TMI Tax Updates - e-Newsletter
April 17, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax

Articles

• Positive decision of Apex Court on Corporate Guarantee under Service Tax regime has negative implications under GST !
• GSTN’S REPORT CARD @ 5 YEARS
• No ITC to purchasing dealer in the absence of proof of genuine transactions and physical movement of goods
• Important Statutory Due dates for OPC Annual Filing for FY 2022-23
• Amendments w.r.t. GST in the Finance Bill, 2023 passed by Lok Sabha

News

• RBI releases Draft Circular on Fair Lending Practice - Penal Charges in Loan Accounts

  ---

Highlights / Catch Notes

GST

• Liability of interest - allegation of undue or excess claim of ITC - By virtue of the Amendment in 2022 that has retrospective effect from 2017, it is only when ITC has been wrongly availed and utilized with a revenue impact, that interest liability is attracted. In the present case, the original error of non-maintenance of ECL is admittedly attributable to the department. Moreover, the petitioner has not utilized the credit. - Liability of interest on ITC, Education Cess and Higher Education Cess, is not in conformity with law and is set aside - HC
  Visit to Get Source

  ---

• Exemption from Service Tax - Services by way of Renting the Warehouse to store Fruits & Vegetables - the applicant has rented the warehouse to the Lessee for storing agricultural produce for trading activity, whereas in the ruling relied by the applicant, the applicant is rendering service of storing and warehousing of agricultural produce - Renting Warehouse to store Agricultural Produce covered under the entry 'Rental or leasing services involving own or leased non-residential property' - Liable to GST @18% - AAR
  Visit to Get Source

  ---

• Doctrine of mutuality - Benefit of exemption from GST - As per the provisions of GST Law, the applicant being a registered society, providing services to their members, who are distinct from the applicant and registered as member on payment of any amount towards subscription/contribution, is a supply of service and is accordingly taxable except subscription received from natural persons who are farmers simpliciter and the annual subscription for all membership is up to Rs. 1000/-. - AAR
  Visit to Get Source

  ---

Income Tax

• Allowable expenditure - Provision for diminution in the value of investments - merely because loss was debited under the nomenclature “provision” did not alter the basic character of the transaction and the loss incurred due to non recoverability of the amount advanced in the ordinary course of business could not have been disallowed by the assessing officer. - HC
  Visit to Get Source

  ---

• Validity of Notices / orders without Document Identification Number (DIN) - The object and purpose of the issuance of the 2019 Circular, inter alia, was to create an audit trail. Therefore, the communication relating to assessments, appeals, orders, etcetera which find mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular. - HC
  Visit to Get Source

  ---

• Nature of rental income - Income from House Property or Business income - Deemed owner - assessee was entitled to have access to operate, manage and maintain the Licensed Space at the Specified Area during the License Period - No semblance of any characteristics of transactions for which Section 53A of the Act is applicable and there is no question of assessee being a deemed owner, so as to account for rent as income from property and not business income. - AT
  Visit to Get Source

  ---

• Amount received after cessation of employment with the employer company - profits in lieu of salary - when the employer itself stated that the payment has been made voluntarily by them out of appreciation for the employee thus falls outside the rigours of section 17(3)(iii) of the Act. - AT
  Visit to Get Source

  ---

• Taxability of excess money received by the assessee over and above the cost of acquisition/WDV - Provisions of section 51 would come into play in these circumstances as it specifically covers this type of transaction, once the transaction had been held to be genuine, there is no question of the transaction being without any consideration so as to invoke provisions of section 56(2)(vi) of the Act. - AT
  Visit to Get Source

  ---

• Undisclosed income - Addition of gift received by assessee from his mother - As per the affidavit, Mother is having PAN, but, had not filed the return of income as the income was less than the taxable limit. However, being an old lady, if she has gifted some amount to her son for Europe tour, then, the same cannot be disputed or disregarded on the basis of surmises and conjectures. - AT
  Visit to Get Source

  ---

• TP Adjustment - ALP of interest on NDC’s [Non-convertible debentures] - NCD issued to associated enterprise is unsecured and loans taken from third parties are secured loans, hence, adjustment for this difference should be made as directed by the DRP in AY 2015- 16. Therefore, we remand the matter back to the TPO to verify if the currency of the internal comparables and NCD issued to associated enterprise is same - AT
  Visit to Get Source

  ---

• Investment in purchase of property - addition on basis of valuation report of DVO u/s 142A - The provisions of section 142A of the Act are applicable only when the assessee has made investment in construction. In the present case, the assessee purchased a ready built house and therefore the provisions of section 142A of the Act are not attracted to the facts and circumstances of the present case. - AT
  Visit to Get Source

  ---

• Disallowance of depreciation and expenses on Sports Car - personal v/s business expenditure - it could not be stated that when the vehicles were used by the directors 'even if they were personally used by the directors', the vehicles were personally used by the company, because a limited company by its very nature cannot have any 'personal use'. The limited company is an inanimate person and there cannot be anything personal about such an entity. - AT
  Visit to Get Source

  ---

IBC

• Admission of Section 7 application - Financial Debt - once the Debt and Default are proved, to its satisfaction - A moonshine or an illusory defence, cannot be put forward by a party, and the same can be brushed assigned by an Adjudicating Authority/ Tribunal in a given case, and even the term claim,(as per Section 3(6) of the code) points out a right to payment, despite the fact the same is controverted/disputed. - AT
  Visit to Get Source

  ---

Service Tax

• Classification of services - manpower recruitment or supply agency service, or not - The contract is relating to the handling and transportation of coal. - The work that was given to the appellant was for unloading, transportation and stacking of coal from the railway wagons to the coal yard and the documents available in the appeal indicate that there is no agreement for supply of manpower to the recipient of service - The services rendered by the appellant cannot be classified under the category of “manpower recruitment or supply agency” service - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2023 (4) TMI 590
  Validity of Clause (iii) of the impugned Notification No. 16/2017 - benefits of exemption from levy of GST on passenger transportation services by a non-air-conditioned stage carriage has been denied when such services/supply are availed through ECOs - supplies continue to be exempted when booking is made by consumers directly through bus operators (offline/online) or offline agents - violative of Articles 19(1)(g) and 21 of the Constitution - whether the impugned Notifications arbitrarily create a classification between the ECOs and the individual service providers solely based on the mode of booking availed by the consumer for availing the said service? - discrimination against the ECOs by denying the ECOs the benefit of exemption available to the individual service providers under the parent Notification. HELD THAT:- The Supreme Court in R.K Garg [ 1981 (11) TMI 57 - SUPREME COURT ] held that the question which the Constitutional Court must address to itself is whether the classification made by the statute satisfies the test of real and substantial distinction or is it arbitrary and irrational and hence violative of the equal protection clause in Article 14 of the Constitution. The ECOs for the purpose of Section 9(5) and Section 52 of the Act of 2017 are entities, which are liable to collect and pay tax on the supplies made through it by other individual suppliers. Thus, Sections 9(5) and 52 of the Act of 2017 statutorily recognises the ECO as a class distinct from the individual supplier registered with the ECO - The ECOs under Section 9(5) are liable to pay tax for the services provided by individual suppliers through it, even when the said individual supplier is otherwise exempt from taxation under Section 22(1) read with 23(2) of the Act of 2017. Section 52 makes the ECOs liable to collect the amount of tax collected at source from suppliers, who have made supplies through the ECO. To enforce this obligation of the ECO, the individual supplier who is otherwise exempt from registration under Section 23(2) is required to obtain the compulsory registration under Section 24(ix) to enable the ECO to comply with the said obligation. This interplay of Section 24(ix) and 52 of the Act of 2017 also evidences the distinction between the supply of service through the e-platform of the ECO and the individual supplier, as a separate class of persons under the statute - A conjoint reading of the Sections 22(1), 23(2) and 24(ix) with the Notifications Nos. 17/2017 and 23/2017 shows that it is the underlying scheme of the Act that even when the individual supplier is per se exempt from levy of GST under Section 23(2), however, if the service is provided by the same said individual supplier through an ECO, the said services are exigible to levy of GST under Sections 9(5) and 52 of the Act of 2017 respectively. The services of radio taxi, motor cabs, maxi cabs and motor cycles are also available through the Uber App of Petitioner 1 and similarly, GST is being levied under Section 9(5) of the Act of 2017 on the fare of these cabs when booked through its App. Similarly, Petitioner 1 has not objected to the said levy of GST being discriminatory. The effect of the impugned Notifications in levying GST on the fare of an auto-rickshaw ride booked through the Uber App is identical and not discriminatory. ECOs seeking parity with the individual auto-rickshaw drivers and bus operators and therefore seek equality amongst unequals - HELD THAT:- This Court is of the opinion that the classification of the ECOs like Petitioner 1 and 3, as a class of service providers, which are separate and distinct from the individual supplier is, therefore, statutorily classified and recognised in the provisions of the Act of 2017 and more specifically in Sections 9(5) and 52 of the Act of 2017 - In view of the statutory recognition in the Act of 2017 that the ECOs are a distinct category, the submission of the Petitioner 1 and 3 that an ECO is necessary entitled to all the exemptions, which are available to an individual service provider is incorrect. Hence, this Court is of the view that the impugned Notifications are not ultra vires to Sections 9(5) of the Act of 2017. Classification has a rational nexus with the object sought to be achieved by the Act of 2017 - HELD THAT:- This Court is of the view that the object which has to be borne in mind for determining validity of the classification, which is the subject matter of challenge in the present petition is the objective of the GST law. The constitutional scheme of GST has been looked into by the Supreme Court, in UNION OF INDIA ORS. VERSUS VKC FOOTSTEPS INDIA PVT LTD. [ 2021 (9) TMI 626 - SUPREME COURT ], wherein it has been held that The proposed Central and State goods and services tax will be levied on all transactions involving supply of goods and services, except those which are kept out of the purview of the goods and services tax - thus, the classification between ECO and the individual service provider has a rational nexus with the object sought to be achieved by the Act of 2017. The impugned Notifications does not result in an artificial discrimination and classification based on the mode of booking - HELD THAT:- Petitioner 1 and 3 are not acting as agents of the auto-rickshaw drivers and the bus-operators. The ECOs charge commission to the registered driver partners and the bus operators for providing digital platform to connect with the potential consumers. This is in addition to the convenience charge, the ECOs collect from the consumer - the ECOs are an independent supplier of service to the consumer. And, the service provided by the individual supplier is only one facet of the bundle of services assured by the ECOs to the consumer booking through it. Hence, the impugned Notifications do not result in discrimination on the basis of the mode of booking - The Petitioner 1, 2 and 3 cannot claim exemption from taxation as a vested right. The Respondents are well within their power to withdraw the exemption granted previously under the unamended parent Notification - the challenge of the Petitioner 1, 2 and 3 to the impugned Notifications, cannot be accepted on the ground that they have a continuing right to claim exemption along with the individual suppliers - This Court is of the opinion that if Respondents have decided to withdraw the exemption from this distinct category of consumer who opts to use the ECO for making bookings, the same is well within their legislative purview. Since, the Petitioner 1, 2 and 3 have failed to prove that they are similarly placed with the individual suppliers to whom the exemption have already been granted, this Court is of the opinion that the Respondents are well within their purview to deny the exemption to the ECOs like the Petitioner 1 and 3 in view of the impugned Notifications. Instances of levying tax on other transportations facilitated through ECOs - HELD THAT:- This Court is satisfied that the Respondents have sufficiently explained that since the services at categories a to d are those which are provided by the sovereign with an element of public welfare and subsidised rates, the decision to not levy tax on bookings made through ECO for the said services is based on public interest. The taxing event which attracts the levy of GST - HELD THAT:- The scheme of the statute shows that Respondents are entitled to exclude a class of suppliers from the levy of tax under Sections 11, 22 and 23 of the Act of 2017 while the service or the goods itself may continue to be exigible to tax - The issuance of the impugned Notifications by the Respondents evidences that the service of transportation by mode of auto rickshaw and non-air-conditioned stage carriages when availed through ECOs has been made exigible to tax with effect from 01.01.2022. Even in the case of the ECO, though the supply of service of transportation through the auto-rickshaw or the bus continues to be provided by an individual supplier, the said supply of service when provided through the ECO has been made exigible to tax under Section 9(1) read with Section 9(5) of the Act as a taxable event under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 read with the impugned Notifications. The locus of the Petitioner - HELD THAT:- The Respondents have raised an objection that Petitioner 2 which is a union has no locus to maintain the present petition. It is stated that since the withdrawal of the exemption effects the consumer using the auto rickshaw and since no consumer has objected to the said levy, the present petition is not maintainable at the behest of the Union. In this regard, reliance has been placed on a judgment of a coordinate Bench of this Court in Sitaram Mehto [ 2012 (9) TMI 1234 - DELHI HIGH COURT ] - the Respondents have also, on similar grounds, raised an objection that Petitioner 1 and 3 ECOs are not entitled to maintain the present petition since the levy has been made on the consumer and is payable by the rider. The conclusions drawn by this Court are as under: a) the Clauses (iii) and (iv) of Notification No. 16/2021- Central Tax (Rate) and Clauses 1(i) and 2(i) of Notification No. 17/2021- Central Tax (Rate), both dated 18.11.2021 are not violative of Articles 14, 19(1)(g) and 21 of the Constitution; b) the impugned Notifications do not create an unreasonable classification on the basis of the mode of booking availed by the consumers; c) the Respondents are empowered to issue the impugned Notifications under Section 9(5) and 11 of the Act of 2017 and we are, therefore, unable to accept the challenge to the constitutional validity of the said notifications. Application disposed off.

  ---

• 2023 (4) TMI 589
  Levy of IGST alongwith interest and penalty - petitioner had already paid IGST at the time of release of imported goods - violation of principles of natural justice - HELD THAT:- There are no fault with the impugned order. The impugned order dated 27.02.2023 only indicates that along with the books of accounts which have been submitted for the purpose of reconsideration of the assessment made, the petitioner has not enclosed any reply as required. Further, the petitioner has also stated that he has not submitted any suitable explanation to the show-cause notice. Without expressing any opinion on merits, the present writ petition is disposed of directing the petitioner to submit suitable reply and any other document and assist the respondent authorities in order to complete the assessment as required under law - Petition is disposed off.

  ---

• 2023 (4) TMI 588
  Cancellation of GST registration of petitioner - grant of amnesty scheme - time limitation - HELD THAT:- Since the order of cancellation in this case is 14.09.2022, the scheme will be applicable to the petitioner subject to satisfaction of all conditions set out thereunder. Hence, and rightly learned counsel for the petitioner prefers to approach the authority seeking Amnesty. The writ petition is closed.

  ---

• 2023 (4) TMI 587
  Cancellation of GST registration of petitioner - non-reversal of disputed input tax credit - violation of principles of natural justice - HELD THAT:- It is obvious that at the first instance, the petitioner was granted four days to file the documents, and on the second instance, when the petitioner appeared before the first respondent on 09.11.2022 after the Show Cause Notice dated 01.11.2022, the petitioner is permitted time to produce documents. However there is nothing on record to indicate that any date was specified before which the petitioner should have furnished the documents to show cause against cancellation. The petitioner relies upon business history of over twenty one years with good business practices and a set of propositions to show cause against cancellation of the GST registration. In the circumstances of the case, the lack of opportunity cannot be disputed and the petitioner's bonafides could also be discerned. Hence, this Court is of the view that the petition must be preferred in part quashing the impugned order of cancellation of GST registration restoring the proceedings for reconsideration by the first respondent. This Court must also observe that all contentions are left open to be considered by the first respondent strictly in accordance with law. The petition is allowed in part quashing the impugned order of cancellation of GST registration dated 08.12.2022 [Annexure-D] restoring the proceedings for reconsideration by the first respondent.

  ---

• 2023 (4) TMI 586
  Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal (for which petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act) - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S.O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Reliance placed in the case of ANGEL ENGICON PRIVATE LIMITED VERSUS STATE OF BIHAR, ASSISTANT COMMISSIONER OF STATE TAX [ 2023 (3) TMI 879 - PATNA HIGH COURT ] where it was held that the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal. In the instant case, this Court is of the opinion, that equities are required to be balanced. In the instant case, non-constitution of the Appellate Tribunal causing deprivation to the petitioner s statutory right to appeal under Section 112(8)(9) has to be viewed in the background of the fact that at least the amount, as contemplated under Section 112(8), i.e., 20 percent of the remaining tax in dispute is required to be deposited by the petitioner with due diligence, if he is genuinely desirous of availaing the remedy of appeal, which, in the opinion of this Court, would be within four(4) weeks. Application disposed off.

  ---

• 2023 (4) TMI 585
  Carrying forward of unutilized Credit - migration to GST regime from Service Tax regime - though the credit had been transitioned, it had not found place in the Electronic Credit Ledger (ECL) - Liability of interest - allegation of undue or excess claim of ITC - HELD THAT:- The ECL is an electronic document which reflects the credit available to a particular assessee and this document falls within the domain of the GST department. There is no explanation for why the transitioned credit did not find place in the ECL. Be that as it may and seeing as the credit was unavailable in the ECL, the petitioner reflected the same as available ITC in its retention and in Form GSTR-3B return - the petitioner cannot be faulted for the same, since transition has been sought in line with the procedures set out under the Act and Rules. The flaw had been occasioned in the maintenance of the ECL by the revenue. Thus, it was quite justified for the petitioner to ensure, by all legitimate methods possible, that the credit available was presumed for utilization, as and when required. Disallowance relating to slow moving stock - HELD THAT:- The petitioner does not pursue the challenge in this writ petition and seeks liberty to challenge the same by way of statutory appeal. Seeing as this writ petition has been instituted on 11.12.2020 within 30 days from the date of receipt of the impugned order, there is no bar qua limitation and hence, the petitioner is permitted to challenge that portion of the impugned order within a period of 30 days from today without reference to the limitation, but subject to compliance with all other statutory conditions. Liability of interest - allegation of undue or excess claim of ITC - Reversal of ITC - HELD THAT:- By virtue of the Amendment in 2022 that has retrospective effect from 2017, it is only when ITC has been wrongly availed and utilized with a revenue impact, that interest liability is attracted. In the present case, the original error of non-maintenance of ECL is admittedly attributable to the department. Moreover, the petitioner has not utilized the credit. There is no liability to interest, the impugned order to the extent to which it levies interest under Section 50(3) of the CGST, on ITC, Education Cess and Higher Education Cess, is not in conformity with law and is set aside - Petition allowed.

  ---

• 2023 (4) TMI 584
  Cancellation of GST registration of petitioner - failure to file Goods and Services Tax monthly returns for a continuous period of six months - HELD THAT:- This Court has been consistently following the directions issued in the case of Tvl. Suguna Cutpiece Vs Appellate Deputy Commissioner (ST) (GST) and Others [ 2022 (2) TMI 933 - MADRAS HIGH COURT ] and the Revenue/Department has also accepted the said view as evident from the fact that no appeal has been filed in any of the matters, this Court intends to follow the above order of this Court. This Court feels that the benefit extended by this Court in the earlier orders referred to above in Suguna Cutpiece Centre's case, may be extended to the Petitioner. Petition disposed off.

  ---

• 2023 (4) TMI 583
  Exemption from Service Tax - Services by way of Renting the Warehouse to store Fruits Vegetables - whether renting warehouse to Lessee to store agricultural produce by the Lessee constitute supply of service in terms of Section 7 the Act, if so, whether it is classifiable as loading, unloading, packing, storage or warehousing of agricultural produce with Nil rate of GST vide Sl. No. 54 (e) of Notification No. 11/2017 C.T. (Rate) dated 28.06.2017, if not, its GST rate and SAC? - HELD THAT:- Perusal of the recitals of Lease Agreement dated 14.03.2022 between the applicant and the Lessee reveals that Land and building specified in the Schedule 'A' Property has been allowed to be used for buying and selling of fresh fruits, vegetables and related purpose and for any lawful businesses without any restriction and the Lessee is further entitled to assign under lease or sub-lease or grant leave or license of the schedule premises or any part thereof. The applicant has rented the immovable property to the Lessee and the Lessee in turn have used the said property for trading activity in fruits and vegetables - leasing of immovable property by the applicant is an input service for the trading activity of the Lessee. The activities of the applicant and Lessee is not covered under any of the activities specified under entries 24 (e) of Notification No. 11/2017 C.T (Rate) and 54 (e) of Notification No. 12/2017 C.T (Rate) dated 28.06.2017 - In the present application, the applicant has rented the warehouse to the Lessee for storing agricultural produce for trading activity, whereas in the ruling relied by the applicant, the applicant is rendering service of storing and warehousing of agricultural produce covered under entry No.54 (e) of Notification No. 12/2017 C.T (Rate) dated 28.06.2017.

  ---

• 2023 (4) TMI 582
  Doctrine of mutuality - Benefit of Exemption from GST - Notification No. 14/2018 - Central Tax dated 26.07.2018 - non-profit association registered under any law engaged for the welfare of farmers vide serial No. 77A, Heading 9995 - applicant-association a person distinct from the member or a related person - Section 7(1) (a), (c) or (d) of the Central Goods and Services Tax Act, 2017 - whether the applicant is eligible to avail the benefit of Notification No. 14/2018 CT dated 26.07.2018 as a registered non-profit association engaged for the welfare of farmers under Serial number 77A and whether there is a transaction between the applicant association and its members which is covered under Section 7(1) (a), (c) or (d) of the GST Act, 2017? - HELD THAT:- In order to tax, the activity must be a supply of either goods or service or both end the supply is to be made for a consideration to a person in the course of furtherance of business, i.e., there should be a supply of goods or service, recipient, supplier, consideration, in the course or for furtherance of business - In the instant case, it is evident from the submissions of the applicant that their activities are squarely covered under scope of supply and their contention that applicant association is neither a person distinct from the member nor a related person is laid to rest by retrospective amendment of Section 7 by insertion of clause (aa) to sub-section (1) and explanation with effect from 01.07.2017, which states that the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. As per the provisions of GST Law, the applicant being a registered society, providing services to their members, who are distinct from the applicant and registered as member on payment of any amount towards subscription/contribution, is a supply of service and is accordingly taxable except subscription received from natural persons who are farmers simpliciter and the annual subscription for all membership is up to Rs. 1000/-.

  ---

• Income Tax

• 2023 (4) TMI 581
  Addition of prior period expenses - assessee is following mercantile systems of accounting and as such the prior period expenses cannot be allowed during the assessment year in question - Tribunal allowed it as an allowable expense in the instant assessment year - HELD THAT:- A s consistent view is required to be adopted in the absence of any material placed by the revenue before the required tribunal to show that there was any distinguishing feature in the assessment year under consideration to make a departure from the earlier view. As submitted that merely because the assessee was state undertaking, it cannot be stated that it cannot do any wrong and the learned tribunal did not examine the facts of the case. We do not agree with the said submission as we have found that both the CIT(A) as well as the tribunal has examined the facts. In fact, the examination of facts by the CIT(A) is more elaborate and more importantly as noted by the tribunal, the revenue was not able to place any material to disprove that the assessee explanation furnished before the authorities in support of its claim that the liability to pay the expenses charged under the head prior period crystallized during the financial year 2011-2012. Thus, we find that no substantial question of law arises for consideration under the head prior period expenses. Provision for diminution in the value of investments - AO held that by no such imagination can provisions be treated as allowable expenditure and the claim of the assessee is absurd and accordingly disallowed the same - tribunal allowed the claim - HELD THAT:- Since transferee was a subsidiary promoted for furtherance of the assessee s freight container business and in furtherance of such business the loan were advanced from which interest income was earned and such interest income was assessed under the head business . Further under compelling circumstances as by the direction of the RBI such loans were converted into preference shares which consequently eroded in value because of the law sustained by the subsidiary. Therefore, the tribunal held that merely because loss was debited under the nomenclature provision did not alter the basic character of the transaction and the loss incurred due to non recoverability of the amount advanced in the ordinary course of business could not have been disallowed by the assessing officer. With regard to the objection raised by the revenue to the relief granted by the CIT(A) while computation of book profit under Section 115JB, the tribunal rejected such objection raised by the revenue by rightly placing reliance on the decision of Torrent Private Limited [ 2019 (6) TMI 709 - GUJARAT HIGH COURT] as held the amount though bearing the nomenclature of provision for diminution of value of investment, having been actually written off, cannot be added to the book profit under section 115JB(2)(i) - no substantial question of law arises for consideration on the said issue.

  ---

• 2023 (4) TMI 580
  Block assessment - Addition in hands of assessee on protective purpose - linkage of the assessee s undisclosed income as disclosed in the block return and the transactions in the bank account of PEL and KEW - as per Tribunal AO in the original block assessment made in the year 1998 has made substantive addition in the hands of Shaw Wallace and since the case of Shaw Wallace has been remanded back to the assessing officer for reframing the block assessment and other assessments, the addition made on the assessee was on protective basis - HELD THAT:- Order passed by the tribunal elaborate exercise has been done by the tribunal to examine the details produced by the assessee to return a finding of fact that the money has been transferred to the two entities are from the bank accounts of the two said persons. Thus, the tribunal rightly concluded that the protective assessment was not warranted in the hands of the assessee because the assessee has been able to discharge the onus for showing the nature and source of credit entries in the bank account of KEW, PEL as well as, in the bank accounts of N.C. Jain and P.L. Mittal which in turn are sourced from Shaw Wallace and its subsidiaries. As evident that the source of money for Shaw Wallace and subsidiaries was in turn from ICDS which promoted the assessing officer to disallow in the hands of Shaw Wallace interest expenditure to the tune of Rs. 67.65 crores and therefore the addition to the tune of Rs. 12.41 crores made in respect of credit entities in the bank accounts of the two entries are unjustified and rightly directed the same to be deleted. Thus, we find that the tribunal after verifying and examining the factual position has granted relief to the assessee and the revenue has failed to make out a case to set aside the order passed by the tribunal. Substantial questions of law are answered against the revenue.

  ---

• 2023 (4) TMI 579
  Validity of Notices / orders without DIN - Communications emanating from the revenue - CBDT by Circular no. 19/2019 dated 14.08.2019 sets out the manner in which Document Identification Number [ DIN ] is required to be generated while communicating a notice, order, summon, letter and any correspondence issued by the Income Tax Department, i.e., the Revenue - substantial question of law - as mandated no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etcetera, to the assessee or any other person, on or after 01.10.2019 unless it is allotted a computer-generated DIN - whenever communications are issued in the circumstances alluded to in paragraph 3(i) to (v), i.e., are issued manually without a DIN, they require to be backed by the approval of the Chief Commissioner/Director General - As per revenue failure to allocate DIN was a mere mistake as corrected by taking recourse to Section 292B of the Income Tax Act HELD THAT:- The argument advanced on behalf the appellant/revenue, that recourse can be taken to Section 292B of the Act, is untenable, having regard to the phraseology used in paragraph 4 of the 2019 Circular. The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an audit trail. Therefore, the communication relating to assessments, appeals, orders, etcetera which find mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular. The logical sequitur of the aforesaid reasoning can only be that the Tribunal s decision to not sustain the final assessment order dated 15.10.2019, is a view that cannot call for our interference. As noted above, in the instant appeal all that we are required to consider is whether any substantial question of law arises for consideration, which, inter alia, would require the Court to examine whether the issue is debatable or if there is an alternate view possible. Given the language employed in the 2019 Circular, there is neither any scope for debate not is there any leeway for an alternate view. We find no error in the view adopted by the Tribunal. The Tribunal has simply applied the provisions of the 2019 Circular and thus, reached a conclusion in favour of the respondent/assessee. Accordingly, the appeal filed by the appellant/revenue is closed.

  ---

• 2023 (4) TMI 578
  TP Adjustment - MAM - Tribunal had remanded the matter to the TPO as to whether the other method would be the most appropriate method, as was contended by the respondent/assessee? - For several years assessee had been using TNMM for benchmarking its transactions - Out of the eighteen (18) transactions, was agreed that sixteen (16) transactions will be benchmarked by using the other method while the remaining two (2) transactions will be benchmarked by using Transaction Net Margin Method (TNMM) and Resale Price Method - HELD THAT:- According to us, the approach adopted by the Tribunal is wholesome. A perusal of the impugned order shows that the Tribunal was conscious of the fact that the assessee could enter into the APA with CBDT only from AY 2013-14. Thus, having regard to this limiting factor and given the complexity of the transaction which the respondent/assessee is involved in, the Tribunal thought it fit that the APA could be used to benchmark the transactions even for the AY in issue. As correctly pointed out by Respondent this direction is ring-fenced with the caveat that the TPO will have to determine as to whether the FAR in the given AY is the same as those which are covered in the APA.We may also note that the Tribunal has cited several judgments of various Benches of the Tribunal in adopting this approach - we are of the view that no error has been committed by the Tribunal concerning either in the application of law or on facts.

  ---

• 2023 (4) TMI 577
  Estimation of income - bogus purchases - HELD THAT:- Assessee has failed to prove the genuineness of the purchases made from these entities. Revenue has not doubted the sales declared by the assessee. Further, it cannot be doubted that without the purchase of material, the manufacturing activity of the assessee s concern cannot be carried out. Therefore, it appears to be a case of bogus bills arranged from the aforesaid entity and material purchased from somewhere else at a lower cost. Entire bogus purchases cannot be added in such a case. We are of the considered view that a reasonable disallowance of the purchases would meet the possibility of revenue leakage - no infirmity in the addition of 12.5% of disputed purchases as sustained by the learned CIT(A). We find that the same is also in line with the judgment of the Hon ble jurisdictional High Court in PCIT vs Paramshakti Distributors Ltd. [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] - Appeal by the Revenue is dismissed.

  ---

• 2023 (4) TMI 576
  Addition u/s 68 - amount introduced under the head unsecured loan from various parties - CIT- A deleted the addition - HELD THAT:- As seen from the assessment order and the appellate order that the assessee has given confirmation details namely ledger account, contra account, ITR details and creditors compliance u/s. 131 issued by the A.O. Still not satisfied with the information submitted, only on the ground that the Returned income of the creditors are not commensurate to the loans disbursed by them. Therefore the A.O. made the addition u/s. 68 - A.O. also has not given due credit to the TDS made by the assessee on the interest payment as well as the repayment of the above loans by the assessee during the assessment year 2016-17. It is well settled principle of law in the case of CIT vs. Ranchhod Jivabhai Nakhava [ 2012 (5) TMI 186 - GUJARAT HIGH COURT] that where lenders of assessee are income-tax assessees whose PAN have been disclosed, Assessing Officer cannot ask assessee to further prove genuineness of transactions without first verifying such fact from income-tax returns of the lenders. Also when the loan is repaid by the assessee in the subsequent assessment years, the Hon ble Jurisdictional High Court in the case of CIT vs. Ayachi Chandrashekhar Narsangiji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. Appeal of assessee allowed.

  ---

• 2023 (4) TMI 575
  Income from other sources - Valuation of purchase of agricultural lands - difference between the purchase consideration and Stamp Duty Valuation exceed to be added as income u/s. 56(2)(vii)(b) - excess agricultural income - HELD THAT:- CIT(A) while giving partial relief to the assessee has considered the difference between the declared value determined by the assessee and estimated value determined by the DVO is relating to two survey numbers only, wherein there is different in value and thereby given relief to the assessee. Since the above agricultural land is one lot of large extent of land purchased by the assessee along with his brother as co-owners, once the entire transactions is to be taken as one transaction then the difference between the declared value by the assessee and that is determined by the DVO, which is less than 5% only. Therefore taking into account, the totality of the transactions made by the assessee, we find that the invocation of Section 56(2)(vii)(b) does not arise in this case. Therefore we direct to delete the entire addition made by the AO u/s. 56(2)(vii)(b) of the Act. Decided in favour assessee.

  ---

• 2023 (4) TMI 574
  Revision u/s 263 by CIT - non-invocation by AO of Section 56(2)(vii)(b) to the transaction of immovable property, being land, purchased by the assessee as a co-owner along with other two persons - contention being that the property was purchased for a sum far below its stamp duty value and thus warranted the addition to be made to the income of the assessee of the amount short paid as compared to its stamp duty value, as per the provisions of Section 56(2)(vii)(b) - HELD THAT:- We are not convinced with the contention of the learned Counsel for the assessee. The inquiry of the AO was only a cursory inquiry calling for facts relating to the purchase of immoveable property by the assessee during the year. The only query raised by AO was asking for details of properties transacted into by the assessee, to which the assessee had supplied the copies of the agreements or deeds entered into. No other question or query was raised by the AO. No query relating to the invocation of Section 56(2)(vii)(b) of the Act was raised by the AO in the present case. Therefore, it cannot be said that the AO had examined the issue of purchase of immoveable property and taken a plausible view by making no addition u/s 56(2)(vii)(b) when the issue was not even examined by the AO. Therefore this contention of the learned Counsel for the assessee is rejected. The assessee has been unable to justify his contention that no addition was warranted in the facts of the present case under Section 56(2)(vii)(b) - This contention raised by the learned Counsel for the assessee is, therefore, rejected. As per the facts noted by the Ld. PCIT in his order, the assessment in the present case was a limited scrutiny assessment for the purpose of examining the issue of cash deposits and purchase of property. Vis- -vis the issue of purchase of property, PCIT found the assessment order to be erroneous for the reason that the AO having not examined the applicability and invocation of the provisions of Section 56(2)(vii)(b) - Therefore, it cannot be said that Ld. PCIT had directed the entire assessment to be framed afresh or that the entire assessment was open before the AO even in the restored proceedings. AO in any case, could not have exceeded the limited brief being a limited scrutiny assessment and, as we have noted, the order of the Ld. PCIT was very clear with regard to examination of the issue of invocation of Section 56(2)(vii)(b) . Whether PCIT had directed the Assessing Officer to conduct further inquiry or to examine the issue in the light of provisions of Section 56(2)(vii)(b) of the Act and, therefore, he himself was not sure about the applicability of the same? - In the present case, the Ld. PCIT has brought out the fact that the Assessing officer was required to examine the issue of purchase of property while framing the assessment in the present case as per the limited scrutiny norms; that the details of purchase of property before him showed that the assessee had purchased the property at a very low price as compared to its stamp duty value. The Assessing Officer had clearly not examined the applicability of section 56(2) (vii) (b)in the light of the above facts and therefore, it was a clear case of error in the order of the Assessing Officer. It is not the case of the assessee that the stamp duty value taken by the Ld. PCIT was incorrect. Therefore, based on the facts before him, the Ld. PCIT had rightly found the non-examination of the issue of purchase of land by the assessee in the light of provisions of Section 56(2)(vii)(b) of the Act was an error in the order of the Assessing Officer causing prejudice to the Revenue and accordingly had set aside the assessment order to the Assessing Officer to examine this aspect after giving due opportunity of hearing to the assessee and in accordance with law. It cannot be said in the light of these facts that the Ld. PCIT himself was not convinced whether the provisions of Section 56(2)(vii)(b) of the Act were applicable in the facts of the present case. Decided against assessee.

  ---

• 2023 (4) TMI 573
  Nature of rental income - Income from House Property or Business income - Deemed owner - assessee was entitled to have access to operate, manage and maintain the Licensed Space at the Specified Area during the License Period - Refernce to section 269UA(f)(i) - purchase by central government of immovable properties in certain cases of transfer - assessee filed its reply claiming that it is regular business of the assessee and it is consistently showing these rental receipt as income from business in earlier year also - HELD THAT:- As it comes up that primarily the fact of assessee being a licensee of bare shell structure inclusive of columns etc. is not disputed. Assessee has sub-licensed the commercial places to parties showing them as tenants. AO while invoking provisions of Section 269U (f)(i) of the Act read with section 53A of the Transfer of Property Act has concluded that the assessee is deemed owner for the purpose of Section 27(iii)(b) of the Act and therefore Section 22 of the Act making income from house property taxable is applicable. The bench is of considered opinion that Ld. AO has fallen in error in applying the aforesaid provisions of law while not following the previous year assessment. The first and foremost thing that comes up is that Section 53A of the Transfer of Property Act is applicable in regard to transfer of immovable property by way of registered document. The provision is made in regard to those transactions of immovable property where under an agreement to sell or any other contract wherein a part performance of the contract has occurred, though the title deed has not been registered, in that case, the transferor is departed from agitating his title to the property against the purchaser. The essential condition being the transferee should have taken possession of the property and should be ready and willing to perform his part of the contract. In case of transactions of the nature Build Operate Transfer (BOT), as in the case in hand an entity, which is usually government entity, enters into a build-operate-transfer (BOT) contract, by grant of a concession to a private company to finance, build, and operate a project. The concession given by DMRC to the assessee operating in the form of a license only. The company operates the project for a period of time with the goal of recouping its investment, then transfers control of the project back to the public entity. Thus, handing over of infrastructure facility/project by developer to Government/local authority/statutory body takes place after recoupment of developer's costs. Like in case in hand the bare shell structure inclusive of columns etc has been developed to be available to the tenant for commercial use. The building etc involved always belongs to the DMRC. No semblance of any characteristics of transactions for which Section 53A of the Act is applicable and there is no question of assessee being a deemed owner, so as to account for rent as income from property and not business income. The fact that leasing is one of the objects in the memorandum of association being not disputed and that in the A.Y. 2012-13 and 2013-14, AO had accepted the income from the BOT projects as business income only bolsters the findings in favor of the assessee. Thus, the Bench is of considered opinion the Ld. AO has fallen in error in considering the proceeds of license to be rental income. CIT(A) has rightly interfered and there is no error the impugned order. Appeal of Revenue is dismissed.

  ---

• 2023 (4) TMI 572
  Computation of capital gains on sale of land - Nature of land sold - assessee argued that the impugned land sold by the assessee along with other co-owners is an agricultural land which is situated beyond 8 kms from the limits of local municipality - HELD THAT:- CIT(A) has recorded categorical finding that the assessee could not file any evidence to prove that the impugned land sold by the assessee along with other co-owners is an agricultural land which does not come under the purview of capital gains. CIT(A) had discussed the issue in light of facts brought out by the AO and arguments advanced by the assessee and came to the conclusion that the remand report called for from the AO with respect to the claim of the assessee, the AO gave his findings that the impugned land is not an agricultural land. Assessee neither filed any evidences nor explained how said land is agricultural land which is outside the scope of capital gains tax. The findings of the facts recorded by the CIT(A) is uncontroverted. Assessee neither appeared nor filed any details. No error in the reasons given by the ld. CIT(A) to sustain computation of capital gains on sale of land and thus, we reject grounds taken by the assessee.

  ---

• 2023 (4) TMI 571
  Disallowance of exemption u/s.10(23C)(iiiad) vide order u/s.154 - Gross Receipts were above Rs.1 Crore during the year and hence exemption is not admissible - AR submitted that disallowance made by the AO u/s.10(23C)(iiiad) by clubbing corpus fund with other receipts is not justified - HELD THAT:- We are of the considered view that corpus fund received by the assessee with specific directions cannot be treated as receipt for the purpose of Sec.10(23C)(iiiad) and therefore, the total receipt of the assessee for the relevant assessment year was below the prescribed limit of Rs.1 Cr. for the purpose of exemption claimed under the provisions of section 10(23C)(iiiad) - Accordingly, the assessee s Trust was eligible for exemption u/s.10(23C)(iiiad) of the Act, even if no registration u/s.12AA was in existence or granted for the impugned assessment year, wherein receipt of the society working solely for educational purpose was below Rs.1 Cr. As in the present case, after a thoughtful consideration, we are of the opinion that the assessee trust was undeniably entitled for exemption u/s.10(23C)(iiiad) of the Act, for which, the mistake was apparent from the record of the assessee, which were already in possession with the authorities below. They have considered the corpus donation also as receipt of the assessee for the purpose of Sec.10(23C)(iiiad) of the Act, and denied exemption to the assessee. Therefore, we hold the orders of the Revenue authorities as unsustainable - Directing the AO to grant exemption u/s.10(23C)(iiiad) of the Act, to the assessee. Appeal of assessee allowed.

  ---

• 2023 (4) TMI 570
  Income from production and sale of mushrooms - 'agricultural income' or not? - Scope of definition of agricultural income u/s 2(1A) of the Income Tax Act, 1961 - HELD THAT:- As following the decision of ITAT, Special Bench in the case of DCIT vs M/s. Inventaa Industries Pvt Ltd [ 2018 (8) TMI 69 - ITAT HYDERABAD] we are of the considered view that cultivation and sale of white button mushroom is an agricultural activity and income derived from said activity comes under the head agricultural income, which is exempt from tax. CIT(A), after considering relevant facts has rightly deleted additions made by the AO towards income derived from cultivation and sale of white button mushroom and thus, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeal filed by the revenue.

  ---

• 2023 (4) TMI 569
  Amount received after cessation of employment with the employer company - profits in lieu of salary or not - assessee had received sum from his erstwhile company as ex-gratia and from this amount claimed partial u/s 10(10C) VRS compensation/termination of Service and balance remaining amount from ex-gratia taken as capital receipt - HELD THAT:- In the normal course, section 17(3)(iii) of the Act would apply but in this case, the letter which has been issued by the employer clearly stated that the payment of the amount has been made voluntarily to the assessee and is not the compensation. This letter has not been doubted by the department. Neither, the ld. A.O nor the NFAC conducted any independent inquiry regarding the veracity of this letter and none of the authorities have held this letter issued by the employer to the assessee as bogus. Without establishing the letter as non-genuine or without examining the sanctity of the payment made simply invoking the provisions of the Act for making addition is not appropriate for a quasi-judicial authority. Revenue should have verified and examined the genuineness of the letter which was produced by the assessee wherein the employer had stated that it is a voluntary payment made as per appreciation for the employee without entering into this exercise simply invoking the provision of the Act is not legally tenable and takes the colour of arbitrariness. D.R could not produce any documents/evidences on record to show that the payment received from the employer nor voluntary in nature or that the payment was coupled with some legal obligation on the part of the employer to pay to the employee. No such facts were produced before us. In this case, when the employer itself stated that the payment has been made voluntarily by them out of appreciation for the employee thus falls outside the rigours of section 17(3)(iii) of the Act. In view thereof, we set aside the order of the NFAC and direct the ld. A.O to delete the addition from the hands of the assessee. The grounds of appeal of the assessee are allowed.

  ---

• 2023 (4) TMI 568
  Income deemed to accrue or arise in India - income attributable to the permanent establishment as chargeable to tax in India - fixed place of business of the assessee in India - play out agreement - assessee submitted that that global sports business sold by the assessee, capital gain arising therefrom is not chargeable to tax in India - HELD THAT:- It is to be noted that ZEEL is carrying out play out facilities not only for the assessee but also for many other broadcasters. It is not for this year but for past several years, ZEEL is providing the service of play out station. During this year, undisputedly there is an agreement for payment of services of play out facilities. No doubt, the agreement was made on 19/4/2017, which is given effect to from April 2016 till 28th of February 2017 at total consideration of US$ 1,048,290. The claim rose before us is that this is merely an afterthought. AO has accepted that there is an agreement during the year for play out facilities. If for the earlier years, such facilities were not remunerated to the ZEEl, that does not make the service provider a fixed place permanent establishment of the assessee for this year, especially when, for this year, there is an agreement and remuneration for using such facilities are paid. For this year, facts clearly show that ZEEL is a service provider to the assessee. Non-payment, subsistence of any agreement for this facility in earlier years, is also not the case of the LD AO or the learned Dispute Resolution Panel. Further with respect to the claim of the learned departmental representative that if this play out facilities are not used by the assessee then from where the play out is being carried out. For this purpose the assessee has placed a lease agreement between the assessee and Gulf DTH FZ LLC which clearly says that there are two studio accommodation already available with the assessee of 3603 ft on the ground and Mezzanine Floor on rent in UAE for which the rent agreement is placed on record. Therefore, it is not the cases that play out facility is not available with the assessee other than at Noida. Further, it cannot be said that the play out facility is at the disposal of the assessee, no evidence exists for such test. It is also not challenged that none of the assessee's employees have travelled to India during the year. Therefore, it is apparent that from the play out stations, ZEEL is carrying out its own business and not the business of the assessee. Even otherwise production is separate from play out services availed from ZEEL and further transmission services have been availed from third-party service providers, which happens outside India and not at the facility of ZEEL. Tests while determining the existence of fixed place permanent establishment is the business connection test - On the facts, assessee has clearly stated that play out activities are minuscule part of operation of the sports broadcasting business of the assessee which is assigned to a group company i.e. ZEEL. For the services of the group company, there is an agreement through which the payments are made. Undoubtedly, manner of entering into that agreement is doubted by the learned special counsel, but the fact of payment and play out activities carried out from that fixed place cannot be denied. Unless, there are specific evidences led by the revenue that it was not the business of the service provider but the business of the assessee itself was carried on from those play out facilities, fixed place permanent establishment of assessee cannot be established. It is generally the obligation of the party who alleges to prove the allegation. The defendant of the allegation cannot be asked to prove negative. It is nobody's case that playout activities do not require human efforts. In this case, business is not of the assessee that is being carried out from that play out facilities , but it is used for carrying out the business of ZEEL. AO has further referred to book which dealt with the permanent establishment with respect to server, data centre, and computer Reservation Systems. The reliance on the same is also rejected for the same reason that it is not the business of the assessee that is being carried out from play out facilities but of the service provider ZEEL. In view of this, in our opinion assessee does not have a fixed place permanent establishment in India. We do not find that several connecting facts such as registration of trademarks in India, standalone capability of Business Purchase agreement coupled with share sale agreements of Taj TV India Pvt Ltd etc do have any impact on determination of Fixed Place permanent Establishment. Permanent establishment in respect of advertisement and distribution revenue - DRP confirmed so only because of the reason that the revenue has been continuously holding that the applicant has a permanent establishment in India - With respect to the advertisement agreement, though the subsequent amendments, gives an authority to enter into an agreement to an Indian entity on behalf of the assessee but those have not been habitually exercised by that entity. Therefore, the assessee does not have dependent agency permanent establishment in India. The Burden of proving that assessee has a Permanent Establishment in India and must suffer taxation from business generated from such PE is initially on the revenue as held by Assistant Director of Income tax V E Funds It Solutions Inc. [ 2017 (10) TMI 1011 - SUPREME COURT ] Now it cannot be grievance of the revenue that any information is withheld by the assessee. Thus, we hold that, assessee does not have either fixed place permanent establishment or dependent agent permanent establishment in India. Whether the assessee is entitled to the treaty benefits or not? - challenge to the treaty benefits of the assessee is only for the reason to bring the taxation of capital gains in India - The operation of the bank account of the assessee was also jointly, where the directors of the assessee company were one of the signatories. Merely because one Mr. Anil Maurya was authorized to sign the agreement cannot lead to the conclusion that business is run by the parent of the assessee, especially when, that person is a director of ATL media Ltd and properly authorized by the assessee to carry out the necessary agreements. It is also a fact that assessee is denied treaty benefit for the purpose of taxation of the capital gain on sale of an undertaking however on other issues of advertisement and subscription revenue are held to be taxable, Treaty provisions are applied. Even otherwise the learned dispute resolution panel has accepted the applicability of the Treaty provisions to the transaction of the sale of undertaking holding that it is covered by article 13 (2) of the Double Taxation Avoidance Agreement. Therefore, we reject the contentions of the AO that assessee should be denied the treaty benefit. Whether the provisions of article 13 (2) of the treaty is applicable or article 13(4) of the treaty should be applied? - As we have already held that assessee does not have a permanent establishment in India, either in the form of a fixed place permanent establishment or dependent agency permanent establishment, article 13 (2) of DTAA does not apply. According to article 13 (4) of DTAA when any property other than the property is covered in earlier articles, gain arising on alienation of such property would be chargeable to tax only in the state of residence of the alienator. It may also include movable property, which is not forming part of the business property of permanent establishment or fixed base available to the alienator. As the alienator is a resident of Mauritius, according to us the capital gain on sale of global broadcasting business shall be chargeable to tax only in Mauritius and not in India. Accordingly, we hold that the gain on sale of sports broadcasting undertaking by the assessee is not chargeable to tax in India. Hence, ground number 1 of the appeal is allowed. Advertisement and subscription income is not chargeable to tax in India. Plea that if the assessee even if has a permanent establishment in India but is remunerated at arm's-length, further tax liability in India would extinguish - As we hold that, though there is no such provision as it exists in India US DTAA, in Indo Mauritius DTAA, even for attributing further profit to the income of the assessee, the revenue is required to bring on record further functions performed, risks assumed and assets used along with capital infused. Before us, revenue could not bring on record any such fact. Therefore, we hold that no further tax liability arises in the hands of the assessee in India. TDS u/s 195 - disallowance of programming cost, transponder fees and up linking charges for non-deduction of tax at source - disallowance under section 40 (a) (i) - AO has disallowed these expenses holding that the payments made for acquisition of rights in respect of various content acquired by the assessee including live feed for broadcasting in India is in the nature of Royalty requiring tax deduction at source - HELD THAT:- DRP while disposing of the objection number 5 has held that the coordinate bench has decided the issue in favour of the assessee in earlier years and the order of the coordinate bench has not been accepted by the Department by preferring an appeal under section 260A of the act and therefore to keep the issue alive no directions were issued to the learned assessing officer. As the learned dispute resolution panel has accepted that this issue is covered in favour of the assessee by the order of the coordinate bench in assessee's own case in earlier years, we do not find any reason to deviate from the same, accordingly we direct the learned assessing officer to delete this disallowance. Accordingly, grounds of the appeal is allowed.

  ---

• 2023 (4) TMI 567
  Taxability of excess money received by the assessee over and above the cost of acquisition/WDV - Capital gain or Income from other sources - assessee submitted that it is well settled law that any amount received against the sale of capital asset is a capital in nature not a revenue receipt , hence can be subjected to capital gain only and it cannot be taxed under the head income from other sources - HELD THAT:- It is not in dispute that assessee had entered into agreement to sell of the property as buyer VA Realcon Pvt. Ltd on 07.12.2013 for a total sell consideration of Rs. 25 crores and an amount of Rs. 6 crores was received as advance/ part payment by way of 4 demand drafts issued by IDBI Bank. Since, the buyer failed to pay the balance amount in complying with the conditions of the agreement, an amount of Rs. 6 crores paid as advance sale consideration was forfeited by the assessee. Thus Amount of 6 crores received by the assessee will not fall within the ambit of section 56(2) Admittedly money has been received in pursuance to the agreement to sell which could not be materialized due to non performance of contract by the buyer. Therefore, it cannot be said that the amount was received by the assessee without any consideration. Delhi High Court in the case of CIT vs Meera Goyal[ 2013 (2) TMI 74 - DELHI HIGH COURT] have observed that earnest money of 18 Cr forfeited by the assessee as provided in the agreement to sell received from the purchaser, Shinestar Buildcon Pvt. Ltd. who failed to pay the 'balance consideration by 30.03.2007, is a capital receipt not liable to tax. Provisions of section 51 would come into play in these circumstances as it specifically covers this type of transaction, once the transaction had been held to be genuine, there is no question of the transaction being without any consideration so as to invoke provisions of section 56(2)(vi) of the Act. The judgement of the Jurisdictional High Court is squarely applicable to the present case. Thus, we do not find any error/ infirmity in the approach of the ld CIT(A) in deleting the addition made by the A.O. and we find no merit in the Ground No.1 of the Revenue. Accordingly, ground No. 1 is dismissed. Assessee has not proved the genuineness and creditworthiness of the buyer - In the absence of any contrary evidence it cannot be said that the transaction i.e. agreement to sell entered into by the assessee and the buyer is not proved and the buyer is genuine. Therefore, in our opinion the order of the ld CIT(A) in deleting the said addition requires no interference. Accordingly the Ground No. 2 of the Revenue is dismissed Depreciation at 10% on the value of building - Admittedly, the agreement to sell was entered by the assessee with the buyer and even the advance of Rs. 6 crores was received and forfeited, but ultimately the said amount of Rs. 6 crores has been forfeited due to failure on the part of the buyer. The premises was continued to be used by the assessee for its business purposes. Therefore, in our opinion the depreciation is allowable to the assessee, therefore, we find no error in the order of the ld CIT(A) on the said issue. Accordingly we dismiss the Ground No.3.

  ---

• 2023 (4) TMI 566
  Revision u/s 263 by CIT - bogus long term capital gains derived from sale of certain shares through certain companies - Validity of assessment order passed by the AO u/s. 143(3) r.w.s. 147 - HELD THAT:- Report of investigation wing is not sacrosanct, but what is necessary to decide the issue is whether said transactions are genuine or not, is independent enquiry in light of available materials. In this case, the evidences filed by the assessee before the AO during the re-assessment proceedings clearly shows that long term capital gains declared u/s. 10(38) of the Act is nothing to do with survey conducted in the case of M/s. Onkar Supply Pvt Ltd and statement recorded from Shri Ashok Kumar Kayan. Therefore, we are of the considered view that capital gains declared by the assessee from sale of certain shares cannot be considered as bogus only on the basis of report of Income-tax Department. Assessment order passed by the AO is neither erroneous nor prejudicial to the interests of the revenue, on the issue of long term capital gains declared u/s. 10(38) - Therefore, we are of the considered view that the PCIT is completely erred in assuming his jurisdiction and revised assessment order u/s. 263 of the Act. Thus, we quashed order passed by the PCIT u/s. 263 of the Act.Appeal filed by the assessee is allowed.

  ---

• 2023 (4) TMI 565
  Revision u/s 263 by CIT - Revision on the basis of audit objection - Applicability of provisions contained in clause (a) of explanation 2 below sub section of section 263 - HELD THAT:- Admittedly, the proceedings were initiated u/s 263 of the Act on the basis of audit objection and consequent order passed u/s 263 of the Act is opposed to judgment of SOHANA WOOLLEN MILLS [ 2006 (9) TMI 157 - PUNJAB AND HARYANA HIGH COURT ] From the record, it is established that the Ld. PCIT has initiated the proceedings u/s 263 of the Act by invoking provisions contained in clause (a) of explanation 2 to sub section 1 of section 263 of the Act. In our view, the subject proceeding initiated by the Ld. PCIT u/s 263 of the Act, is illegal and bad in law, since the provisions contained in clause (a) of explanation 2 below to section of section 263 of the Act were introduced by Finance Act 2015 are not applicable retrospectively and therefore, clause (a) of explanation 2 to sub section 1 of section 263 is not applicable to Assessment Year (2011-12), under consideration. We hold that the order of the CIT passed u/s 263 is bad in law and as such it is quashed. Appeal of assessee allowed.

  ---

• 2023 (4) TMI 564
  LTCG - Sale of immovable property of urban agricultural land - consideration of indexation cost on the basis of report of Govt. approved Valuer - assessee is NRI staying at Arizona, USA since many years and did not maintain the books of account - argument of ld Counsel to the effect that in case of assessee`s co-owner the FMV as on 01.04.1981 was accepted at Rs.175 per sq. meter. - HELD THAT:- We note that in case of assessee`s co-owner, there was no scrutiny assessment under section 143(3) of the Act, hence there is no opinion of the assessing officer. Therefore, return of income accepted by the Department under section 143(1) of the Act, in case of assessee`s co-owner, cannot be accepted to determine FMV as on 01.04.1981, therefore arguments advanced by ld Counsel is hereby rejected. AO has calculated long term capital gain on sale of two pieces of land by applying the fair market value of the said land as on 01.04.1981 at Rs. 3.44 per sq. mtr. as against the assessee's claim of fair market value of the said land as on 01.04.1981 at Rs. 175 per sq. mtr. - As both the DVO valuation as well as Government approved valuations are nothing but estimation of value as on specific date, it will be reasonable and justified if the average of two rates are taken as fair market value of the said land as on 01.04.1981. This way ld CIT(A) took the average rate of FMV of land vide RS No.118/97 will be Rs.69 (Rs.135 + 2.55/2) and FMV of land vide Rs no.123/103/1 will be Rs.69 (Rs.135 + 3.14/2). Average FMV as on 01.04.1981 determined by ld CIT(A) is still lower side therefore, considering the facts of the assessee as narrated above, the FMV of land as on 01.04.1981 should be adopted at Rs.90 per sq. meter. We note that determination of fair market value as on 01.04.1981, after all, is an estimate only and therefore we are of the view that ends of justice would be met, if a rate of Rs.90 per sq. meter is adopted as fair market value as on 01.04.1981 for the purpose of indexed cost of acquisition, as the same would take care of the inconsistencies between DVO report and report of registered valuers of the assessee. Therefore, we direct the assessing officer to recompute capital gain on sale of land by taking fair market value of land at Rs.90 per. Sq. meter, as on 01.04.1981, for the purpose of indexation. Appeal of assessee is partly allowed.

  ---

• 2023 (4) TMI 563
  Undisclosed income - Unexplained cash deposit in Saving Bank Account - HELD THAT:- Assessee has submitted cash flow statement from 08.04.2013 to 12.02.2013 explaining the source of cash deposit to the Oriental Bank of Commerce account and the AO has not made any comment thereon. Accounts of the assessee proprietorship firm M/s Lala Flour Mills are audited u/s 44AB of the Act and the assessee has filed audit report in Form No.3CB and 3CD along with audited balance sheet before the AO for verification which has never been disputed by the AO - no addition is called for in the hands of the assessee on account of cash deposits to his bank account since the assessee has successfully demonstrated that the amount so deposited to his bank account is out of withdrawals from the bank account of his proprietorship firm and profit received in cash from the proprietorship firm. Decided in favour of assessee. Addition of gift received by assessee from his mother - Used for Tour Travelling expenses - HELD THAT:- Assessee has submitted affidavit of his mother stating the clear facts that she is holding PAN, but had not filed the return of income during the period under consideration. Counsel submitted that since her income was lesser than the taxable limit, therefore, she was not filing the return of income for relevant AY 2014- 15. In para 3 of the affidavit, As per the affidavit, Mother is having PAN, but, had not filed the return of income as the income was less than the taxable limit. However, being an old lady, if she has gifted some amount to her son for Europe tour, then, the same cannot be disputed or disregarded on the basis of surmises and conjectures. Therefore, ground No.2 of the assessee is allowed. TDS u/s 194J or 194I - rent received as undisclosed income - deduction of TDS is defective and deduction of TDS was under the wrong provisions by the tenant - HELD THAT:- From the copy of computation of income, it is clearly discernible that the assessee has shown rental income in the computation of income and has also claimed deduction u/s 24 of the Act thereon - the landlord, who is declaring rental income in his return of income, cannot be blamed for deduction of TDS under wrong provision by the submission of incorrect return of TDS by the tenant. Therefore, the disallowance made by the AO and sustained by the ld.CIT(A) is held as invalid, baseless and thus, unsustainable. Therefore, the ground of the assessee allowed.

  ---

• 2023 (4) TMI 562
  Revision u/s 263 - Mandation to provide proper opportunity of hearing - HELD THAT:- The perusal of order of PCIT passed u/s. 263 reveals that PCIT has passed only on the basis of material on record. It order is a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. Assessee deserves proper opportunity of hearing .We set aside the impugned order of PCIT and restore the issue to the file of PCIT for re-adjudication of the issues. PCIT shall grant sufficient opportunity of hearing to the assessee. Assessee is also directed to promptly furnish the required details called for by the lower authorities. In view of our decision to restore the issue back to PCIT, we are not adjudicating on merits the grounds raised by the assessee. Thus the grounds of assessee are allowed for statistical purposes.

  ---

• 2023 (4) TMI 561
  Penalty u/s. 270A - Proceedings u/s. 272A(1)(d) - misreporting of the turnover - HELD THAT:- Admittedly, there is a suppression of turnover by the assessee while filing her return of income by declaring the income u/s. 44AD of the Act. Section 44AD is a presumptive taxation where 8% of the turnover is taxed as income. It is not acceptable by us that the assessee s Accountant has mis-reported the turnover by reverse working. We are also unable to understand when the profits are declared under presumptive basis, why the Profit Loss Account was prepared showing the same profit as filed under the return of income. Assessee has also not disputed the VAT turnover and the estimation of income on the VAT turnover by the Ld. AO. CIT(A)-NFAC has rightly determined that the assessee has misreported the turnover attracting the penal provisions u/s. 270A of the Act and hence confirmed the penalty u/s. 270A of the Act levied by the Ld. AO. We therefore find no infirmity in the order of the Ld. CIT(A)-NFAC and hence no interference is required. Accordingly, the grounds raised by the assessee in this regard are dismissed.

  ---

• 2023 (4) TMI 560
  Delay in remittance of employees contribution towards provident fund - disallowance u/s 143(1) on account of assessee s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - HELD THAT:- We find that now this issue has been decided in favour of revenue in its recent decision in bunch of appeals titled as Checkmate Services P. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] There is a marked distinction between the nature and character of the two contributions the employer s liability is to be paid out of its income whereas the second is deemed to be an income, by definition, since it is the deduction from the employees income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B. If the same is not deposited as per mandate of Sec.36(1)(va), the deduction of the same would not be available to the assessee. Thus, this issue stands in favor of revenue and we respectfully follow the same. This decision of Hon ble Court would relate back to the date of consequential amendment brought in by legislatures in respective provisions of the act and it was to be presumed that the legal position was always like that i.e., both the contributions were to be treated differently since inception and the Employee s contribution was always subjected to rigors of Sec.36(1)(va). If the assessee complies with the same only then the deduction would be allowed to the assessee otherwise the same would continue to form the income of the assessee. The said decision, in our opinion, is to be given full consequential effect. Thus the impugned disallowances stand confirmed.

  ---

• 2023 (4) TMI 559
  Disallowance u/s 14A - As submitted assessee s own funds are many times more than exempt income - HELD THAT:- As following the precedent in assessee s own case [ 2021 (11) TMI 260 - ITAT DELHI] we direct the AO to delete the disallowance with regard to interest u/s 14A as it is not disputed that assessee s own funds are many times more than exempt income. Computation to book profit u/s 115JB for disallowance u/s 14A - We find that this issue is also squarely covered in favour of the assessee by the decision of the Special Bench of the ITAT in VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] for disallowance u/s 14A r.w.r.8D, wherein it has been held that disallowance u/s 14A cannot be imported in section 115JB - Respectfully following the precedent from the Special Bench of the Tribunal, we direct the AO to follow the same. Valuation of the land - Disallowance by invoking provisions of section 50C - adoption of value of land of Stamp Authorities - HELD THAT:- No cogency in the argument of the Ld. DR. Prescription as per section 50C is quite clear. It mandates that if the assessee objects to the value of the Stamp Authorities, the matter needs to be send to the DVO for valuation. Accordingly, we direct the AO to get the valuation done by DVO. Hence, the matter is remitted back to the file of the AO to get valuation done from the DVO.

  ---

• 2023 (4) TMI 558
  TP Adjustment - Arm s Length Price (ALP) of the trading and manufacturing segments - HELD THAT:- Facts on record further reveal that between January, 2008, wherein, the assessee entered into an agreement with MSIL for sale of ignition coils and the financial year relevant to assessment year under dispute, there has been substantial appreciation in the price of Yen. Thus, the assessee was put to foreign exchange fluctuation risk as the value of Rupee depreciated compared to Yen. Assessee had to pay more to the AE due to variation in foreign exchange rate. Whereas, it was unable to fully recover the increased amount paid form MSIL. Assessee had to absorb loss on account of foreign exchange fluctuation. In its benchmarking under TNMM the assessee has claimed adjustment towards foreign exchange fluctuation. Both the TPO and Commissioner (A) have disallowed such adjustment. It is observed, while considering identical nature of dispute in assessee s own case in assessment years 2009-10, learned DRP has directed the TPO to determine ALP after considering the margin computed by the assessee after making foreign exchange fluctuation adjustment. The decisions cited before us by learned counsel also express similar view. We direct the AO to allow adjustment for foreign exchange fluctuation rate while computing margin of the assessee and the comparables. Adjustment on account of difference in rates of depreciation as per Income-tax Act followed by the assessee and Companies Act in case of comparables - HELD THAT:- As identical issue in assessee s case in assessment year 2012-13 [ 2022 (2) TMI 1361 - ITAT DELHI] we direct the Assessing Officer to allow depreciation adjustment while determining the ALP. Adjustment relating to manufacturing segment - On careful perusal of the orders of the Transfer Pricing Officer (TPO) and learned Commissioner (Appeals), we find, though, detailed submissions were made by the assessee in support of its claim, however, they have not at all been considered on merits and have been rejected on flimsy grounds. Even, the ratio laid down in various judicial precedents have not been taken note of. Considering that this is the first year of commencement of manufacturing activity in case of assessee, the submissions made by assessee require deeper examination. Restore this issue to the AO for fresh adjudication after considering the submissions of the assessee on merits through a well reasoned and speaking order. Further, the Assessing Officer is directed to examine the decisions relied upon by the assessee and must consider applicability of the ratio laid down in the decisions to assessee s case - assessee must be provided reasonable opportunity of being heard before deciding the issue.

  ---

• 2023 (4) TMI 557
  TP Adjustment - ALP of interest on NDC s [Non-convertible debentures] - Comparable selection - HELD THAT:- When internal comparables are available, it would be more appropriate to analyse the comparability first with the internal comparables. First internal comparables should be evaluated for ALP computation. If for any reasons, internal comparables fail the comparability test, then the external comparables can be adopted for ALP computation. ALP of interest on loan will depend on various factors like the nature and purpose of the loan, currency in which the loan is provided and in which interest is to be paid, security or guarantees offered by the borrower, the amount duration of the loan and credit rating of the borrower. In the instant case, the assessee has also taken secured loans from unrelated third parties being PFC, REC and PNB at the rate of interest of 13.75%. The assessee has contended that these third party loans can be taken as internal comparables and they were also accepted by the DRP as comparables for A Y 2015-16. The learned DR contended that the internal comparables cannot be accepted due to difference in geographical region. It is contended that the associated enterprises are outside India and the third party lenders are in India. It is not clear if the NCD issued to associated enterprise is denominated in Indian rupees and whether the interest on these NCD's is paid in Indian rupees. If the loan taken from associated enterprise is denominated in Indian rupees and the loan taken from third parties is also denominated in Indian rupees and the interest on such loans is also paid in Indian rupees, the question of geographical difference does not arise. Therefore, taking internal comparables will also take care of credit rating of borrowers and nature and purpose of the loan. Thus, if both the loans are denominated in same currency, internal comparables can be adopted for computation of ALP. NCD issued to associated enterprise is unsecured and loans taken from third parties are secured loans, hence, adjustment for this difference should be made as directed by the DRP in AY 2015- 16. Therefore, we remand the matter back to the TPO to verify if the currency of the internal comparables and NCD issued to associated enterprise is same - internal comparable should be adopted for ALP computation after making adjustment for difference in security - borrowers in external comparables should have similar credit rating like that of the assessee - comparison should be made for interest on NCD and convertible debenture cannot be adopted for comparison. Appeals filed by the assessee are allowed for statistical purposes.

  ---

• 2023 (4) TMI 556
  Treatment to claims which are not a part of resolution plan on date of approval of resolution plan - Liability of dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan - Corporate Insolvency Resolution Proceedings (CIRP) are pending against the respondent-assessee and as of now, Hon'ble National Company Law Appellate Tribunal (NCLAT) is seized with the jurisdiction. HELD THAT:- Hon ble Bombay High Court in Murli Industries Limited [ 2021 (12) TMI 1182 - BOMBAY HIGH COURT] after referring to the judgement of Ghanashyam Mishra And Sons [ 2021 (4) TMI 613 - SUPREME COURT] held that on the date of approval of the resolution plan by the Adjudicating Authority, all such claims which are not a part of the resolution plan, shall stand extinguished and no personnel shall be entitled to initiate or continue any proceedings in respect to a claim, which is not a part of the resolution plan. In the present case also, it is not a case of the Department that the claims which are part of subject matter of appeal are part of the resolution plan. Thus, we do not find any merit in the appeal filed by the Revenue and hence stands dismissed.

  ---

• 2023 (4) TMI 555
  Investment in purchase of property - addition on basis of valuation report - applicability of provisions of Section 142A - assessee did not offer to tax the sum declared by him at the time of survey - As per assessee declaration given at the time of survey was under pressure and confusion and to buy peace - HELD THAT:- As clear from the order of the NFAC that there is no proper application of the mind. AO has made the addition u/s 69 of the Act. A careful perusal of the provision divulges that in order to invoke this provision, it is sine qua non that the assessee must have made investments which are not recorded in the books of account. The factum of the assesses having made investment should be first proved by the AO, only then the burden shifts on the assessee to prove the source of investment. Such investment outside the books of account must be positively proved by the AO and not only inferred from the attending facts. If such an investment outside the books is not proved, the assessee cannot be called upon to prove the source of such a hypothetical investment. Adverting to the facts of the instant case, we find that apart from relying on the DVO's report, the AO has not brought anything on record or any other material to indicate that the assessee did make investment in purchase of property over and above that declared in the books of account. Addition made by the OA and confirmed by the NFAC is unsustainable - Also provisions of section 142A of the Act are applicable only when the assessee has made investment in construction. In the present case, the assessee purchased a ready built house and therefore the provisions of section 142A of the Act are not attracted to the facts and circumstances of the present case. Hence, reference to the DVO by the AO was not valid and consequently, the addition made by the AO on the report of the DVO cannot be sustained. The same is directed to be deleted and the appeal of the Assessee is allowed.

  ---

• 2023 (4) TMI 554
  Reopening of assessment - reassessment as barred by limitation - Addition of undisclosed Foreign Asset - HELD THAT:- Hon ble High Court in the case of Jayashree Jayakar Mohankar [ 2022 (7) TMI 1395 - CALCUTTA HIGH COURT ] held that proceedings initiated by AO u/s 147/148 of the Act had become time barred prior to 01.07.2012 and which could not have been revived by Section 149(1)(c). CIT(A) has rightly decided the legal issue raised by the assessee in accordance to the ratio laid by the Hon ble Delhi High Court in Brahma Datt Vs. ACIT [ 2018 (12) TMI 832 - DELHI HIGH COURT ] which decision was challenged by the department before the Hon ble Supreme Court without any success because SLP was dismissed [ 2019 (7) TMI 351 - SC ORDER ]. Appeals filed by the revenue dismissed.

  ---

• 2023 (4) TMI 553
  Disallowance of depreciation and expenses on Sports Car - personal v/s business expenditure - As per CIT appellant's sports vehicle has been used for the purpose of business and eligible for claim of depreciation as well as of the expenditure incurred on maintenance and upkeep of the vehicle - HELD THAT:- We are of the opinion that the action of AO in disallowing 50% of depreciation and maintenance charges on the sports car owned and used by the assessee for the purpose of business is not justified. AO is failed to establish, on the given facts that sports car being owned by the assessee has any personal use or being not used fully for the purposes of business. The assessee, which was a private limited company, was a distinct assessable entity as per the definition of 'person' under section 2(31) of the Act. Therefore, it could not be stated that when the vehicles were used by the directors 'even if they were personally used by the directors', the vehicles were personally used by the company, because a limited company by its very nature cannot have any 'personal use'. The limited company is an inanimate person and there cannot be anything personal about such an entity. The view was supported by the provision of section 40(c) and section 40A (5) of the Act. Once the expenditure in question was in terms as provided in sections 309 and 198 of the Companies Act, there could not be any 'non-business' purpose insofar as the assessee-company was concerned. Decided in favour of assessee.

  ---

• Customs

• 2023 (4) TMI 552
  Levy of anti-dumping duty - flat rolled products of aluminium - customs notification dated 06.12.2021 issued by Central Government - HELD THAT:- When the matter was heard on 09.11.2022, another objection was raised by the learned counsel for the respondents that the appeals would not be maintainable since the appellants had not appeared before the designated authority - It was imperative for the appellants to have impleaded all the necessary interested parties as respondents but that has not been done. The appeals, therefore, would have to be dismissed on this ground alone. It also transpires that the appellants had not appeared before the designated authority. In such circumstances, the appellants would not qualify to be interested parties - Appeal dismissed.

  ---

• Insolvency & Bankruptcy

• 2023 (4) TMI 551
  Admission of Section 7 application - Financial Debt - case of appellant is that the Adjudicating Authority/ Tribunal, on an erroneous appreciation of the Facts and Law had proceeded to admit the Section 7 Application filed by the Respondent/Petitioner/Financial Creditor - plea of the Appellant, is that even the repayments made by the Appellant company are not fully and correctly reflected in the Main Petition - HELD THAT:- On going through the Impugned Order on the file of the Adjudicating Authority/Tribunal it is evident that Corporate Debtor side took some time to pay the admitted default but not paid any sum. Also that, the debt sum, payable by the Corporate Debtor as on 11.11.2022, was more than Rs.2 crores and the fact of the matter, is that the I and B code 2016 can be pressed in to service from the time the default is more than Rs.1 crore. If an Adjudicating Authority/Tribunal is subjectively satisfied that a Default took place and in fact when the Debt was admitted, the petition filed by the Financial Creditor, is to be admitted, subject to the condition that the Petition/Application is complete in all respects. As far as the present case is concerned because of the default committed by the Corporate Debtor relating to the repayment of the loan amount due to be paid by Respondent/Financial Creditor, the loan amount, was declared as Non Performing Asset. There is no simmering doubt that the main CP/IB)/06/KOB/2022 was filed by the Respondent/Petitioner as Financial Creditor as per definition Section 5 (7) of the I B Code, 2016. It cannot be gainsaid that, even if a portion of the debt due and payable is tacitly admitted by a Corporate Debtor/company and it comes within the threshold sum of the default of Rs.1 crore, as per (Section 4 (1) of I B code, 2016 vide chapter 1 preliminary part 2) then, the Adjudicating Authority/Tribunal, is endowed with a subjective discretion, to admit the Section 7 Application filed by a party under the I B Code, 2016 once the Debt and Default are proved, to its satisfaction - A moonshine or an illusory defence, cannot be put forward by a party, and the same can be brushed assigned by an Adjudicating Authority/ Tribunal in a given case, and even the term claim,(as per Section 3(6) of the code) points out a right to payment, despite the fact the same is controverted/disputed. Keeping in mind a prime fact that the Insolvency resolution process commences when a default takes place, and in the instant case Debt and Default having been established to its subjective satisfaction, comes to a consequent conclusion that the Adjudicating Authority/ National Company Law Tribunal, Kochi Bench had rightly admitted the Main CP/IB/06/KOB/2022 preferred by Respondent/ Financial Creditor/Petitioner and the same is free from any legal flaws - Appeal dismissed.

  ---

• PMLA

• 2023 (4) TMI 550
  Seeking grant of bail - money laundering - proceeds of crime - materials procured by the petitioner from the proceeds of the crime of illegal possession and sale of Monitor Lizard hemipenises - whether a case for exemption from personal appearance is made out? - H ELD THAT:- In BHASKAR INDUSTRIES LTD. VERSUS M/S. BHIWANI DENIM APPARELS LTD. ORS. [ 2001 (8) TMI 1407 - SUPREME COURT ] it was held that the discretion conferred by Section 205 of Cr.P.C. on the Court is to be used only in rare cases where personal appearance of the accused would cause great hardship on him. In particular, if the accused is residing at a far-off place or has any physical ailment or is otherwise indisposed, the prayer for exemption from personal attendance can be favourbaly considered. But such discretion is not to be exercised routinely or on the mere asking. In the present case, the petitioner claims that he is the only son of his aged parents, who are ill and require constant attention. No document is filed in this regard. This Court finds that the petitioner is a relatively young man, aged about 38 years. He is a resident of Bhubaneswar and also has his business in Bhubaneswar. Therefore, attending the Court can by no stretch of imagination be treated as causing undue hardship on him. As already stated, the power under Section 205 is not meant to be used routinely but only when circumstances so demand. In view of what has been stated hereinbefore, this Court finds the circumstances not justifying exercise of such power by the Court. To such extent therefore, this Court finds no infirmity much less any illegality in the impugned order so as to interfere. Application disposed off.

  ---

• 2023 (4) TMI 549
  Maintainability of petition - availability of efficacious alternative remedy of an Appeal under Section 25 of the PMLA Act of 2002 - Provisional attachment order - petition was filed after expiry of 180 days of the passing of the said order - It was contended by counsel for the petitioner that on the expiry of 180 day period, the provisional attachment order comes to an end and dies a statutory death - HELD THAT:- The Hon ble Supreme Court in the case of UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS [ 2010 (7) TMI 829 - SUPREME COURT ] has held that Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up. This Court is of the view that the writ petition is definitely maintainable but given the effective and efficacious remedy of appeal under Section 25 the writ Court should be slow to entertain it. An appellate authority is better equipped to deal with the contentions of the petitioner given the procedural powers conferred on it - The Appellate authority is empowered to deal with all questions raised by the petitioner including the legality and or validity of the order of Adjudicating authority. In the backdrop of the availability of the efficacious alternative remedy of appeal before the Appellate Authority under Section 25 of the Act of 2002 and the dicta of the Hon ble Apex Court, this court is of the view that a writ petition under Article 226 of the Constitution of India may not be entertained. More so when the petitioner has already filed an appeal under Section 25 before the Appellate Authority against the order of Adjudicating Authority, confirming of order of provisional attachment. Application disposed off.

  ---

• Service Tax

• 2023 (4) TMI 548
  Levy of Service Tax - Architect services - completion certificate for the Mall had been issued before July 01, 2010, or not (because in that case no service tax would be leviable) - HELD THAT:- Government had issued the Service Tax (Removal of Difficulty) Order 2010. It may have come into force with effect from July 01, 2010 but it states that for the purpose of section 65(105)(zzq), the expression authority competent would include an Architect registered that the Council of Architecture constituted under the Architect Act, 1972. Since it is a Removal of Difficulty Order, the Commissioner (Appeals) was not justified in holding that it would be prospective in nature. The benefit of the certificate date August 19, 2009 issued by the Architect would come to the aid of the appellant. Regarding the certificate dated March 31, 2010 issued by the Regional Manager, RIICO, a perusal of the said certificate would show that it was issued by the Regional Manager RIICO in connection with the commercial plot allotted to the appellant. It states that the construction was done by the appellant as per the sanctioned plan and RIICO norms and the property may be used for commercial activities as per the terms and conditions of the allotment. This communication was sent by the Regional Manager pursuant to the communication dated August 19, 2009 sent by the appellant to RIICO seeking approval for use of the building Capital Mall for commercial/business purpose. The appellant had stated that the construction of the shopping mall named Capital Mall was completed on the allotted premises ad measuring 9996 sq. mtrs. and therefore, RIICO should issue the letter of approval for using the Capital Mall for business activities. Thus, the completion certificate has been issued to the appellant before July 01, 2010. The payments were received by the appellant after the completion certificate was issued to the appellant. They could, therefore, not be subjected to levy of service tax. The impugned order dated March 27, 2013 passed by the Commissioner (Appeals), therefore, cannot be sustained - appeal allowed.

  ---

• 2023 (4) TMI 547
  Classification of services - manpower recruitment or supply agency service, or not - appellant engaged by the society only for the purpose of unloading of coal from the railway wagons, which was shifted to the coal yard using hired JCBs, Trucks and Tipper Lorries with the help of required labourers for the said services provided such as loading, unloading and stacking of coal, which have been paid by the Society based on the quantum of coal off-loaded and transported - extended period of limitation - HELD THAT:- The appellant was in fact paid for the services rendered for transportation of coal in JCBs, Front Loaders or Tipper Lorries from the railway wagons to the coal yard of the Gas Plant on per tonne basis. The above Society has sub-contracted the work to the appellant viz. Shri S. Selvam, who is a lorry transporting contractor and civil contractor. The society has been paid for the services on the basis of the quantity of coal handled. The services provided are unloading of coal from the wagons, its transportation by using JCB front loaders and tipper lorries and its shifting to the specified place in the coal yard for stacking. In our opinion, the above services are definitely not related to either recruitment or supply of labour. Though consignment note was not issued by the appellant for transportation of the coal to be classified as GTA service , the classification of the services provided by him are not under manpower recruitment or supply agency service. The appellant has repeatedly put forth that he has been paid for the services rendered on the basis of quantity of coal handled, by M/s. BHEL Complex Co-operative Labour Contract Society Ltd., Trichy. When specifically asked for an Agreement copy by the appellant with M/s. BHEL Complex Co-operative Labour Contract Society Ltd., the Learned Advocate for the appellant has stated that such a written contract was not entered into - The work that was given to the appellant was for unloading, transportation and stacking of coal from the railway wagons to the coal yard and the documents available in the appeal indicate that there is no agreement for supply of manpower to the recipient of service i.e., M/s. BHEL Complex Co-operative Labour Contract Society Ltd., Trichy. The contract that was awarded to M/s. BHEL Complex Co-operative Labour Contract Society Ltd., which has been executed by the appellant, is relating to the handling and transportation of coal. The services rendered by the appellant cannot be classified under the category of manpower recruitment or supply agency service - As the appeal is allowed on merits, there is no need to discuss regarding the invocability of extended period and justification for imposition of penalties. Appeal allowed.

  ---

• 2023 (4) TMI 546
  Levy of service tax - dealings on a species of Digital Signature Certificate - demand under four different taxable service categories, for different period - HELD THAT:- In the matter of SIFY TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LTU, CHENNAI [ 2018 (6) TMI 644 - CESTAT CHENNAI] the co-ordinate bench of the Tribunal was confronted with the issue of providing Secured Socket Layer Certification (SSLC) and Digital Signature Certificate being an IT service from 16.05.2008 onward or not and whether the same were Development of Content Service or Business Support Service for the earlier period. After considering the entire gamut of services as well as CBEC clarification bearing F. No. 137/76/2008-CX4 dated 05.06.2008 and F. No. 137/76/2008-CX4 dated 28.07.2008, the bench concluded that the services involved are not taxable services of the nature sought by the department and simply usage of some software by the party in India would not amount to activities coming under the preview of information technology services. The Sify Order extensively covers the rejection of the activities for service tax under the heads purposed by the department in the instant case also, and even for the same periods. Thus, activities of the appellants are not covered under various heads proposed by the department - appeal allowed.

  ---