonstrated in earlier paragraphs that though the appellant has earned substantial income, not a rupee has been spent on objects of the society. Rather, appellant is generating income with an intention to earn profit as is visible from the income expenditure account. Though the appellant claimed that it had carried out charitable activities like blood donation etc, no evidence has been filed to substantiate the claim. Also, the CIT(E) has not mentioned anything about the objects of the society. Further he has not given any reasoned findings whether the objects are charitable or not. During the registration proceedings u/s 12AA, the CIT(E) has to decide whether the objects are charitable or not as defined u/s 2(15) - we remand the matter back to the file of CIT(E) for reconsideration of the application filed by the assessee society U/s 12AA and pass an order afresh. The Appellant is also directed to file/produce all necessary documents as desired by CIT(E). CIT(E) shall afford reasonable opportunity of hearing to the assessee before passing the order. Thus, this case is set aside and remanded back to the CIT(E). Appeal of the appellant is allowed for statistical purpose.

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• 2022 (4) TMI 533
  Disallowance made in respect of PF ESI in respect employee s contribution u/s. 36(1)(va) r.w.s. 2(24)(x) - assessee has not remitted the employees contribution on the due date as prescribed by the PF ESI Act - HELD THAT:- We find that the CIT(A) erred in referring to the Amendment brought in by Finance Act 2021 w.e.f. 01.04.2021 which inserted an Explanation to section 36(1)(va) and section 43B of the Act and erred in holding it as clarificatory and so, retrospective in nature. Whereas we note that it is only prospective in nature and cannot disturb the binding judicial precedents in favour of assessee. However, we find that any way this issue is no longer res integra as held by this Tribunal in the case of Lumino Industries Ltd. [ 2021 (11) TMI 926 - ITAT KOLKATA] wherein assessee s favour view was taken by the Tribunal after holding that the amendment brought in by Finance Act, 2021 w.e.f 1.04.2021 is prospective in operation and so will be in force from AY 2021-22 onwards and not retrospective. Assessee is to be allowed deduction in respect of employees contribution to PF ESI provided these are paid before the due date of filing the return of income. On the basis of records before us we are unable to ascertain the date of payments of these dues. Therefore, we are restoring the matter back to the file of the AO to examine and allow the same if these are paid before due date of filing the return of income - Decided in favour of assessee.

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• 2022 (4) TMI 532
  Revenue Recognition - Correct head of income - gain on sale / Assignment of Intellectual Property Rights (IPR) - whether assessable to tax at all ? - whether it has to be assessed to tax under the head Income from Business or Profession or Capital Gain - assessee is in the business of rendering software development services (SWD services) and software development products (SWD products). - HELD THAT:- The contention of the assessee that the assessee was not in the business of buying and selling IPR s and was only engaged in creating and exploiting IPRs is devoid of any merit. The business of the assessee is developing software for telecom companies. The revenue that the assessee derives in its business is from software services, product and technology licencing and commissioning services. In the course of its business, it develops software and becomes owner of the copyright therein, depending on the contract with its customer. The assessee licences software and derives income in the form of license fee or sells software and derives income from sale of software. This would be clear from the revenue recognition policy of the assessee as would be evident from Note 2(j) of the Notes to financial statement The revenue received by the assessee from licensing the IPR to Spreadtrum was at all times earlier offered to tax by the assessee as licence fee / royalty and declared as business revenue. The sum received under the Arbitration award was also offered to tax as business income. It is only the sum received under the Settlement Agreement that was claimed as not taxable. It is therefore clear that the independently owned IPR and Foreground Information which partakes the character of stock-in-trade for companies like that of the assessee was not a capital asset within the meaning of section 2(14) of the Act and therefore the sum received by the assessee cannot fall within the ambit of the head of Income from Capital Gain . The assessee did not receive the sum in question for giving up any source of income as the assessee was free to exploit independently owned IPR as well as Foreground information and therefore the argument that the sum received is capial receipt for losing a source of income and therefore not chargeable to tax, is devoid of any merits. In view of the above assessee transferred capital asset and that capital gain cannot be brought to tax due to the fact that it was not possible to compute capital gain and thefore the machinery provisions fail and therefore the charge itself fails. - Decided against assessee. Contingent liability - sum shown as payable to other employees - HELD THAT:- We are of the view that the liability in question was not certain and was contingent. No basis for the claim being certan has been given by the assessee, especially when the payment itself is voluntary and in the nature of an incentive. The fact that part of the sum claimed as deduction was revised in the subsequent year also lends credence to the conclusion of the AO that the liability was contingent in nature. Hence, the ground of appeal of the assessee is held to be without any merit. However, we direct that the sum reversed in subsequent year and offered to tax shall not be taxed so as to avoid double taxation of the same income. The AO is directed to allow relief in the subsequent Assessment Year. We hold and direct accordingly. Sum payable to Chairman and MD and wholetime Director and CFO - additional payment made to the Chairman MD and WTD CFO were for services rendered - HELD THAT:- AO has failed to highlight that the decision of the Special bench states that as regards the rendering of services by the employees for payment of bonus/commission, the only requirement of section 36(1)(ii ) is that some services should have been rendered. Adequacy of services is not a relevant consideration. It is not necessary that payment should be made commensurate to the rendering of services or there should be some extra services rendered for payment on account of bonus or commission. The AO has stated that a law firm was appointed in the US for the arguing the arbitration proceedings and that the services of the CEO or CFO in the arbitration or settlement negotiation was only supervisory in nature. Therefore, the AO has himself conceded that the CEO or CFO has rendered services towards the arbitration proceedings, however remote. Whereas the CEO and CFO cannot take a hands-off approach and had played a significant role in strategizing and providing inputs to the lawyers. The lawyers themselves cannot guide the legal matters Hence, applying the ratio in the case of Dalal Broacha Stock Trading [ 2011 (6) TMI 251 - ITAT, MUMBAI] , the expense is to be allowed under section 36(1)(ii). Disallowing deduction of a sum paid to BSE Ltd., while computing income from business - HELD THAT:- The sum was paid to BSE Ltd., to give effect to a scheme of amalgamation of Sasken Network Engineering Ltd., with the assessee. The AO and CIT(A) held that the expenditure is capital expenditure and disallowed the claim of the assessee for deduction. The assessee contends that the expenditure is revenue in nature and in the alternative submitted that the assesee should be allowed deduction under section 35DD of the Act which allows expenditure on amalgamation at 1/5th of the expenditure over a period of 5 Assessment Years. After considering rival submissions, we are of the view that without going into the question whether the expenditure is capital or revenue in nature, it would be just and appropriate to direct the AO to allow 1/5th of expenditure under section 35DD of the Act. Thus, ground No.6 is partly allowed. Disallowance of profession fees paid - assessee claimed that it engaged the consultant for formulating business strategy for future growth - AO and CIT(A) held that strategy for future business growth cannot be regarded as revenue expenditure and disallowed the claim for deduction - HELD THAT:- Consultancy services were procured from a consultant regarding the growth opportunities available in the embedded and digital space. The Study was to help Sasken evaluate whether the market size where we operate is large enough and whether it was a growing market. This exercise was undertaken since the company had been de growing for the last 5 years. Thus we are of the view that the plea of the assessee to allow deduction deserves to be accepted. Ground No.7 is accordingly allowed. Non-grant of credit for Foreign Taxes (FTC) - credit for Foreign Taxes paid were in relation to foreign branches and overseas customers of the non-SEZ units for which no deduction under section 10AA was claimed by the assessee - AO denied benefit of FTC for the reason that since the non-SEZ unit was incurring loss, no tax was payable in India - CIT(A) confirmed the order of the AO - HELD THAT:- The fact that the Assessee suffered loss in Non-SEZ unit and therefore the claim for FTC cannot be allowed cannot be accepted as taxability is not the criteria to deny FTC. Thus ground No.8 is allowed. MAT credit - HELD THAT:- As it is seen that due to an order under section 154 dated 04.10.2018 for Assessment Year 2013-14 wherein MAT credit was reduced by Rs. 37.23 lakhs, the MAT credit for Assessment Year amounting to Rs. 12.34 lakhs were disallowed. The final order in Assessment Year 2013-14 on the issue will have consequential effect and the AO is directed to give consequential relief. Disallowance of processing fees paid to BSE Ltd - whether AO and CIT(A) have erred in not considering the said expenditure as deductible under section 35DD over a period of 5 years? - HELD THAT:- We are of the view that it would be just and appropriate to direct the AO to consider the claim of the assessee in the light of CBDT Circular No.37/2016 dated 02.11.2016 on the approach to be adopted on such claims. The AO will afford opportunity of being heard to the assessee before deciding on the issue.

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• 2022 (4) TMI 531
  Reopening of assessment u/s 147 - Mode and manner of service of notice as contemplated in Sec. 282(1)(b) - validity of the service by affixture of the Notice u/s.148 - HELD THAT:- Notice server having failed to effect the service of the Notice u/s. 148, dated 11.03.2015, had returned the same with a report, viz. viz. Shrimaan Ji, is kothi mein is naam ka kohi nahin hai (that no one by the said name is available at this address), which thus clearly did cast an obligation upon the A.O. to have made necessary verifications as regards the whereabouts of the assessee, which we are afraid he had most arbitrarily dispensed with, and instead, by way of an idle formality got the same served by way of affixture at the aforesaid wrong address - if the A.O. would have done the bare minimum that was expected of him, i.e., consulted/referred to the assessment record of the assessee, i.e., his returns of income, PAN data, Form No. 26AS etc., then, the correct present address of the assessee could have easily been gathered by him. As the A.O. had failed to exercise his diligence as regards verifying the address of the assessee, and had in fact most arbitrarily dispensing with the said statutory obligation got the Notice u/s. 148, dated 11.03.2015 affixed at an address, i.e., 1-B, New Guru Teg Bahadur Nagar, Jalandhar, at which the assessee well to his knowledge (as intimated by the notice server vide his report) was not residing, therefore, the validity of such a service cannot be subscribed on our part. At this stage, we may observe, that the manner in which the A.O. had ordered for the service of the Notice u/s.148, dated 11.03.2015 by way of affixture at the aforesaid address, i.e., without using all due and reasonable diligence for verifying the whereabouts of the assessee is absolutely not in conformity with the mode and manner of service of notice as contemplated in Sec. 282(1)(b) r.w. Order V - Rule 17 of the Code of Civil Procedure, 1908 (V of 1908). We, thus, in terms of our aforesaid observations are of the considered view that the service of the Notice u/s. 148, dated 11.03.2015 cannot be held to have been carried out as per the mandate of law. As in the case before us the Notice u/s. 148, dated 11.03.2015 had been served on the assessee s counsel for the first time in the month of February, 2016, i.e., much beyond the prescribed period of 6 years from the end of the relevant assessment year which had expired on 31.03.2015, therefore, respectfully following case of Harjeet Surajprakash Girotra . [ 2019 (7) TMI 941 - BOMBAY HIGH COURT] we are of the considered view, that the A.O. had invalidly assumed jurisdiction for reopening the concluded assessment of the assessee company and passed the reassessment order u/s. 148 r.w.s. 143(3), dated 30.03.2016. At the same time, we may herein observe, that our aforesaid view is subject to our observations recorded herein below. Thus order passed u/s. 148 r.w.s. 143(3) shall stand vacated for want of valid assumption of jurisdiction by him for passing the impugned order.

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• 2022 (4) TMI 530
  Exemption u/s 11 - registration invoking section 12AA(3) w.e.f. 01.04.2014 cancelled - Allen Group has made DDPS (assesee) - subservient to their coaching programme - from the time Maheshwari brothers took management control over DDPS, this school which is the property of society is being used or applied directly for the benefit of Maheshwari brothers and M/s Allen Career Institute - AR has mentioned that the assessee-society was running into losses and therefore, Shri RK Verma approached the Maheshwari brothers to become member of the assessee-society and help the assessee-society to run the school efficiently. Thereafter, the Maheshwari brothers had extended loan to assessee-society at 9% interest rate and this loan was used to pay-back loan taken from Punjab National Bank at higher interest rate at 16% HELD THAT:- The submissions made by the ld. AR of the assessee-society are not acceptable as they are in contrary to the facts at hand. Firstly, the Maheshwari brothers as well as Shri RK Verma have admitted on oath that the payment of Rs. 46 crore in cheque and Rs. 19 crore in cash by Maheshwari brothers to Shri R. K Verma as well as share investment of Rs. 8 crores by Maheshwari brothers in R. C. Jain Invest Finance Pvt. Ltd were all made in lieu of the deal between the Maheshwari brothers and Shri RK Verma for transfer of administrative control and management rights of Disha Delphi School from Shri RK Verma to the Maheshwari brothers and Allen Group. Therefore, the claim made by the ld. AR that the assessee-society is not connected in any way to these payments are completely opposite to the actual scenario. AR has also claimed that the Maheshwari brothers are just mere members of the assessee-society and the office bearers of the society have not changed even after the deal between Maheshwari brothers and RK Verma. With this argument, the ld. A/R is attempting to hide the true picture behind nomenclatures and designations. Irrespective of what designation is bestowed upon the Maheshwari brothers, it is undisputed fact that as on date, the administrative control and management of Disha Delphi School vests solely with the Maheshwari brothers and the Allen Group. This fact was not disputed anywhere by the A/R in his submission. Incriminating evidences have been gathered during search action in the cases of Allen Group, Resonance Group as well as surveys in the case of the assessee that the Maheshwari brothers exercise full control over Disha Delphi School and that they have made this school subservient to their coaching programme. It is solely for this purpose that huge money was spent by Maheshwari brothers to obtain management rights over Disha Delphi School. The facts and submissions as well as case laws relied upon by the ld. AR are not applicable as per facts of the present case, therefore, considering the totality of facts and circumstances, we found that the ld. CIT(A) has passed a speaking and well reasoned order discussing all the details of the case of the assessee, therefore, we do not find any reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and hence, we uphold the same. - Decided against assessee.

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• Customs

• 2022 (4) TMI 529
  Duty Drawback - circular trading of footballs and other sports items - whether the appellants herein have connived in doing circular trading in order to claim wrongful benefit of duty drawback - admissibility of evidences - penalty u/s 114 and 114AA of Customs Act - HELD THAT:- It is found that the entire case of the Revenue is mainly based on the statements, which are not corroborated with any independent credible evidence - In the present case, the trail of flow back of money to the overseas buyer from the 1st Appellant, due to the alleged over-invoicing, is not established in the investigation. Further, the Respondent revenue has failed to establish the said money trail even during the hearing before this Tribunal. It is found from records that the Revenue has failed to prove even by probability that the footballs and other sports goods exported were subsequently imported back and again exported the same. The footballs exported by the 1st Appellant from India were of Indian origin, manufactured from Polyurethane. Further, the exports were under the claim for drawback. The officer who passed order under Section 51 of the Customs Act was satisfied after examination of the exports, that they are as declared in the shipping bill - it can be concluded that the declarations made in the import documents by the 3rd and 4thAppellants and the goods exported by the 1st Appellant are not disputed. It is clear that the case of the department is based on assumption and the investigation is not complete and conclusive. The case of circular trading is setup based on assumption and not proved definitively - It is constrained to observe that the contention of the Appellants that the goods imported and exported are different, deserves acceptance on merits. In a case of alleged circular trading, the crucial aspect is to prove that the goods exported and those subsequently imported are the same. Similarly, in case of alleged overvaluation of export goods with a claim of incentives, allegation of flow back of money from the exporter to the overseas buyer needs to be proved. It is found that the Revenue has failed to prove the same - there are considerable force in the argument that the goods exported by the 1st Appellant are common sports goods such as footballs manufactured with PU and other sports articles, for which the details of identical or similar contemporaneous goods are always available. Both the authorities below have grossly erred in holding that there were no records to determine the value under Rules 4 and 5 of the Valuation Rules and hence, the value is determined under Rule 6 of the Valuation Rules by resorting to market survey. There are considerable force in the argument of the Appellants that the authorities below have committed an error of law in admitting the statements of various persons in evidence, without complying with the mandatory requirement of Section 138B of the Customs Act - the statements made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceedings under the Customs Act shall be relevant, for the purpose of proving, in any proceedings under the Customs Act, the truth of the facts which it contains only when the person who made the statement is examined in the case before the adjudicating authority and the adjudicating authority is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. None of the exceptions contained in Section 138B (1)(a) are recorded as reasons by the authorities below to dispense with the mandatory requirement of Section 138B. Since the statements are the basis on which the entire case has been set up by the Revenue against the Appellants, cannot be relied upon for the want of following the procedure prescribed under Section 138B of the Customs Act. Thus the entire proceedings initiated by the Respondent Revenue fails, due to insufficient evidence - in absence of any material evidence corroborating and supplementing the allegations and/or the statements relied upon, and for the want of following the procedure prescribed under Section 138B of the Customs Act, it is found that the Revenue has failed to prove its case of purported overvaluation of the footballs and other sports goods exported, and that of circular trading. The authorities below have denied the drawback under Rule 16A by holding that the Appellant has failed to produce evidence in respect of realisation of export proceeds within the time allowed - the denial of claim for drawback under Rule 16A is liable to be set aside. Penalty under Section 114 and Section 114AA of the Customs Act - HELD THAT:- The revenue has failed to establish violation of any provisions of Section 113 of the Customs Act and/or any provisions of the Duty Drawback Rules and hence, no penalties can be imposed on any of the Appellants under Section 114 and Section 114AA of the Customs Act - In absence of any violation of provisions of Section 113 of the Customs Act, the goods are not liable to confiscation and seizure of goods is liable to be set aside. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2022 (4) TMI 528
  Initiation of CIRP - - time limitation - assignment of debt - It is the main case of the Appellant that since the interest portion has never been reflected in the Balance Sheet since 2012, it cannot be claimed now at this belated stage and is barred by Limitation - HELD THAT:- In the Assignment Agreement dated 04/12/2014 entered into between the UTI and the first Respondent, it is specifically stated in Clause (E) that the Borrower had failed to make payment in respect of the Financial Assistance due and payable to the Assignors in accordance with the applicable terms and conditions and an aggregate sum of Rs. 79,26,21,750/- as on 30/09/2014 in respect of the Financial Assistance granted by Assignors is outstanding against the Borrower, as per books of accounts maintained by the Assignors. - it is clear that the debt has been assigned to the first Respondent and as on the date of the assignment it is stated that an amount of Rs. 79,66,21,750/- is due and payable by the Corporate Debtor . Be that as it may, it is not within the domain of the Adjudicating Authority to decide the amount of debt at the stage of admission of Section 7 Application. Quantum of payment of debt - HELD THAT:- The same does not fall for consideration before the Adjudicating Authority at the stage of admission of the Application under Section 7 of the Code. The only requirement is that the minimum outstanding debt should be more than the threshold amount provided for under the Code. The actual amount of Claim is to be ascertained by the Resolution Professional after collating the Claims and their verification which comes at a later stage - this Tribunal is satisfied that there is an admission of debt and default as defined under the Code - there are no illegality or infirmity in the Impugned Order. Appeal dismissed.

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• 2022 (4) TMI 527
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Personal Guarantor of the Corporate Debtor - existence of debt and dispute or not - right of audience - HELD THAT:- Under Section 99 such Resolution Professional shall submit his report and based on that report, under Section 100, the Adjudicating Authority, shall pass an order either admitting or rejecting the Application. It is only under Section 100(3) that the Adjudicating Authority shall provide a copy of the order passed under Sub-section (1) to the Creditors. Hence, in terms of Section 97 100 of IBC, 2016 no right of audience can be given to the Respondents at a stage before appointing the IRP - though time-lines have been prescribed at each stage of the proceeding, leading to acceptance or rejection of the application under section 100, no such time-line has been prescribed for submission of report by the resolution professional though section 100 provides that the adjudicating authority shall take a decision either admitting or rejecting the application within 14 days from the date of submission of the report. That apart on a careful examination of section 100, before the adjudicating authority takes a decision to either admit or reject the application upon receipt of report from the resolution professional, the parties to the insolvency resolution process are required to be heard. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form-C and that the Creditor will serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been submitted . What is contemplated is that the application in Form C should be submitted and then the Creditor should serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. The procedure thus prescribed will give the Personal Guarantor notice of the application already filed before the Adjudicating Authority. Section 95(5) requires the Creditor to provide copy of the application made under sub-section (1) , to the Debtor. Thus, serving advance copy is not contemplated. The argument that Section 98 provides for replacement of the Resolution Professional and hence the Guarantor should have an opportunity to seek replacement of Resolution Professional and hence he should be heard before appointment of IRP was also considered and held that going through Section 98 of IBC, 2016, it is found that Section 98 is not stage specific. Section 98 itself shows that the section could be resorted to even at stages like implementation of repayment plan which would be a stage beyond Section 116, where implementation and supervision of repayment plan is provided for - Any amount of audience is provided to the debtor before the Resolution Professional submits a report. Section 99(2) of IBC gives an opportunity to the debtor to prove repayment of debt claimed as unpaid by the creditor. Section 99(4) of IBC, empowers the Resolution Professional to seek further information or explanation in connection with the application as may be required from the Debtor or the Creditor or any other person, who, in the opinion of the Resolution Professional, may provide such information. Hence it is not as if, the Debtor is not provided an audience before the submission of the report. Hence there are no violation of principles of natural justice by not giving an opportunity to the Debtor for making his submissions before the appointment of IRP. This Tribunal is of the considered opinion that there is no hurdle to entertain this application under Section 95 of IBC, 2016. Since the application is found to be complete - Application admitted - moratorium declared.

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• 2022 (4) TMI 526
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and pre-existing dispute or not - HELD THAT:- The contention of the operational Creditor is that all the decisions taken by the Corporate Debtor are to be approved by the Management at Abu Dhabi and hence, when the Management at Abu Dhabi does not instruct anything with regard to the dues of the Operational Creditor, the same cannot be withheld. The dispute as can be seen from the reply notice is with Mr. M.V. Bhushanam, who was allegedly responsible for the financial loss of the Corporate Debtor. It also can be noted from the reply notice that the Corporate Debtor is not doing well and is in the state of losses and that endeavours to bring out the company from the loss making to profit making are being done. The invoices pertaining to the supplies are filed and the same are not denied. There is acknowledgment of the debt by way of acknowledging the letter with the subject confirmation of accounts which is dated 11.12.2017. The pre-existing dispute which is taken as a defence by the Corporate Debtor should relate to the claim made by the Operational Creditor. The dispute, which is for the first time stated in the reply notice, is only with regard to Mr. M.V. Bhushanam. Even after Mr. M.V. Bhushanam was removed as an Authorised Signatory the liability of the Corporate Debtor is acknowledged. Payments were being made till 16.04.2016. No action was taken with regard to the alleged mismanagement of Mr. M.V. Bhushanam prior to 16.04.2016 and the due amount was also confirmed on 11.12.2017. There is no protest made while acknowledging the said accounts. When no action is initiated in respect of the said mismanagement, projecting the mismanagement as the preexisting dispute, only when a demand is raised by the Operational Creditor, cannot be considered as a pre-existing dispute. When the amount due is not disputed and when it is not disputed that the goods under the invoices were delivered to the Corporate Debtor, the contention that they are lying idle on their site cannot be given weight. Two years have elapsed from the supply of the material till the filing of this application, during which period there was no action taken by the Corporate Debtor with regard to the said material. Hence, all the defences raised by the Corporate Debtor get marginalized from the fact that the supply of material is not denied and that the statement of account was confirmed on 11.12.2017. Mere mentioning in the reply notice, that there is a pre-existing dispute does not deprive the Tribunal of its power to order CIRP. If the dispute is found to be not genuine and not related to the claim, the same can be ignored. Hence, it is clear that the Corporate Debtor has fallen due the amount that is claimed by the Operational Creditor. This is a fit case to admit and order initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - petition admitted - moratorium declared.

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• 2022 (4) TMI 525
  Seeking liquidation of the Corporate Debtor - Section 33 and 34 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In absence of any Resolution Plan forthcoming the CoC decided to liquidate the corporate debtor as going concern. Thereby, the CoC in the 4th meeting held on 24.08.2021 had unanimously resolved to liquidate the Corporate Debtor as going concern and also resolved to appoint the Applicant herein Mr. Shalabh Kumar Daga as a liquidator under Section 34(4) of the Code. The liquidation of Corporate Debtor is allowed - application allowed.

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• 2022 (4) TMI 524
  Admission of claim of applicant, as Operational Creditor - stay on further process of CIRP of the Corporate Applicant - HELD THAT:- It is an admitted fact that the Corporate Debtor had entered into an agreement with Applicant in around 1997 and when the dispute had arisen under the said contract, the Applicant had filed a suit before Ld. Senior Civil Judge, Bhavnagar in 1999. The Ld. Senior Civil Judge, Bhavnagar after adjudication of the matter passed a decree followed by a judgment in 2015 in favour of the Applicant. It is noted that the Corporate Debtor had filed a counter claim before the Ld. Senior Civil Judge, Bhavnagar however the same was rejected while passing decree. Being aggrieved by the decree, the Corporate Debtor approached the Hon ble High Court - During the pendency of the appeal and execution proceeding the Corporate Debtor filed an application under Section 10 of the Code for initiation of CIRP of itself in 2019. It is noted that in the Section 10 Application the order was passed on 08.03.2021 initiating CIRP against Corporate Debtor. When the IRP had issued a demand notice dated 24.03.2021 on the Applicant for Rs. 17,15,703/-, the Applicant apprised the RP about the decree and pendency of appeal before Hon ble High court and execution proceeding. The Resolution Professional has errored in registering the claim of the Applicant at a notional value of Rs. 1 but should have admitted the entire decretal amount of Rs. 21,79,88,328.04 (Rs. 7,39,31,941/- plus interest at 9% p.a. and cost of suit) in terms of the Decree passed by the Learned Senior Civil Judge, Bhavnagar - Application allowed.

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• 2022 (4) TMI 523
  Seeking dissolution of the Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 45 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- Having satisfied that no assets were found during the CIRP and liquidation process for recovery of dues of the Stakeholders, nothing would remain in the Liquidation Process of the Corporate Debtor, to proceed with. The liquidator therefore conducted the final meeting of the Stakeholders Consultation Committee on 04.06.2021, wherein it was resolved to apply for dissolution of Corporate Debtor, hence, the instant application is filed by the Liquidator. In view of the documents placed on record, in the exercise of the powers conferred under section 54(2) of the IB Code, the dissolution of the Corporate Debtor viz., M/s. Drup Suppliers Pvt. Ltd. having CIN U65990GJ1987PTC009648 is ordered from the date of this order and the Corporate Debtor stands dissolved. Application allowed.

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• 2022 (4) TMI 522
  Entitlement to copy of valuation report of the assets of corporate debtor to ex-directors - whether the suspended management of the Corporate Debtor is entitled to get the copy of the valuation reports prepared during CIRP? - whether Resolution Professional can supply the valuation report copy as per provisions of the IB Code? - HELD THAT:- Resolution plan is a highly confidential document but when such document is required to be given to the most affected parties being erstwhile members of the Board of Directors of the corporate debtor, then the valuation report in our view which is an important document having bearing onto the fate of corporate debtor must be supplied to ex-management. In present case it is the valuation report which is in question. Whether it can be shared by Resolution Professional with ex-directors specially when the ex-management alleges and apprehends that properties of corporate debtor are being valued and offered at throw away price. In our view, the ex-management is the appropriate concerned parties to comment on valuation of properties of corporate debtor. The corporate debtor is the body of Ex-management and they were in control and handling the same till CIRP initiation. It would be pre-judicial if they are not even allowed to view the valuation and point out the shortfalls in valuation, if any. There is no specific provision to not to share copy of valuation report with ex-directors, it is held that in interest of justice the copy of valuation report needs to be supplied to ex-directors, as already directed by the Predecessor Bench - the Resolution Professional are directed to supply copy of valuation report to the applicants within 2 days of this order. Application allowed in part.

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• 2022 (4) TMI 521
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is found that the corporate debtor had sent an email on 12.01.2022 proposing a settlement which was rejected by the applicant vide email dated 17.01.2022. Subsequently, the corporate debtor had sent another email dated 23.01.2022 proposing a modified settlement which was also rejected by the applicant on 25.01.2022. Lastly, vide letter dated 07.02.2022, the corporate debtor has sent a settlement proposal which is available on record. This amounts to acknowledgement of debt time and again. All the above documents clearly reflect that the corporate debtor had availed loan being financial debt and has failed to repay the same. Default has occurred which is also admitted on various occasions by the corporate debtor, leaving no scope to reject the application. The present application is complete in terms of Section 7(5) of the Code. The applicant is entitled to claim its dues, establishing the default in payment of the financial debt beyond doubt which is acknowledged and admitted in writing by the corporate debtor. In light of the above facts and records the present application is admitted and CIRP is ordered to be initiated against corporate debtor. Petition admitted - moratorium declared.

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• Service Tax

• 2022 (4) TMI 520
  Levy of Service tax - various fees paid by the appellant to the State Excise Department or to the Government or Government agencies during their business of manufacture, import and sale of alcoholic beverages for human consumption - applicability of reverse charge mechanism - HELD THAT:- The adjudicating authority, though dropped the demand on licence fee, but confirmed the demand on all other fees. In our considered view, there is no difference between the licence fee and other fees as these fees are not charged against any service provided by the State Government. These fees were charged as per the Statutory levy; therefore not against provision of any service. Since there is no service is existing against fee paid by the appellant to the State Government, service tax cannot be charged on the said fees. This issue is no longer res integra as the same has been considered by this Tribunal in the case M/S. ANHEUSER BUSCH INBEV INDIA LTD. (FORMERLY KNOWN AS SAB MILLER INDIA LTD.) VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU NORTH WEST [ 2021 (2) TMI 1023 - CESTAT BANGALORE] where it was held that the appellant is not liable to pay service tax on Export Pass fee, Import Pass fee, Permit fee, Excise Staff Salary and overtime allowances/charges. It can be seen that the various fees paid by the assessee in the aforesaid case were identical to the fees paid by the present appellant. Therefore, the facts of both the cases are absolutely identical. Thus, the fees paid by the appellant to the State Government during the course of manufacture and trading of alcoholic beverages does not amount to provision of any service - no service tax can be demanded - appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 519
  Refund of penalty paid by appellant - rejection on the ground of unjust enrichment - HELD THAT:- The learned Commissioner (Appeals) had failed to appreciate the facts of the case as it is a case of refund of penalty paid by the appellant where he has considered that it is a case of refund of duty. As facts of the case are crystal clear that it is a case of refund of penalty and for refund of penalty there is no such provisions in law where the appellant is required to establish that they have to pass the bar of unjust enrichment. Thus, following the decisions of the Tribunal in the case of THE COMMISSIONER OF CUSTOMS (I) , MUMBAI VERSUS BE OFFICE AUTOMATION PVT LTD. [ 2009 (9) TMI 968 - CESTAT MUMBAI] , and RATAN UDYOG VERSUS COMMISSIONER OF CUS. (ACC EXPORT) , MUMBAI [ 2010 (11) TMI 926 - CESTAT MUMBAI] , it is held that bar of unjust enrichment is not applicable to the facts of the case. The impugned order qua rejecting the refund claim on the ground that appellant has failed to pass the bar of unjust enrichment, is set aside - appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 518
  CENVAT Credit - duty paying documents - credit availed on the strength of debit notes issued by the service provider - HELD THAT:- This issue is no longer res-integra as the same has been decided in various judgements cited by the appellant - reliance can be placed in the case of AD-MANUM PACKAGING PVT. LTD. VERSUS COMMISSIONER OF C. EX., INDORE [ 2017 (4) TMI 209 - CESTAT NEW DELHI] where it was held that Cenvat credit should not be denied simply on the basis that they are debit notes and are not documents specified under Rule 9(1) of the CCR, 2004. Thus, the appellant are entitled for the cenvat credit on debit note. It is further noted that the debit note has contained all the information such as Name and address of the service provider and service recipient, the registration number of the service provider, the amount of service tax charged to the appellant, description of service etc., Therefore, all the details which is otherwise required to be mentioned in the valid document for cenvat credit are appearing in the debit note, for this reason also the cenvat credit cannot be denied to the appellant. Appeal allowed - decided in favor of appellant.

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• 2022 (4) TMI 517
  Classification of services - Business Auxiliary Services or mining services - services of excavation, extraction, grading, sorting, crushing, screening, loading and transportation of iron ore - period April 2006 to October 2006 - HELD THAT:- The classification of activities of the assessee under BAS is no more res integra as the same is considered by this very Bench of CESTAT in the case of M RAMAKRISHNA REDDY VERSUS COMMR. OF C. EX. CUS., TIRUPATHI [ 2008 (10) TMI 115 - CESTAT, BANGALORE] where it was held that the services rendered by the appellant are classifiable only under the category of Mining Services and therefore they would not be liable to service tax prior to 1-6-2007. In the present case, the primary activity of the appellant viz. winning minerals or raising iron ore from mines which was carried out through a separate contractor and as per the above order of this Bench, services relating to winning of minerals is held to be falling under the category of mining services which has become taxable w.e.f. 01/06/2007. Period involved in the case in hand is April 2006 to October 2006 and hence, the demand cannot sustain - appeal allowed. Maintainability of appeal - monetary amount involved in the appeal - appropriating and allowing credit of service tax - HELD THAT:- The Government s Litigation Policy, i.e. Instruction F.No.390/Misc./116/2017-JC dt. 22/08/2019 was issued whereby the monetary limit for filing appeal before this forum was enhanced to Rs. 50 lakhs, i.e. to say, any dispute involving less than Rs. 50 lakhs should not filed by the Revenue before the CESTAT and it has also been made clear in the said instructions that the same would apply to pending cases as well. The disputed amount in the case on hand is Rs. 45,26,438/- which is below the prescribed monetary limit for filing appeal by the Revenue and hence, in terms of the above instruction, the appeal becomes non-maintainable and the appeal is therefore dismissed in view of the Litigation Policy. Appeal allowed - decided in favor of assessee.

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• 2022 (4) TMI 516
  Refund of unutilised Credit - input services - Goods Transport Agency - Port Services, BAS, Erection commissioning, Installation service - repair maintenance service - telephone charges - consultancy services - rejection of refund on the ground that the assessee was ineligible to avail the cenvat credit on the input services claimed - period April 2007 to September 2007 - HELD THAT:- The issue is no more res integra since the same has been addressed to by this very Bench in the assessee s own case for a different period and laid to rest vide in C.C.,C.E. S. T-BELGAUM VERSUS BELLARY IRON ORES PVT. LTD. [ 2018 (10) TMI 219 - CESTAT BANGALORE] where it was held that The Commissioner (Appeals) has rightly held that the respondents are entitled to cenvat credit and there is no provisions contained in Rule 6(1) of the Cenvat Credit Rules when the final product is exempted from Central Excise duty by virtue of Notification 4/2006 CE dated 01.03.2006. Appeal dismissed - decided against Revenue.

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• Central Excise

• 2022 (4) TMI 515
  Condonation of delay in filing appeal - appeal have been filed after 505 days from the date of despatch - address has been mentioned wrongly for despatch - presumption of service - proof of delivery not produced by Revenue - Compounded Levy Scheme - Section 37C of Central Excise Act - HELD THAT:- Admittedly Revenue has despatched the order-in-original on 06.05.2019 at the wrong address. Hence, it is held that, there can be no presumption of service for want of despatch to the correct address. In this view of the matter, it is held that the presumption drawn by the learned Commissioner (Appeals) is wholly erroneous and against all canons of justice. In this view of the matter, the appellant have received the order-in- original only on 28.07.2020, and thus they have filed the appeal within the prescribed time as allowable under Section 35 of the Central Excise Act. The matter is remanded to the Commissioner (Appeals) to hear the appellant and decide the appeal on merits - appeal allowed by way of remand.

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• 2022 (4) TMI 514
  CENVAT Credit - input services - outward GTA - sale is on FOR basis - freight is integral part of the value of the goods on which excise duty was charged - Board Circular dated 08.06.2018 - HELD THAT:- The fact is not under dispute that the sale is on FOR basis and the freight is integral part of the price of the goods on which the excise duty was discharged. In this fact the appellant is entitled for cenvat credit as held by this Tribunal in the case of M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] and M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD] , where it was held that as the ownership of the goods remained with the Appellants till the goods reached to the customer s doorstep and the freight charges as well as damage (insurance) to the goods till destination were borne by the Appellant, they are eligible for the credit of service tax paid by them on outward freight. Thus, it is concluded that in case of FOR sale, the cenvat credit on outward transportation is admissible. Therefore, as per the facts of the present case, the sale being FOR sale and freight is inclusive in the price of the goods and the same was not charged separately to the customers, the cenvat credit in respect of outward transportation is admissible - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (4) TMI 513
  Affirmation of remand order passed by the Additional Commissioner - reassessment proceedings were only initiated on the ground that tax could not be levied on the essential oil - change of opinion or not - burden to prove - second remand order - HELD THAT:- Admittedly, the dealer has acted as a commission agent for purchase of goods for and on behalf of Ex. U.P. Principals to which the various agreements have been referred in the original assessment order. The Tribunal being the last court of fact ought to have considered on legal issues as well as on the fact. This proceeding is not the original proceeding but it is a reassessment proceeding. The burden is heavily on the revenue to prove its case. The reassessment order was passed against the dealer. Against which the first appeal was preferred and the matter was remanded. Against the second remand, the assessee has already filed materials to prove its case though it is incumbent upon the Tribunal to have decide the issue itself. It is not the case that the dealer has failed to product material to prove its case. The Tribunal has further erred in holding that under Section 9 of U.P. Trade Tax Act the first appellate authority is not competent to look into the facts of the case. The matter is remanded back to the Tribunal to decide the issue afresh only on the basis of material available before the Tribunal - Revision allowed.

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• 2022 (4) TMI 512
  Initiation of re-assessment proceeding on the basis of subsequent judgement - Classification of goods - Kaththa - exclusion of Gambier from the category of item kaththa, when the item Kaththa is not defined under U.P. Trade Tax Act, 1948 - Gambier (Uncaria Gambier) is known as WHITE KATHTHA or not - division of kaththa into two groups that is BLACK KATHTHA and second the WHITE KATHTHA, or not - Whether if any item under Section 59 of U.P. VAT ACT, 2008 declared it as unclassified, it is also deemed to be unclassified under U.P. TRADE TAX ACT, 1948? - re-assessment by fresh appaisal of the original order would amount to change of opinion or not? HELD THAT:- It is admitted between the parties that the applicant is a proprietorship firm and is selling the item as mentioned in the registration certificate. While granting registration, the goods have been mentioned as gambier (white kaththa ), which is not disputed. In the disputed year applicant had purchased and sold kaththa. While passing the original assessment order, the assessing authority on the basis of material as well as documents available on record and after due verification has assessed the tax @ 4 %. Therefore, on the basis of subsequent order passed by this Court, the re-assessment proceeding has been initiated and permission was granted and thereafter the assessment order was passed imposing the tax on the item in question as unclassified item. The proceeding of re-assessment has been initiated against the applicant on the basis of subsequent judgement. The Apex Court as well as this Court, time and again, have held that completed assessment should and must not be re-opened on the basis of subsequent judgment. Reliance can be placed in the case of M/s Samsung India Electronics Pvt. Ltd. Vs. State of U.P. 2 Others [ 2016 (12) TMI 630 - ALLAHABAD HIGH COURT ] where it was held that 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. Thus, a subsequent judgement cannot be used to reopen assessment or disturb past assessment which has been concluded. Therefore, the re-assessment proceeding initiated against the revisionist on the basis of subsequent judgement cannot be said to be justified. The impugned order of the Tribunal as well as the re-assessment order passed by the authorities below are hereby quashed. Revision allowed.

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• Indian Laws

• 2022 (4) TMI 511
  Dishonor of Cheque - insufficiency of funds - second and successive presentation of a cheque - legality and judicial propriety of order of cognizance - maintainability of the complaint for a cause of action, when the cheque could not be honoured for insufficient funds on an earlier occasion - HELD THAT:- When a cheque is presented for encashment and stands dishonoured, the payee is required to issue a notice to the drawer demanding payment of the amount and in case, such request is not obliged, complaint under Section 138 of the N.I. Act is filed for the drawer having committed the offence. The question is, whether on the basis of a statutory notice issued by OP No.1 subsequent to dishonour of cheque about five months before, the learned court below could have entertained the complaint and taken cognizance of offence under Section 138 of the N.I. Act as against the petitioner? More or less a similar question was before the Supreme Court in M/S. SICAGEN INDIA LTD. VERSUS MAHINDRA VADINENI ORS. [ 2019 (2) TMI 545 - SUPREME COURT ], wherein, it has been held that even a second statutory notice after re-representation of cheque is maintainable in law. In fact, the issue before the Supreme Court was, whether, a criminal complaint based on a subsequent or successive statutory notice filed under Section 138 of the N.I. Act is maintainable. In the decision, the Supreme Court observed that such an issue is no longer res integra and referred to one of its earlier judgment in SADANANDAN BHADRAN VERSUS MADHAVAN SUNIL KUMAR [ 1998 (8) TMI 541 - SUPREME COURT ], where it was held to the extent that second and successive presentation of a cheque is legally permissible as long as it is within six months or validity of the cheque, whichever is earlier. The Court in the present case finds that OP No.1 did not send any statutory notice after the cheque was dishonoured in the month of May, 2010 but once again presented it within the validity period of the cheque and thereafter, issued the statutory notice as required under law and under such circumstances, it cannot be said that the complaint is invalid. With the above conclusion, the Court holds that the contention of the petitioner vis- -vis maintainability of the complaint on the ground raised is misconceived and therefore, cannot be sustained. The other grounds which have been raised challenging the filing of criminal complaint need no discussion which may be agitated by the petitioner during and in course of trial as a means of defence before the learned court below. Application dismissed.

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