Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 18, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of GST registration of petitioner - non-filing of returns for a continuous period of 6 months - if any such outstanding statutory dues under GST are required to be paid, the same shall be deposited by the petitioner without fail. Upon such payment of statutory dues under the GST by the petitioner, the appellate authority will re-decide the appeal on merits and pass appropriate order. - HC
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Challenging the revocation of GST registration - Since it is apparent that the order dated 15.02.2022 cancelling the petitioner’s GST registration was passed in the violation of the principles of natural justice, the said order is liable to be set aside.- HC
Income Tax
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Addition u/s 68 - sale transaction in penny stock shares - fictitious booked loss by the assessee - Assessee having not proved the genuineness of the claim, the creditworthiness of the companies in which they had invested and the identity of the persons to whom the transactions were done, have to necessarily fail. - Order of ITAT deleting the additions reversed - HC
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Condonation of delay in claiming refund based on Tax Deducted at Source [TDS] - As the petitioner is being permitted to file revised returns on condonation of delay, if there is any occasion for the respondents to initiate proceedings u/s 143[2] for framing of assessment u/s 143[3] petitioner must be precluded from raising the defence of limitation. - HC
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Validity of proceedings u/s 153C - Revenue protest, stating that the petitioner has chosen to approach this Court at the eleventh hour, knowing fully well that the limitation for completion of the assessments is imminent. This contention is not acceptable for the reason that the show-cause notices were issued only on 11.03.2023. - HC
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Deduction u/s 10AA - having regard to the fact that the deduction made available to an assessee under Section 10AA of the 1961 Act, which has a unit located in the SEZ, is rooted in the 2005 Act, one would, in our opinion, necessarily have to advert to the definition of expression “services” contained in the said Act. - HC
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Assessment u/s 153C - Since a response was on record, undoubtedly, the AO was required to issue a notice under Section 143(2) of the Act and then proceed further in the matter, and perhaps thereafter, frame an assessment u/s 147 read with Section 144 of the Act. This was not done. - for the AO to take recourse to Section 144 of the Act was completely uncalled. - HC
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Foreign Tax Credit (FTC) u/s 90/90A - Judicial precedent - The Bench is of considered opinion that Ld. first Appellate Authority being Subordinate to the Tribunal was supposed to follow the principles of law set down and without citing any proposition of law of binding nature contradictory could not have ignored the judgment on observation that it is not known as to whether the aforesaid decision has attained finality or not. - AT
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Unaccounted professional charges received in cash - Addition u/s 28 - AO is completely erred in making addition towards difference amount of professional charges on the basis of Out Patients data collected from M/s.Apollo Hospitals and statement of Manager (Operations) without any corroborative evidence to suggest that the assessee has received so much professional charges from the Hospitals and further, the same has not been accounted in his books of accounts - AT
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Levying penalty u/s 271D - violation of section 269SS - “reasonable cause” u/s 273B - sale of property - total consideration assessee received part by demand draft and balance amount in cash - Such technical breach due to ignorance of the relevant provision of law on account of bonafide belief coupled with the fact that the transaction in question is genuine and bonafide transaction are undertaken during the regular course of its business will not result in levy of penalty u/ 271D of the Act. - AT
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Revision u/s 263 - once we have found that AO has discharged the duty of investigator (on the issue of deduction claimed u/s 24(a) of the Act which included amenities charges), then before CIT(E) holds the view of AO as erroneous, it was imperative on the part of CIT(E) to have made necessary enquiries or verification and should have arrived at a conclusion that the view of AO was unsustainable in law. - AT
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Disallowance of depreciation claim - assessee has not carried out any business activity - The case of the assessee that the assets are kept ready for use and it was expecting only favourable market situation. It is also submitted that the assessee has maintained its business establishment and was generating other types of income, besides servicing loan taken for business purposes. - claim of depreciation allowed - AT
Customs
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Valuation of imported goods - rejection of assessabla value - The statements, as summarized, only show that the respondent was ignorant of many factors, but it does not establish that the respondent had mis-declared the value. It is also evident that there was no chemical analysis report nor was any sample drawn to allege mis-declaration of the nature of the goods. - amount already deposited need to be refunded - AT
Indian Laws
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Dishonour of Cheque - In view of the settled legal position, it is clear that at this stage, only a prima facie case is to be seen and the complaint cannot be thrown at the threshold and the factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court. - HC
Service Tax
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Refund/rebate of service tax - payment of service tax on the renting of immovable property of the concerned Duty Free Shops - if any tax is levied, the same cannot be retained and the Duty Free Shops would be entitled for refund of the same without raising any technical objection including that of limitation. - SC
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Liability of service tax - Reverse Charge Mechanism - the records clearly reveal that the inspection service got performed in India though the certificate was issued by M/s. CSA International, Canada. As M/s. CSA International, Canada has got its 100% Subsidiary in Bangalore, invoking the provisions of Section 66A of the Finance Act and fastening the tax liability on the appellant on RCM basis is not legally sustainable and as such, the appellant succeeds on merits. - AT
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Levy of Service tax - re-instatement interest collected on lapsed insurance policy - The manner in which interest has to be paid is governed by the terms of contract agreed between the parties. The department cannot, therefore, urge that since uniform rate of interest has not been levied, the amount collected would not partake the character of “interest” but would be in the nature of administrative/processing fee. - AT
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Valuation of services - inclusion of value of non-monetary consideration (free accommodation, medical facilities, vehicle and telephone insurance and stationery and other expenses) in the taxable value or not - Not to be included - AT
Central Excise
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Clandestine Removal - This case is based on the records found during investigation and no statement is relied to demand duty. Thereafter, the appellant is liable to pay duty on shortage of finish goods - AT
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SSI Exemption - using brand name of another person - As the Trademark Registry has recognized the logo Sunshine used by M/s SKPL all different and registered the same in the name of the appellant. In that circumstances, benefit of SSI exemption cannot be denied to the appellant - AT
VAT
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Violation of principles of natural justice - ex-parte order - failure to appeal on the first date - The learned Tribunal was clearly unjustified in deciding the second appeal on ex parte basis on the very first day of hearing and as such the order impugned is clearly vitiated due to violation of principles of natural justice - HC
Case Laws:
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GST
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2023 (4) TMI 645
Rejection of appeal - appeal rejected as the pre-deposit of 10% of admitted tax amount was debited through the Electronic Credit Ledger (ECL) instead of Electronic Cash Ledger - circular dated 6th July 2022 issued by the GST Policy Wing, Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, Government of India - HELD THAT:- It is seen that by circular dated 6th July 2022 issued by the GST Policy Wing, Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, Government of India, it has been clarified that payment of pre-deposit can be made by using the ECL. The impugned order dated 7th April, 2022 is set aside. As the learned counsel for the Petitioner points out that the Petitioner has already made the pre-deposit using the ECL, that will now be accepted by the Department. The appeal will now be listed before the 1st appellate authority i.e., the Joint Commissioner of CT GST on 2nd May, 2023. The Petitioner will appear on that date before the appellate authority along with a downloaded copy of this order. Petition disposed off.
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2023 (4) TMI 644
Condonation of delay in filing appeal - It is contended that the petitioner has already deposited 10% of the demanded tax amount before the first appellate authority and as there is no second appellate forum, this Court should entertain this writ petition - HELD THAT:- Since Mr. Sunil Mishra, learned Addl. Standing counsel for the Department accepts notice for the Opposite parties, let required number of copies of the writ petition be served on him within three working days. Reply be filed within two weeks and rejoinder thereto, if any, be filed before the next date. Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of four weeks from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off.
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2023 (4) TMI 643
Cancellation of GST registration of petitioner - non-filing of returns for a continuous period of 6 months - HELD THAT:- A writ Court is empowered to condone the delay of any statutory or quasi judicial authority. Such power is inherent in a Writ Court - Accordingly, the impugned order dated 17.02.2022 and the order of the Appellate Authority dated 11.08.2022 are hereby interfered with and set aside. It is directed that the Respondent No. 4, namely Assistant Commissioner of State Tax, Guwahati will intimate the petitioner the total outstanding statutory dues standing in the name of the petitioner till the date on which her GST registration was cancelled. Upon such intimation, if any such outstanding statutory dues under GST are required to be paid, the same shall be deposited by the petitioner without fail. Upon such payment of statutory dues under the GST by the petitioner, the appellate authority will re-decide the appeal on merits and pass appropriate order. The matter is remanded back to the appellate authority to comply with the directions as indicated - Petition disposed off.
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2023 (4) TMI 642
Rejection of claim of the petitioner under Budgetary Support Scheme notified vide Notifications No.FNO 10(1)/2017- DBA-II/NER dated 05.10.2017, SRO 519 dated 21.12.2017 and SRO 521 dated 21.12.2017 - seeking issuance of Writ of Mandamus directing the respondents to allow the Budgetary support to it by calculating the same on the quantum of cash tax paid through cash ledger account on monthly basis instead of adopting the calculations on quarterly basis. HELD THAT:- It is submitted that, during pendency of the writ petitions, the Financial Commissioner of Finance Department, UT of Jammu and Kashmir issued clarification vide his No. FD-ST/29/2022-03 dated 26.04.2022 with respect to determination of amount of reimbursement under SRO 519 dated 21.12.2017, SRO 521 dated 21.12.2017 and SRO 63 dated 05.02.2018. It is submitted that the aforesaid clarification came to be issued by the Financial Commissioner in view of the doubts raised with regard to the application of formula related to determination of amount of reimbursement to the eligible industrial units and also that in view of the wrong formula applied, the claims of various industrial units were being rejected erroneously. Issuance of clarification by the Finance Department, UT of Jammu and Kashmir, has necessitated revisiting of claim of the petitioner by the Adjudicating Authority. The matters remanded to respondent No.3 to reconsider the entire issue having regard to the clarification issued by the Department of Finance, UT of Jammu and Kashmir bearing No. FDST/ 29/2022-03 dated 26.04.2022 - Petition allowed by way of remand.
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2023 (4) TMI 641
Challenging the revocation of GST registration - Appeal rejected on the ground that the appeal was beyond the period of limitation - reasons for cancellation of the petitioner s GST registration is that he had not filed the returns for a period of six months - HELD THAT:- The scope of the present petition is limited to the action of the respondents in cancelling the petitioner s GST registration. It is, thus, not necessary for this Court to examine whether there has been any other default on the part of the petitioner or whether sufficient opportunity has been provided to the petitioner to rectify the same. Since it is apparent that the order dated 15.02.2022 cancelling the petitioner s GST registration was passed in the violation of the principles of natural justice, the said order is liable to be set aside. The petition is allowed and the impugned order dated 15.02.2022 is set aside. The respondents are directed to forthwith restore the petitioner s GST registration.
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2023 (4) TMI 591
Maintainability of petition - It is contended that the petitioner is willing to deposit 40% of the remaining amount of tax before the authority and as there is no second appellate forum, this Court should entertain this writ petition - Condonation of delay in filing appeal - Attachment of Bank Accounts of petitioner - HELD THAT:- Since Mr. Sunil Mishra, learned Addl. Standing counsel for the Department accepts notice for the Opposite parties, let required number of copies of the writ petition be served on him within three working days. Reply be filed within two weeks and rejoinder thereto, if any, be filed before the next date. Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted and, as such, learned counsel for the petitioner informs the Court that at the stage of first appeal, 10% of the tax has already been deposited, as an interim measure, it is directed that the penalty and interest amount demanded by the authority shall remain stayed during the pendency of the writ petition, subject to the petitioner depositing the demanded tax amount by the authority within two weeks. In order to facilitate the petitioner making the aforesaid deposit, the attachment of the petitioner s bank account shall stand lifted forthwith. Application disposed off.
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Income Tax
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2023 (4) TMI 640
Characterization of receipt - revenue or capital receipts - interest earned by the assessee from borrowed funds (short-term/temporary deposits) - whether these amounts of interest would be liable to be taxed or would be exempted income? - HELD THAT:- When an assessee who is involved in the task of setting up of a project, places the unutilized part of the capital funds in short term bank deposits and earns interest thereupon, the same would be added to the capital funds, and hence it would definitely have an inextricable link with the project cost. Thus, such interest income cannot be considered to be profit earned by the assessee and would definitely have to be treated as capital gains and cannot be clubbed to revenue receipts. Assessee rightly claimed this amount as exempted income under the head of capital gains. Interest received by the respondent assessee from short term deposits made out of unutilized capital subsidy, unutilized debt funds, unutilized equity funds received as capital during the formative years till the project was completed, was rightly claimed by the assessee under the head of capital receipts. Revenue s stand that this interest income should be treated as revenue receipts so as to make it taxable income is not acceptable in view of the law as laid down in the case of Bokaro Steel Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] - No substantial question of law.
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2023 (4) TMI 639
Addition u/s 68 - fictitious booked loss by the assessee company an account of sale transaction in penny stock shares - Tribunal had allowed the assessee s appeal fully relying upon its earlier decision in the case of in SMT. USHA DEVI MODI [ 2021 (1) TMI 679 - ITAT KOLKATA] - assessee submitted that Tribunal did not solely passed its conclusion in the decision of Usha Devi Modi (supra) but also took note of various other decisions which were relied on in the said decision - HELD THAT:- As case of SMT. USHA DEVI MODI vs. CIT decided by ITAT in favour of assessee revenue had preferred appeal before this Court [ 2023 (4) TMI 118 - CALCUTTA HIGH COURT] which held merely because the assessee had invested in other blue chit companies had earned profit or incurred loss cannot validate the tainted transactions. It has been established by the department that the rise of the prices of the shares was artificially done by the adopting manipulative practices. Consequently whatever resultant benefits which accrue from out of such manipulative practices are also to be treated as tainted. However, the assessee had opportunity to prove that there was no manipulation at the other end and whatever gains the assessee has reaped was not tainted. This has not been proved or established by any of the assessee before us. Assessee having not proved the genuineness of the claim, the creditworthiness of the companies in which they had invested and the identity of the persons to whom the transactions were done, have to necessarily fail. In such factual scenario, the Assessing Officers as well as the CIT(A) have adopted an inferential process which we find to be a process which would be followed by a reasonable and prudent person. Taking note of the proximity of the time between the buy and sale operations and also the sudden and steep rise of the price of the shares of the companies when the general market trend was admittedly recessive and thereafter arrived at a conclusion which in our opinion is a proper conclusion and in the absence of any satisfactory explanation by the assessee, the Assessing Officers were bound to make addition under Section 68 On a reading of the impugned order we find that in paragraph 10 the entire decision in Usha Devi Modi has been extracted and in paragraph 11 the Tribunal states that applying the proposition of law laid down in case restricted above the appeal of the assessee was allowed . The argument with regard to the manner in which the power under Section 263 of the Act was exercised by PCIT was considered in the batch of cases and the decision was arrived at in favour of the appellant/revenue. We find, that the decision in the case of Usha Devi Modi has been rendered by the Tribunal having been raised by the Court in its judgement dated 30.03.2023, we hold that the said decision will apply to the case on hand. Consequently, the revenue has to succeed in this appeal.
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2023 (4) TMI 638
Condonation of delay in claiming refund based on Tax Deducted at Source [TDS] - permission to carry forward the same to the future assessment years - HELD THAT:- The receipt of advances and the deduction of under Section 195A as reflected in the corresponding Form 26AS filed but the TDS is not claimed under the impression that it is not required as the deduction is towards advance as against income which is realized only with the sale of the apartments when capital gains are offered during the assessment year 2021-22. The petitioner has declared the transaction, and a strong case of bonafide error in not claiming the benefit of TDS in the assessment year 2018-19 is established. Though the impugned order cannot be found fault with because of the ambiguous language employed by the petitioner, in the circumstances of the case, the impugned order must be quashed condoning the delay and permitting the petitioner to file revised returns within three months from the date of receipt of certified copy of this order. As the petitioner is being permitted to file revised returns on condonation of delay, if there is any occasion for the respondents to initiate proceedings u/s 143[2] for framing of assessment u/s 143[3] petitioner must be precluded from raising the defence of limitation. ORDER : - The petition is allowed, and the impugned order dated 14.09.2022 [Annexure-A] passed by the first respondent is quashed construing the petitioner's application dated 10.04.2022 as application for condonation of delay in filing the revised ROI u/s 139[5] permitting the petitioner to file such returns within three [3] months from the date of receipt of a certified copy of this order.
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2023 (4) TMI 637
Validity of proceedings u/s 153C - Disclosure of material which was 'relevant' to the subject matter of the proceedings - non furnishing of statements relied upon by the Department - Selective supply of the documents - denial of principles of natural justice - HELD THAT:- The primary premise upon which an assessment must be formulated is bearing in mind the principles of natural justice. The submission of the Revenue that the necessary documents, as intended to be relied upon have been supplied and that they would suffice, is unacceptable seen in light of the observations of the Apex Court in two judgments T.Takano v Securities And Exchange Board of India and another [ 2022 (2) TMI 907 - SUPREME COURT] and (ii) Reliance Industries Limited v Securities and Exchange Board of India and others [ 2022 (8) TMI 423 - SUPREME COURT] Selective supply of the documents would be unfair simply for the reason that the petitioners must know the entire context in which the statement has been made. Apart from that, there may be other portions of the statement that might well support the assessee that it must not be denied. Typically, seizures give rise to several issues for consideration in the assessment of a searched entity. Not all of them would have relevance to a third party in respect of whom also, incriminating material might be found. The Scheme of the Income- Tax Act provides for two modes of assessment in such situations; an assessment under Section 153A in the case of the searched person and Section 153C in the case of the third party. In the present case, the petitioner was in receipt of notices under Section 153C and has filed returns. The status as a third party to the search assessment is not in dispute. Thus, and in these circumstances, it is incumbent upon the authorities to handover such allegedly incriminating materials that have been found by the Revenue in the course of the search and which have been handed over by the Assessing Officer of the searched entity to the assessing officer of the third party. These materials that are the basis of the Section 153 proceedings themselves and thus the assessee must have the benefit of the entirety of the material in order to formulate its defence against the proceedings. Entirety of the statements as recorded from Mr.Rajendra Kothari and Mr.Suresh Khatri must be supplied to the petitioner. Revenue protest, stating that the petitioner has chosen to approach this Court at the eleventh hour, knowing fully well that the limitation for completion of the assessments is imminent. This contention is not acceptable for the reason that the show-cause notices were issued only on 11.03.2023. Issuance of a show-cause notice is a sine qua non for completion of assessment. Thus mere mention of the issues in the questionnaires under Section 142(1) or notices under Section 142(3) would not suffice as only the proposals contained in the show-cause notices can ultimately fructify into an order of assessment. Thus, and since the show-cause notice have been issued only on 11.03.2023 proposing reliance on the statements, and the petitioner having made its request for the same on 20.03.2023, there is no delay in the institution of the present writ petitions.The statements shall be handed over within one week from today and an opportunity to cross-examine shall be provided thereafter.
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2023 (4) TMI 636
Deduction u/s 10AA - disallowing the deduction as that the deduction could be claimed only against articles manufactured in, or against the services which emanated from, the NSEZ - whether or not the Tribunal could have taken recourse to the definition of expression services given in the 2005 Act and the 2006 Rules framed thereunder? - HELD THAT:- The undisputed position is that the definition of the expression services is not provided in the 1961 Act. That being said, a plain reading of the language of Section 10AA of the 1961 Act would show that an assessee can claim deduction equivalent to 100% of profits and gains derived from export of services. Whether trading services of the nature which the respondent/assessee was involved in would fall within the ambit and scope of Section 10AA ? - A plain reading of Section 27 of the 2005 Act would show that, clearly, the provisions of 1961 Act are made applicable to a developer or entrepreneur who carries out authorized operations in the SEZ, subject to modifications specified in the Second Schedule appended to the 2005 Act. The Second Schedule of the 2005 Act, which adverts to the modifications made in the 1961 Act, concededly, refers to Section 10AA of the 1961 Act. Thus, having regard to the fact that the deduction made available to an assessee under Section 10AA of the 1961 Act, which has a unit located in the SEZ, is rooted in the 2005 Act, one would, in our opinion, necessarily have to advert to the definition of expression services contained in the said Act. A plain reading of the Explanation would show that trading for the purposes of the Second Schedule of the 2005 Act means import for the purposes of re-export. Undoubtedly, the 2005 Act and Rule 76 point in the direction that the expression services means services which are offered by way of re-export of articles that are imported into the country. If there was any doubt as regards this aspect of the matter, the same is clarified if one were to peruse Instruction No.4 dated 24.05.2006 issued by the Government of India, Ministry of Commerce and Industry, Department of Commerce.. The aforementioned Instruction has been adopted by the Export Promotion Council [in short, EPC ] via its Circular No.17 dated 29.05.2006. Likewise, after Rule 76 was inserted in the 2006 Rules, the EPC for EOUs and SEZ units issued another Circular dated 16.11.2006. Thus we have no doubt that it was always intended that the deduction under Section 10AA of the 1961 Act will also be available qua those articles which, upon import to the unit located in SEZ, were thereafter re-exported. Decided in favour of assessee.
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2023 (4) TMI 635
Assessment u/s 153C - assessment order was set aside by the CIT-A on the ground that no incriminating material had been found against the respondent/assessee - assessment order in the second round was passed under Section 147 read with Section 144 - Non issue of notice under Section 143(2) - As argued based on the material found in the first round, reassessment proceedings could have been triggered by the AO, for the reason that the scheme of Section 153C and Section 147/148 are materially different - HELD THAT:- The assessment order in the second round was passed under Section 147 read with Section 144 of the Act. Section 144 of the Act concededly deals with the situation where inter alia, the assessee fails to file a return or fails to comply with all the terms of the notice issued under Section 142 or fails to comply with the direction issued under sub-section (2A) of Section 142 or fails to comply with the terms of the notice issued under Section 143(2) of the Act. As noted above, the record shows that the respondent/assessee s return was in place. The respondent/assessee had taken the plea that the earlier return should be treated as a return in response to notice under Section 148 of the Act. AO to take recourse to Section 144 of the Act was completely uncalled. In our opinion, Section 144 of the Act was taken recourse to under a mistaken belief, or otherwise, that there was no return on record. Since a response was on record, undoubtedly, the AO was required to issue a notice under Section 143(2) of the Act and then proceed further in the matter, and perhaps thereafter, frame an assessment u/s 147 read with Section 144 of the Act. This was not done. We are of the view that order passed by the Tribunal does not call for any interference. No substantial question of law arises.
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2023 (4) TMI 634
Reopening of assessment u/s 147 - addition u/s 68 - Addition made on amounts which did not form part of the reasons recorded for reopening - CIT(A) deleting the addition u/s 68 on concluding that when on the ground on which the reopening of assessment is based, no additions are made by the AO in the order of assessment, he cannot make additions on some other grounds which did not form part of the reasons recorded by him - .HELD THAT:- Assessee s case was reopened on the basis of information relating to accommodation entry received from TVH Trading Company Pvt. Ltd. No addition was made in the assessment order on this account since the amount had already been added in the order u/s 153A. The addition was made u/s 68 in respect of the amount received from 5 persons which did not form part of the reasons recorded for reopening of the case Case laws in the case of Ranbaxy Laboratories Ltd. [ 2011 (6) TMI 4 - DELHI HIGH COURT] and case of Jet Airways (I) Ltd.[ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] are fully applicable and there is no infirmity in the well-reasoned order of ld. CIT (A). DR tried to submit that there are some other High Courts who have taken a contrary view. But, in our considered view, this is not an acceptable proposition in view of the decision of the Hon ble jurisdictional High Court which is a binding. Hence, we uphold the order of ld. CIT (A). Decided against revenue.
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2023 (4) TMI 633
Foreign Tax Credit (FTC) u/s 90/90A - Judicial precedent - denial of relief as in intimation processed u/s 143(1) and rectification order u/s 154 - assessee had not filed the Form 67 before filing the return of income - HELD THAT:- As decided in case of Brinda Rama Krishna [ 2022 (2) TMI 752 - ITAT BANGALORE] has observed that filing of Form 67 is not mandatory but directory requirement. CIT(A) in the case in hand however, has not followed the aforesaid judgment. The Bench is of considered opinion that Ld. first Appellate Authority being Subordinate to the Tribunal was supposed to follow the principles of law set down and without citing any proposition of law of binding nature contradictory could not have ignored the judgment on observation that it is not known as to whether the aforesaid decision has attained finality or not. Appeal of assessee is allowed.
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2023 (4) TMI 632
TDS provision applicability - Addition being 30% of the amount of interest paid to various depositors by invoking the provisions of section 40(a)(ia) - grievance of the assessee is that it has not been allowed sufficient opportunity to substantiate its case before the lower authorities - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one last opportunity to the assessee to prove that the TDS has been deducted from the interest amount or that the TDS provisions are not applicable. AO shall decide the issue as per fact and law after affording due opportunity of being heard to the assessee. Grounds raised by the assessee are accordingly allowed for statistical purposes.
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2023 (4) TMI 631
Deduction u/s 80P(2)(c)(ii) - interest income earned from co-operative bank - co-operative bank is a commercial bank and does not fall under the purview of co-operative society referred to in section 80P(2)(d) - AO held that co-operative banks are excluded from the applicability of section 80P of the Act and therefore, even the interest income earned by the assessee from the deposits from the investment made by it with the co-operative bank would not be exempt - HELD THAT:- It is pertinent to note that all co-operative banks are co-operative societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the co-operative banks is allowable as a deduction under section 80P(2)(d) of the Act. See Kaliandas Udyog Bhavan Premises Co-op Society Ltd vs ITO [ 2018 (4) TMI 1678 - ITAT MUMBAI] . We uphold the plea of the assessee and direct the AO to grant deduction u/s 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with co-operative banks. Accordingly, we set aside the impugned order passed by the learned CIT(A) - Decided in favour of assessee.
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2023 (4) TMI 630
Revision u/s 263 by CIT - difference in cash sales and sales reflected in the profit/loss account - disclosure of total sales in the profit/loss account lower than the cash sales - HELD THAT:- We find that the assessee has provided the necessary explanation regarding the difference in cash sales and sales reflected in the profit/loss account which is on account of manner of reflection of VAT amount collected from the customers. In the profit/loss account, the sales have been shown net of VAT and VAT has been shown separately and therefore, merely on account of separate reflection of sales and VAT and in absence of any other discrepancy, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue and thus, the findings of the ld PCIT in this regard are set-aside. No details of quantum of sale on commission basis affected by the assessee provided - As per assessee s own submissions before the AO, the assessee was a sub-dealer of M/s Agarwal Autosales, Sitapur till June 2016 and used to collect the sales proceeds of bikes and deposit the same in her bank account maintained with Vijay Bank and subsequently, the same was transferred to the account of M/s Agarwal Autosales, Sitapur. The collections so made from the customers were thus in cash and how the same has been accounted for in its books of accounts and offered to tax is clearly within the mandate of limited scrutiny for which the matter was selected under CASS to examine the cash deposits during the year. During the course of assessment proceedings, the matter relating to cash deposits was enquired by the AO and in response to the notices issued, the assessee filed her submissions which were examined and thereafter, the assessment order was passed wherein there is a clear mention of the transactions effected by the assessee on behalf of M/s Agarwal Autosales, Sitapur. It is therefore not a case of lack of enquiry on part of the AO Assessee has obtained and filed a fresh certificate during the course of revisionary proceedings before the ld PCIT bringing out the fact that during the financial year 2016-17, 490 vehicles were sold by the assessee on behalf of M/s Agarwal Autosales, Sitapur which were duly recorded in the books of accounts of M/s Agarwal Autosales, Sitapur and for which commission was paid to the assessee after deducting of TDS. The ld PCIT has not pointed out any defect in the said certificate and even during the course of proceedings before us, the ld CIT DR couldn t point out any discrepancy in the certificate so filed by the assessee and what further enquiries/verification were required. Where the sales were effected by the assessee on behalf of M/s Agarwal Autosales, Sitapur which were duly recorded in the books of accounts of M/s Agarwal Autosales, Sitapur, and the cash collections so made on behalf of M/s Agarwal Autosales, Sitapur were duly transferred to the account of M/s Agarwal Autosales, Sitapur and for such activities, the commission earned by the assessee has been duly offered in the return of income and which has been accepted by the AO, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. Order passed by the ld PCIT u/s 263 is set-aside and that of the AO is sustained. Decided in favour of assessee.
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2023 (4) TMI 629
Revision u/s 263 - AO has not discussed in the final assessment order about the additions proposed in the draft assessment order - Dispute of PCIT is that had the FAO accepted the submissions of the assessee made in response to the draft assessment order, the generally accepted principles while framing the assessment order, is to discuss the issue chronologically and then pass the judgement whether or not the assessee s submission is acceptable and if it is acceptable whether it is in accordance with law - HELD THAT:- We defer from the above observation of the ld. PCIT. When the reply of the assessee is not in accordance with law, then only it will be reflected in the assessment order describing; what was the proposal, what was the reply and as to how the reply of the assessee was found not in accordance with law. Naturally, when the AO considered the reply of the assessee was in accordance with law, he has described in the final assessment order and just because the AO has not elaborately discussed the addition proposed in the draft assessment order, reply of the assessee, whether the reply is in accordance with law, etc. the final assessment order cannot be held that as erroneous and prejudicial to the interest of the Revenue. Under the above facts and circumstances of the case, we are of the opinion that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue. Thus, the revision order passed by the ld. PCIT under section 263 of the Act is quashed.Appeal filed by the assessee is allowed.
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2023 (4) TMI 628
Trading addition - net profit determined as per duplicate cash book during the course of survey proceedings u/s 133A - AO in nut shell applied the G.P. Rate of 25% and worked out the addition - HELD THAT:- CIT(A) observed that the assessee had himself shown GP 29.25% and 25% in the A.Y. 1998-99 and 1999-2000. Thus considering the factual and legal position as well as the nature and volume of assessee's business, CIT(A) confirmed the action of AO holding the G.P. @ 25% as reasonable and dismissed the ground of appeal of the assessee. It may be noted that in assessee's own case for the assessment year 1999-2000, the Tribunal had upheld the G.P. Rate at 18.93%. We find that G.P. Rate at 17.5% would be reasonable in view of the addition so made by the AO. Thus Ground No.2 of the assessee is partly allowed. Addition for the peak credit made by the AO - HELD THAT:- During the course of hearing, we observed that no contrary view or documents to controvert the findings was advanced by the ld. AR of the assessee concerning the issue in question. In such a situation, we have no other alternative except to confirm the order of the ld. CIT(A) on the issue in question. Thus Ground No. 3 of the assessee is dismissed.
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2023 (4) TMI 627
Exemption u/s 11 - Charitable activity u/s 2(15) - assessee Society was pursuing charitable activities by running Suvidha Centre for general public by organizing and participating in awareness campaigns against drug abuse and addiction, spreading traffic awareness in general public, rendering service related to passport and visa related services, police clearance certificate, issuance of copy of NOC, issuance of documents and arms license verification etc. - AO considering the activities of assessee first determined the violation of section 2(15)and had rejected the claim of deduction U/s 11 r.w.s. 13(8) - HELD THAT:- Revenue authorities first pointed out that from the financial statement of the assessee it is not clear that the assessee is doing any charitable work. The eligibility for deduction u/s 11 for community work for collection of facilitation charges is not under the purview of the Act. In appeal order, the appellate authority reproduced the income and expenditure account of the assessee. Whereas, no such charitable work is reflected in collection of facilitation charges. We respectfully considered the order in the matter of DCIT, Exemption Vs. Sabarmati Ashram Gaushala Trust [ 2014 (1) TMI 1539 - GUJARAT HIGH COURT] . The same factual aspect is duly settled in the case of Ahmedabad Urban Development Authority, [ 2022 (10) TMI 948 - SUPREME COURT] as held essee's activities amount to trade, commerce or business based on its receipts and income (i.e., whether the amounts charged are on cost-basis, or significantly higher). If it is found that they are in the nature of trade, commerce or business , then it must be examined whether the quantified limit (as amended from time to time) in proviso to section2(15), has been breached, thus disentitling them to exemption. Accordingly, we remit back the ground of the assessee to ld. AO for adjudication, de novo in the light of the order above. Appeals of the assessee allowed for statistical purpose.
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2023 (4) TMI 626
Disallowance of employees contribution towards PF/ESI u/s 36(1)(va) - AR submitted that the assessee deposited the contribution towards PF/ESI belatedly, however, the said deposits were made prior to filing of return of income under section 139(1) - HELD THAT:- We find that the matter is squarely covered by the decision of Hon ble Supreme Court in case of Checkmate Services P. Ltd. Ors.[ 2022 (10) TMI 617 - SUPREME COURT] wherein after taking into consideration the relevant provisions of the Act as well as the provisions of relevant welfare ESI/PF schemes, it was held that the contribution by the employees to the relevant funds is the employer s income under section 2(24)(x), but the deduction for the same can be allowed under section 36(1)(va) only if such sum is deposited in the employee s account in the relevant fund before the date stipulated under the respective Act and as rightly pointed out by the DR that the ratio laid down by the Hon ble Karnataka High Court [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] stand overruled by the decision of the Hon ble Supreme Court and the same doesn t support the case of the assessee. Disallowance made by CPC while processing the return of income and specially in the context of 143(1)(a)(iv) - we find that the matter is squarely covered by the decision Cemetile Industries Ors [ 2022 (12) TMI 354 - ITAT PUNE] - CIT(A) was justified in sustaining the adjustment u/s 143(1)(a) by means of disallowance made for late deposit of employees share of PF/ESI contribution to the relevant funds beyond the date prescribed under the respective Acts. Appeal of the assessee is dismissed.
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2023 (4) TMI 625
Unaccounted professional charges received in cash - Addition u/s 28 - difference between professional charges received and offered by the assessee as income - Addition on the basis of statement of the third party alone - search operations conducted by the Department in the case of M/s.Apollo Hospitals - assessee was working for M/s.Apollo Hospitals as Consultant and received professional charges on his own, which was not considered as receipts of M/s.Apollo Hospitals - HELD THAT:- We do not ourselves subscribe to the reasons given by AO to make additions towards unaccounted professional charges received in cash for simple reason that except statement of an employee recorded during the course of search, the AO has never brought on record any other evidence to support his finding that the assessee has received professional charges in cash from Apollo Hospitals. Explanation given by the assessee that additions cannot be made on the basis of number of patients registered with Apollo Hospitals appears to be reasonable and bonafide. AO never disproved claim of the assessee with any evidences, but went on to make additions only on the basis of statement of a third party, that too without providing evidences and opportunity of cross examination to the assessee in violation of principles of natural justice. It is well settled principles of law by the decision of M/s.Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkatta-II [ 2015 (10) TMI 442 - SUPREME COURT ] where it was categorically held that not allowing assessee to cross examine witnesses by the adjudicating authority, though statements of those witnesses were made on the basis of impugned order is a serious flaw, which makes the order nullity, inasmuch as it amounted to violation of principles of natural justice, because of which the assessee was adversely affected. Therefore, we are of the considered view that no addition can be made on the basis of statement of the third party alone, without any corroborative evidence. We are of the considered view that the AO is completely erred in making addition towards difference amount of professional charges on the basis of Out Patients data collected from M/s.Apollo Hospitals and statement of Manager (Operations) Ms.Subhadra.G, without any corroborative evidence to suggest that the assessee has received so much professional charges from the Hospitals and further, the same has not been accounted in his books of accounts - assessee has analyzed Out Patients list given by the Hospitals with his books of accounts and also reconciled the amount of income accounted in his books of accounts for all these assessment years and claimed that income accounted by the assessee from M/s.Apollo Hospitals is more than the amount of income quantified by the AO from the list of Out Patients supplied by the Hospitals. AO is completely erred in making addition towards differential amount of professional charges u/s.28 - Decided in favour of assessee.
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2023 (4) TMI 624
TP adjustment on account of excess AMP expenditure - Assessee is engaged in the business of manufacturing and distribution of desktop, laptop, servers, and smartphones and incurred expenditure in connection with campaigning, depicting features of new products, providing information to the public about details of product, its specification etc. - HELD THAT:- We notice that the TPO has not made any adjustment in the trading segment and also in the manufacturing segment in which the AMP expenses are included as part of operating cost. In our view, this would mean that there is no adverse inference drawn by the TPO in respect of the arm s length price in the trading segment in the order passed u/s. 92CA and has accepted the entity level margins earned by the assessee with respect to trading segment. Therefore, we hold that no adjustment is warranted separately with respect to AMP expenses in the case where the TPO has accepted the overall margin of the trading segment which included the AMP expenses as part of the operating cost. Accordingly, we delete the adjustment made by the TPO. TPO considering incorrect margins - As prayed to direct the Ld. TPO to rectify the above Arithmetical errors in computation of the weighted average of operating margin to operating cost ratio (`OP/OC') margin of the company - HELD THAT:- As considering the submissions, remit the issue back to the TPO to consider the correct margins of the above companies. Working capital adjustment - HELD THAT:- It is a settled position that working capital adjustment need to be given while computing the ALP - We direct the Ld.AO/TPO to compute the working capital adjustment while computing the operating margin of the comparables following the decision of Coordinate Bench of this Tribunal in case of Huawei Technologies India P. Ltd. [ 2018 (10) TMI 1796 - ITAT BANGALORE]
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2023 (4) TMI 623
Disallowance of electricity charges - electricity charges are not related to the business of the assessee as standing against the directors of the assessee compan y - electricity bills produced by the assessee are not in the name of the firm, therefore, AO made the disallowance - CIT(A) allowed the electricity charges, stating that this is due to technical mistake - HELD THAT:- The electricity bills clearly establish the name of the directors of the assessee company, inspite of the name of the assessee company. Therefore, the AO has rightly disallowed the electricity expenditure. Assessee has not given any reason to establish that the assessee company shares this expenditure. Hence, we set aside the order passed by the CIT(A) and allow the appeal of the revenue on this ground. Nature of expenses - restricting depreciation on the ponds @15% and treating the expenditure on ponds as revenue expenditure - HELD THAT:- In the instant case, the prawn ponds are tools to the business of the assessee and hence constitute plant . There are specialized machinery for pumping the water, oxygen etc. and various processes for cleaning and treatment of water in the ponds. As such water plays the role of a machine, ponds also constitute part of the machinery and hence, eligible for depreciation at the rates applicable to the plant and machinery. The AO has rightly allowed depreciation under Depreciation Schedule Plant and Machinery @15%. Hence, we do not find any infirmity in the order passed by the Ld.AO and uphold the order passed by the Ld.AO. Decided in favour of revenue. Disallowance u/s 14A r.w.r.8D (1)(b) - CIT(A) deleted the addition made by the AO, saying that the assessee has not received any dividend income during the year under consideration - HELD THAT:- It is an admitted fact that the assessee had received Rs.12.5 lakhs as against his investment of Rs.2.5 crores. AO has invoked the provisions of section 14A r.w.r.8D (1)(b) by disallowing 0.5% as expenditure. But the Ld.CIT(A) mentioned that there is no dividend income, however, in his order itself, CIT(A) mentioned that the assessee has received Rs.12.5 lakhs as divided income, but he deleted the addition, saying that the assessee has not received dividend income, which is factually incorrect. Therefore, we set aside the order passed by the Ld.CIT(A) and allow the appeal of the revenue on this ground.
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2023 (4) TMI 622
Levying penalty u/s 271D - violation of section 269SS - reasonable cause u/s 273B - assessee sold that property [unauthorized construction work was being carried out at the assessee s plot ] to the unauthorized occupant of the assessee s plot and out of total consideration assessee received part by demand draft and balance amount in cash - HELD THAT:- The assessee has filed return for assessment year 2017-18 u/s 139(1) and declared the long term capital gain out of sale of the impugned property and paid the tax liability on it - The assessee in this case has no intention to evade the tax and it has truly disclosed all the details for the purpose of assessment and there was no loss to the Government exchequer. Due to compulsion, assessee received an amount of Rs.15.70 lakhs in cash. The assessee has accepted the cash due to compelling circumstances and had the assessee waited for the demand draft to receive, assessee might have suffered further loss from the unauthorized occupant of the assessee s plot. The assessee in this case settled the dispute with the unauthorized occupant by selling the property to them to avoid any further litigations as the assessee has been staying in Mangalore and also a retired person, having not much strength to fight with unauthorized occupant of the assessee s plot and the assessee pleaded that this is the reasonable cause for accepting an amount of Rs.15.70 lakhs by cash. As per section 273B of the Act, no penalty would be leviable if the person concerned proves that there is reasonable cause or said failure clearly indicates the bonafideness of the assessee, then it gives a discretion to the authority to impose the penalty or not to impose penalty. Such discretion has to be exercised in a just and fair manner having regard to the entire facts and material existing on record. Ordinarily, a plea has to be ignorance of law cannot support the breach of a statutory provision. Such technical breach due to ignorance of the relevant provision of law on account of bonafide belief coupled with the fact that the transaction in question is genuine and bonafide transaction are undertaken during the regular course of its business will not result in levy of penalty u/ 271D of the Act. Thus provisions of section 269SS of the Act cannot be applied as the assessee s transaction is genuine and also constituted with reasonable cause and in such case, default on the part of assessee is merely a technical and venial nature and no penalty u/s 271D of the Act could be levied. Decided in favour of assessee.
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2023 (4) TMI 621
Revision u/s 263 by CIT - satisfaction of the ld. PCIT that order of AO is erroneous in so far as it is prejudicial to the interests of the revenue - HELD THAT:- Show cause issued by the ld. PCIT is total replication of the letter of the ITO. From, the above, we find that it is more of the satisfaction of the ITO that the Assessment Order is erroneous in so far as it is prejudicial to the interest of revenue than the satisfaction of the ld. PCIT. The common portion has been highlighted which could only lead to an inevitable conclusion that there was an absolute lack of application of mind by the ld. PCIT while issuing the show cause, as the show cause clearly proves that the consideration of the ld. PCIT is solely derived from the letter of the ITO and bereft of independent application of mind by the ld. PCIT which makes the order passed u/s 263 void ab initio. Appeal of the assessee is allowed.
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2023 (4) TMI 620
Addition u/s 69A r/w section 115BBE - unexplained income representing on-money received - loose document found during the search and seizure action - HELD THAT:- Not Only the father of the assessee but Mr. Mangesh D. Gaikar also admitted to the fact that the money paid by the assessee in fact belong to Mr. Mangesh D. Gaikar, which was returned to Mr. Mangesh D. Gaikar and the same has been recorded in the loose document found during the search and seizure action at the premises of Mr. Mangesh D. Gaikar. We are of the considered opinion that once the Revenue in the case of Mr. Mangesh D. Gaikar, has held that Mr. Mangesh D. Gaikar was receiving maintenance charges in cash and not recording the same in the books of account as collection, there is no merits in rejecting the submission of the assessee on the basis that transaction in cash was not recorded in books and no documentary evidence was produced. Once the non-maintainability of the books of account in respect of the cash received has been found by the Revenue after a detailed examination in the case of Mr. Mangesh D. Gaikar, asking the assessee to produce the documentary evidence is contrary to their own findings. When the claim of the assessee has been duly corroborated by the statement of Mr. Mangesh D. Gaikar and assessee s father, and Mr. Mangesh D. Gaikar, has been taxed in respect of the aforesaid cash receipt as unaccounted income, we find no basis in upholding addition in the hands of the assessee - Assessing Officer is directed to delete the impugned addition. As a result, grounds raised by the assessee are allowed.
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2023 (4) TMI 619
Revision u/s 263 - CIT found fault with the action of the AO accepting the service charges received by it as rental income - According to CIT(E), the assessee trust has claimed deduction u/s 24(a) of the Act on service charges received by it and wondered as to how the service charge can be included in property income and standard deduction can be claimed and allowed by AO, which action of AO was erroneous and that the assessment order has been passed without basic verification about the allowability of claim under section 24(a) of the Act which is erroneous in so far as it was prejudicial to the interest of revenue - HELD THAT:- These are essential requirements/ necessities and in-extricable part for usage of the property taken on rent by the tenant, and without which they cannot function in the leased out premises. And it can be seen that when the amenities given to the leased out premises/tenant have nexus to the enjoyment of the property, then it can be included in the income from house property as held by the Hon ble Calcutta High Court [ 2001 (3) TMI 77 - CALCUTTA HIGH COURT] which has been upheld by the Hon ble Supreme Court in Shambu Investments Vs. CIT [ 2003 (1) TMI 99 - SC ORDER] and Raj Dadarkar Associates [ 2017 (5) TMI 586 - SUPREME COURT] and by Tribunal in assessee s own case [ 2013 (7) TMI 1209 - ITAT MUMBAI] wherein the Tribunal was considering whether the assessee was entitled to deduction us/ 24(a) of the Act or not on the composite rent income comprising of income from renting out of property and income from amenities, which was allowed by the Tribunal by relying on the decision in similar case of Sri Satya Sai Trust Since the AO view after enquiring is plausible view it could not have been interfered with unless the Ld CIT(E) has conducted during revisional proceedings enquiry or verified the facts in order to come to a conclusion that AO s view was erroneous/un-sustainable in law. As noticed once AO has conducted enquiry (on an issue) then the Ld Pr. CIT before holding the order of AO to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the AO on that issue is erroneous/unsustainable in law. Coming back to the present case, once we have found that AO has discharged the duty of investigator (on the issue of deduction claimed u/s 24(a) of the Act which included amenities charges), then before CIT(E) holds the view of AO as erroneous, it was imperative on the part of CIT(E) to have made necessary enquiries or verification and should have arrived at a conclusion that the view of AO was unsustainable in law. Admittedly, in the instant case, CIT(E) has not conducted any such enquiry or verification. In such a scenario, we have to hold that he has initiated revision jurisdiction on mere conjectures, suspicions and surmises, which is not permitted. In such a scenario, his impugned action of holding the claim of assessee (deduction u/s 24(a) of the Act which includes amenity charges) as erroneous and prejudicial to the interests of revenue is untenable - we are of the view that the impugned revision order passed by Ld PCIT is not sustainable in law and assessee succeeds on the legal issue.
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2023 (4) TMI 618
Revision u/s 263 by CIT - amount of service tax reported in Balance Sheet CIT observed that this has not been paid and, therefore, according to the provisions of section 43B it is not allowable, which the Ld. AO failed to add back - HELD THAT:- On referring to section 43B of the Act, we note that certain deductions are allowed only on actual payment. In this section, a deduction which otherwise is allowable under this Act is subjected to the condition of actual payment for its allowability for the purpose of computing the income under the head, profit and gains of business and profession - assessee is following the exclusive method of accounting in respect of service tax as noted in its tax audit report. Assessee has not claimed any expense towards service tax liability but has reported it in its Balance Sheet. The same amount is shown from the balance Sheet on 31.03.2008 to the Balance Sheet for the year under consideration - we find force in the submission of the Ld. Counsel and disregard the observation and consideration arrived at by the Ld. CIT for invoking the revisionary proceeding on this issue. Difference between receipt disclosed in the P L Account and the amount appearing in Form 26AS - Assessee has demonstrated that the difference is on account of inclusion of service tax by the payer of this receipt after subjecting it to TDS. Considering this verifiable fact duly explained by the assessee, we do not find any reason that revisionary proceeding is justified to hold the order being erroneous and prejudicial to the interest of revenue on this issue also. Various expenses claimed by the assessee and no TDS deposited thereon despite reporting of TDS liability in the balance sheet as at 31.03.2010 - There is nothing on record to appreciate the fact about the deposit of this TDS liability and also the extent to which TDS has been done on these expenses claimed by the assessee. The mere assertion by the assessee which also is general in nature that almost 50% of this amount is reimbursed expenses does not justify its claim made before the ld. CIT as well as before us. Accordingly, this being an issue purely on facts which can be verified from the records of the assessee, we find it proper to sustain the order of Ld. CIT(A) on this specific issue for the purpose of examination and verification of the details and documents which may be placed by the assessee to substantiate its claim. Accordingly, on the first issue raised by the Ld. CIT in the revisionary proceeding as noted above, we hold the order of Ld. CIT u/s. 263 as justifiable. Appeal of the assessee is partly allowed.
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2023 (4) TMI 617
TP Adjustment - Adjustment on AMP expenses - HELD THAT:- When the TPO has not rejected the gross margin and the net margin of the assessee in the trading segment, separate TP adjustment on AMP expenses is not called for. Therefore, we delete the TP adjustment proposed by the TPO under the AMP segment. TP adjustment on BSS Segment - Comparable selection - Majestic Research Services Solutions Limited Company is functionally not compatible with that of the Assessee as the company is engaged in the business of providing marketing research services and offers wide range of qualitative and quantitative research services. Scarecrow Communications Limited - Since the Tribunal has excluded this company as comparable for assessment year 2016-2017 and the profile is same for the relevant assessment year, namely, A.Y. 2017-2018, which has been even accepted by the TPO, the above company needs to be excluded from the comparable list. Pressman Advertising Limited - We find that the assessee s main stream of revenue is for providing services pertaining to advertisement on radio, television and public relation. The same prima facie cannot be compared with the profile of the assessee s business support services. Since the matter needs fresh examination, we restore the issue to the AO / TPO to consider whether Pressman Advertising Limited s profile is the same as that of the assessee.
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2023 (4) TMI 616
Disallowance of interest expenditure claimed by the assessee - DR submitted that the assessee has not proved from the books of accounts that it has availed loan from M/s Adarsh Credit Co-operative Society Ltd.- HELD THAT:- This issue could be resolved by examining the books of accounts. It is also the submission of the AR that the loan taken from above society has been duly recorded in the books of accounts and the same has been grouped under the head loan from banks while preparing balance-sheet. Further, the assessee seeks an opportunity to prove its claim. Accordingly, this issue may be restored to the file of the Assessing Officer in both the years for an examining the books of accounts of the assessee in order to satisfy himself that the assessee has actually availed loan from said aforesaid society - We also direct the assessee to produce the books of accounts and also furnish any other information and explanations that may be called for by the AO in this regard. Decided in favour of assessee for statistical purposes. Disallowance of depreciation claim - assessee has not carried out any business activity during the year relevant - AR submitted that assets were put to use in the earlier years and the depreciation was also allowed in those years - HELD THAT:- In the instant case, though the tax authorities have stated that the assessee has not started business activities in the subsequent years also, it was not shown that the assessee has completely abandoned the business of generation of electricity. The case of the assessee that the assets are kept ready for use and it was expecting only favourable market situation. It is also submitted that the assessee has maintained its business establishment and was generating other types of income, besides servicing loan taken for business purposes. We are of the view that there is no reason to disallow the depreciation claimed by the assessee. Decided in favour of assessee.
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Customs
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2023 (4) TMI 615
Valuation of imported goods - modified Tapioca Starch - rejection of assessable value - redetermination of value under Rule 5 of the Valuation Rules - wilful mis-statements of facts or not - extended period of limitation - seeking refund of deposit made during investigation - HELD THAT:- It is evident from the SCN that the demand in dispute is regarding the past consignments which were already cleared as per the declared values by the respondent. The assessment, therefore, attained finality. Once the assessment attained finality, it can be either appealed against to the Commissioner (Appeals) by either side or a notice under section 28 can be issued by the Revenue. While appeal to the Commissioner (Appeals) can be for any aspect of the assessment, a notice under section 28 can be issued only to recover duty not paid, short paid or erroneously refunded or not levied and it can be issued only by the proper officer . The notice can be issued within the normal period of limitation of one year under section 28 (1) from the date of clearance of goods for home consumption or, within the extended period of limitation of 5 years if the short payment or non-payment is because of collusion or any willful misstatement or suppression of facts. If the SCN is issued alleging non-payment or short payment of duty, the basis of such an allegation must be on sound footing, backed by evidence. There is nothing in the SCN and in the grounds of appeal in the present case, which shows that the declared value was incorrect apart from the statements. The statements, as summarized, only show that the respondent was ignorant of many factors, but it does not establish that the respondent had mis-declared the value. It is also evident that there was no chemical analysis report nor was any sample drawn to allege mis-declaration of the nature of the goods. Therefore, we do not find even a shred of evidence in this case to confirm the demand as proposed in the SCN. Therefore, the Joint Commissioner was correct in dropping the SCN and the Commissioner (Appeals) was correct in upholding the decision in the impugned order. Deposit of Rs. 10 lakhs by the respondent during the investigation - HELD THAT:- It can only be called as deposit. The mere fact that some amount has been deposited during investigation does not establish in any way the case of the Department. Needless to say since the respondent has succeeded, the amount so deposited should have been refunded to him, if it has not already been refunded. Appeal of Revenue dismissed.
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2023 (4) TMI 614
Valuation of imported goods - modified Tapioca Starch - rejection of assessabla value - redetermination of value under Rule 5 of the Valuation Rules - allegation of misdeclaration of import value by wilful suppression of facts - extended period of limitation - seeking refund of deposit of Rs. 10 lakhs by the respondent during the investigation - HELD THAT:- It is evident from the SCN that the demand in dispute is regarding the past consignments which were already cleared as per the declared values by the respondent. The assessment, therefore, attained finality. Once the assessment attained finality, it can be either appealed against to the Commissioner (Appeals) by either side or a notice under section 28 can be issued by the Revenue. While appeal to the Commissioner (Appeals) can be for any aspect of the assessment, a notice under section 28 can be issued only to recover duty not paid, short paid or erroneously refunded or not levied and it can be issued only by the proper officer . The notice can be issued within the normal period of limitation of one year under section 28 (1) from the date of clearance of goods for home consumption or, within the extended period of limitation of 5 years if the short payment or non-payment is because of collusion or any willful misstatement or suppression of facts. In this case, the SCN was issued invoking the extended period of limitation and there is not even any allegation of collusion or suppression of facts and the only allegation is of willful mis-statement of the value by the respondent, which was inferred from his statement. If the SCN is issued alleging non-payment or short payment of duty, the basis of such an allegation must be on sound footing, backed by evidence. There is nothing in the SCN and in the grounds of appeal before us which shows that the declared value was incorrect apart from the statements. The statements, as summarized, only show that the respondent was ignorant of many factors, but it does not establish that the respondent had mis-declared the value. It is also evident that there was no chemical analysis report nor was any sample drawn to allege mis-declaration of the nature of the goods. Deposit of Rs. 10 lakhs by the respondent during the investigation - HELD THAT:- It can only be called as deposit. The mere fact that some amount has been deposited during investigation does not establish in any way the case of the Department. Needless to say since the respondent has succeeded, the amount so deposited should have been refunded to him, if it has not already been refunded. Appeal of Revenue dismissed.
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Service Tax
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2023 (4) TMI 613
Refund/rebate of service tax - payment of service tax on the renting of immovable property of the concerned Duty Free Shops - HELD THAT:- In Aatish Altaf Tinwala [ 2019 (5) TMI 1802 - SC ORDER] and [ 2018 (12) TMI 1278 - BOMBAY HIGH COURT ], It was held that the Duty Free Shops in international arrival or departure terminals shall be deemed to be the area beyond the customs frontiers of India. - as affirmed by this Court [ 2018 (12) TMI 1971 - SC ORDER ] Duty Free Shops, whether in the arrival or departure terminals, being outside the customs frontiers of India, cannot be saddled with any indirect tax burden and any such levy would be unconstitutional. Therefore, if any tax is levied, the same cannot be retained and the Duty Free Shops would be entitled for refund of the same without raising any technical objection including that of limitation. In the end, learned counsel appearing for the appellant made a passing reference to two pending appeals which according to him raises an identical issue and thus, a request was made to tag this appeal along with the pending appeals. Appeal dismissed.
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2023 (4) TMI 612
Rectification of mistake - error apparent on the face of record or not - application for rectification of mistake under Section 74 of the Finance Act, 1994, filed within time or not - HELD THAT:- The explanation offered by the petitioner is that application dated 14.09.2022 was sent by registered post acknowledgment due and though there is a proof of dispatch, and there has been no acknowledgment card received by it. This writ petition stands disposed, permitting the petitioner to appear before the respondent on 19.04.2023 at 10.30 a.m. without expecting any further notice in this regard, with a copy of application dated 14.09.2022 and all documents in support of the same. Let the petitioner be heard, the application be considered and orders be passed within a period of four (4) weeks from that date, in accordance with law.
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2023 (4) TMI 611
Invocation of extended period of limitation - suppression of facts or not - the period involved is July 2003 to July 2004 and the show cause notice was issued on 12.01.2007 - levy of penalty - HELD THAT:- The intention to evade payment of service tax and suppression of facts needs to be determined based on the evidence available on records. As long as the assessee is registered and continues to file returns as required and supplies information sought by the officers, nothing more is required from the assessee. The assessee is required to self assess its service tax, and the officer is required to carry out the scrutiny of the returns if filed or otherwise make best judgement assessment. The appellant had taken service tax registration and admittedly it had not filed any ST-3 returns. Even if the appellant was under the impression that it was not required to file returns or pay tax, there can be no justification whatsoever for the appellant to not reply to or provide information which is sought by the officers. Since the appellant had not supplied the information despite repeated reminders from the Range Superintendent, the Assistant Commissioner did what was best possible under the circumstances. Thus, the lower authorities were correct in concluding that the appellant had intention to evade payment of service tax and had suppressed providing the information - there are no reason to interfere with the penalties imposed as well. Appeal dismissed.
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2023 (4) TMI 610
Liability of service tax - Transport of Goods by Road and Maintenance of Repair Services - payment was made in foreign currency to the Canadian Standards Association operating as M/s. CSA International, Canada for factory certification which is similar to ISO Certification - applicability of Section 66A of the Finance Act, 1994 under Reverse Charge Mechanism - extended period of limitation - HELD THAT:- A perusal of the provisions of Section 66A of the Finance Act, 1994, reveal that the service recipient is held accountable for payment of service tax when the services are received from a Foreign Service Provider whose usual place of residence or whose permanent address is located other than in India. Explanation-1 to this Section clearly says that a person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. In this appeal, facts clearly indicate that M/s. CSA International, Canada has its 100% Subsidiary viz. M/s. CSA Private Limited, Bangalore, who is registered with Service Tax R.C. No, AABCC2605FST001. The service of Technical Inspection and Certificate was definitely provided in the country and as such to be treated as service performed in India. At the relevant time there was no condition attached for RCM that the Foreign Service Provider should not have an office in India. Whereas, the appellant relies on the Explanation-1 to Section 66A to drive his point that RCM cannot be made applicable to him as M/s. CSA International, Canada is having its 100% Subsidiary Branch Office operating as M/s. CSA Private Ltd., at Bangalore. Whereas, the revenue relies on sub-section-2 of Section 66A, to fasten the tax liability on the appellant which states that where a person is carrying on a business through a permanent establishment in India and through a permanent establishment other than India, such permanent establishment shall be treated as separate persons. However, the records clearly reveal that the inspection service got performed in India though the certificate was issued by M/s. CSA International, Canada. As M/s. CSA International, Canada has got its 100% Subsidiary in Bangalore, invoking the provisions of Section 66A of the Finance Act and fastening the tax liability on the appellant on RCM basis is not legally sustainable and as such, the appellant succeeds on merits. As such, other issues like invoking extended period and imposition of penalties are not discussed. Appeal allowed.
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2023 (4) TMI 609
Levy of Service tax - re-instatement interest collected by the appellant on delayed payment of premium by the policy holder to reinstate a lapsed policy (interest on delayed payment of premium by the policy holder) - applicability of rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006 - department believes that the appellant camouflaged the amount received towards processing/administrative charges as reinstatement interest collected on delayed payment of premium. HELD THAT:- It is more than apparent that it is only in a case where the policy has lapsed that it can be revived and a policy which stands terminated cannot be revived. The rights and obligation of the parties under the contract do not come to an end on lapse of the policy as the policy holder has an option to revive the policy on payment of premium with interest. This requirement of payment of interest for revival of a lapsed policy flows from the policy contract. A policy holder is under an obligation to make timely payments of the premium and if such payments are not made in time, the policy may lapse and to revive this policy interest has to be paid under the terms of the contract. The overdue premium interest is, therefore, linked to the obligation of timely payment of premium. The Commissioner committed an error in concluding that the relationship stands terminated upon lapse of a policy and, therefore, no interest can be charged for reviving it. The Commissioner also committed an error in concluding that since the rate of interest is not uniform, it cannot be considered as interest . Section 65B(30) of the Finance Act 1994, which defines interest, does not impose any condition that the interest that has to be charged has to be at a uniform rate. The manner in which interest has to be paid is governed by the terms of contract agreed between the parties. The department cannot, therefore, urge that since uniform rate of interest has not been levied, the amount collected would not partake the character of interest but would be in the nature of administrative/processing fee. In this view of the matter it would not be necessary to examine the contention advanced by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case. Appeal allowed.
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2023 (4) TMI 608
Valuation of services - inclusion of value of non-monetary consideration (free accommodation, medical facilities, vehicle and telephone insurance and stationery and other expenses) in the taxable value or not - extended period of limitation - HELD THAT:- The issue as to whether the aforesaid value of non-monetary consideration could be included in the taxable value has been decided in M/S. CENTRAL INDUSTRIAL SECURITY FORCE (CISF) VERSUS COMMISSIONER OF SERVICE TAX-I, PUNE [ 2021 (11) TMI 835 - CESTAT MUMBAI] , following the decision of Supreme court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that the Tribunal in the case of M/S BHARAT COKING COAL LTD. VERSUS COMMR. OF CENTRAL EXCISE S. TAX, DHANBAD [ 2021 (9) TMI 23 - CESTAT KOLKATA] where it was held that Allahabad Bench of the Tribunal in the case of CENTRAL INDUSTRIAL SECURITY FORCE VERSUS COMMISSIONER OF CUSTOMS, C.E. S.T., ALLAHABAD [ 2019 (1) TMI 1661 - CESTAT ALLAHABAD ], has already settled the issue in favour of the appellant to hold that expenses incurred towards medical Services, vehicles, expenditure on Dog Squad, stationery expenses, telephone charges, expenditure incurred by the service recipient for accommodation provided to CISF etc are not includible. The impugned order deserves to be set aside. It would, therefore, not be necessary to examine the issue relating to limitation. Appeal allowed.
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2023 (4) TMI 607
Wrongful availment of benefit of notification dated March 01, 2006 - benefit available only, if CENVAT credit on input services and capital goods had not been taken by the assessee (as assessee has also availed credit in respect of commercial or industrial construction service) - demand under works contract service, valid or not - HELD THAT:- On remand, the Commissioner has confirmed the demand under works category holding that it could be done even if the show cause notice did not propose that the activity carried out by the appellant would fall under works contract service. This view taken by the Commissioner is contrary to the decision rendered by the Tribunal in INDIA GUNITING CORPORATION VERSUS COMMISSIONER OF CENTRAL TAX [ 2021 (2) TMI 400 - CESTAT NEW DELHI] as it was held that a demand proposed under a particular category cannot be confirmed under a different category. It would not be possible to sustain the order dated February 09, 2017 passed by the Commissioner confirming the demand under the works contract service for the period w.e.f. June 01, 2007 - Appeal allowed.
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2023 (4) TMI 606
CENVAT Credit - input services - whether after amendment to definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004, with effect from 01.04.2011, the said CENVAT Credit was admissible to the appellant or not specifically after the words setting up has been deleted from the definition? - HELD THAT:- In the present case activity was that of construction and therefore the services stated such as architect service, telephone expenses etc. were input services and therefore the Service Tax paid on the said services is eligible as CENVAT Credit to the appellant. Appeal allowed.
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Central Excise
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2023 (4) TMI 605
Doctrine of promissory estoppel - Seeking grant of exemption from payment of Duty of Excise or Additional Duty of Excise - Cement - applicability of N/N. 56/2002-Central Excise dated 14.11.2002 - HELD THAT:- The Hon ble Supreme Court in UNION OF INDIA ANOTHER ETC. ETC. VERSUS M/S V.V.F LIMITED ANOTHER ETC. ETC. [ 2020 (4) TMI 669 - SUPREME COURT] after considering the entire matter in the light of latest exposition of law governing the Doctrine of Promissory Estopple came to the conclusion that the impugned notifications issued by the Government were not in violation of Doctrine of Promissory Estopple. The Hon ble Supreme Court held the impugned notifications clarificatory in nature and issued in public interest and also in the interest of revenue. Be that as it may, the fact remains that the issue has now been given a quietus by the Hon ble Supreme Court in M/S V.V.F Limited by upholding the legal validity and sustainability of the impugned notifications in law. In view of the authoritative pronouncement of the Apex Court, there remains nothing for this Court to adjudicate in this petition. Petition dismissed.
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2023 (4) TMI 604
MODVAT Credit - Process amounting to manufacture or not - purchase of item Chloropyriphos falling under chapter heading 3808.10 of Central Excise Tariff Act, 1985 - said products was purchased in bulk and repacked in the factory of production in smaller packs of different sizes - Chloropyriphos so purchased in bulk can be regarded as input in terms of Rule 57 A of Central Excise Rules, 1944 or not - reversal of MODVAT Credit under erstwhile Rule 57I of Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944. HELD THAT:- The appellant are engaged in the activity of repacking of the insecticide Chloropyriphos purchased in bulk, into smaller retails packs and cleared the same under the appellant s brand on payment of excise duty. It is also not disputed that during the impugned period process of repacking of the said goods does not amount to manufacture. Therefore, the issue before us is that whether the MODAVT/CENVAT credit taken by the appellants on Chloroypyriphos which were cleared by them on payment of duty, after the process of re-packing and affixing their brands is legally correct or not. The appellant have paid more duty than the credit availed after value addition. When duty paid at the time of clearance equal to or higher than the credit availed, the same is to be treated as reversal of credit. Therefore, no further reversal of credit is required as held by Tribunal in number of cases. Such payment of duty that too in excess of the credit availed tantamount to reversal of credit and there is no need to once again reverse the Modavt/Cenvat credit taken - In a similar situation, the Hon ble Apex Court in the case of COMMISSIONER OF C. EX. CUS., VADODARA VERSUS NARMADA CHEMATUR PHARMACEUTICALS LTD. [ 2004 (12) TMI 93 - SUPREME COURT] held that when Cenvat credit wrongly availed is exactly equivalent to the amount of duty paid, the consequence is revenue neutral and hence the demand for such wrong availment of credit is not sustainable in law. The ratio of this judgment squarely applies to the facts of the present case. The duty paid by the appellants has been accepted by the department which is admittedly more than the Modavt/CENVAT credit availed by the appellant. Therefore, following the various judicial pronouncements as relied upon by the appellant, the appellant are not required to reverse the credit. Appeal allowed.
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2023 (4) TMI 603
Demand of interest on differential duty - price-escalation clause - whether the Appellants are required to pay interest on the differential duty paid subsequently due to price variation clause or any reason or for that matter if the price is revised for any reason much a later date? - HELD THAT:- Hon ble Apex Court has discussed the issue at length in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2019 (5) TMI 657 - SUPREME COURT] . Hon ble Apex Court has upheld the principle that the duty is payable at the time of removal irrespective of the fact that it is paid subsequently. Accordingly, interest as far as Section 11AB is concerned would be reckoned from the date on which the duty is payable and not from the date of payment of such duty. Thus, nothing survives in the appeal - appeal filed by appellant dismissed.
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2023 (4) TMI 602
Recovery of the suomotu credit along with proposal for penalty - whether the appellant could suomotu take the credit reversed during the litigation? - HELD THAT:- The impugned order under challenge in this matter was passed on 18.10.2012 whereas as per the submission of the appellant that disputed amount of Rs. 65,98,211 was already refunded by the Assistant Commissioner, Central GST, Division X, Vadodara-II, vide Order-In-Original No. 15/Dn-X/NNB/REFUND/19-20 dtd. 11.11.2019. The reversal of entry No. 1109 dtd. 25.03.2011 for filing appeal before the CESTAT in Appeal No. E/595 /2011 against the OIA No. BC/10/SURAT-II/2011 dtd. 08.03.2011 and Reversal of Entry No. 1109 dtd. 25.03.2011 disputed in the present appeal No. E/10141/2013 are same. The matter is remanded to the adjudicating authority to consider these aspects and to decide the matter a fresh after verifying the records /details of the appellant as claimed by them before this tribunal.
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2023 (4) TMI 601
Admissibility of CENVAT credit on the services availed prior to registration - allegations in the show cause notice that the two units were earlier separate and independent and obtained the common registration only on 31.01.2014 - whether the appellant rightly availed the cenvat credit on input services used by them in connection with setting up of their new unit which has been deleted from the inclusion part of section 2(l) post amendment of the definition of 'input service', w.e.f. 01.04.2011? - HELD THAT:- The Apex Court in SARVESH REFRACTORIES (P) LTD. VERSUS COMMISSIONER OF C. EX. CUSTOMS [ 2007 (11) TMI 23 - SUPREME COURT] , dealing with the issue of classification by the manufacturer and the supplier of the goods under a particular heading was please to hold that the appellant who is the consumer of those goods could not get the classification of the manufacturer change. Similarly, the case of COMMISSIONER OF C. EX., JAIPUR-I VERSUS MANGALAM CEMENT LTD. [ 2017 (4) TMI 499 - CESTAT NEW DELHI] , holds that it is well settled position of law that the credit availed by an assessee cannot be denied or varied on the ground that the classification of service should have been made in a different category by the provider of service. Variation in the classification or consequent rate of payment of service tax is not possible at the end of the recipient of service. Once the classification is finalised at the end of the service provider the same cannot be altered at the end of the service recipient - Consequently, the cenvat credit cannot be denied to the appellant on this ground. The demand made by the revenue to deny cenvat credit by the appellant and order its recovery is rejected - question of interest and penalty no longer survives - Appeal allowed.
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2023 (4) TMI 600
Clandestine Removal - raw material namely sponge iron was found short in quantity of 403.51 metric ton and finish goods M.S. Ingot was found short of 1952.62 metric tons - no explanation was given by appellants - demand based on the records found during investigation and no statement is relied to demand duty - HELD THAT:- In appellants own case, in the case of Unit 1 M/S SOURABH ROLLING MILL PVT LTD. AND SHRI PANKAJ AGARWAL VERSUS PRINCIPAL COMMISSIONER, CENTRAL TAX, CENTRAL EXCISE CUSTOMS, CENTRAL GOODS AND SERVICE TAX, RAIPUR (C.G) [ 2019 (12) TMI 620 - CESTAT NEW DELHI] , this Tribunal held that the charge of clandestine removal cannot be based on series of assumption and presumption, where it should be based on evidence like unaccounted purchase of raw material receipt and consumption of raw material etc. - the demand on the basis of yield production of raw material of sponge iron 403.51 metric ton found short is not acceptable, but at the same time, as no explanation was given by the appellant for shortage of raw material, it is held that (if any) Cenvat credit taken by the appellant on sponge iron is required to be reversed alongwith interest. Shortage of M.S. Ingot - HELD THAT:- No explanation was given by the appellant during the course of investigation and defence taken by the learned Counsel for the appellant that no search warrant was issued to the appellant, we hold that the Investigating Agency found during the course of investigation of another unit, some illegal activity like clandestine removal of goods found, in that circumstances, in continuation of search, the search of the Unit can be done. Therefore, the said argument is not acceptable - if investigation could not have been done, the clandestine removal of goods could not be detected and investigation was continuing process and after completion of investigation, the show cause notice has been issued to the appellant. Therefore, it cannot be held that show cause notice issued to the appellant is barred by limitation. This case is based on the records found during investigation and no statement is relied to demand duty. Thereafter, the appellant is liable to pay duty on shortage of finish goods - the appellant is required to reverse Cenvat credit on shortage of sponge iron (if any) and liable to pay duty on M.S. Ingots found short. The duty is payable alongwith interest and penalty imposed on the appellant shall be equivalent to duty payable. Penalty on Shri Pankaj Agrawal is reduced to Rs. 5,00,000/- - Appeal disposed off.
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2023 (4) TMI 599
SSI Exemption (benefit of N/N. 08/2003 Central Excise dated 01.03.2003) - Exemption denied on the ground that the appellants were using brand name of another person - HELD THAT:- The logo Touch wood was used by the appellant as a manufacturer and the appellant has applied for registration with Trade Marks Registry. M/s SKPL has merely applied for registration of trademark logo Touch wood, therefore it cannot be alleged that the appellant is using trademark of another person. In fact, appellant is a manufacturer of goods under the said logo and SKPL has merely applied for registration of said logo for trading of goods. Furthermore, the logo Touch wood was registered in the name of the appellant and the application filed by M/s SKPL for registration of touchwud logo is rejected by Trademark Registry. he logo Touch wood was used by the appellant as a manufacturer and the appellant has applied for registration with Trade Marks Registry. M/s SKPL has merely applied for registration of trademark logo Touch wood, therefore it cannot be alleged that the appellant is using trademark of another person. In fact, appellant is a manufacturer of goods under the said logo and SKPL has merely applied for registration of said logo for trading of goods. Furthermore, the logo Touch wood was registered in the name of the appellant and the application filed by M/s SKPL for registration of touchwud logo is rejected by Trademark Registry. As the Trademark Registry has recognized the logo Sunshine used by M/s SKPL all different and registered the same in the name of the appellant. In that circumstances, benefit of SSI exemption cannot be denied to the appellant - Further, it is a fact of record that the logo Touchwud was registered in the name of the appellant and they are using the said logo as manufacturer whereas M/s SKPL has applied for registration of logo Touchwud being trader in their name and their application for registration has been rejected by the Trademark Registry. The appellant is not using brand name of another person and have not contravened Para 4 of the Notification No. 01/2003, Central Excise dated 01.03.2003, therefore is entitled to get the benefit of SSI exemption under the said notification - Appeal allowed.
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2023 (4) TMI 598
Benefit of Cenvat credit on the inputs and input services which were used in the manufacture of the final product - Interest - penalty - HELD THAT:- The undisputed facts of the case are that the appellant was liable to pay excise duty and had not done so and during the first round of litigation, the appellant had paid Rs. 11,42,678/- as duty along with interest of Rs. 12,49,677/- and a penalty of Rs. 2,85,670/-. This tribunal had allowed the benefit of Cenvat credit in the first round of litigation and remanded the matter to the original authority for calculation. There is no dispute regarding the calculations and all benefits which the appellant was entitled to have been given by the Joint Commissioner while re-determining the duty. It is also not in dispute that the excess duty deposited in the first round of litigation has been refunded to the appellant along with the interest applicable on such amount. Interest - HELD THAT:- Interest under section 11AA of the Central Excise Act is to be calculated on the amount of duty not paid or short paid. If the duty gets reduced, so should the interest. The Department cannot retain any excess amount paid as interest over and above what is due. The Joint Commissioner has wrongly rejected the refund of the interest. Penalty - HELD THAT:- Mandatory penalty under section 11AC @ 25% has to be calculated on the amount of duty not paid or short paid. Once the duty has been re-determined the amount of penalty should automatically be re-determined. The excess amount paid as interest and as penalty under section 11AC must be refunded to the appellant. The respondent are directed to refund the excess amounts deposited as interest and as penalty under section 11AC by the appellant during investigation - appeal allowed.
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CST, VAT & Sales Tax
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2023 (4) TMI 597
Validity of assessment orders in respect of turnover from the manufacture of kraft paper - reversal of Input Tax Credit - basis for reversal was that sale of the goods to SEZ in other States are exempt from payment of tax and ITC is impermissible in terms of such exempted sales - HELD THAT:- The question of reversal of ITC in regard to supply made to SEZ was considered by a Division Bench of this Court in W.A.No.703 of 2020 Batch in the case of M/S. CONSOLIDATED CONSTRUCTION CONSORTIUM LTD. VERSUS THE ASSISTANT COMMISSIONER (CT) [ 2023 (3) TMI 884 - MADRAS HIGH COURT] . In conclusion, the assessments have been remanded to the Assessing authority for fresh consideration . In light of the aforesaid order, the impugned assessment also stands remanded.
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2023 (4) TMI 596
Disallowance of ITC - It is alleged that no documentary evidence has been produced as required in terms of Rule 10(6)(b) of the Tamil Nadu Value Added Tax Rules, 2007 - HELD THAT:- The entirety of the reply has been extracted in the assessment order. However, while confirming the disallowance of ITC, the officer merely refers to Section 19(13) of the Act and nothing else and does not address the contentions put forth by the petitioner in the reply. There are no justification for the reversal of ITC, finding the impugned order cryptic and arbitrary. The reversal of ITC penalty are set aside. Petition allowed.
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2023 (4) TMI 595
Violation of principles of natural justice - ex-parte order - impugned order has been passed on an ex parte basis (on the very first day of hearing) without recording any satisfaction about service upon the revisionist - HELD THAT:- In view of specific assertion made by revisionist that no notice whatsoever was ever served upon revisionist, a perusal of impugned order makes it evident that although it has been indicated that notice was served upon partner of firm on 27th February, 2008, the order does not indicate anywhere as to whether and by which mode the notice was issued to revisionist-respondent. The only fact indicated in the order is that notice was served upon partner of firm on 27th February, 2008 fixing 15th April, 2008 as the first date of hearing. It is also evident from the impugned order that hearing took place on the very first day of hearing and impugned order has thereafter been passed on 26th April, 2008. Evidently the order impugned is an ex parte order. In the considered opinion of this Court, the second appellate authority has clearly erred in not recording a finding as to when and by which mode notices were issued to the revisionist-respondent and how service can be said to have been effected upon the said person. Even otherwise it would have been in the interest of justice for the second appellate authority to have fixed at least another date to permit representation of revisionist-respondent in the said proceedings prior to deciding it on an ex parte basis, which has resulted in substantial injury to the revisionist-respondent. The learned Tribunal was clearly unjustified in deciding the second appeal on ex parte basis on the very first day of hearing and as such the order impugned is clearly vitiated due to violation of principles of natural justice - Revision allowed.
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Indian Laws
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2023 (4) TMI 594
Seeking grant of Bail - Bike Bot Scheme - involvement in the scheme of embezzlement of huge amount - money received from investors (even in the account of the applicant directly) have not been returned back to them - HELD THAT:- It is evident that although the Apex Court has ordered treating Case Crime No. 206 of 2019 as the main case and has directed charge sheets in other matters to be submitted in the said case as a supplementary charge sheets and has ordered clubbing of the cases together of the State of U.P. and New Delhi but looking to the nature of offence, the magnitude of the money embezzled has issued notices to the Enforcement Directorate and CBI to look into the matter for investigation by a central agency and as has surfaced during investigation that the applicant was involved in the company even since before his induction as an Additional Director and money was received by him directly in his bank accounts from various investors, it cannot be said that the applicant has not benefited from the money of the investors and the said scheme. The receiving of money directly in the bank account by the applicant from the investors clearly shows his active involvement and participation in the scheme and also being a part of group of persons involved in the scheme of embezzlement of huge amount. The money received from investors even in the account of the applicant directly have not been returned back to them. Looking to the facts and circumstances of the case, this Court does not find it to be a fit case for bail in all the bail applications - bail application dismissed.
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2023 (4) TMI 593
Dishonour of Cheque - insufficient funds - existence of legally enforceable debt or not - petitioner would submit that the petitioner never borrowed any loan as alleged by the respondent herein - rebuttal of presumption - HELD THAT:- The respondent failed to prove that he had lent a sum of Rs.3,00,000/- to the petitioner on 15.09.2013. Further, the respondent caused statutory notice to the petitioner on 20.06.2013 thereby calling upon him to pay a sum of Rs.2,00,000/- for the dishonour of the cheque bearing No.156938. Thereafter, he further had lent a sum of Rs.3,00,000/- on 15.09.2013. No prudent man would lend such a huge sum, that too after dishonouring the cheque which was issued by the person for the previous borrowal. Therefore, the case of the respondent is unbelievable one and the cheque which was issued for security purposes in favour of Shri Balaji Finance was misused by the respondent. In fact while crossexamination of P.W.1, he did not answer properly with regard to the source of income and his financial capacity to lend such a huge sum of Rs.3,00,000/- that too without any security. The evidence on record thus is a probable defence by the petitioner, which shifted the burden on the respondent to prove his financial capacity and other facts. However, the respondent failed to prove the same. Taking into consideration of all the facts and circumstances, it appears that the petitioner sufficiently rebutted the presumption arising under Section 139 of the Negotiable Instruments Act. Hence, Ex.P.1 was not issued for any legally enforceable debt in favour of the respondent in order to attract the offence punishable under Section 138 of the Negotiable Instruments Act. Therefore, the conviction and sentence imposed by the Courts below cannot be sustained against the petitioner and the same is liable to be set aside. The Criminal Revision Case is allowed.
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2023 (4) TMI 592
Dishonour of Cheque - existence of legally enforceable debt and liability or not - non-service of notice - burden to prove - Sections 118 and 139 of NI Act - HELD THAT:- In complaint under Section 138 of N.I. Act, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. The applicant being holder of cheque and the signature appended on the cheque having not been denied by the Bank, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption. It is not necessary to aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, the service of notice is deemed to have been effected at the time, at which the letter would have been delivered in the ordinary course of business - In the judgment of the Apex Court in the case of M/S. AJEET SEEDS LTD. VERSUS K. GOPALA KRISHNAIAH [ 2014 (8) TMI 464 - SUPREME COURT] , the Apex Court has held that absence of averments in the complaint about service of notice upon the accused is the matter of evidence. In view of the settled legal position, it is clear that at this stage, only a prima facie case is to be seen and the complaint cannot be thrown at the threshold and the factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court. All the submissions made by learned counsel for the applicant is disputed questions of fact. Therefore, when the facts have to be established by way of evidence, this Court while exercising the powers under section 482 of Cr.P.C., cannot interfere with such proceedings. Hence, no grounds are made out for quashing of the proceedings under section 138 of the Negotiable Instruments Act. This Court finds that there is no illegality or infirmity in the summoning order dated 21.01.2021 passed by the concerned court below - application dismissed.
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