TMI Tax Updates - e-Newsletter
April 17, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Indian Laws

Articles

1. Optimizing Efficiency: The Crucial Role of Integrating Inventory Accounting with Financial Accounting for SMEs

   By: Sundaran Damodaran

2. REPAYMENT PLAN IN INSOLVENCY RESOLUTION PROCESS OF PERSONAL GUARANTORS TO CORPORATE DEBTOR

   By: DR.MARIAPPAN GOVINDARAJAN

3. If an Assessee deposits all taxes, interest, etc. and complies with other formalities the Proper Officer can open the GST portal to enable the Assessee to file GST returns

   By: Bimal jain

Notifications

Central Excise

1. 12/2024 - dated 15-4-2024 - CE

Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022 to increase the Special Additional Excise Duty on production of Petroleum Crude.

Customs

2. 29/2024 - dated 15-4-2024 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

GST - States

3. S.O. 158 - dated 15-4-2024 - Bihar SGST

Seeks to rescind Notification No. S.O. 261 dated the 05th October 202

4. CCT/26-2/2024-25/81/195 - dated 16-4-2024 - Goa SGST

Amendment in Notification No. CCT/26-2/2018-19/64/1825 dated the 25th November, 2020

5. 06/2024-State Tax - dated 8-4-2024 - Gujarat SGST

Notify “Public Tech Platform for Frictionless Credit” as the system with which information may be shared by the common portal based on consent under sub-section (2) of Section 158A of the Gujarat Goods and Services Tax Act, 2017

6. F. 12 (1)FD/Tax/2024-75 - dated 15-4-2024 - Rajasthan SGST

Seeks to extend the timeline under section 148 of the Rajasthan Goods and Services Tax Act, 2017 for implementation of Notification No. F.12(1)FD/Tax/2024-71 dated 09.01.2024

7. 01/2024–C.T./GST - dated 15-4-2024 - West Bengal SGST

Seeks to extend the due date for filing FORM GSTR-1 for the month of March ,2024

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 02/2024 - dated 1-4-2024

Invitation of applications for empanelment of Chartered Engineers for examination / valuation of Second / Old & Used machinery / goods etc. in the jurisdiction of Kandla Customs Regarding.

Highlights / Catch Notes

GST

• Court Allows Late Appeal Filing, Orders Consideration Without Time Limit Due to Pre-Deposit and Recovered Tax Liability.

  Case-Laws - HC : Condonation of delay in filing an appeal before the Appellate Authority - The High Court, while acknowledging the delay in appeal filing beyond the condonable period of limitation, emphasized the petitioner's substantive right to seek redress. Considering that the tax liability had already been recovered from the petitioner and a pre-deposit was made along with the appeal, the court directed the second respondent to consider and decide on the appeal without considering the limitation period. As a result, the writ petition was allowed, with no costs incurred.
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• Court Orders GST Reimbursement; Contract Clause Misinterpreted, Rates Found Exclusive of GST, Prompt Payment Required.

  Case-Laws - HC : Seeking reimbursement of GST amount paid by the petitioner - Interpretation of Contract Clause - After analyzing the documents and submissions, the High Court found that the petitioner's quoted rates were indeed exclusive of GST and that the respondent had already reimbursed GST for previous bills. The court rejected the respondent's interpretation of the contract clause, stating that there was no evidence to support that it included GST. Therefore, the court directed the respondent to reimburse the GST paid by the petitioner on all bills within a specified timeframe.
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• Unsigned Orders Deemed Invalid: Court Quashes Assessment Order and SCN for Lack of Required Signatures.

  Case-Laws - HC : Validity of assessment order - SCN as also the assessment order have not been signed by the 2nd respondent either digitally or physically - The High court examined similar cases and legal provisions, concluding that unsigned orders are legally ineffective. Sections 160 and 169 of the CGST Act do not justify the absence of signatures. Previous judgments from other high courts supported the requirement of signatures for authentication. Consequently, the court set aside/quashed the challenged documents, affirming that the lack of signatures rendered them legally unsustainable.
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Income Tax

• Retirement Payment from Partnership Not Taxable as Capital Gains, No Transfer of Goodwill Found, Rules Court.

  Case-Laws - HC : Characterization of receipt - amount received by the appellant upon retirement from the partnership - taxability as capital gains under the Income Tax or not? - The High Court agrees with the appellant's argument that the amount received by her upon retirement, being the balance of her capital account in the firm, does not qualify as a transfer for the purpose of capital gains taxation. It concurs with the principle that the adjustment of rights of partners in a dissolved firm, through the distribution of assets, does not amount to a transfer. - Regarding the receipt of the share value of goodwill, the High Court holds that in the absence of a clear transfer of goodwill to the firm by the appellant, such receipt cannot be taxed as capital gains.
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• Court Upholds Objections to Reassessment: Petitioner Fully Disclosed Facts, Authorities Overlooked Original Compliance.

  Case-Laws - HC : Reopening of assessment - reasons to believe - On the issue of disclosure and compliance with TDS provisions, the court found that the petitioner had indeed disclosed all material facts during the original assessment proceedings. The transactions in question were merely transfers of funds on instructions from the horse owners. - The court held that the objections raised by the petitioner against the reassessment were valid. The authorities had failed to consider the full scope of the disclosures made during the original assessments and erroneously pursued reassessment.
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• High Court Orders Reassessment: Petitioner Must Present Comprehensive Documentation on Income and Expenditures.

  Case-Laws - HC : Revision petition u/s 264 by assessee - Claiming to act as a collection agent for borewell digging payments, the petitioner argued that the income was exaggerated and included expenditures paid to rig owners. Despite the petitioner's assertions, the High Court found insufficient evidence to support their claims and emphasized the need for comprehensive documentation to challenge the assessment under revisional jurisdiction. However, acknowledging the petitioner's request for another opportunity to present evidence, the court granted the writ petition, nullified the previous order, and instructed the petitioner to appear before the Commissioner of Income Tax with all necessary documents for reconsideration.
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• Tribunal Overturns Decision on Foreign Exchange Contracts, Cites Insufficient Evidence and Remands for Further Review.

  Case-Laws - AT : Speculative loss or not - Determine the nature of losses on forward foreign exchange contracts and foreign exchange derivative contracts - the tribunal found the evidence provided by the appellant to be insufficient in establishing the nature of the losses. It highlighted discrepancies in the claimed amounts and noted a lack of clarity regarding the cancellation of contracts. Consequently, the tribunal set aside the CIT(A)'s decision and remanded the issue for further examination. It emphasized the importance of establishing a direct connection between the transactions and the appellant's business activities.
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• Trust's Income Activities Don't Affect Charitable Status if Primary Purpose Remains Charitable, Says Tribunal.

  Case-Laws - AT : Exemption u/s 11 - Charitable activity u/s 2(15) - Commercial activity - Citing past decisions favorable to the trust under similar assessments, the Tribunal reiterated that activities generating income do not automatically disqualify an entity from being charitable if the primary purpose is charitable and the commercial activities are incidental. It was highlighted that the trust's income was indeed applied towards its stated charitable purposes, fulfilling the criteria for exemption under Section 11.
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• Tribunal Orders Deletion of Addition After Assessee Proves Legitimacy of Loan Transactions; AO's Investigation Insufficient.

  Case-Laws - AT : Addition u/s 68 - the Tribunal noted the extensive documentary evidence provided by the assessee to establish the legitimacy of the loan transactions. However, the AO failed to conduct proper investigations and relied solely on the report from the investigation wing. As the assessee had fulfilled its initial burden of proof, the Tribunal directed the deletion of the addition.
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• ITAT Bangalore rules software license sales not royalties, aligning with Supreme Court for legal consistency across years.

  Case-Laws - AT : Royalty receipts - income deemed to accrue or arise in India - assessee had sold software licenses to its associated enterprises and to other Indian customers - The ITAT Bangalore ruled that the income received by the software company from software sales to IBM India and others did not constitute royalties under the applicable laws and treaties. This judgment aligns with SC's interpretation and emphasizes consistency in legal interpretations across different assessment years.
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• Tribunal Evaluates Unexplained Stock Investments; Assessees Challenge Evidence from Raids and Seek Credit for Past Disclosures.

  Case-Laws - AT : Unexplained investment u/s 69 - The tribunal closely examined the additions made under Section 69 related to unexplained investments in stock. The assessees argued that rough jottings or documents seized during raids were not conclusive evidence of unaccounted investments. Furthermore, they contended that previous voluntary disclosures or surrendered amounts during surveys should offset these additions.
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• Gifted Land in Family Settlement Not Deemed Income, Says ITAT; Assessee's Appeal Approved by Tribunal.

  Case-Laws - AT : Addition u/s 56(2)(vii)(b) - transfer under gift deed - family settlement- The Assessee contended that the transfer of land through a gift deed was part of a family settlement/arrangement between the parties involved. They argued that various documents, including a family settlement arrangement and MOUs, supported their position. The Revenue, however, maintained that the transfer was without consideration and fell within the ambit of deemed income under the Act. - The ITAT concluded that the transaction should be understood in the context of the broader arrangement and not in isolation. Therefore, the addition made by the AO was deemed unjustified, and the appeal of the Assessee was allowed.
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• Appellate Tribunal classifies income from software usage rights as royalty, subject to 10% tax under Income Tax Act.

  Case-Laws - AT : Royalty receipt - transfer of right to use a computer software - The Judgement by the Appellate Tribunal addressed the dispute regarding the classification of income and the applicable tax rate for the appellant. The Tribunal found in favor of the appellant, ruling that the income received should be considered royalty income under Sec. 9(1)(vi) of the Act and taxed at 10%.
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• Tribunal Rules No TDS Deduction Needed for Finished Goods Purchases; Manufacturers Operate Independently.

  Case-Laws - AT : TDS u/s 194C - payments of purchase to various vendors - Non deduction of TDS - Upon analysis, the Appellate Tribunal agreed with the assessee, ruling that the transactions were indeed purchases of finished goods. It noted that the manufacturers independently sourced raw materials and produced goods according to the specifications provided. Furthermore, the Tribunal found that the assessee's control over production was limited, as evidenced by the return of rejected goods to the vendors. Tribunal dismissed the revenue's appeal.
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• Tribunal Overturns Denial of Charitable Registration, Citing Lack of Evidence and Misinterpretation of Objectives.

  Case-Laws - AT : Exemption u/s 11 - rejection of assessee’s application for registration u/s 12A - The Appellate Tribunal found that the rejection of the application was unjustified as it was based on suspicion without credible material. It emphasized that at the registration stage, the focus should be on determining whether the objectives of the institution are charitable, rather than questioning the expenditure incurred. It was observed that while the Commissioner did not doubt the charitable nature of the institution's objectives, the rejection was primarily based on concerns about promoting pharmaceutical businesses. However, the Tribunal asserted that educating and raising awareness about diseases like endocrine disorders is inherently charitable.
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• Tribunal Defines Transfer Date for Equity Shares, Confirms Long-Term Capital Gains Based on Holding Period Over 12 Months.

  Case-Laws - AT : LTCG OR STCG - Capital gain on sale of equity shares - period of holding of shares - There exists a clause for condition precedent to the sale which has to be fulfilled by both the vendor and the purchaser - The Appellate Tribunal's decision focused on the interpretation of the "date of transfer" of shares. The Tribunal cited several precedents, including the decision of the Delhi High Court in Bharti Gupta Ramola vs. CIT and similar Tribunal decisions, which supported the assessee's contention that the transfer date should be recognized as the date when all substantive conditions of the share transfer agreement were fulfilled. The Tribunal concluded that the shares were held for more than 12 months and therefore qualified for LTCG treatment.
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• Tribunal Upholds Dismissal of Share Valuation Claims, Citing Lack of Support and Non-Arm's Length Transactions.

  Case-Laws - AT : Revision u/s 263 - Disallowance of STCG - FMV determination of shares - The Appellate Tribunal (AT) scrutinized the fair market value and share valuation process, concluding that the appellant failed to substantiate their claims adequately. They found discrepancies in the valuation and affirmed the PCIT's decision to reject the appellant's arguments. The AT affirmed the PCIT's characterization of the transactions as structured and not at arm's length. They concluded that the assessment order was prejudicial to the interest of the Revenue and upheld the PCIT's decision to set it aside.
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• Tribunal Rules TDS Deduction Not Required for Payments to Non-Registered Vehicle Possessors u/s 194C.

  Case-Laws - AT : TDS u/s 194C - Non deduction of TDS on payment to the persons who were not the owner of the vehicle - The Tribunal interpreted the term "owns" in section 194C(6) to encompass possession rather than strict registered ownership. Referring to section 44AE, which defines "owner" for the purpose of presumptive taxation, the Tribunal concluded that ownership includes possession of the goods carriage, not just registered ownership. Citing judicial precedents and the intention of the legislature to provide benefits to taxpayers, the Tribunal determined that the appellant complied with section 194C(6) by obtaining declarations from those in possession of the goods carriages and making payments accordingly.
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Customs

• Court Upholds Validity of Show Cause Notice Despite Commissioner's Involvement; Authority of Officer Confirmed.

  Case-Laws - HC : Jurisdiction - power to adjudicate SCN - The High Court rejected the contention that the previous involvement of a Commissioner of Customs in the case's proceedings biased the adjudication process. It held that the competence and authority of the officer who issued the Show Cause Notice were not affected by the Commissioner's involvement. The Court noted the legal provisions empowering certain officers to authorize arrests and issue Show Cause Notices. It also acknowledged a notification specifying procedures for representation before the High Court but concluded that the involvement of a Commissioner of Customs did not affect the authority of the adjudicating officer.
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• Court Upholds Technical Grade Urea Classification, Validates Chemical Examiner's Report, Dismisses Trade Policy Concerns.

  Case-Laws - HC : Classification of imported goods - Technical Grade Urea - Chemical Examiner’s report is correct or not - The High Court acknowledges the contention regarding the Foreign Trade Policy but refrains from intervening in the classification decision based on the laboratory findings. The High Court upholds the validity of the laboratory tests conducted by the authorities and underscores their importance in determining the classification of the imported goods. It dismisses the petitioner's challenge to the tests and affirms their role in decision-making.
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• Court Allows Amendment of Shipping Bills for RoSCTL Credit Due to Inadvertent Errors, Upholds Exporters' Entitlements.

  Case-Laws - HC : Seeking amendment of shipping bills - inadvertent error in the Shipping bills - seeking to credit ROSCTL benefit amounts to the petitioner’s Customs E-Scrip Ledger - The High Court noted that the petitioner's intention to claim benefits under the RoSCTL Scheme was evident from the Shipping bills and other related documents, despite the inadvertent error in declaration. Drawing from judgments of the Madras High Court, the High Court concluded that such errors, if inadvertent, should not deprive exporters of entitled benefits.
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• Tribunal Rules in Favor of Refund for Overpaid Customs Duty; No Unjust Enrichment Found in Settlement Case.

  Case-Laws - AT : Refund of Excess Customs Duty paid - principles of unjust enrichment - Following proceedings before the Settlement Commission, it was determined that the appellant had indeed overpaid, resulting in an excess amount of refund. The Tribunal upheld the appellant's right to claim the refund, considering the terms of the agreement with their overseas supplier, the treatment of the amount in their accounting records, and legal precedents supporting their case. - The Tribunal concluded that the appellant was entitled to the refund of the excess amount, as they had not passed on the duty burden and had treated it as receivable in their accounts.
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• Reflective glass liable for anti-dumping duties as not exempted in Notification No. 4/2009-Cus, tribunal rules.

  Case-Laws - AT : Levy of Anti-dumping duty - The Tribunal observes that reflective glass was not explicitly mentioned in Notification No. 4/2009-Cus, which exempted certain types of glass from anti-dumping duty. As a result, the Tribunal concludes that since reflective glass was not listed for exemption, it remains subject to anti-dumping duty during the specified period.
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Indian Laws

• Curative Petition Restores Arbitral Award: Supreme Court Invokes Jurisdiction to Prevent Gross Injustice.

  Case-Laws - SC : Maintainability of curative petition - restoration of arbitral award which had been set aside by the Division Bench of the High court on the ground that it suffered from patently illegality. - The Supreme Court found that invoking curative jurisdiction was justified to prevent a miscarriage of justice. It highlighted the circumstances under which curative petitions could be entertained, emphasizing cases where there is a gross miscarriage of justice or abuse of process. The Court reiterated that interference with arbitral awards should be minimal and only on grounds of patent illegality or perversity. It emphasized that an arbitral tribunal's decision should not be disturbed unless it is evident that a reasonable person could not have arrived at such a decision based on the evidence presented.
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• Cheque Dishonor Case: High Court Finds Procedural Errors in Statutory Notice, Upholds Acquittal Due to Mismanagement.

  Case-Laws - HC : Dishonour of Cheque - issuance of statutory notice to proper person or not - acquittal of accused - The High Court noted a misunderstanding by the trial court regarding the management of the company by its directors and the legal implications thereof. The statutory notice was not properly issued to the company along with its director, leading to procedural discrepancies. Despite acknowledging errors in the trial court's judgment, the High Court upheld the acquittal based on procedural faults in issuing the statutory notice.
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IBC

• Insolvency Code Clarifies: Partnership Firms Not Corporate Debtors; Debts Tribunal Authority Affirmed for Non-Corporate Entities.

  Case-Laws - HC : CIRP - Partnership Form - The court examined the definitions under the IBC and noted that it does not include partnership firms or their directors as corporate debtors. Rather, such cases fall under Part III of the IBC, which designates the Debts Recovery Tribunal as the adjudicating authority. The court highlighted amendments to the IBC regarding personal guarantors, specifying that they come under the Code's ambit. However, this addition did not extend to partnership firms or directors.
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• Tribunal Rules No Interest Due on Sale Delay Caused by NCLT Order, Citing Judicial Intervention Not Administrative Fault.

  Case-Laws - AT : Interest on deposit - sale consideration amount deposited by the appellant - The Tribunal acknowledged the regulations stipulating that payments made after thirty days attract a 12% interest rate. However, it noted that the Liquidator’s hands were tied due to the NCLT’s restraining order, preventing the issuance of the Sale Certificate until specific approvals were obtained. Citing Supreme Court precedents, the Tribunal discussed the entitlement to interest and the principles of equity and restitution but ultimately noted that these did not apply under the circumstances where the Sale Certificate’s issuance was delayed by judicial intervention rather than administrative oversight.
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• Corporate Guarantor's Liability Persists Despite Uninvoked Guarantees, Tribunal Affirms Lenders' Rights Remain Intact.

  Case-Laws - AT : CIRP - Corporate Guarantee and Liability - The Appellate Tribunal acknowledged that the company had issued corporate guarantees to financial institutions. Despite the guarantee not being invoked, the Tribunal emphasized that the liability of the corporate guarantor remains intact. It cited clauses from the Guarantee Deed emphasizing that the rights of lenders against the guarantor remain in force regardless of any arrangements between lenders and other guarantors.
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• Creditors Reject Repayment Plan; Tribunal Allows Bankruptcy Proceedings, Orders Payment of Resolution Professional's Fees.

  Case-Laws - Tri : Approval of the Repayment Plan submitted by the Personal Guarantor - Despite the RP's efforts to submit a repayment plan, it was ultimately rejected by the majority of creditors. Consequently, the Tribunal noted that creditors had the option to file for bankruptcy under Chapter IV, and the RP was relieved of their duties. However, the Tribunal ensured that the RP's approved fees and expenses were to be paid.
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• Supreme Court Upholds Resolution Plan, Dismisses Fraud Claims in Insolvency and Bankruptcy Code Case.

  Case-Laws - SC : Withdrawal/modification of approved Resolution Plan - Section 31(1) of IBC - The Supreme Court addressed cross-appeals concerning the approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016. It reiterated the legal position established in a previous judgment regarding the withdrawal or modification of a resolution plan post-approval by the Committee of Creditors. Additionally, the Court dismissed allegations of fraud and misinformation, emphasizing the adequacy of information provided to the resolution applicants. As a result, the Court set aside the impugned judgment and approved the resolution plan submitted by the successful resolution applicants.
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• Pending Civil Suit Doesn't Bar IBC Admission if Genuine Debt Dispute Exists, Supreme Court Upholds CIRP Initiation.

  Case-Laws - SC : Admissibility of section 9 application - The Appellant argued that the application under the IBC should not have been admitted due to the pendency of a civil suit. However, the Supreme Court held that the existence of a pending civil suit does not preclude the admission of an application under the IBC if there is a genuine dispute regarding the debt. They cited the principle established in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT], emphasizing that the adjudicating authority is only required to determine whether there is a plausible contention for further investigation. Ultimately, the Supreme Court dismissed the appeal, affirming the decision of the lower tribunals to admit the application under the IBC and initiate CIRP against the Corporate Debtor.
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• Supreme Court defers decision on IBC petition amendment, leaves time limitation issues to NCLT for resolution.

  Case-Laws - SC : Amendment of section 7 application - time limitation - date of default - The Supreme Court addressed a case involving the correction of a date mentioned in a previous order and an amendment to a petition under the Insolvency and Bankruptcy Code (IBC) 2016. The respondent sought an amendment to the petition, asserting that despite an initial default, subsequent events prevented the petition from being barred by limitation. The National Company Law Appellate Tribunal (NCLAT) affirmed the order allowing the amendment but left the question of limitation open. The Supreme Court decided not to entertain the appeal, deferring all aspects regarding limitation to the NCLT.
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Service Tax

• Appellant Denied SVLDRS Amnesty Relief Due to Missed Payment Deadline and No Evidence of Technical Glitch Impact.

  Case-Laws - HC : SVLDRS - Benefit of the Amnesty Scheme opted - failure to make payment on account of technical glitch or not - Despite the appellant's assertion of technical glitches, an affidavit from the Assistant Director of GST and Central Excise indicated that there were no attempts by the appellant to make payments on the specified dates. - The High Court rejected the appellant's claim of technical glitches, emphasizing the appellant's awareness of the deadline and his failure to attempt payment within the extended period. It deemed the appellant ineligible for relief under the Amnesty Scheme.
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Case Laws:

• GST

• 2024 (4) TMI 620
  Seeking grant of Anticipatory bail - power to arrest - it was held by High Court that in view of the specific statement by learned senior counsel for the petitioner that there is no apprehension of arrest, the impugned order on the face of it requires an examination. Hence, the operation of the impugned order is stayed. HELD THAT:- Delay condoned. Issue notice to the respondent returnable on 02.02.2024.

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• 2024 (4) TMI 619
  Jurisdiction - appropriate forum - HELD THAT:- Having heard learned counsel for the petitioners and having regard to the nature of confiscated goods and bearing in mind the perishable nature of the same, the petitioners are permitted to move the High Court for expeditious interim relief in the matter. SLP disposed off.

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• 2024 (4) TMI 618
  Maintainability of appeal - time limitation - appeal filed by the petitioner before the second respondent, beyond 24 days of the condonable period of limitation under Section 107(4) of the TNGST Act - HELD THAT:- This Court is of the view that substantiative right of the petitioner to redress his grievance by way of appeal cannot be curtailed particularly, when the amount due towards tax liability has been recovered from the petitioner on 01.12.2022. Over and above, the petitioner has also paid a sum of Rs. 1,15,372/- on 27.12.2022 along with the appeal filed beyond the condonable period of limitation under Section 107 (4) of the TNGST Act. Be that as it may, since the appeal has been filed along with the pre-deposit on 27.12.2022 and considering the fact that a sum of Rs. 11,53,720/- has already been recovered from the petitioner on 01.12.2022, this Court is of the view that it is a fit case, for a direction to the second respondent to consider the appeal and dispose of the same. Therefore, the second respondent is directed to consider the appeal and dispose of the same on merits without reference to the period of limitation. Petition allowed.

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• 2024 (4) TMI 617
  Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner - cryptic order - HELD THAT:- The observation in the impugned order dated 15.02.2024 is not sustainable for the reasons that the reply dated 07.02.2024 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is devoid of merits and without any justification, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 15.02.2024 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 15.02.2024 is set aside and the matter is remitted to the Proper Officer for re-adjudication. Petition disposed off by way of remand.

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• 2024 (4) TMI 616
  Violation of principles of natural justice - Petitioner submits that Petitioner had filed a detailed reply, however, the impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - Seeking stay of the operation of impugned order - HELD THAT:- The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 25.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete, not duly supported by adequate documents, not clear and unsatisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 30.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.

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• 2024 (4) TMI 615
  Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner - cryptic order - HELD THAT:- The observation in the impugned order dated 30.03.2024 is not sustainable for the reasons that the reply dated 01.02.2024 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is devoid of merits and without any justification, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 30.03.2024 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.03.2024 is set aside and the matter is remitted to the Proper Officer for re-adjudication. Petition disposed off by way of remand.

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• 2024 (4) TMI 614
  Challenge to SCN issued in respect of assessment years 2019-20, 2020-21, 2021-22, 2022-23, and 2023-24 - ingredients of Section 74 are not made out - HELD THAT:- The petitioner submits that the last date for submitting the replies expires on or before 15.04.2024 and the hearing is scheduled on 10.04.2024. In view of the filing of these writ petitions, it is just and appropriate that these time lines be revised to enable the petitioner to respond meaningfully to the show cause notices. The petitioner shall reply to the respective show cause notice on or before 29.04.2024 - Upon receipt of the petitioner s reply, the respondent is directed to provide a reasonable opportunity to the petitioner, including by way of personal hearings - The respondent is further directed to consider all contentions raised by the petitioner objectively and not in a pre-determined manner by taking note of the observations in this order. The petitions are disposed off.

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• 2024 (4) TMI 613
  Violation of principles of natural justice - personal hearing was not provided after the petitioner s reply to the SCN - impugned order does not contain any reasons for rejecting the petitioner s reply - HELD THAT:- Although the document indicates that the petitioner had checked the box for no personal hearing, the statutory mandate of sub-section (4) of Section 75 of applicable GST enactments is that a personal hearing should be provided either if requested for or if an order adverse to the tax payer is proposed to be issued. In this case, it should also be noticed that the petitioner s requested for personal hearing under e-mail dated 05.12.2022, which the respondent says was not received. Also, the order does not contain any reasons for rejecting the petitioner s reply. Since these findings are not supported by reasons, the impugned order is not sustainable. The impugned order dated 28.12.2023 is set aside and the matter is remanded for reconsideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of a copy of this order - Petition disposed off by way of remand.

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• 2024 (4) TMI 612
  Irregular availment of input tax credit - specific details have not been mentioned in the SCN - Violation of principles of natural justice - HELD THAT:- This petition is disposed of directing the petitioner to file a response to the show cause notice for the financial year 2019-20 and 2020-21 within 30 days from today. Petitioner shall appear before the Sales Tax Officer (Ward-1, Zone-1) who has issued the notice and is adjudicating the same on 15.04.2024 at 12.00 (Noon) for clarification/query if any. Said officer shall thereafter adjudicate the notice in accordance with law.

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• 2024 (4) TMI 611
  Seeking reimbursement of GST amount paid by the petitioner - Interpretation of Contract Clause - it is submitted that after having realized its mistake, respondent No. 1 not only informed the petitioner that it would not be liable to reimburse the GST but also deducted the GST already paid in favour of the petitioner and as such there is no merit in the petition and the same is liable to be dismissed - HELD THAT:- A perusal of the material on record, in particular the cumulative effect of the short term tender notification dated 01.02.2019 containing clause C to note No. 1 which stipulates that GST shall be paid to the tendered amount separately as per Rules and applicable Government Orders and notice to the tender notification as well as the work order and other documents will clearly indicate that the rate quoted by the petitioner was exclusive of GST and did not include the same as contended by respondent No. 1. So also, merely because Clause 36 of the scheduled agreement includes sales tax and VAT, in the absence of any material to show that sales tax and VAT include GST also and that the rates quoted by the petitioner include GST, it is opined that respondent No. 1 is liable to reimburse the GST paid in favour of the petitioner. The respondent is hereby directed to reimburse GST amount as indicated in the representation dated 15.04.2023 vide Annexure-E - The respondent/Department shall reimburse the said amount within a period of six weeks from the date of receipt of copy of this order - petition allowed.

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• 2024 (4) TMI 610
  Validity of assessment order - SCN as also the assessment order have not been signed by the 2nd respondent either digitally or physically as is otherwise required under Rule 26 of the Central Goods and Services Taxes Rules - HELD THAT:- It is relevant to take note of the recent decision of the High Court for the State of Andhra Pradesh in M/S. SRK ENTERPRISES, VERSUS ASSISTANT COMMISSIONER (ST) , BHEEMILI CIRCLE, VISAKHAPATNAM [ 2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT] wherein the Hon ble Division Bench of the Andhra Pradesh High Court had under similar circumstances held we are of the view that Section 160 of CGST Act 2017 is not attracted. An unsigned order cannot be covered under - any mistake, defect or omission therein as used in Section 160. The said expression refers to any mistake, defect or omission in an order with respect to assessment, re-assessment; adjudication etc and which shall not be invalid or deemed to be invalid by such reason, if in substance and effect the assessment, reassessment etc is in conformity with the requirements of the Act or any existing law. Thus, the impugned order in the instant case also set aside, since it is an un-signed document which lose its efficacy in the light of requirement of Rule 26(3) of the CGST Rules 2017 and also under the TGST Act and Rules 2017. The show cause notice as also the impugned order both would not be sustainable and the same deserves to be and is accordingly set aside/quashed. However, the right of the respondents would stand reserved to take appropriate steps strictly in accordance with law governing the field. This Writ Petition stands allowed.

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• 2024 (4) TMI 609
  Violation of principles of natural justice - non-compliance with the provisions of Rule 142 (1) of the Central Goods and Services Tax Rules 2017 by giving an opportunity to the petitioner to respond in Form GST/DRC-01A or to pay the amount of tax - HELD THAT:- Keeping in view the peculiar facts and circumstances of the case, petition is disposed of granting petitioner two weeks time to file a response to the show cause notice dated 08.12.2023. The proper officer shall give an opportunity of personal hearing to the petitioner and thereafter adjudicate the show cause notice in accordance with law. Petition disposed off.

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• Income Tax

• 2024 (4) TMI 608
  Eligibility of Vivad se Vishwas scheme - Denial of claim as prosecution proceedings u/s 276CC of the Act were instituted for the aforesaid assessment years before the date of filing of the declarations and the proceedings were pending - As decided by HC [ 2022 (7) TMI 286 - TELANGANA HIGH COURT] prosecution against petitioner No.1 is u/s 276 CC which pertains to failure to furnish return under Sections 139 (1) or under Section 153 A etc., of the Act. Such delayed filing of income tax returns cannot be construed to be a tax arrear within the meaning of Section 2 (1) (o) of the Vivad se Vishwas Act. Therefore, such pending prosecution cannot be said to be in respect of tax arrear though it may be relatable to the assessment years in question and cannot render petitioner No.1 ineligible. Thus, rejection of the declarations of petitioner No.1 by the respondents cannot be sustained HELD THAT:- Having considered the matter in detail we dismiss this Special Leave Petition. However, we keep the question of law open. Pending application(s), if any, shall stand disposed of.

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• 2024 (4) TMI 607
  Addition u/s 68 - unexplained credit brought to tax - Addition u/s 2(2)(e) - amounts secured as loan were treated as deemed dividend - HC [ 2018 (2) TMI 2113 - DELHI HIGH COURT] deleted both the additions as done by ITAT and decided the appeal in favour of assessee. HELD THAT:- As we are of the view that the judgment of the High Court does not warrant interference. Hence, the Special Leave Petition is dismissed.

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• 2024 (4) TMI 606
  Addition u/s 14A r.w.r.8D - expenditure incurred on earning exempt income - Effect of section 14A amendment - ITAT deleted addition - HELD THAT:- The issue is squarely covered by an order of the Supreme Court in Essar Teleholdings Ltd [ 2018 (2) TMI 115 - SUPREME COURT ] as held Rule 8D is prospective in operation and could not have been applied to any assessment year prior to Assessment Year 2008-09. - Decided against revenue Addition made on account of income from interest - assessee is following mercantile system of accounting were the interest income would be considered on accrual basis - ITAT deleted addition - as per revenue Tribunal has erred in granting the benefit of Section 43D of the Act to the assessee - HELD THAT:- In absence of any doubt as to the status of the assessee as a State Financial Corporation and in face of the statutory scheme allowing it to account for recovery of interest on bad debts on cash basis, primarily, there is no error seen in the order of the Tribunal having allowed the benefit to the assessee to account for interest of bad debts on cash basis. The revenue has not brought on record any material fact as may raise a genuine doubt as to the entitlement of the assessee to account for interest of bad debts on cash basis. Therefore, suggestion made by Shri Mahajan that the matter may be remitted to the Tribunal to pass appropriate order in accordance with the scheme of the Act, is declined. In absence of any basis shown to make such an order of remand, we are of the opinion that that exercise may remain purely academic and may therefore serve no real purpose. Here, we may note that the Tribunal has not recorded any independent finding in the order impugned in the present appeal. It has rather followed its earlier order inter party for the Assessment Year 2001-02. Revenue as fairly states that the revenue does not appear to have assailed that order inasmuch as despite making efforts to obtain instructions in that regard, those are not forthcoming. We find that the findings recorded by the Tribunal are findings of fact based on material evidence on record.

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• 2024 (4) TMI 605
  Characterization of receipt - amount received by the appellant upon retirement from the partnership - taxability as capital gains under the Income Tax or not? - department, was of the firm stand that the right of the appellant in the partnership firm is a capital asset and the extinguishment of the right in the said firm is in fact a transfer of the receipt against capital asset - Appellant as contended that receipt of the share value of goodwill cannot be subjected to capital gains tax as there was no transfer of goodwill to the firm by the appellant - Whether the Income Tax Appellate Tribunal was correct in law in holding that the receipt of the share in value of goodwill by the appellant is taxable as capital gains under the Act ? HELD THAT:- Coming to the impugned order passed by the Tribunal in SMT. GIRIJA REDDY, P HYDERABAD [ 2012 (7) TMI 652 - ITAT HYDERABAD] would give a clear indication that the principles laid down by the Division Bench of this High Court in Chalasani Venkateswara Rao [ 2012 (9) TMI 12 - ANDHRA PRADESH HIGH COURT] has been accepted by the Tribunal while making the aforesaid observations. However, while concluding, the Tribunal took a different view altogether which, therefore, would not be in the opinion of this Bench, proper, legal and justified. Therefore, the respondent-Department cannot tax the amount received by the appellant upon retirement from the partnership as capital gains as there is no specific transfer of a capital asset affected when the appellant had retired from the partnership firm. So also, the finding of the Tribunal holding that the receipt of share in value of goodwill by the appellant is taxable as capital gains is not proper. Therefore, the impugned order passed by the Tribunal is unsustainable and the same deserves to be and is accordingly dismissed. Assessee appeal stands allowed.

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• 2024 (4) TMI 604
  Reopening of assessment - reasons to believe - reopening beyond period of four years - disallowance u/s 40(a)(ia) - non deduction of tds on stake money paid by the petitioner to the horse owners u/s 194B or Section 194BB - as argued receipt on behalf of the horse - owners and the debits affected on their instructions disclosing that the financials are prepared from the primary accounts and without claiming any expenditure in the regard, thus there cannot be any allegation of failure to truly and fully disclose material facts - HELD THAT:- The second respondent, while deciding on the petitioner s objections to the reasons offered to initiate re-assessment, has overlooked that the question of failure to deduct TDS for the amounts paid as Stake Money and the amounts deducted from the Stake Money on the instructions of the horse-owners to the credit of the horse-trainers and jockeys was examined after scrutiny of the petitioner s book while considering disallowing these amounts under Section 40(a)(ia) of the IT Act. In the light of the above, this Court must opine that there was no failure on the petitioner s part to disclose primary facts and the reasons for re-assessment are recorded arbitrarily without considering all the circumstances. Hence, the second question framed is answered in favour of the petitioner holding that the re-assessment that is initiated after four years on the ground that there is failure to disclose primary facts is barred in law. Decided in favour of assessee.

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• 2024 (4) TMI 603
  Rejection of DTVsV application - petitioner/assessee was seeking to settle only a part of the dispute obtaining between them - HELD THAT:- Given the fact we have concluded, while disposing of MUFG BANK LTD VERSUS COMMISSIONER OF INCOME TAX 2 ANR. [ 2024 (4) TMI 530 - DELHI HIGH COURT] that an applicant can choose to settle one or more appeals or SLPs that may emerge from a given assessment year under the VSV Act, the issue raised in this writ petition stands covered by a decision in the said matter. Accordingly, the prayer made in the writ petition is allowed. The impugned order rejecting the declaration and undertaking made by the petitioner/assessee along with the communication are set aside.

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• 2024 (4) TMI 602
  Validity of Reopening of assessment - as argued notices were not served on the petitioner - HELD THAT:- The documents that are relied on by the petitioner disclose that respondent had issued various notices to the petitioner calling upon him to file his returns for the year 2014-15. Even though it is contended that notices were not served on the petitioner, the same cannot be accepted, in view of the specific averment made in the assessment order regarding service of notices. Therefore, the contention taken by the petitioner is that, he was not given sufficient opportunity of being heard and the order in question is an ex-parte order, also cannot be accepted. Annexure-D was came to be passed on 19.03.2022 and before passing the order, several notices were issued to the petitioner. In spite of that, he has not chosen to appear before the authority and not complied the demand made therein. The next ground urged by the petitioner that the order in question was passed during Covid-19 also cannot be accepted. Under such circumstances, even though we do not find any reason to entertain the petition, only to afford one more opportunity to the petitioner of being heard, we deem it appropriate to quash the assessment order produced, and petitioner is directed to file income tax returns for the assessment year 2014-15 with respondent No. 3 within 30 days from today and to cooperate in compliance of the procedure in terms of the Act.

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• 2024 (4) TMI 601
  Revision petition u/s 264 by assessee - contention of the petitioner was negated by passing the order in the absence of any proper material being placed on record by the petitioner to establish that there was expenditure incurred in relation to earning income - as argued when the money was collected by the petitioner from farmers and repaid to the rig owners, the petitioner has acted as only a collection agent and there cannot be any income that has been derived by the petitioner and the said aspect of the matter has not property considered by the Commissioner of Income Tax HELD THAT:- In the first place, there is no material on record to show that there was income derived by the petitioner by doing business. According to the petitioner, he was only a collection agent. The previous year returns and the relevant year business would only go to show that he was running vulcanizing shop and he could not have derived so much of income from his business. Nevertheless, it was for the petitioner to place on record necessary documents before the Commissioner of Income Tax so as to consider the case of the writ petitioner in a proper manner while exercising the revisional jurisdiction u/s 264 of the I.T. Act. As settled principles of law and requires no emphasis that the power of the revisional authorities is not as vide as an appeal and therefore, in was incumbent on the part of the petitioner to place clinching material on record so as to revise the order of assessing authority by exercising the power under Section 264 of the I.T. Act. The petitioner having not placed on record such clinching material to show that what is the amount of money exactly derived, who are the persons who are land owners, who said to have dug the borewell in their lands and what exactly the charges that has been paid by him to rig owners, except producing the Bank statement as is rightly contended by the learned counsel for the respondents, the impugned order was inevitable. Petitioner as seeks one more opportunity for the petitioner to place on record the necessary material before the Commissioner of Income Tax and requests the Court to set aside the impugned order and provide one more opportunity for the petitioner to place necessary clinching evidence so as to show that there was no income derived by him or to explain the alleged expenses. Thus the matter is remitted to respondent No. 1 - the Commissioner of Income Tax for fresh disposal in accordance with law.

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• 2024 (4) TMI 599
  Ex-parte order passed by CIT - Revision u/s 263 - no representation on behalf of the assessee in respect of the notice issued by him - DR placed on record the assessment order passed by the AO in pursuance to the direction of Ld.Pr.CIT - HELD THAT:- DR for the Revenue and perused the material available on record and gone through the orders of the authorities below. It is brought to our notice that the assessment has already been passed by the Revenue in pursuance to the direction of Ld. Pr.CIT. From the assessment order, it is transpired that there was no compliance by the assessee. Further, it is noted that the original assessment order dated 21.10.2016 which has been revised, does not disclose any inquiry conducted by the AO except he accepted the documents filed by assessee. In the absence of any verification by the AO by making inquiry, we do not see any reason to interfere in the finding of Ld.Pr.CIT. Under these identical facts in the case of Rajmandir Estates (P.) Ltd. [ 2017 (1) TMI 774 - SC ORDER] has approved the action of Ld.Pr.CIT. Therefore, respectfully following the same, the grounds raised by the assessee are dismissed.

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• 2024 (4) TMI 598
  Dismissal of appeal in limine u/s 249 by CIT(A) - Addition of purchase price of the property bought by assessee son - as argued payment made for purchase of property for which the investment is made by assessee s son from his own independent source - D.R. submitted that as per section 249(4)(b) the assessee is liable to file the return of income and pay the advance tax before filing the appeal before the CIT(A) but assessee failed to do so HELD THAT:- The provisions of section 249(4)(b) of the Act is clear that the appeal before the CIT(A) should be admitted only when the assessee paid the advance tax where return of income has not been filed. The proviso to said section also describes that the assessee will get exemption from this clause if the application is made before the CIT(A) for not filing return of income or paying advance tax. But in the present case assessee has explained that the assessee herself has not obtained the said property but her son has paid the said amount for purchase of property from his own fund. In fact, the assessee s son is a joint owner of the said property and for the sake of conveyance specially the conveyance deed, the stamp deed is lesser therefore the assessee s name has been utilised in the conveyance deed. The relation is direct relation between the mother and son and therefore this should have been considered by the Assessing Officer as well as by the CIT(A). In the peculiar circumstances of the present case, the proviso to section 249(4)(b) of the Act should have been pointed out by the CIT(A) during the hearing which the CIT(A) failed to do so. Merely on the technical ground, the appeal before the CIT(A) cannot be dismissed and in fact after seeing the merit of the case, it appears that the transaction was not doubted and the investment made by the son of the assessee was also not questioned by the Assessing Officer. Decided on favour of assessee.

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• 2024 (4) TMI 597
  D eduction u/s 80P(2)(d) - interest received from the Co-operative Bank - gross interest calculation - HELD THAT:- We note that issue under consideration is no longer res judicata and the interest received from Co-operative Bank is allowable deduction u/s 80P(2)(d) for that reliance is placed on the decision of Surat VankarSahakari Sangh Ltd [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] wherein it was held that assessee-co-operative society was eligible for deduction under section 80P(2)(d) of the Act, in respect of gross interest received from co-operative bank without adjusting interest paid to said bank - Appeal of assessee allowed.

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• 2024 (4) TMI 596
  Addition u/s 68 sales made by the assessee to M/s Sangeeta enterprises - distance between the factory of the assessee and destination of Sangeeta enterprises is 54 km and therefore in the timing that is provided in the invoices of dispatch of goods is not possible - argument in the decision of Unicot food products private limited [ 2023 (9) TMI 1458 - ITAT MUMBAI] which is raised before us by the learned departmental representative of goods transported from assessee to destination of Sangeeta enterprises in one lorry and at jet speed - HELD THAT:- We find that the distant shown by the learned departmental representative of 54 km however the learned authorised representative has shown that the distance has wrongly been calculated by the learned departmental representative by Google Maps taking the wrong destination. The correct destination is hardly 30 km away from the place of dispatch of goods to the destination of delivery of goods. Even otherwise, from the excise records of the assessee, the goods have been shown as dispatch to the Sangeeta enterprises and relevant quantity of goods are reduced from the stock. Such stock has been sold by Sangeeta enterprises and sales is assessed in the hence of Sangeeta enterprises. Even in the case of unicot food products private limited the dispute was with respect to the sales made by that entity to Samaira enterprises, the coordinate bench has upheld in favour of the assessee. Therefore, we do not find any reason to deviate from the finding of the coordinate bench in that case. We confirm the order of the learned CIT A deleting the addition. Addition u/s 69C - advertisement expenditure incurred by the assessee on video shooting of its product santoor not recorded in the books of account of the assessee - HELD THAT:- As the product Santoor is owned by the assessee, marketed by the assessee and manufactured by the assessee naturally the expenditure is belonging to the assessee only. Thus, the argument that these expenses do not belong to the assessee is devoid of any merit. Also out of the total payment to be made of the expenditure of Rs. 28,222,000 the payment of Rs. 229 lakhs belongs to the period prior to 4/3/2014. Thus, the above payment, if at all made, does not belong to financial year 2014 2015. Thus, addition could not have been made for assessment year 2015 2016. Accordingly, the addition made by the learned AO under section 69C of the act and confirmed by the learned CIT A is not sustainable and hence directed to be deleted. Addition u/s 69A - unexplained money - Loose papers found the learned assessing officer noted that during search - HELD THAT:- We find that the order of the learned CIT A in case of Unicote for products private limited has travelled before the coordinate bench wherein [ 2023 (9) TMI 1458 - ITAT MUMBAI] as according to ld. AO, the entire cash sales reflected in the loose sheets pertain to the assessee when there are corresponding sales, which has been accounted in the books of M/s. Samaira Enterprises. If that premise of the AO is to be accepted then sale of M/s. Samaira Enterprises would be nil which cannot be the case, because this entity has shown sales and is assessed to tax since past. Thus, based on these documents and the ld. CIT (A) has given his elaborate finding for his conclusion and given direction to the ld. AO to verify and cross check, whether the sales adopted by him from the loose sheets appears in the cash book / bank book / sales of M/s. Samaira Enterprises or not and similar exercise to be undertaken with respect to expenses of the outgoing in the loose sheets seized and impounded in search proceedings. We do not find any reason to tinker with such a direction, which is based on the facts and material on record. Decided against revenue.

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• 2024 (4) TMI 595
  Exemption u/s 11 - Charitable activity u/s 2(15) - AO has treated that the activities of the trust as commercial activity by invoking the proviso to section 2(15) - HELD THAT:- As relying on decision by the Co-ordinate Bench in assessee s own case [ 2024 (3) TMI 944 - ITAT KOLKATA] we are inclined set aside the order of ld. CIT(A) and further uphold that the assessee is entitled to exempt u/s. 11 of the Act during the year on the ground that the profit derived from the services rendered as public utility service is very meager or there is deficit. Accordingly, the AO is directed to allow the exemption u/s. 11 of the Act. Appeals of the assessee are allowed.

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• 2024 (4) TMI 594
  Addition u/s 68 - share capital/share premium received as unexplained - onus to prove - no compliance of summons issued u/s 131 to the directors of the assessee - HELD THAT:- When the assessee has filed all the evidences as desired by the AO ,then the assessee is presumed to have discharged the onus cast upon it and the onus shifts to the revenue to conduct an enquiry on this evidences and record findings as to how the investment/money received by the assessee are covered u/s 68 of the Act. However in the present case, we note that no such enquiry was conducted into the evidences filed by the assessee and the addition was made simply for the reason that there was no compliance of summons issued u/s 131 to the directors of the assessee for enquiry and to produce the directors of the subscribing companies. In our opinion, there is no substantive ground for making the impugned addition and non production of directors of subscribing companies cannot be a justification for addition u/s 68 - Also assessee has filed all the details/evidences/ information from his own source as well as from all the subscribers. In the present case before us the assessee has furnished all the evidences before the AO but the AO has failed to conduct any further enquiry into these details /evidences and merely relied on the theory of non production of directors of the subscribing companies by the assessee while issuing no summons u/s 131 or notices u/s 133(6) of the Act to the subscribers. Decided in favour of assessee.

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• 2024 (4) TMI 593
  Reopening of assessment u/s 147 - Addition u/s 68 - applicability of section 115BBE - HELD THAT:- Information received from investigation wing, while recording the reasons AO categorically mentions that escapement of income has arisen on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. However, assessee has already assessed u/s 143(3). The search on Mr. Dilip Kumar Gupta, his statement and information about accommodation entries received by the assessee from Sarwaria Investments Consultants Pvt. Ltd. as a result into formation of belief that income of the assessee has escaped assessment cannot be found fault with. AO has received a tangible material and therefore, found if the assessment u/s 143(3) of the Act has been made, the reopening of the assessment on receipt of new information cannot be found fault with. As the assessee is also not challenging reopening of the assessment, same stands confirmed. Thus, ground no. 1 of the appeal is dismissed. Addition u/s 68 - onus to prove the identity, creditworthiness of the lender and genuineness of the transaction - Assessee produces material to discharge onus cast up on it in reassessment proceedings showing identity and creditworthiness of the lender as well as genuineness of the Transaction. If we hold that such material is enough, it will result in to blurring distinction between reopening of an assessment and reassessment of income. Reopening is door to make a reassessment. Assessee has accepted a loan from Sarwaria Investments Consultants Pvt. Ltd. To prove the identity of the above company, assessee has submitted the PAN No. of the lender as well as the fact that it is assessed with ITO, ward 2(1), Kolkata. With respect to the credit worthiness of the above loan, assessee has submitted the copy of the bank account of the lender with IndusInd bank. In the bank account when the loans were given to the assessee company, lender had received the sum from other entities. With respect to the genuineness of the transaction, assessee has submitted the copy of account of the lender from the books of the assessee and the confirmation of the lender from the books of lender providing copy of account of the assessee. The bank account of the lender and bank account of the assessee is also shown at the time of taking of the loan and on repayment of the loan. Form no. 26 AS, which is the annual tax statement of the lender, also shows that assessee has paid interest to the lender is deducted. In view of the above information provided before the lower authorities it is clear that assessee has discharged its initial onus to prove the identity, creditworthiness of the lender and genuineness of the transaction as per provision of Section 68 of the Act. Failure of the learned Assessing Officer to make any further inquiry on the document submitted by the assessee and throwing back onus on the assessee is fatal to the addition made in this case. Ld AO is not correct in holding that inquiry made by the Investigation wing is clear-cut. According to us AO should have conducted inquiry on the evidences submitted during reassessment proceedings either by (i) deputing inspectors (ii) issuing summons u/s 131 or (iii) by issuing inquiry letter u/s 133 (6), (iv) by asking assessee to produce the directors of the company. If none of the above steps or any other efforts are made by the ld AO on the evidences submitted, AO cannot make addition u/s 68 - we reverse the orders of the Ld. lower authorities and direct the learned Assessing Officer to delete the addition u/s 68 - Appeal of the assessee is partly allowed.

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• 2024 (4) TMI 592
  Penalty proceedings u/s 271(1)(c) - deduction u/s 35(2)(AB) was reduced by the Competent Authority - HELD THAT:- As time of filing of the return of income, the claim of deduction u/s 35(2)(AB) of the Act, was not reduced by the Competent Authority. The Competent Authority had subsequently approved the expenditure to an extent , therefore, the assessee during the course of assessment proceedings, reduced its claim as approved. CIT(A), therefore, considering the facts and circumstances of the case, applied the ratio laid down in the case of Price Water House Coopers Pvt. Ltd [ 2012 (9) TMI 775 - SUPREME COURT] It is not the case of the Revenue that expenditure claimed by the assessee, was not genuine. The accounts are audited and reported in Form No.3CLA was filed. Thus, the assessee had disclosed all material particulars before the Assessing Authority. Merely because the DSIR reduced and approved lower expenditure should not be the only reason for imposition of penalty. The AO ought to have brought adverse material in respect of the expenditure so claimed by the assessee more particularly, when the assessee himself has reduced its claim as recorded by the AO in the assessment order itself. Thus in the light of decision of M/s. Napord Life Sicences P.Ltd. [ 2019 (2) TMI 980 - ITAT MUMBAI] no infirmity in the finding of Ld.CIT(A), the same is hereby affirmed. Grounds raised by the Revenue are accordingly, dismissed.

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• 2024 (4) TMI 591
  Royalty receipts - income deemed to accrue or arise in India - assessee had sold software licenses to its associated enterprises and to other Indian customers - HELD THAT:- As decided in assessee own case [ 2021 (9) TMI 1542 - KARNATAKA HIGH COURT] relying on the case of Engineering Analysis Centre of Excellence Pvt. Ltd. ( 2021 (3) TMI 138 - SUPREME COURT] sale proceeds received by the assessee on sale of software licenses cannot be categorized as Royalty within the meaning of provisions of DTAA. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete the addition made as royalty income - Decided in favour of assessee.

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• 2024 (4) TMI 590
  Determine the nature of losses on forward foreign exchange contracts and foreign exchange derivative contracts - CIT(A) deleting the disallowances of losses made by the AO on Forward Foreign Exchange Contract and Foreign Exchange Derivative Contract by treating them as business loss and allowed them to set off and carry forward against the business income - AR as submitted that the transactions would not be covered u/s 43(5) but the losses were allowable to the assessee as business expenditure u/s 37(1) - HELD THAT:- The assessee, in the present case, is not a dealer in foreign exchange and therefore, it could not be said that such transactions were part and parcel of business transactions unless interse nexus thereof was established by the assessee. In the decision of Mumbai Tribunal in Vinodkumar Diamonds Pvt. Ltd. [ 2013 (11) TMI 408 - ITAT MUMBAI] it was held by the bench that in order that for forward transactions in commodities may fall within proviso (a) to section 43(5) of the Act, it would be necessary that the raw materials or merchandise in respect of which the forward transactions have been made by the assessee must have a direct connection with the goods manufactured or the merchandise sold by him. As per Board s Circular, in order to be genuine and valid hedging contracts of sales, the total of such transactions should not exceed the total stocks of the raw materials or the merchandise on hand which would include existing stocks as well as the stocks acquired under the firm contracts of purchase as held by Mumbai Tribunal in the case of Araska Diamond (P.) Ltd [ 2014 (10) TMI 776 - ITAT MUMBAI] - This decision considered the decision of MP Sugar Mills (P.) Ltd. [ 1983 (8) TMI 42 - ALLAHABAD HIGH COURT] which held that it will depend upon the facts of each case whether a particular transaction by way of forward sale, which is mutually settled otherwise than by actual delivery of the said goods, has been entered into with a view to safeguard against loss through price fluctuation in respect of the contract for actual delivery of the goods manufactured. Therefore, the loss was held to be not allowable either u/s 43(5) or under proviso thereof. Thus the adjudication of Ld. CIT(A) is set aside and the issue is restored back to the file of CIT(A) for de novo adjudication with a direction to the assessee to substantiate its case and by filing requisite details / explanations. Revenue appeal stand allowed for statistical purposes.

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• 2024 (4) TMI 589
  Disallowance of Provision for leave encashment - AO disallowed the same on the ground that, as per Section 43B(f) deduction for Leave Encashment is allowable only on actual payment and provision for Leave Encashment cannot be allowed as deduction - HELD THAT:- The issue is now settled against the assessee by the decision of the co-ordinate bench of this Tribunal in the assessee s own case [ 2020 (3) TMI 713 - ITAT CHENNAI] . Thus we are of the considered view that the assessee is not entitled for deduction towards the provision for Leave Encashment and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the assessee. Disallowance of deduction u/s 36(1)(viii) - AO has disallowed the claim, mainly on account of the fact that the amount was not transferred to Special Reserve during the financial year 2013-14 - HELD THAT:- Assessee has transferred Rs. 30 Cr to Special Reserve from the profits of the previous year 2013-14 and therefore, is eligible to claim the deduction u/s 36(1)(viii). Though as per the section, Reserve needs to be created out of the income of the previous year, there is no stipulation that the Reserve should be created in the previous year itself. A similar issue has been decided by the co-ordinate Bench of this ITAT in the assessee s own case in [ 2016 (2) TMI 1236 - ITAT CHENNAI] for the Asst Year 2009-10. The only reason for disallowing the claim of the assessee is that the Reserve was not created during the Financial Year 2013-14 and the ITAT order for the earlier year has not been accepted by the Department. Therefore, respectfully following the decision of the co-ordinate bench of the ITAT in assessee s own case[supra], we hold that the assessee is entitled to the deduction u/s 36(1)(viii) as the Reserve was created out of the profits for the year 2013-14 and delete the addition made by the AO. This ground of the assessee s appeal is allowed. Enhancement by CIT(A) - Depreciation on investments - CIT(A) confirmed additions based on the enhancement petition by the AO - HELD THAT:- Disallowance of depreciation on investment, was never subject matter of assessment order. Hence, we are of the view that enhancement made by CIT(A) on altogether new issue is without authority of law and accordingly, we quash the enhancement. Since we have decided the issue on technical grounds, the issue on merits is left open. Release of NPA provision - During the assessment proceedings the AO did not raise the issue - as during the appellate proceedings before the CIT(A), the AO moved an enhancement petition requesting him to enhance the income in respect of reversal of NPA provision made by the assessee in the books - HELD THAT:- We find that this issue is also a purely a new issue raised by CIT(A) and this was never the subject matter of appeal before him or this was never discussed by the AO during assessment proceedings or even a whisper is not there in the assessment order about this issue. The reasons given by us in the preceding paragraph on the power of enhancement shall mutatis mutandis apply to this ground of appeal as well. Therefore, we quash the enhancement and allow the ground of assessee s appeal by directing the AO to delete the addition. Deduction u/s. 36(1)(vii) - bad debts actually written off in the books of accounts of the assessee - HELD THAT:- As relying on decision of City Union Bank Ltd [ 2020 (3) TMI 475 - MADRAS HIGH COURT] we hold that the bad debts written off relating to non-rural advances is not required to be adjusted against provision for bad and doubtful debts made u/s. 36(1)(viia) of the Act and quash the enhancement made by the CIT(A) allowing the ground of assessee s appeal by directing the AO to delete the addition. Since we have decided this issue on merits, the issue on technical ground is left open. MAT computation - computing the book profit u/s 115JB towards provision for leave encashment - assessee had made provision for leave encashment in the books based on actuarial valuation and claimed the same as deduction while computing book-profit by observing the same an unascertained liability - HELD THAT:- As relying on HP. Tourism Development Corporation Ltd [ 2013 (6) TMI 97 - HIMACHAL PRADESH HIGH COURT] we hold that the provision for leave encashment is an ascertained liability and cannot be added to book profit, allowing the ground of assessee s appeal by directing the AO to delete the addition. Enhancement ordered by the CIT(A) - rework the deduction u/s. 36(1)(viia) by reclassifying some of the banks as non rural based on the census data of the year 2011 - HELD THAT:- As in the assessee s case in [ 2021 (11) TMI 568 - ITAT CHEENAI] for the A.Y 2013-14. we hold that the branches cannot classified considering the population as per 2011 census and therefore set aside the order of the CIT(A) on this issue and allow the ground of appeal of the assessee. Since the issue is decided on merits the technical ground raised by the appellant is left open. Disallowance of stale drafts - assessee is in the business of banking, has issued demand drafts to various persons and further any unclaimed demand drafts was kept in stale draft account under the head outstanding liabilities - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of ITAT in assessee s own case for assessment year 2013-14 [ 2021 (11) TMI 568 - ITAT CHEENAI] , where under identical circumstances the Tribunal has deleted addition made by the AO by holding that amount kept under stale draft account is not income of the assessee. Identical issue in case of City Union Bank Ltd. [ 2020 (3) TMI 475 - MADRAS HIGH COURT] where it has been clearly held that amount kept under stale draft account cannot be treated as income of the assessee. Decided against revenue. Disallowance of ex-gratia payment - AO had disallowed ex-gratia payment made by the assessee to its staff by observing that the Revenue has filed appeals before the Hon ble High Court against the orders of the ITAT and in order to keep the issue alive, the claim made by the assessee was disallowed - HELD THAT:- An identical issue had been considered by the Tribunal in assessee s own case for assessment year 2013-14 in [ 2021 (11) TMI 568 - ITAT CHEENAI] , where the Tribunal after considering relevant facts held that exgratia payment to staff is deductible u/s. 37(1) - Decided against revenue. Disallowance of expenditure relatable to exempt income u/s. 14A - HELD THAT:- An identical issue had been considered by the Tribunal in assessee s own case for assessment year 2013-14 [ 2021 (11) TMI 568 - ITAT CHEENAI] , where the Tribunal after considering relevant facts held that no disallowance u/s 14A is warranted held that no disallowance u/s. 14A is permissible in terms of Rule 8D, where the assessee is engaged in banking business. A similar view is taken by the Hon ble Supreme Court in the case of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] and held that shares and securities held by a bank are stock-in-trade and income received on such shares and securities must be considered to be business income. That is why, Section 14A of the Act would not be attracted to such income. Decided against revenue. Accrual of income - Addition made towards interest on non-performing assets - AO has made addition towards interest on nonperforming assets (NPAs) by holding that interest on loans needs to be offered to tax on accrual basis in respect of NPAs, which are more than 90 days old but less than 180 days - HELD THAT:- We find that an identical issue has been considered by the Tribunal in assessee s own case for assessment year 2013- 14 [ 2021 (11) TMI 568 - ITAT CHEENAI] , where under identical set of facts and by following the decision of Vasisth Chary Vyapar Ltd., [ 2018 (3) TMI 56 - SUPREME COURT] held that interest income cannot be said to have been accrued to the assessee on NPAs account - Decided against revenue. Disallowance of depreciation on ATMs - assessee has claimed depreciation on ATMs at 60% - AO treated the ATMs as Plant Machinery and restricted the depreciation @ 15% - HELD THAT:- We find that an identical issue has been considered in the case of NCR Corporation [ 2020 (6) TMI 439 - KARNATAKA HIGH COURT] wherein held that the ATM machines are computers and are eligible for 60% depreciation. Disallowance of deduction claimed by the bank u/s 36(1)(viia) by computing the Aggregate Average Rural Advances by considering the incremental advance and not outstanding advance - HELD THAT:- We find that an identical issue has been considered by the Tribunal in the case of City Union Bank [ 2024 (3) TMI 613 - ITAT CHENNAI] where under identical set of facts has decided the issue in favour of the assessee as held AO is erred in computing deduction u/s. 36(1)(viia) of the Act, by considering only incremental advances made by rural branches of appellant bank as against the aggregate average advances made by rural branches of appellant bank as outstanding at the end of the financial year and thus, we direct the Assessing Officer to consider aggregate average advances outstanding at the end of the relevant financial year for the purpose of computing deduction u/s. 36(1)(viia) of the Act - Decided against revenue. Depreciation on investments - notional appreciation adjustment against the depreciation - HELD THAT:- We find that this issue is squarely covered by the ITAT in the case of State Bank of India [ 2020 (2) TMI 1350 - ITAT MUMBAI] with regard to addition of notional appreciation. In the said decision, the ITAT after analysing various decisions of the Hon ble Supreme Court held that notional appreciation cannot be taxed. Valuation of Preference Shares , we find that the same is held by the assessee as stock in trade. The Courts have consistently held in various decisions that the securities held by the Bank are stock in trade and can be valued at lower of cost or market value. Further we also find that the Board has issued a circular No. 18/2015 dated 02-11- 2015 in which it has stated that all the securities held by the Bank are business assets. In view of the above, we hold that the notional appreciation need not be offered to tax and the depreciation on the Preference shares is allowable and we delete the addition made by the AO and allow the assessee s ground of appeal. Computation of deduction u/s. 36(1)(viii) - Assessee has followed a particular method. But the AO has substituted his own method and has disallowed a sum - HELD THAT:- We find that this issue has been decided by the ITAT in the assessee s case for the Asst Year 2013-14 [ 2021 (11) TMI 568 - ITAT CHEENAI] wherein as held AO had already accepted computation methodology adopted by the assessee bank for assessment years 2010-11 2011-12, based on directions of ITAT, we are of the considered view that this year also the issue needs to go back to the file of the AO to consider the issue in light of directions of the Tribunal for earlier years. Hence, we set aside the issue to the file of the AO and direct him to follow the directions given by the Tribunal for earlier assessment years. This ground of the assessee is allowed for statistical purpose. Classification of 8 branches as non rural by the AO - HELD THAT:- As we find that the CIT(A) has not adjudicated this ground. Hence, in the interest of justice, we remit the issue back to the CIT(A) with a direction to adjudicate the same. This ground of the assessee is allowed for statistical purpose. Addition made towards interest accrued but not due on Government securities - AO made this addition by holding that income has accrued on the Government securities for the period from December 2014 to May 2015 and the same should be offered to tax for the Asst Year 2015-16 - CIT(A) deleted addition - AR submitted that the income on government securities accrues only on appointed days and therefore, the broken period interest receivable is not liable to tax - HELD THAT:- We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that this issue has been decided by the Hon ble Madras High Court in the assessee s own case in favour of the assessee. Further, we find that the Hon ble Karnataka High Court also decided the issue in favour of the assessee.

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• 2024 (4) TMI 588
  Delay in filling appeals - delays of 160 days in filing present appeal - HELD THAT:- The assessee is not likely to get any benefit in filing the appeals belatedly, rather there is always chance that such delay not be condoned. Considering the submission of Ld. AR for the assessee, wherein he has fairly accepted that he could not logged on the ITBA portal due to frequent changing in password by regular CA of assessee. We find that assessee has reasonably explained the cause of delay of 160 days, hence, the delay in the appeal is condoned. Bogus LTCG on listed company s shares - Addition u/s 68 - disallowance of appellant s claim of exempt income u/s 10(38) - HELD THAT:- We find that fact of the present case is identical to the facts in [ 2024 (4) TMI 529 - ITAT SURAT] wherein held as the assessee proved genuineness of sale transaction by bringing on record contract notes of sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, Assessing Officer was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit. Thus, addition of undisclosed income under section 68 is deleted. In the result, the ground of appeal raised by the assessee is allowed.

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• 2024 (4) TMI 587
  Commission paid on bogus purchase and sales made by the assessee company - HELD THAT:- We find that the assessee has been contending right from the assessment proceedings that it has disclosed and offered to tax gross profit on bogus sales which has been accounted for in its books of accounts and the commission payment to the broker is therefore duly covered by the quantum of gross profit already offered to tax. The factum thereof has not been disputed by the Revenue and at the same time, both the lower authorities have failed to give due effect to the same. On perusal of records, it is noted that the assessee has disclosed gross profit at the rate of 1.60% on bogus sales of knitted cloth and therefore, the commission for procuring the bogus purchase and sale amounting as so determined by the AO stand covered by the said gross profit and there cannot be any separate addition in this regard. Therefore, the addition sustained by the ld CIT(A) is hereby directed to be deleted and the ground of appeal is allowed. Unexplained investment u/s 69 - HELD THAT:- Useful reference can be drawn to the decision of the Hon ble Supreme Court in case of Anantharam Veerasinghaiah Co [ 1980 (4) TMI 2 - SUPREME COURT] where the Lordships have held that where an intangible addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitute the undisclosed income of the assessee. It was held that that income is as much a part of real income as that disclosed in the account books, has the same existence and could be available to the assessee as the books profits could be and may constitute a fund from which the assessee may draw subsequently for meeting expenditure or introducing amount in his books. It was held that the mere availability of such fund cannot in all cases imply that the assessee has not earned further secret profits. It is for the taxing authority in each case to determine whether the unexplained cash deficit and the cash credits can be reasonably attributable to a pre-existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that year. In the instant case, we find that the unaccounted receivables which were brought to tax as undisclosed income at the time of survey was available to the assessee to make subsequent purchases which again remain unaccounted for and now sought to be taxed by the authorities. Given that the said amount has already been brought to tax in the impugned assessment year, there cannot be any further addition on utilization of the said amount towards making the purchases. Therefore, the addition to the extent of Rs 57.85 lacs out of addition of Rs 58.57 lacs sustained by the CIT(A) is hereby directed to be deleted. In the result, the ground of appeal is partly allowed. Addition on account of difference in stock - assessed the value of dead stock @ 30% and relief of value of 70% was given - HELD THAT:- We find that the ld CIT(A) has taken due cognizance of the assessee s contention regarding valuation of stock on average price and has held that the stock valuation was done on the basis of sale price and Gross profit @ 7.45% is to be reduced for arriving at the value as per books of accounts and assessee was held entitled for benefit. Further, regarding the second valuation report, we find that no such contention has been raised by the assessee before the lower authorities or is emerging from the assessment and appellate order. Even if we look at the valuation we find that it is unclear whether the same has been taken cognizance of by the survey team or for that matter, the AO during the assessment proceedings and in any case, it talks about valuation of stock as per average weighted price method for two quarters which has been duly addressed by the ld CIT(A) where he has held that the stock has to be valued at cost after reducing the gross profit rate. No justifiable basis to interfere with the order of the ld CIT(A) where he has sustained the addition and the same is hereby upheld and the ground of appeal taken by the assessee is dismissed.

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• 2024 (4) TMI 586
  Estimation of income - bogus purchases - Sales Tax Department has proved beyond doubt that the parties declared as hawala traders were involved in providing accommodation entry of purchases and the assessee was one of the beneficiary of accepting accommodation entry for the purchase - CIT(A) restricted addition to 12.5% of total bogus purchases - HELD THAT:- CIT - A while confirming the addition to the extent of 12.5% of the bogus purchases directed the learned assessing officer to allow deduction of gross profit already returned by the assessee in the regular books of account in respect of purchases made from the said alleged hawala bogus suppliers also. We find that CIT A has correctly upheld the addition to the extent of 12.5% when the complete stock register showing quantitative details along with undisputed sales are accepted. No infirmity was pointed out by the learned departmental representative that when learned CIT A has followed the decision of Vishwashakti Construction [ 2023 (5) TMI 278 - BOMBAY HIGH COURT] and retained the addition to the extent of 12.5% of the bogus purchases correctly - Decided against revenue.

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• 2024 (4) TMI 585
  Addition u/s 56(2)(vii)(b) - transfer under gift deed - execution of the gift deed in pursuant to the family settlement / arrangement - HELD THAT:- As it is settled proposition of law that to understand the terms of a document one has to look to the substance rather than the form of it if mere formal description is not conclusive, unless the context shows the intention of the parties. In the case in hand as evident from the relevant record the gift deed in question was executed in the process of family settlement arrangement and distribution of the assets between the parties and therefore, the nature of transactions has to be determined on the basis of the substance and the real and intent of the parties behind the transactions. As evident from the seized material itself that the land in question was very much part of the assets to be distributed and consequently part of the family settlement/arrangements. The execution of the gift deed in question is only to give effect to the settlement and distribution of the assets between the parties. Hence, it is only a document of transfer of title in the scheme of distribution of assets under the Settlement between the parties and not in the nature of gift. Therefore, the transfer of the land in question through gift deed ought to have been considered in the light of surrounding facts and circumstances of settlement of division of properties between two related families and not in isolation. As the land in question was very much part and parcel of the settlement between the parties therefore, was also subject matter of distribution of assets between the parties then it would not fall in the ambit of section 56(2)(vii)(b) of the Act as it is not a transfer without consideration rather it is a transactions of exchange of the assets under the family settlement arrangement and distribution of the assets between the parties. Accordingly, transactions of transfer of the land in question by execution of the gift deed dated 04.02.2017 is only in pursuant to the family settlement/arrangement and in exchange of distribution of assets between the parties and consequently the said transactions would not fall in the ambit of section 56(2)(vii)(b) - Appeal of the assessee is allowed.

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• 2024 (4) TMI 584
  Royalty receipt - transfer of right to use a computer software - taxation @ 10% as per 115A(1)(b)(A) or @ 20% as per section 206AA - HELD THAT:- Assessee has developed a data base cloud Indix which enable the customers to structure crawled product data and a data-as-a-service business model for most consumer retail product categories. As per agreement between the assessee and M/s.Samsung R D Institute India Bangalore Pvt. Ltd., the assessee had agreed to categories and integrates data services as shopping application of the Indian Company, whereby, the Indian Company would use Indix Data services to internally copy, store, reproduce and modify assessee s licensed data for their shopping application. Integrating the Indix Data services into the shopping application and developing shopping application and also use a reasonable number of copies of documentation or materials provided solely in connection with the Indix Data services. From a combined understanding of the assessee s services, as per agreement between the parties and as per provisions of Sec. 9(1)(vi) of the Act, it is clear that the services provided by the assessee to Indian company is in the nature of transfer of right to use a computer software and the consideration received is for the transfer of all or any right/s (including granting of license) to use of computer software owned by the assessee and thus, in our considered view, the services provided by the assessee to the India payee falls under the definition of royalty in terms of Sec. 9(1)(vi). Therefore, the assessee offering income as per Sec. 115A(1)(b)(A) of the Act @ 10% is in accordance with law. The Ld.CIT(A) without appreciating relevant facts and also not considering the agreement between the parties, simply directed the AO to assess sum received by the assessee @ 20% and thus, we set aside the order of the CIT(A) and direct the AO to assess royalty received by the assessee from Indian Company u/s. 115A(1)(b)(A) of the Act, and charge tax @10%. The AO is also directed to verify Form No.26AS of the assessee and give credit for the taxes - Appeal filed by the assessee is allowed.

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• 2024 (4) TMI 583
  TDS u/s 194C - payments of purchase to various vendors - Non deduction of TDS - addition u/s 201(1) and interest u/s 201(1A) - CIT(A) came to the conclusion that the transaction on account of supply of finished goods to the assessee was principal to principal basis in pursuance of a contract for a sale and not a contract for work as alleged by the AO - Whether the transaction involving payment to various parties toward purchase of finished goods are under contract of purchase or contracts of works contract within the meaning of section 194C? - HELD THAT:- We are of the view that as per the definition of works given in section 194C it is only a contract of works only when the assessee supplies the raw materials or directs vendors to purchase from its associate and supplies the finished goods to the assessee then only it will fall under works contract. In the given case it is not brought on record that assessee has supplied the raw materials or directed the vendors to purchase from its associate to complete the manufacturing. As per the information available on record the assessee has given purchase order with the specification of the finished product with a condition that the finished goods should match the specifications and in case it does not match the goods will be returned back to the vendors. This is a standard purchase order given to the vendors to supply the goods as per the specification, without specifications the purchase order is not complete. Here, the payments made by the assessee is towards the contract of purchase or contracts of works is an issue under consideration, as held in the case of CIT v. Glenmark Pharmaceuticals Ltd. [ 2010 (3) TMI 289 - BOMBAY HIGH COURT] , thus the transactions carried on by the assessee is clearly falls within the ambit of contract of purchase. Thus not to disturb the findings of the Ld. CIT(A) to treat the transactions as contract of purchase and not of works contracts. Accordingly, we direct the AO to delete the additions proposed u/s 201(1)/201(1A) - Grounds raised by the revenue are dismissed.

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• 2024 (4) TMI 582
  Exemption u/s 11 - rejection of assessee s application for registration u/s 12A - application rejected primarily on the basis that the assessee would be promoting business of manufacturing and marketing of pharmaceutical drugs of the entities who had sponsored the research work - whether the objectives of the assessee are charitable or not? - HELD THAT:- CIT(Exemption) has not doubted about the charitable nature of the objectives, but rejected the application primarily on the basis that the assessee would be promoting business of manufacturing and marketing of pharmaceutical drugs of the entities who had sponsored the research work. There cannot be any doubt that imparting awareness amongst the patients in respect of diseases which badly affected the health of the individual, is certainly a charitable activity. In our considered view at the stage of registration the learned CIT(Exemption) is required to examine the objectives of the assessee, whether such objectives would fall under the category of charitable or not. Whether the assessee incurred expenses on such activity or not can be verified by the assessing authority and if it is found that the assessee is not carrying any charitable activity and the expenditure is incurred for promotion of business of other entity, the AO is empowered to disallow the expenditure and request for cancellation of registration. See FIFTH GENERATION EDUCATION SOCIETY VERSUS COMMISSIONER OF INCOME-TAX [ 1990 (5) TMI 38 - ALLAHABAD HIGH COURT] Commissioner is not to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17A and whether Form No. 10A has been properly filled up.The order impugned does not say that the objects of the society are not charitable in nature; it merely says that they are general in nature. Just because they are general, they do not cease to be charitable. The Commissioner has also observed that no activity has been carried on by the society. It is also not the requirement of section 12A of the Act We restore the application to the file of learned CIT(Exemption) to grant registration in accordance with law. Decided in favour of assessee.

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• 2024 (4) TMI 581
  Capital gain on sale of equity shares - period of holding of shares - LTCG OR STCG - short term capital gain (STCG) as held by the AO - date of transfer of shares - as argued said shares were held by the assessee for more than 12 months preceding the date of transfer - assessee company incorporated under the laws of the state of Delaware, USA is a tax resident of the Unites States of America - assessee s preposition before us is that the period of holding of equity shares to be taken from original allotment of CCPS, through which it was converted into equity shares that were sold by assessee. HELD THAT:- As observed that there exists a clause for condition precedent to the sale which has to be fulfilled by both the vendor and the purchaser as specified in clause (4) of the said agreement. It is also evident that clause 4.3.7 of the said agreement either the purchaser or the vendor can rescind the said agreement within 120 days from the date of the agreement where either of the parties have failed to fulfill the conditions precedent to the satisfaction of either of the parties. It is also evident that sub clause 1 specified in clause 5 for delivery of shares to the purchaser is also fixed by the parties to be after the satisfaction of all the condition precedent but in any event has to be after 03.07.2006 and not later within 120 days from the date of execution of the said agreement. These clauses have categorically specified the date of contract of sale as declared by the parties which has been mandated by the board in Circular No. 704 which has been heavily relied upon by the lower authorities. The above position has justified the fact that the date of the agreement by no stretch of imagination could be the date of sale of the shares by the assessee to the purchaser. As per the decision of Bharti Gupta Ramola [ 2012 (4) TMI 438 - DELHI HIGH COURT] the date of transfer is 30.06.2006 for computing the holding period of assets from both the date, i.e., of acquisition and sale are not to be excluded. We would also like to draw our support from the decisions relied upon by the ld. AR where in case of Mrs. Hami Aspi Balsara [ 2009 (5) TMI 920 - ITAT MUMBAI] the co-ordinate bench on identical facts have decided that the date of contract of sale would be the date of fulfillment of the conditions specified in the share purchase agreement and only upon the fulfillment of the said conditions, the date of contract of sale is said to have crystallized. Thus we hold that there is merit in the submission of the assessee and, therefore, we deem it fit to hold that the sale of shares by the assessee would attract LONG TERM CAPITAL GAIN (LTCG) and, hence, allow the grounds raised by the assessee.

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• 2024 (4) TMI 580
  Revision u/s 263 - Disallowance of STCG - FMV determination of shares - assessee and eight investment companies are not directly related by virtue of shareholding - as per CIT AO has failed to verify the issue of short term capital loss declared by the assessee from sale of unquoted equity shares pertaining to eight investment companies in right perspective of law, even though, the assessee has escalated the price of the shares to derive artificial short term capital loss HELD THAT:- When Fair Market Value of the shares when allotted was not on par with face value of shares, in our considered view, no prudent businessman will venture into subscribe to said shares. Further, the analysis financial statements of eight companies as explained by the PCIT clearly reveals that the valuation has been done to arrive at Fair Market Value of shares, is not in accordance with Rule 11UA of the Income Tax Rules, 1962. Although, the assessee claims that it has agreed to subscribe to shares of eight companies at face value to recover unpaid/ unsecured loans from said companies, but said claim was unsubstantiated. From the above and also from the reasons given by the PCIT in their order u/s. 263 it is abundantly clear that although, the assessee and eight investment companies are not directly related by virtue of shareholding, but because of control and management, they can be considered as related parties. Since, the transactions between the assessee and eight companies were not at arm s length price the resultant loss declared by the assessee from transfer of equity shares can at best be treated as structured transactions to derive undue benefit of short term capital loss . Although, the assessee has claimed excessive loss from sale of equity shares of eight companies and allowed to carry forward to subsequent years, the AO has failed to carry out required enquiries he ought to have been carried out in light of Explanation-2 to Sec. 263 of the Act, and thus, in our considered view, the assessment order passed by the AO u/s. 143(3) definitely becomes prejudicial to the interest of the Revenue. Therefore, no error in the findings recorded by the PCIT to set aside the assessment order passed by the AO as erroneous in so far as it is prejudicial to the interest of the Revenue and thus, we are inclined to uphold the findings of the PCIT and dismiss the appeal filed by the assessee.

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• 2024 (4) TMI 579
  TDS u/s 194C - Non deduction of TDS on payment to the persons who were not the owner of the vehicle - computing and levying amount of TDS u/s 201(1) and interest u/s 201 (1A) - as per DR vehicle owners are not having PAN and person who filed declaration are not owner of the vehicle, therefore, the assessee is liable to make TDS and on account of such default demand has rightly been confirmed in the case of the assessee - whether the term owns be taken essentially to mean registered owner under Motor Vehicles (MV) Act or should it be read to mean the beneficial owner? HELD THAT:- Declaration u/s 194C (6) is a statement made by a transporter and it confirms that the transporter does not own more than ten goods carriages during the previous year and is engaged in the business of the plying, hiring or leasing goods carriage. Thus, the term owner here refers to anyone who is in possession of the goods carriage, not necessarily the registered owner. Transporters provide this declaration along with their Permanent Account Number (PAN) to the payer to avoid TDS deduction. The Finance Act 2015 has approved amendment to section 194C (6) providing for deduction of tax at source unless the transporter who is engaged in the business of playing, hiring or leasing goods carriage, owns not more than goods carriages and furnishes a declaration to this effect along with PAN to the payer. The amendment is applicable from 01-06-2015. The meaning of the word owner as occurring in section 194C(6) regarding deduction of tax at source. For the purpose of section 44AE, the term owner means anyone in possession of the goods carriage and not the registered owner. This assumes importance in defining the term owns in section 194C(6) because, the taxation of the assessee transporter is squarely covered under the provisions of section 44AE. In addition we also take support of our view from the various judicial precedent on the issue and the apex court of the country has decide the question of ownership based on the intention of the legislature, namely to give benefit or to tax the assessee. Thus for the purpose of section 194C(6), the term who owns essentially means the one who possesses . Since it is not a case of the revenue that the assessee has not submitted the declaration, it is available on record and based on that declaration the contention of the revenue that persons to whom the payments were not the owner and the ultimately owners name was displayed and contended that the person who filed the declaration is not the owner of the vehicle. Based on the discussion recorded here in above, since in this case the declaration is already obtained by the assessee and the purpose of section 194C(6), the term who owns essentially means the one who possesses and the assessee has paid to the person who filed the declaration, ergo we order accordingly. Appeal of the assessee is allowed.

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• Customs

• 2024 (4) TMI 578
  Jurisdiction - power to adjudicate SCN - Seeking direction to expeditiously adjudicate SCN u/s 124 of the Customs Act, 1962 - seeking provisional release of the seized goods u/s 110A of the Act - only argument raised by the petitioner is that the case of the petitioner is peculiar and as such an officer now below the rank of Commissioner of Customs should adjudicate the same. HELD THAT:- The only factor to show peculiarity is that the petitioner was arrested at the Airport and the arrest was authorized by Commissioner of Customs. Further, it is contended that in the litigation that enured prior to the issuance of the Show Cause Notice, an affidavit was filed by Commissioner of Customs - there are no so-called facts as contended by the petitioner amount of any peculiar facts and circumstances warranting any transfer of jurisdiction. Section 104 of the Act dealing with power of arrest, empowers Principal Commissioner of Customs or Commissioner of Customs, by a general or special order, to arrest any person whom he has reason to believe has committed an offence punishable under Section 132, 133, 135, 135A or Section 136 of the Act. Petitioner was alleged to have committed an offence under Section 132 and 135 and the arrest of the petitioner was done under the order of Commissioner of Customs. Since the Commissioner of Customs was impleaded, in terms of the said Circular, it was the Commissioner of Customs, who was authorized to file an affidavit. Accordingly, mere fact that Commissioner of Customs has filed an affidavit would not denude an officer, otherwise empowered under the Act and the Rules and Notifications, to issue and adjudicate a Show Cause Notice even though the officer may be below the rank of the Commissioner of Customs - it is noticed that the case of the petitioner is far from peculiar/unique as there are several cases where arrests are made for infraction of the provisions under orders issued by Commissioner of Customs, which are challenged and proceedings initiated prior and post issuance of Show Cause Notices. There are no peculiar facts and circumstances in the case of the petitioner to hold that an officer below the rank of Commissioner of Customs is denuded of the power or authority to adjudicate the Show Cause Notice - In the instant case subject Show Cause Notice issued on 31.03.2023 has been issued by a competent and authorized officer whose competence and authority is not under challenge by the petitioner. There are no merit in the petition - The petition is consequently dismissed.

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• 2024 (4) TMI 577
  Maintainability of petition - Chemical Examiner s report is correct or not - Classification of imported goods - Technical Grade Urea - to be classified under tariff item 31021090 of the First Schedule to the Customs Tariff Act, 1975 or not - Petitioner seeks to command the respondents to forthwith complete all procedures and formalities and clear the goods imported by the Bill of Entry in Ext. P4 as Technical Grade Urea - HELD THAT:- Whether the petitioner s product is Technical Grade Urea, or the Fertilizer Grade Urea is a question of fact which can be determined on the basis of the relevant parameters as determined by the Laboratory on examination of the samples drawn from the imported goods. This Court absolutely has no expertise to hold that the Chemical Examiner s report is incorrect. This question has to be decided by the authorities themselves. The writ petition is not maintainable and is dismissed.

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• 2024 (4) TMI 576
  Seeking amendment of shipping bills - inadvertent error in the Shipping bills - seeking to credit ROSCTL benefit amounts to the petitioner s Customs E-Scrip Ledger - HELD THAT:- The issue / question whether an inadvertent error in the Shipping bills by affixing No instead of Yes under the RoSCTL Scheme can be amended came up for consideration before the Madras High Court in PARAMOUNT TEXTILES MILLS PRIVATE LIMITED VERSUS THE DEPUTY DIRECTOR GENERAL OF FOREIGN TRADE, THE DGFT POLICY RELAXATION COMMITTEE, THE ASSISTANT COMMISSIONER OF CUSTOMS [ 2022 (4) TMI 1260 - MADRAS HIGH COURT] where the Madras High Court allowed the petition and granted the benefit of the RoSCTL Scheme in favour of the writ petitioner by permitting amendment of the Shipping bills. In the instant case, the material on record discloses that except for the inadvertent error that had crept into the Shipping bills, wherein the petitioner had declared N in the RoDTEP column instead of Yes , its intention to claim benefits under the RoSCTL Scheme is evident from the other material on record including the Shipping bills. Under these circumstances, in the light of the judgment of the Madras High Court in Paramount s case, the petitioner would be entitled to amend the subject 28 Shipping bills and necessary directions are to be issued to the respondents in this regard by quashing the Communication at Annexure N dated 24.11.2022 issued by the 1st respondent. The concerned respondents are directed to permit / allow the petitioner to amend the 28 Shipping bills vide Annexure H of the petitioner for the period from January 2021 to September 2021 and to grant the RoSCTL Scheme benefits to the petitioner and credit the said benefits to his Customs E-Scrip Ledger as expeditiously as possible - Petition allowed.

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• 2024 (4) TMI 575
  Refund of Excess Customs Duty paid - principles of unjust enrichment - refund claimed transferred to consumer welfare fund alleging that the amount has been passed on to others and not borne by the appellant - HELD THAT:- The entire amount of duty and interest has been paid by the appellant after receiving certain amounts from M/s. Microsoft Corporation to meet the requirement of payment of duty. During the settlement proceedings, the Hon ble Settlement Commission recorded the amount required to be paid and the amount deposited and also held that the excess amount, if any, be refunded to the assessee after adjusting the penalty amount. The authorities below transferred the refund amount to the Consumer Welfare Fund observing that the appellant has not borne the burden of the duty themselves but passed on to Microsoft Corporation; also the amount has not been shown as receivable soon after payment of duty. Reading the agreement in its entirety, it is found that after the proceedings were initiated against the appellant, they have received certain amounts from the overseas suppliers of M/s. Microsoft Corporation to meet the requirement of payment of duty and interest, who advanced certain amounts with a condition that the excess amount, if any, after adjusting the duty and interest be refunded to M/s. Microsoft Corporation. The appellant, thus, cannot retain the excess amount with them in accordance with the said agreement. Consequently, the refund amount cannot be retained by the Appellant but has to be repaid to M/s. Microsoft as per the said Agreement. Also, it is found that the appellant could not reflect the excess amount refundable in their books of accounts before the order of the Settlement Commission but could reflect only after the Settlement Commission has recorded a finding to this effect, quantifying the settlement amount. There are no discrepancy of not showing the excess amount as receivables before the Settlement Commission s order in their books of accounts which has been successively every year thereafter has been shown including for the financial year ending 31.3.2023. The impugned order is set aside - appeal allowed.

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• 2024 (4) TMI 574
  Levy of Anti-dumping duty - reflective glass during the period 04/01/2009 to 22/05/2009 - scope of N/N. 51/2009-Cus. dt. 22/05/2009 - HELD THAT:- During the intervening period i.e. 06.01.2009 to 22.05.2009, green reflective glass was not mentioned under the exclusion category of the N/N. 4/2009-Cus dt. 06/01/2009 but mentioned in the amending N/N. 51/2009-Cus. dt. 22/05/2009. It is found that recently, Bangalore Bench of this Tribunal interpreting the said notifications in the light of the principle of law laid down by the Hon ble Supreme Court in the case of Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT] and in the case of State of Gujarat Vs. Arcelor Mittal Nippon Steel India Ltd. [ 2022 (1) TMI 1013 - SUPREME COURT] , in the case of Glass House Vs. CC(Appeals) [ 2023 (11) TMI 915 - CESTAT BANGALORE] , observed In the present case, since Reflective Glass is not found in the Notification No.4/2009-Cus. dated 06.01.2009 for exempting them from anti-dumping duty, question of extending the benefit does not arise. The Commissioner (Appeals) has rightly held that no attempt can be made to infer the motive or meaning of the Notification other than what is emanating from the plain language of the Notification. Therefore, we uphold the order of the Commissioner (Appeals) and dismiss the Appeal. The impugned order upheld - appeal dismissed.

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• Insolvency & Bankruptcy

• 2024 (4) TMI 573
  Aggrieved person or not - sufficient cause or not - it was held by NCLAT that the Leave prayed for, by the Petitioner / Appellant, to prefer the present Comp. App is not accorded to, by this Tribunal, based on the facts and surrounding circumstances of the case, which float on the surface - HELD THAT:- The appellant T. Johnson, who was a Director of the company under liquidation had earlier submitted a proposal during the Corporate Insolvency Resolution Process, which upon consideration, was not accepted - at this stage, he should not be allowed and permitted to raise or propose a scheme. Further, the sale, as envisaged and accepted, was after long drawn process, in which opportunity was available to anyone to participate. Appeal dismissed.

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• 2024 (4) TMI 572
  Condonation of delay of 15 days in filing of the appeal - Jurisdiction - power of Tribunal to condone the delay - Section 61(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- After having perused the application for condonation of delay and the explanation offered for the delay, it is held that the Tribunal ought to have condoned the delay. The delay is condoned - impugned order set aside - appeal allowed.

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• 2024 (4) TMI 571
  Seeking extension of CIRP beyond the period of 330 days - liquidation of the Corporate Debtor - it was held by NCLAT that the applications filed for extension of time by the RP has rightly been dismissed and the application filed by the RP for an order of liquidation of the Corporate Debtor has rightly been passed which does not require interference by this Tribunal - withdrawal of CIRP application. HELD THAT:- In view of the subsequent development and as Indian Renewable Energy Development Agency Ltd. and National Asset Reconstruction Company Limited have accepted the proposal, the impugned order as well as the judgment/order dated 27.06.2023 passed by the National Company Law Tribunal is set aside, and the matter remitted to the NCLT, to examine and follow the procedure established by law in terms of Section 12A of the Insolvency and Bankruptcy Code, 2016. Appeal disposed off.

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• 2024 (4) TMI 570
  Maintainability of appeal - Approval of Resolution Plan - case in impugned order is that an order approving the Resolution Plan was passed by a Single Member of the NCLT in violation of the provisions of Section 419 (3) of the Companies Act 2013 - HELD THAT:- Since the impugned order of the NCLAT is by way of an order of remand, the appeal is not entertained at the present stage keeping open all the rights and contentions of the parties to be urged before the NCLT. The parties would be at liberty to approach the NCLT at an early date so that orders can be passed in accordance with the above directions. Appeal disposed off.

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• 2024 (4) TMI 569
  Withdrawal/modification of approved Resolution Plan - Section 31(1) of IBC - HELD THAT:- Resolution plans are not prepared and submitted by lay persons. They are submitted after the financial statements and data are examined by domain and financial experts, who scan, appraise evaluate the material as available for its usefulness, with caution and scepticism. Inadequacies and paltriness of data are accounted and chronicled for valuations and the risk involved. It is rather strange to argue that the superspecialists and financial experts were gullible and misunderstood the details, figures or data. The assumption is that the resolution applicant would submit the revival/resolution plan specifying the monetary amount and other obligations, after in-depth analysis of the fiscal and commercial viability of the corporate debtor - Absence or ambiguity of details and particulars should put the parties to caution, and it is for them to ascertain details, and exercise discretion to submit or not submit resolution plan. Records of corporate debtor, who are in financial distress, may suffer from data asymmetry, debatable or even wrong data. Thus, the provision for transactional audit etc, but this takes time and is not necessary before information memorandum or virtual data room is set up. Financial experts being aware, do tread with caution. Information memorandum is not to be tested applying the true picture of risk obligation, albeit as observed by the NCLAT the resolution professional s obligation to provide information has to be understood on best effort basis. The impugned order set aside - appeal allowed.

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• 2024 (4) TMI 568
  Condonation of delay in filing appeal - Auction of the Corporate Debtor as a going concern - lease deed continues in the name of Corporate Debtor - sale of shares of corporate debtor - it was held by NCLAT that There are no error in the carrying out auction of the corporate debtor as going concern - HELD THAT:- The impugned order of the NCLAT is dated 1 March 2023. The appeal has been filed on 24 May 2023. The delay of 22 days in filing the appeal is beyond the period of fifteen days which can be condoned under Section 62 of the Insolvency and Bankruptcy Code. The Civil Appeal is dismissed on the ground of delay.

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• 2024 (4) TMI 567
  Admissibility of section 9 application - initiation of CIRP against the Corporate Debtor - Respondent No. 1 and the Corporate Debtor both filed civil suit for recovery against each other - after the formation of the NCLT, the matter stood transferred in terms of the Notification dated 07.12.2016 of the Ministry of Corporate Affairs, Government of India - HELD THAT:- The judgment of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] , is considered, which is heavily relied upon by the counsel for the appellant to contend that due to pendency of civil suit application u/s 9 of the IBC cannot be admitted, where it was held that So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application. After going through the same and considering the findings as recorded by the NCLT and NCLAT, it is concluded that the argument as advanced by the counsel for appellant is of no help to them and the Tribunal has rightly admitted the application filed by the operational creditor for CIRP. Therefore, the order impugned of NCLT and NCLAT need no interference. Appeal dismissed.

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• 2024 (4) TMI 566
  Amendment of section 7 application - time limitation - date of default - HELD THAT:- It is clear from the amendment that the case of the respondent is that though the first default arose on 30 April 2014, the petition under Section 7 is not barred by limitation in view of the subsequent events including the acknowledgements in the balance sheets and the recovery certificate. The NCLAT while affirming the order of the NCLT allowing the amendment has specifically kept the question of limitation open. In that sense, the plea of the appellant that the petition under Section 7 of the IBC is barred by limitation is not prejudiced - Bearing in mind the above circumstances, it is not necessary for the Court to entertain the appeal. All aspects on the question of limitation would be decided by the NCLT. This order merely affirms the correctness of the order allowing the amendment without expressing any opinion on the merits of the plea on limitation - Appeal disposed off.

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• 2024 (4) TMI 565
  CIRP - Partnership Form - Maintainability of petition - Invocation of Section 95 of the Insolvency and Bankruptcy Code - Whether a petition against a partnership firm or its Directors is fileable and maintainable under Section 95 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal? - HELD THAT:- The maintainability of the petition before the Tribunal cuts at the root of the matter, as it relates to jurisdiction, to entertain the petition by the Tribunal. The Code does not permit it. If that be so, even a speck of paper cannot move before a fora that has no jurisdiction. It is un-understandable as to how and why the petitioners have to go before the Tribunal and tell the Tribunal that it has no jurisdiction to entertain the petition. The very acceptance of filing by the Tribunal is contrary to law. It is declared that the e-filing by the 2nd respondent under Section 95 of the Insolvency and Bankruptcy Code, 2016 as non est and illegal and consequently, the proceedings at whatever stage they are, before the National Company Law Tribunal, stands quashed. Petition allowed.

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• 2024 (4) TMI 564
  Interest on deposit - sale consideration amount deposited by the appellant - claim of interest after completion of the sale - rate of interest - HELD THAT:- The sale consideration was deposited by the Appellant, which was lying with the Liquidator and has earned interest. Sale consideration received for the assets of the Corporate Debtor is to be distributed to the stakeholders. The present is a case where assets have been handed over to the Appellant. Present is not a case where due to any reason, the Appellant is entitled for refund of sale consideration. In event the Appellant may be entitled for refund of sale consideration the prayer for refund of the sale consideration along with interest could have been considered. But, here the sale consideration, which was deposited and which has earned interest is in lieu of the assets, which have been ultimately sold to the Appellant and handed over to him. There is no merit in the submission of the Appellant that Liquidator should be directed to make payment of interest on the sale consideration, which was deposited by the Appellant due to delay in handing over of assets to the Appellant, which assets could not be handed over earlier due to restraint order of the Adjudicating Authority dated 04.04.2022, which could be vacated only on 01.06.2023. There are no merits in the appeal - appeal dismissed.

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• 2024 (4) TMI 563
  Liability of Corporate Guarantor - Guarantee has not been invoked by any of the financial creditors nor any claim was filed before the liquidator - existence of debt or not - HELD THAT:- From the facts brought on record, especially by RoC that 23 charges are still showing against the Company and the Company has issued Corporate Guarantee. The submission which has been pressed by the Appellant is that since Corporate Guarantee has not been invoked and no claim has been filed that cannot be relied for rejecting the liquidation application. The fact that guarantee has not been invoked, does not absolve the Corporate Guarantor from debt. The debt which is Corporate Guarantor, the Company has been given corporate guarantee and undertaken to pay the debt. The judgment of MUDHIT MADANLAL GUPTA VERSUS SUPREME CONSTRUCTIONS AND DEVELOPERS PVT. LTD. [ 2023 (7) TMI 1397 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] was a case where this court took a view that default occurred between 10A period and it was held that default on the Guarantor shall be on the date when the Corporate Guarantee has been invoked. The above was a case arising out of Section 7 application which was rejected on the ground of 10A which order was upheld. The above judgment in no manner support the submission of the Appellant. The liability of Corporate Guarantor is coextensive with the Lenders and the Lenders are at liberty to require the performance by the Guarantor of its obligation. The Adjudicating Authority after noticing the fact which was brought by the RoC as well as Central Bank of India and has rightly taken the view that the present in the not case for liquidating the Company under the process of voluntary liquidation. The submission of the Appellant that since guarantee has not been invoked there is no debt, cannot be accepted. Guarantee continues to bind the Corporate Guarantor to discharge its liability and the fact that as on date, guarantee has not been invoked, cannot be a ground for Appellant to be liquidated under Section 59 of the IBC. There are no error in the impugned order - appeal dismissed.

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• 2024 (4) TMI 562
  Condonation of delay of 34 days in submission of report under Section 112(1) of IBC - rejection of the repayment plan by the creditors - seeking necessary orders to the creditors for payment of Resolution Professional fee and expenses, already approved by the creditors - HELD THAT:- The delay of 34 days i.e. for the period from 24.10.2023 to 27.11.2023 arose in view of the delay in approval of the repayment plan, is condoned. Approval of the Repayment Plan submitted by the Personal Guarantor - HELD THAT:- The repayment plan placed before the 3rd creditors meeting held on 12.10.2023 was rejected by the Creditors with 88.52% and the remaining 11.48% did not exercise their vote - Considering the report of the Resolution Professional filed u/s. 112 and rejection of the Repayment Plan by the creditors, the creditors shall be entitled to file an application for Bankruptcy under Chapter IV consequent to the rejection of the Repayment Plan. The RP stands discharged. Since the Creditors have approved the payment of Resolution Professional fee and expenses with 64.01% voting share, the Resolution Professional fee and expenses of Rs.6,75,000/- as already approved by the creditors shall be paid. Application allowed.

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• Service Tax

• 2024 (4) TMI 561
  SVLDRS - Benefit of the Amnesty Scheme opted - non-payment of service tax in respect of services rendered under the head of commercial training and coaching services - failure to make payment on account of technical glitch or not - HELD THAT:- Taking note of the report issued by the Assistant Director attached to the office of the Principal Additional Director General of Systems and Data Management GST and Central Excise, GST Bhavan, Chennai, the contention of the appellant regarding technical glitches of the system cannot be accepted - this is a case where the appellant who had applied for the benefit of the Amnesty Scheme was well aware of the strict time schedule that had to be adhered to for making payments under the Scheme. It clearly comes out through the affidavit of the appellant himself that he came to know of the SVLDRS-3 intimation only on 15.06.2020, which was well after the last date of 31.03.2020 for making payments as originally envisaged under the Scheme. While the appellant apparently accessed the web portal of the SVLDRS on 29.06.2020, he does not appear to have attempted to make the payment envisaged since such details have not been captured by the system. The terms of the Amnesty Scheme being of the nature of an exemption from the requirement to pay the actual tax due to the government, have to be considered strictly in favour of the revenue and against the assessee, and hence the appellant cannot be permitted to avail the benefit of the Scheme on the facts of the instant case - Appeal dismissed.

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• 2024 (4) TMI 560
  Refund of service tax paid - time limitation - Business Auxiliary Service or not - rejection of refund claim on the ground that the petitioner had filed the said application after one year, the statutory period prescribed under Section 11B of the Central Excise Act, 1944 - principles of unjust enrichment. Unjust Enrichment - HELD THAT:- The Revenue took up this matter before the CESTAT against the order passed in Ext. P2 by the Commissioner (Appeals). The Tribunal vide the order dated 19.01.2018 in Ext. P3, remanded the matter back to the original authority to examine the record of the petitioner afresh and pass a fresh order. On remand, the 2nd respondent/original authority had considered the issue afresh and issued order dated 25.03.2021 in Ext. P5. The 2nd respondent had found that the payment of Rs. 15,66,169/- was made under protest. However, the petitioner did not produce any convincing document to prove that the tax paid by him of Rs. 15,66,169/- had not been passed on to the consumer of services ie., the respective distilleries and therefore, the petitioner had been held not to be entitled for claiming refund in absence of the evidence to prove that the petitioner had not passed on the tax liability on the distilleries, and he had paid an amount of Rs. 15,6,169/- from the own pocket. Time Limitation - 2nd respondent found that out of the said amount, Rs. 2,78,100/- was paid by the petitioner on 04.01.2007 and the application was made after one year, which would be barred under Section 11B of the Central Excise Act, 1944 - HELD THAT:- The question is of evidence and not on of the law. Whether the petitioner had passed on the tax liability on the distilleries, the consumers of the services of the petitioner is a matter of fact and evidence, and this Court cannot go into this question in exercise of its jurisdiction under Article 227 of the Constitution of India. In respect of the amount of Rs. 2,78,100/-, the original authority had categorically held that the application had been filed after one year of prescribed limitation period, and in respect of the other amount, he had failed to prove that the said tax liability had not been passed on to the consumers of the petitioner service. Therefore, this Court cannot examine the issue, which is only a question of fact and evidence and not of the law. This Court find no substance in this writ petition. Thus, the writ petition is hereby dismissed.

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• 2024 (4) TMI 559
  Reversal of CENVAT Credit - exempted service rendered as trading activity - whether the option exercised by the appellant by intimating to the Department under Rule 6(3A) dated 24.05.2011 and 02.05.2012 is legal and valid? - HELD THAT:- It is found that in the various cases, the issue for consideration was whether the demand can be sustained even when the appellant has not complied with the requirement of intimating the Department about availing the option under Rule 6(3A) of the CCR, 2004. In all the decisions, the appellant has reversed the credit attributable to the exempted services and it has been held by the Tribunal consistently that the said requirement is only a procedural requirement and the demand cannot be confirmed for such procedural lapse. Further, in the present case, the appellant is on a better footing because he has exercised the option by submitting intimation letters under Rule 6(3A) dated 24.05.2011 and 02.05.2012, but the Department has not considered the option exercised by the appellant simply on the ground that the option cannot be operative retrospectively from 01.04.2011 and 01.04.2012 respectively. The impugned order is not sustainable - Appeal allowed.

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• 2024 (4) TMI 558
  Refund of service tax paid - Construction of Residential Complexes Service - rejection on the grounds of non-submission of the required documents despite seeking time for submission of the same - HELD THAT:- Commissioner (Appeals) in the impugned order has upheld the order of the original authority on the ground that no documentary proof to satisfy that their service/activity falls within the purview of Board Circular 96/2007-ST dated 23.08.2007 was submitted. The contention of the appellant that their service would fall under Works Contract was also not considered by Commissioner (Appeals) as they have not taken any registration under Works Contract and discharged appropriate service tax. In this case the appellant contends that they are not in the activity of Construction of Residential Complexes to attract levy of service tax. They have contended that they are purchasing land, building flats and selling them to the customers. They are in the business of buying and selling of flats and hence they are not liable for service tax.Nonetheless they have registered and paid service tax, realizing that they ought not to have paid service tax they have filed a refund claim for the service tax paid. However, since the required documents as proof of payment of service tax as well as non-collection of same from the buyers was not produced by way of documents, their refund claim was rejected by the original authority as well as by the first appellate authority. The required documents are not brought on record even in the appeal before this Tribunal and the appellant has not appeared for hearing on the last three occasions - the appeal filed by the appellant is dismissed.

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• Indian Laws

• 2024 (4) TMI 600
  Regularization of petitioners who had served as casual/daily wage workers for a period of more than 10 years when decision in Uma Devi was pronounced by Apex Court [ 2006 (4) TMI 456 - SUPREME COURT] - Reason for Tribunal s disinclination to grant relief was that no material could be brought on record to establish that appointment of petitioners was not illegal but merely irregular. HELD THAT:- It is not dispute at the Bar by learned counsel for employer that the petitioners are equally situated as Ravi Verma Ors [supra] for having completed more than 10 years of casual/daily wage services on the date 10.04.2006 when decision in Uma Devi was pronounced by Apex Court [ 2006 (4) TMI 456 - SUPREME COURT] . It is also not disputed by the learned counsel for employer that the petitioners herein were also appointed in similar manner as the case of Ravi Verma Ors. and thus their appointments were not illegal but merely irregular and, therefore this Court is of the considered view that the benefit flowing from the decision of Uma Devi specially the directions in paragraph 53 of the said judgment squarely apply to the petitioners who are thus entitled to the same relief as extended by the Apex Court to Ravi Verma Ors. The period of 10 years which was pre-requisite for consideration for regularization as one time measure vide para 53 of Apex Court decision in Uma Devi, has been completed by all the petitioners herein. Therefore, the case of the petitioners is identical to the case of Ravi Verma and Ors. Accordingly, the objection raised by Shri Gopi Chourasia - Advocate on behalf of appellant stands rejected.

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• 2024 (4) TMI 557
  Maintainability of curative petition - restoration of arbitral award which had been set aside by the Division Bench of the High court on the ground that it suffered from patently illegality. Curative Jurisdiction may be invoked if there is a miscarriage of justice - HELD THAT:- In RUPA ASHOK HURRA VERSUS ASHOK HURRA ANOTHER [ 2002 (4) TMI 889 - SUPREME COURT] , a Constitution Bench of this Court dwelt on whether any relief is available against a final judgement of this Court after the dismissal of a petition seeking review of the judgement. Two opinions were authored. The main judgment was by Justice Syed Shah Quadri (on behalf of Chief Justice S P Bharucha, Justice Variava, Justice Shivraj Patil and himself). A concurring opinion was authored by Justice U C Banerjee - In his concurring opinion, Justice Banerjee also laid down a similar test of manifest injustice to exercise the jurisdiction of this Court under Article 142 while entertaining a curative petition. In essence, the jurisdiction of this Court, while deciding a curative petition, extends to cases where the Court acts beyond its jurisdiction, resulting in a grave miscarriage of justice. Scope of interference of courts with arbitral awards - HELD THAT:- The contours of the power of the competent court to set aside an award under Section 34 has been explored in several decisions of this Court. In addition to the grounds on which an arbitral award can be assailed laid down in Section 34(2), there is another ground for challenge against domestic awards, such as the award in the present case. Under Section 34(2-A) of the Arbitration Act, a domestic award may be set aside if the Court finds that it is vitiated by patent illegality appearing on the face of the award. In ASSOCIATE BUILDERS VERSUS DELHI DEVELOPMENT AUTHORITY [ 2014 (11) TMI 1114 - SUPREME COURT] , a two-judge Bench of this Court held that although the interpretation of a contract is exclusively within the domain of the arbitrator, construction of a contract in a manner that no fair-minded or reasonable person would take, is impermissible. A patent illegality arises where the arbitrator adopts a view which is not a possible view. A view can be regarded as not even a possible view where no reasonable body of persons could possibly have taken it. This Court held with reference to Sections 28(1)(a) and 28(3), that the arbitrator must take into account the terms of the contract and the usages of trade applicable to the transaction. The decision or award should not be perverse or irrational. An award is rendered perverse or irrational where the findings are (i) based on no evidence; (ii) based on irrelevant material; or (iii) ignores vital evidence. Patent illegality may also arise where the award is in breach of the provisions of the arbitration statute, as when for instance the award contains no reasons at all, so as to be described as unreasoned. While adjudicating the merits of a Special Leave Petition and exercising its power under Article 136, this Court must interfere sparingly and only when exceptional circumstances exist, justifying the exercise of this Court s discretion - Unlike the exercise of power under Section 37, which is akin to Section 34, this Court (under Article 136) must limit itself to testing whether the court acting under Section 37 exceeded its jurisdiction by failing to apply the correct tests to assail the award. The award was patently illegal - HELD THAT:- In the case at hand, the Division Bench found the award to be perverse, irrational and patently illegal since it ignored the vital evidence of CMRS certification in deciding the validity of termination. This, the Division Bench held, overlooked the statutory certification deeming it irrelevant without reasons and thus the award was patently illegal according to the test in Associate Builders - The Tribunal did not appreciate the individual import of the two phrases separately from each other. This was not a matter of mere alternate interpretation of the clause, but an unreasonable and uncalled for interpretation of the clause, which frustrated the very provision, and which no reasonable person would have accepted considering the terms of the clause. It is clarified that Tribunal could have still arrived at the conclusion that the steps taken during the cure period were not effective within the meaning of the clause for certain reasons. However, such discussion and reasoning is conspicuously absent. In essence, therefore the award is unreasoned. It overlooks vital evidence in the form of the joint application of the contesting parties to CMRS and the CMRS certificate. The arbitral tribunal ignored the specific terms of the termination clause. It reached a conclusion which is not possible for any reasonable body of persons to arrive at. The arbitral tribunal erroneously rejected the CMRS sanction as irrelevant. The award bypassed the material on record and failed to reconcile inconsistencies between the factual averments made in the cure notice, which formed the basis of termination on the one hand and the evidence of the successful running of the line on the other. The Division Bench correctly held that the arbitral tribunal ignored vital evidence on the record, resulting in perversity and patent illegality, warranting interference. The parties are restored to the position in which they were on the pronouncement of the judgement of the Division Bench. The execution proceedings before the High Court for enforcing the arbitral award must be discontinued and the amounts deposited by the petitioner pursuant to the judgment of this Court shall be refunded. The Curative petitions must be and are accordingly allowed.

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• 2024 (4) TMI 556
  Dishonour of Cheque - issuance of statutory notice to proper person or not - acquittal of respondent No. 2 - not giving findings by the trial court will affect the outcome of the case or not. HELD THAT:- In this case, admittedly the cheques are issued on a Bank account maintained by the Company with the Federal Bank. It was not a Bank Account in the name of Respondent No. 2. He has signed as a Director of Respondent No. 1. The issue in Aneeta Hada s case is slightly different. It is on the point of necessity of joining Company when the cheques are drawn on an account maintained by the Company. The Company has to be joined - In this case, Company is joined as an Accused along with the signatory who is its Director. The issue is different. The issue is about issuance of a notice to proper person. The proviso (b) contemplates issuance of a notice to a drawer. In this case, cheques are drawn by Respondent No. 2 as a Director of Respondent No. 1 and that too on an account standing in Bank s record in the name of Respondent No. 1. It is not in dispute that notice is not issued to the Company and Respondent No. 2 as Director of Respondent No. 1. There is a liability in between the complainant and Accused No. 1. But he has not issued the cheques in his personal capacity on an account maintained by him in his person but he has chosen to draw the cheques on a Bank account maintained by his Company. The complainant has failed to issue notice to Company and Respondent No. 1 as Director. The provisions of clause (b) of Section 138 are mandatory. When the consequences of a particular Act are deterrent, the provisions have to be followed and interpreted strictly. The complainant has failed to adhere to the provisions of the proviso (b) of Section 138 of the NI Act. So even though I have given finding in favour of the complainant on the other aspect, the contention of learned Advocate Shri Khanchandani cannot be accepted. Respondent No. 2 is a Director in Respondent No. 1 Company but law recognizes both these entities as separate. The judgment of acquittal need no interference - appeal dismissed.

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