Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 26, 2023
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
FEMA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Release / return of Seized currency to the petitioner - currency notes recovered by the police under Section 102 Cr.P.C. - the release of vehicle/article/currency notes under Section 451 Cr.P.C. cannot be restricted merely on account of the fact that they were used for commission of any offence. - HC
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Transactions not regarded as transfer - exemption from tax on capital gains - the prerequisites provided in Section 47(iv) of the Act stand fulfilled i.e., the transfer of the Trunk Infrastructure/capital work-in-progress was made by the respondent/assessee to its 100% subsidiary and the subsidiary was an Indian company. - HC
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Reopening of assessment u/s 147 - time limit for issuance of notice for reopening of the assessment - Validity of order u/s 148A - The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. - HC
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Validity of the assessment framed u/s 147 - Denial of natural justice - Copy of the documents place show the ld. Commissioner has not put his signature on the reasons recorded by the AO. Therefore, various objections raised by the assessee before us, which have been noted by us in the foregoing paragraphs require adjudication afresh on merit at the end of the Revenue authorities. - AT
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Taxability of interest earned on External Commercial Borrowings (“ECB”) loans - Permanent Establishment - Undisclosed income / TDS - Not claiming credit of TDS on the ground the income is not taxable in India and Tax Burden is born by the Deductors themselves - AO directed to adjudicate the issue afresh - AT
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Taxability of dividend as declared, distributed or paid by a domestic company to a non-resident shareholder(s) which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec.115-O of the Act - such additional income tax payable by the domestic company shall be at the rate mentioned in Section 115 O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. - AT
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TDS u/s 194C - freight expenses - since the three parties were having PAN and also were in possession of less than 10 vehicles and therefore there was no requirement to deduct tax at source under s 194C(6) - AO directed to verify the claim - AT
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TDS u/s 194J - non deduction of TDS from payments made to Guest faculties - the remuneration paid to Guest Faculty is drawn from contingency/wages head in the light of the order of the Government of Haryana and thus shown under the head ‘Professional and Special Services’ in its income and expenditure account. - The monthly remuneration paid to the Guest Faculties are in the nature of ‘contract of service’ between the assessee deductor and its teaching staff appointed on adhoc basis and such adhoc salary paid to them being below taxable limit on individual basis, does not warrant deduction of tax at source - AT
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TP Adjustment with respect to receivables from the Associated Enterprises (AE) - With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharacterized the transaction. - AT
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TP adjustment - Segment results cannot be said to be unreliable. However on perusal of the transfer pricing order, we agree with the ld. DR that these segmented results were never verified by the TPO since he had out-rightly rejected the same. Accordingly we uphold the Ld. DR's alternative claim and set aside the audited segmented results to the file of the AO for the limited purpose of verification and cross- check with the overall audited financial statements of the appellant. - AT
Customs
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Levy of Anti-Dumping Duty - Failure on the part of the respondent–authority to impose Anti Dumping Duty on imports of Low Density Polyethylene (LDPE) from foreign countries - petitioner is entitled to an interim order - Central Government shall impose a provisional Anti Dumping Duty under Section 9A (2) of the Tariff Act at the rate determined by respondent No. 2 in its Final Finding - SC
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Classification of imported goods - digital cameras - There is nothing on record to indicate that the imported goods do not conform to the description that entitles them to the benefit of exemption in the impugned notification. The rescinding of the Explanation therein has done away with any technical specification that may, at some in the past, have served to segregate ‘digital still image video camera’ as eligible and ineligible for the exemption. - AT
Direct Taxes
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Benami Transaction or not - properties purchased by the father in the name of mother - he person in whose name stamp papers were purchased, more so when they are spouses, can never be considered as a strong piece of evidence to compel an inference conclusively the intent behind a purchase. This Court considers that it is far too inadequate to prove benami. - HC
Indian Laws
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Corruption and money laundering - HC has quashed the FIR - Viewed through the prism of gravity of allegations, a first information report based on "probability" of a crime having been committed would obviously be of a higher degree as compared to a first information report lodged on a "mere suspicion" that a crime has been committed - The High Court failed to bear in mind these principles and precisely did what it was not supposed to do at this stage. We are, thus, unhesitatingly of the view that the High Court was not justified in its interference on the ground it did. - SC
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Validity of WILL - The defence set up by the respondent was that the Will was brought about by undue influence and coercion. In such cases, on the propounder discharging the initial burden required to prove the Will, the onus shifts to the Caveator to prove the allegations of undue influence and coercion. - HC
Service Tax
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Levy of Service tax - GTA service or not - hiring tankers on monthly basis - no consignment notes issued - the transporter is taking the entire responsibility of the goods for the route and transporter is not issuing any LRs for the purpose of these goods. The appellants are issuing delivery challans. - No service tax liability - AT
Case Laws:
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GST
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2023 (4) TMI 1007
Maintainability of petition - statutory alternative remedy of preferring an appeal, not availed - (jurisdiction to) demand for service tax from U.P. Power Corporation - Chapter V of the Finance Act, 1994 is omitted - HELD THAT:- So far as issue with regard to raising of demand for service tax from U.P. Power Corporation is concerned this is a factual issue which can always be determined in appropriate proceedings instituted by the petitioner while challenging the assessment order. Routine issues with regard to the legality of the assessment order are not required to be entertained in excercise of extraordinary jurisdiction conferred upon this court under Article 226 of the Constitution of India by passing the statutory alternative remedy provided in the statute itself. So far as omission of Chapter V of the Finance Act, 1994 is concerned, the obligation created thereunder shall continue to be saved by virtue of Section 174(2)(c) of the GST Act, 2017. The petitioner therefore cannot challenge the imposition of service tax on the ground that Chapter V of the Finance Act, 1994 is omitted. The present writ petition directly against the order of assessment not entertained, so as to bypass the remedy of appeal contemplated in the Act - petition dismissed.
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2023 (4) TMI 1006
Rejection of refund claims - rejection on the ground of limitation - authority also mentions the non-availability of certain statutory / other documents in support of the claim for refund - HELD THAT:- The Central Board of Indirect Taxes and Customs has, vide Notification No.13/2022 - Central Tax dated 05.07.2022, stated that the time between 01.03.2020 - 28.02.2022 shall stand excluded in construing the limitation for issuance of order under Section 73(9) for computation of limitation for seeking refund under Sections 54 or 55 of the enactments - this Notification issued by the Board applies to Central GST authorities and GST authorities in the Union Territories. However, Mr.C.Harsha Raj, learned Additional Government Pleader, who appears for the State has written instructions dated 05.04.2023, a copy of which is placed on file, to state that the benefit under Notification No. 13/2022 will be extended to assesses in the State of Tamil Nadu as well. This is recorded. Petition disposed off.
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2023 (4) TMI 1005
Seeking release of detained goods alongwith truck - petitioner is ready and willing to abide by the conditions - HELD THAT:- It is directed that the respondent shall release the goods and the conveyance of the petitioner confiscated and detained pursuant to the order dated 09.10.2022 passed under FORM GST MOV-06 subject to the conditions imposed. Application allowed.
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Income Tax
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2023 (4) TMI 1004
Release / return of Seized currency to the petitioner - currency notes recovered by the police under Section 102 Cr.P.C. - unexplained and unaccounted cash - discloser of currency / income in the ITR - HELD THAT:- As per the legislative intent of Section 451 Cr.P.C., the property means any property regarding which an offence appears to have been committed or which appears to have been used for the commission of any offence, and therefore, the release of vehicle/article/currency notes under Section 451 Cr.P.C. cannot be restricted merely on account of the fact that they were used for commission of any offence. In the aforecited precedent law, the Hon'ble Apex Court [ 2002 (10) TMI 773 - SUPREME COURT] has held that the court should pass appropriate orders immediately and the articles should not be kept for a long time at the police station, and the procedure for disposal of the seized valuable articles, currency notes, vehicles, seized liquor and narcotic drugs has been laid down therein. In the present case, currency of Rs.47 lacs were recovered by the Police under Section 102 Cr.P.C. way back on 09.10.2018 and still the matter is at the initial stage of the trial and the currency in dispute is lying in the Police Station. Present misc. petition is allowed. The impugned orders passed by the courts below refusing to hand over the seized currency to the petitioner, are hereby quashed and set aside. The seized currency of Rs.47 lacs is ordered to be released in favour of the petitioner on supurdgi subject to the conditions that the petitioner shall furnish a bank guarantee of Rs.10 lacs in favour of the respondent-Income Tax Department, initially for a period of one year and which shall be renewed by the petitioner till completion of proceeding of tax assessment over the seized currency of Rs.47 lacs, by the respondent-Income Tax Department. Upon completion of proceedings of tax assessment, the respondent Income Tax Department shall be at liberty to recover tax from the bank guarantee as submitted by the petitioner.
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2023 (4) TMI 1003
Transactions not regarded as transfer - exemption of income arising on account of transfer of Trunk Infrastructure Asset to its 100% subsidiary - CIT(A) concluded that the surplus generated by the respondent/assessee on transfer of what was, essentially, capital work-in-progress would be chargeable to tax, as it was an asset employed in the business - HELD THAT:- Trunk Infrastructure , which includes roads etc., were, admittedly, transferred by the respondent/assessee to its 100% subsidiary. Transfer of Trunk Infrastructure , concededly, led to generation of surplus. The record shows that the respondent/assessee had included this surplus in its return of income albeit, with a note which explained as to how the surplus arose. Tribunal, in reversing the view of the CIT(A), has, in our view, rightly, concluded that an assessee employees both capital assets and trading assets in his business; the fact that a capital asset (i.e., Trunk Infrastructure), which was, as noted above, a capital work-in-progress, on transfer, generated surplus, could not be treated as income, in view of the provisions of Section 47(iv) of the Act. There is no dispute raised before us that the prerequisites provided in Section 47(iv) of the Act stand fulfilled i.e., the transfer of the Trunk Infrastructure/capital work-in-progress was made by the respondent/assessee to its 100% subsidiary and the subsidiary was an Indian company. Whether Tribunal could not have gone beyond the assessment order, given the fact that the respondent/assessee itself had included the surplus as income chargeable to tax in its return of income? - This argument misses the point (something which the Tribunal has noted) which is that the assessee had entered a caveat in the return of income. It is not disputed that a note was incorporated in the return wherein it was explained as to how the surplus arose in the instant case on transfer of Trunk Infrastructure/capital work-in-progress. In our view, it is more than well-established that merely because the assessee inadvertently offers a receipt for levy of tax, tax cannot be levied by the revenue if it is not otherwise constitute income of the assessee. Every receipt is not an income chargeable to tax under the provisions of the Act. Decided against revenue.
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2023 (4) TMI 1002
Reopening of assessment u/s 147 - time limit for issuance of notice for reopening of the assessment - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT:- As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time. In Keenara Industries Pvt. Ltd. [ 2023 (3) TMI 104 - GUJARAT HIGH COURT] this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions. The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into in respect of the above petitions. All other questions on facts involved in the reasons weighed with Assessing Officer seeking to reopen the assessment are kept open in all cases.
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2023 (4) TMI 1001
Reopening of assessment u/s 147 - time limit for issuance of notice for reopening of the assessment - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT:- As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time. In Keenara Industries Pvt. Ltd. [ 2023 (3) TMI 104 - GUJARAT HIGH COURT] this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions. The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into in respect of the above petitions. All other questions on facts involved in the reasons weighed with Assessing Officer seeking to reopen the assessment are kept open in all cases.
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2023 (4) TMI 1000
Revision u/s 263 by CIT - deduction u/s 80P on the FDs made - Diversified views - As per the PCIT the impugned interest income was not arising from the activity of financing from the members and as assessee is not eligible for deduction for such interest income under the provisions of section 80P but the AO has allowed the same without the necessary verification and application of mind - HELD THAT:- We note that this tribunal in the case of Shree Keshav Co-operative Credit Society Limited [ 2022 (7) TMI 79 - ITAT RAJKOT] as held that AO has taken one of the possible view for allowing the deduction to the assessee under the provisions of section 80P(2)(d)/80P(2)(a)(i)(a) of the Act. Where two view are possible on the issue and the AO has taken one of the possible view, but the PCIT do not agree with the view adopted by the AO, in such scenario, the order of the AO cannot be held erroneous. Decided in favour of assessee.
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2023 (4) TMI 999
Validity of the assessment framed u/s 147 - Denial of natural justice - assessee not given adequate opportunity to put forward its defense/explanation - Necessity to get approval as required under the law u/s 151 - HELD THAT:- As assessee has not been provided with adequate opportunity to put forward its defense/explanation with supporting evidences to make out its case that the action of the Revenue authorities are not valid. When the Revenue authorities noticed that the notices could not be served upon the assessee, it has not carried out its primary responsibility to ascertain the company, against which notices were issued, and proceedings under section 148 was contemplated, whether was existing or not. Documents filed in the PB before us show that it was intimated to the ld.CIT(A) that the assessee-company was defunct and was struck off from the record of the ROC - contention of the assessee that while recording the reasons, the AO has not applied his mind and has not even obtained the approval as required under the law before issuing the same, cannot be simply brushed aside. Copy of the documents place show the ld. Commissioner has not put his signature on the reasons recorded by the AO. Therefore, various objections raised by the assessee before us, which have been noted by us in the foregoing paragraphs require adjudication afresh on merit at the end of the Revenue authorities. We set aside the impugned order of the ld.CIT(A) with direction to consider various issues and objections raised by the assessee, both on the facts and in law and pass a speaking order.We allow the quantum appeal of the assessee for statistical purpose.
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2023 (4) TMI 998
Seeking waiver for late fee and rectification U/s. 154 before the Ld. AO - Late filing fee u/s. 234E - assessee has filed e-TDS return belatedly for the respective quarters of the impugned AY under consideration which was processed u/s. 200A of the Act - HELD THAT:- Assessee filed a letter on 24/01/2019 seeking waive-off of late fee and rectification u/s.154 before the AO. AO did not pass any rectification order since it is not a petition u/s.154. ITO (TDS), Ward-1, Visakhapatnam responded to the assessee s letter stating that the waive-off of the late filing fee is out of his scope. In our view the assessee ought to have filed a petition seeking rectification of the order passed by the Ld. AO instead of filing a letter. Assessee filed an appeal based on the letter issued by the Ld. ITO (TDS), Ward-1, Visakhapatnam instead of filing the appeal against the intimation. CIT(A)-NFAC, following the provisions of section 246A of the Income Tax Act, 1961 dismissed the appeal of the assessee in limine as the same is not a maintainable appeal. One can clearly understand that the letter issued by the Ld. ITO, Ward-1, Visakhapatnam dated 10/05/2019 is nothing but a response to the letter filed by the assessee seeking waive-off of late filing fee imposed by the Ld. AO. Therefore it is not an appealable order before the Appellate Authorities as described in the provisions of the IT Act, 1961. CIT(A)-NFAC has rightly concluded that the grounds of appeal raised by the assessee cannot be adjudicated on merits since the appeal itself is not maintainable and therefore dismissed in limine. We have no hesitation to come to a conclusion that the Ld. CIT(A)-NFAC s order holds good as there is no infirmity in the order of the Ld. CIT(A)-NFAC and accordingly no interference is required. Assessee appeal dismissed.
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2023 (4) TMI 997
Unexplained cash deposits in bank accounts - main contention of the Ld.AR is that the assessee has received partial amount by way of cheque against sale cum GPA agreement from Sri S.Veera Raghavareddy as advance - AR pleaded that the same amount cannot be taxed twice and prayed for relief - HELD THAT:- Admittedly, the assessee has received Rs.15,00,000/- by way of cheque from Shri Veera Raghava Reddy as loan against property by way of execution of GPA cum sale agreement for security. This fact was not disputed by the revenue. We find from the arguments of the Ld.AR that the Ld.AO order has given a detailed breakup of cash deposits and cheque deposits in assessee s bank account - We find from the table as extracted in Ld.AO s order that the amount of Rs.15,00,000/- was included while disallowing the cash deposits - We, therefore find merit in the argument of the Ld.AR that the same amount cannot be taxed twice in the hands of the assessee. We are therefore of the considered view that since the same amount cannot be taxed twice, we direct the Ld.AO to delete the addition. Decided in favour of assessee. Addition of agricultural income - contention of the Ld.AR that the assessee is deriving agricultural income from Ac.29.76 cnts owned by her but the AO rejected the contention of the assessee holding that the assessee has not produced revenue records in support of her claim - HELD THAT:- We find, that the Ld.CIT(A) has rightly estimated the agricultural income of the assessee basing on the valid proposition. Hence, we do not find any infirmity in the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee on this ground
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2023 (4) TMI 996
Validity of notice u/s 143(2) - transfer of jurisdiction from ACIT to JCIT - notice u/s. 143(2) was issued by the ld. ACIT, Business Circle-7, Chennai, but the assessment order is signed by the ld. JCIT, Range-VII, Chennai - HELD THAT:- As there remains no dispute to the fact that the jurisdiction was transferred from ACIT to JCIT vide order dated 26.08.2013 and therefore, notice issued u/s.143(2) of the Act is a valid notice, issued by the Assessing Officer having jurisdiction over the assessee and similarly the assessment proceedings has also been carried out by the Assessing Officer having jurisdiction over the assessee. Therefore all the additional grounds raised by the assessee challenging the validity of assessment proceedings are dismissed. Addition of proportionate interest payment on borrowed funds, commission payment, sale promotion disallowance, and travelling expenses issues relating to disallowance of all these expenses is hereby restored to the file of the ld. CIT(A), who shall call for remand report on all these issues for which a fair opportunity shall be provided to the assessee, who shall not take unnecessary adjournments unless otherwise required for and furnish necessary details and in absence thereby, ld. CIT(A) can decide in accordance with law by way of passing a speaking order. Expenses claimed towards service tax penalty the disallowance is confirmed as alleged sum being penalty in nature is not allowable as expenditure u/s. 37. Additional grounds raised by the assessee are dismissed and the grounds raised on merits are partly allowed for statistical purposes.
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2023 (4) TMI 995
Disallowance u/s. 14A - Assessee submitted that the assessee company has not earned any exempt income during the year - HELD THAT:- As in view of the recent judgment in the case of PCIT vs Era Infrastructure (India) Pvt Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] are inclined to hold that for the year under appeal, in absence of any exempt income disallowance u/s. 14A of the Act is uncalled for. Therefore, no interference is called for in the findings of the ld. CIT(A) and ground no. 2.1 to 2.4 raised by the revenue are dismissed. Addition made on account of closing stock - Difference in closing stock - in the audit report u/s. 44AB quantity of closing stock of LAB stated at 6973 MT, whereas the figure of 6978 MT has been stated in the schedule related to quantitative details appearing in the income tax returns - HELD THAT:- As the opening quantity of 6973 MT has been taken, in our view this prima facie, seems to be a typographical error which do not call for any addition/disallowance. Thus, no interference is called for in the findings of the ld. CIT(A). Therefore, revenue ground is dismissed. Addition for notional loss arising on account of foreign exchange loss - alleged claim of foreign currency loss is notional in nature and the same has been calculated for the outstanding foreign currency payable/receivable by the assessee for the contract which have not expired at the close of the year - HELD THAT:- In the instant case, such contract which did not expire on 31.03.2013, the foreign currency loss has been calculated, considering the currency value on the last date of the financial year. In the subsequent period, when these contracts expire or the liability to be payable or the claim on receiving from debtors is crystallized actual gain/loss is calculated and routed through the profit and loss account. Since, the said claim is notional and has been claimed in order to make the true and fair presentation of the financial statement, therefore, respectfully following the ratio laid down in the case of Woodward Governor India Pvt Ltd [ 2009 (4) TMI 4 - SUPREME COURT] no infirmity in the findings of the ld. CIT(A) deleting the disallowance - ground raised by the revenue is dismissed. Addition made on account of long term capital gains - shortfall of receiving sale consideration from sale of equity shares - HELD THAT:- Before us, assessee failed to file any documentary evidence to explain the reason of alleged short fall. On the other hand ld. CIT(A) has placed complete burden of proof on the shoulders of the AO alleging him to have failed to establish with necessary detailed documentary evidence which in our view is not justified. Sale consideration has been received by the assessee, therefore, the reason for the shortfall has to be explained by the assessee only by placing necessary documentary evidence. Thus, this issue of addition regarding shortfall of receiving sale consideration from sale of equity shares is restored to the ld. AO for examining it afresh for which necessary details shall be filed by the assessee so as to unable the Assessing Officer to decide in accordance with law. Disallowance for a cost incurred for effecting the said transaction of sale of equity shares which is paid to MAPE Advisory Group, Mumbai- 30 - main reason for the said disallowance by the Assessing Officer was that the major portion of the professional fees to MAPE Advisory Group was paid in the preceding year and the invoice was raised on 09.10.2011 - Expenditure towards professional fees paid for the said sale transaction has been rightly claimed during the year under appeal, because the genuineness of the expenditure is not in doubt and the facts as narrated by the assessee are found to be correct. We therefore, confirm the findings of the ld. CIT(A) allowing the claim of cost incurred for effecting transaction of sale of equity shares. Thus, ground no. 5 raised by the revenue is partly allowed for statistical purposes.
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2023 (4) TMI 994
Denial of deduction u/s.80P - interest income earned from Maharashtra Gramin Bank - HELD THAT:- As decided in RENA SAHAKARI SAKHAR KARKHANA LTD. case [ 2022 (1) TMI 419 - ITAT PUNE] though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The payer of interest is also a Co-operative society registered under the Cooperative Societies Act. Thus we direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest earned from Maharashtra Gramin Bank. Decided in favour of assessee.
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2023 (4) TMI 993
Reopening of assessment u/s 147 - allowability of MTM loss/gain - assessee has conveniently recognizes the MTM losses in the P L account but also reverses the same whenever there is a MTM gain, while at the same time not recognizing the MTM gain as revenue, which is not a correct method and therefore, according to the AO there is an escapement of income - case of the assessee is that whenever there is MTM loss, debited to P L account and no claim was made and for MTM same was not brought into P L account and submitted that neither the assessee claimed the loss in the return of income nor gain was shown in the income computation HELD THAT:- When the AO passed the assessment under section 143(3) of the Act, there was no material placed before him with regard to MTM gains. When there is no material before the AO with regard to MTM gains, there was no occasion for him to apply his mind. Therefore, change of opinion does not arise in this case. In our opinion, the AO has not examined the issue of MTM gains and therefore, the Assessing Officer has rightly issued notice u/s 148 and completed the assessment order under section 143(3) r.w.s. 147 which is a valid assessment order. So far as case law relied on by the assessee is concerned, we have gone through each and every case law and find no application to the facts of the present case and all are distinguishable. Case of the assessee is that the assessee was not claiming MTM loss and therefore, taxation of MTM gain is amounting to double taxation, which is not in accordance with law. The case of the Department is that the assessee was claiming MTM loss in P L account, but also reversing the same whenever there is MTM gain. In the appellate order, the ld. CIT(A) has not discussed the facts properly and simply deleted the addition made by the Assessing Officer without giving any reason on the basis of any supporting evidence. Under the above facts and circumstances, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to consider the issue de novo in accordance with law. The assessee has raised in its Cross Objections that in case of MTM gain is taxed, the same may be allowed under section 10AA of the Act and also raised the issue of book profits. We direct the assessee to raise these issues before the AO for consideration and pass order in accordance with law. Both the appeal filed by the Revenue and the Cross Objections filed by the assessee are allowed for statistical purposes.
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2023 (4) TMI 992
Reopening of assessment u/s 147 - Deduction u/s.80P(2)(a)(i) on the interest income - AO initiated re-assessment proceedings on the ground that the cash deposited in savings bank account and with banking company was not properly verifiable - HELD THAT:- Denial of deduction u/s.80P on interest income was not the subject matter of the reasons recorded by the AO for initiating the re-assessment proceedings. At the same time, the reasons which constituted the foundation for the initiation of re-assessment proceedings, did not get reflected in the computation of total income as determined by the AO on his being satisfied. Hon ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. ( 2010 (4) TMI 431 - HIGH COURT OF BOMBAY ) has held that the AO cannot proceed with re-assessment if the grounds mentioned in re-assessment are non-existent i.e., if no addition is made on that score. When examine the factual scenario obtaining in the instant case on the touchstone of the ratio laid down by the Hon ble jurisdictional High Court in the above decision, the inescapable conclusion which can be drawn is that the addition made in the re-assessment order, different from the one for which notice u/s 148 of the Act was issued and that itself was not made, lacks legality. The same is, therefore, directed to be deleted. Assessment u/s 144 - addition u/s.69A towards cash deposited in the bank account and a further addition towards estimation of income on amount deposited in the bank account - HELD THAT:- It is seen that the assessment order in this case was passed on 18-12-2019, whereas the assessee filed its reply to the AO by means of an e-mail communication dated 12-12-2019, whose evidence has been placed on record. Similar is the position regarding the first appeal inasmuch as the assessee furnished written submissions, which were omitted to be considered by the ld. CIT(A). The ends of justice would meet adequately if the impugned order for this year is set-aside and the matter is remitted to the file of AO for making the assessment afresh.
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2023 (4) TMI 991
Assessment u/s 153A - Undisclosed investment in share capital - assessee could not explain the source and creditworthiness of investors - CIT-A deleted the addition - HELD THAT:- In the case of PCIT v. Devangi [ 2017 (2) TMI 724 - GUJARAT HIGH COURT ] after the search conducted at the assessee's premises, AO initiated proceedings u/s 153A on the basis of the incriminating material seized for the period of the assessment year 2004-05 onwards, and made the addition for the assessment years 2000-01 to 2004-05. Tribunal deleted the addition holding that only undisclosed income and undisclosed assets deducted during the search could be brought to tax and in assessee's case no incriminating material was found with respect to the assessment years 2000-01 to 2004-05, at the time of search. Gujarat High Court held that the Tribunal was correct in law in holding that the scope of section 153A was limited to assessing only search related income. We are also of the view that CIT(A) has not erred in holding that the share application money received by the assessee pursuant to allotment of search cannot be construed as incriminating material found during the course of search and hence additions cannot be made in the hands of the assessee u/s. 153A of the Act in case of unabated assessment year in absence of any incriminating material unearthed during the course of search. In the case of M/s. Garg Brothers Pvt. Ltd. [ 2018 (4) TMI 986 - ITAT KOLKATA ] the ITAT held that no addition in Section 153A assessment for unexplained share capital in absence of incriminating material. Accordingly, in the case of Saumya Construction Pvt. Ltd. [ 2016 (7) TMI 911 - GUJARAT HIGH COUR ] and various other judicial precedents reproduced above, we are of the considered view that CIT(A) has not erred in facts and in law in deleting the additions made by the AO u/s. 68 of the Act, in the instant set of facts. In the result, the appeal of the Department is dismissed.
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2023 (4) TMI 990
Taxability of interest earned on External Commercial Borrowings ( ECB ) loans - Permanent Establishment - Undisclosed income / TDS - Not claiming credit of TDS on the ground the income is not taxable in India and Tax Burden is born by the Deductors themselves - income earned by the head office/overseas branches has been subjected to TDS at 10% under the India Netherlands Double Taxation Avoidance Agreement ( DTAA ) - HELD THAT:- AO as well as the learned CIT(A) though held that the interest income is includable in the hands of the assessee, however, did not analyse the applicability of the provisions of the DTAA in the present case. Assessee has also not made any submission before the lower authorities as regards the provision under which this income is taxable under the DTAA - As during the assessment proceedings, the assessee merely requested that the income be taxed at the rates prescribed under the treaty. Before us the assessee has prayed for the applicability of the rate of tax of 10% as per Article 11(2), however, the assessee has also not proved the beneficial ownership of the interest for the applicability of the aforesaid rate of tax under Article 11(2) of the India-Netherlands DTAA - remand this issue to the file of the AO for de novo adjudication after examining the applicability of the India-Netherlands DTAA in the present case - assessee shall be at liberty to adduce all the evidence in support of its submission of taxability @10% under Article 11(2) of the India-Netherlands DTAA. As a result, grounds no.1-4 raised in Revenue s appeal are allowed for statistical purposes. Addition in respect of interest received by the head office/overseas branches from the Indian branch - HELD THAT:- Special Bench in Sumitomo Mitsui Banking Corporation[ 2012 (4) TMI 80 - ITAT MUMBAI] held that the interest paid by the Indian branch is not taxable in the hands of the head office or overseas branches, all being the same entity. As regards the reliance placed upon the amendment to section 9(1)(v) of the Act vide Finance Act, 2015 w.e.f. 01/04/2016 by the AO, we find that the said amendment was held to be applicable prospectively from 01/04/2016 and not prior thereto by the coordinate bench of the Tribunal in JP Morgan Chase Bank N.A.[ 2020 (1) TMI 19 - ITAT MUMBAI] . Thus, this amendment is not applicable to the year under consideration and would only be applicable to the assessment year 2016-17 and onwards - No infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground raised in Revenue s appeal is dismissed.
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2023 (4) TMI 989
Bogus weighted deduction u/s 35(1)(ii) - donation made to Hebicure Health Cure Bio Herbal Research Foundation - CIT-A allowed the deduction - HELD THAT:- CIT(A) has placed reliance on the decision of M/s. Thakkar Govindbhai Ganpatlal HUF [ 2020 (2) TMI 31 - GUJARAT HIGH COURT] in which on similar set of facts the claim of deduction u/s. 35(1)(ii) in respect of donations made to HHBRF was allowed to the assessee as held On the basis of general information collected from the donee, the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination, nor any specific reply deposing that such donation was not received, or if received the same was repaid in cash, has been brought on record. In the absence of such circumstances, donation given by the assesses to the donee, on which the assessee no mechanism to check the veracity, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore, there cannot be any disallowance on this issue - Decided against revenue.
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2023 (4) TMI 988
Taxability of dividend as declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts additional income-tax (tax on distributed profits) u/s 115-O - Special Bench decision - whether such additional income-tax payable by the domestic company shall be at the rate mentioned in Section 115-O of the Act or the rate of tax applicable to the non-resident shareholder(s) with reference to such dividend income? - Scope of benefit of DTAA - Whether DTAA does get triggered at all when a domestic company pays DDT u/s.115O? - HELD THAT:- Where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec.115-O of the Act, such additional income tax payable by the domestic company shall be at the rate mentioned in Section 115 O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. We are conscious of the sovereign s prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. Thus, the question before the Special Bench is answered, accordingly.
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2023 (4) TMI 987
Validity of Additions on protective basis - Substantive Addition made under the Black Money Act are sub-judice before the first appellate authority - search and seizure operation u/s.132 - HELD THAT:- We have carefully perused the orders of the authorities below. Without going into the merits of the case, we are of the considered view that once additions have been made under Black Money Act the same addition cannot be made under the IT Act on the same set of facts, therefore, the deletion of the addition by the CIT(A) does not call for any interference. Hence, both the appeal by the revenue are dismissed.
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2023 (4) TMI 986
Income deemed to accrue or arise in - PE in India - Taxing the receipts from the contract u/s 44DA - HELD THAT:- Assessing Officer has not even alleged the existence of PE. Merely applying Force of Attraction Rule he has brought to tax the receipts under section 44D/44DA of the Act. We are inclined to delete the additions made by the Assessing Officer under Section 44D/44DA of the Act and direct the Assessing Officer to compute assessee's income under Article 12 of India - Germany DTAA. These grounds are allowed. Applicability of Force of Attraction Rule - While deciding ground above we have held that the PE in relation to JKSPDC -Baglihar Project cannot be construed to be the PE in respect of JKHCL and JVL Projects. Insofar as, the applicability of Force of Attraction Rules, while deciding identical issue in assessee's own case in assessment years 2006-07 and 2007-08, the Tribunal has held that such rule will not apply, unless, even a remote link between the activities of other projects is established with the PE in relation to PKSPDC-Baglihar Project. That being the case, we hold that Force of Attraction Rule does not apply. This ground is allowed. Interest u/s 234B and 234C is not chargeable where tax is deductible at source. The reliance placed on GE Packages Power Inc [ 2015 (1) TMI 1168 - DELHI HIGH COURT] is apt.
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2023 (4) TMI 985
Disallowance u/s 14A r.w.r. 8D - contention of the assessee that interest free funds available with the assessee in the form of Share Capital and free Reserves are much in excess then the investments and therefore no disallowance of interest expenditure under Rule 8D(2)(ii) - HELD THAT:- Since the issue raised in the present ground as admitted by Learned AR is identical to that of A.Y. 2014-15, we following the same reasoning of the Co-ordinate Bench while deciding the issue for A.Y. 2014-15 and similar reasons restore the issue back to the file of AO and direct him to rework that disallowance u/s 14A r.w.r 8D in accordance with law and the decisions of Hon ble Jurisdictional High Court. AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee. Assessee shall also be free to file such documents, explanations, submissions as it deems fit in respect of the claim. Needless to state that AO shall grant adequate opportunity of hearing to the assessee. Disallowance of loss - whether the loss was a business loss or a capital loss and if it is a capital loss whether the loss can be allowed as a business expenditure? - HELD THAT:- The loss in the present case is on account of depreciation in the value of investments. It is not the case of assessee that the loss is a business loss. In such a situation, when the loss is not a business loss, we do not find any infirmity in the order of CIT(A) and thus this ground of assessee is dismissed. Deduction u/s 10AA - AO after making the adjustment on account of allocation of office expenses and interest and other adjustment recomputed the exemption u/s 10AA - HELD THAT:- We find that identical issue arose in assessee s own case in A.Y. 2014-15 [ 2020 (9) TMI 403 - ITAT DELHI] and Co-ordinate Bench of Tribunal on this issue restored the issue back to the file of AO - We therefore following the order of Co-ordinate Bench for A.Y. 2014-15 and with similar directions restore the issue back to the file of AO and direct him to re-compute the exemption under 10AA of the Act in accordance with law. Assessee shall be free to file such documents, explanations, submissions as it deems fit in respect of the claim and AO shall also be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee.
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2023 (4) TMI 984
Revision u/s 263 by CIT - Disallowance u/s 14A - premise of the Ld. PCIT in his revisionary order is that, Assessee has invested substantial amount which are investment which have yielded exempt income - HELD THAT:- This investment constituted tax free bonds and also mutual funds investment. As undisputed fact that assessee has earned exempt income from tax free bond alone for sums and other investment have not yielded any exempt income and in fact were taxable investments. Once, that is so, the entire premise of the Ld. PCIT is incorrect and therefore, the assessment order cannot held to be erroneous, in so far as prejudicial to the interest of revenue. Now, whether the disallowance made by the AO is correct or it is excessive the same is already subject matter of first appeal and therefore, we are not going into this aspects. However, in so far as observation and the finding of the Ld. PCIT in setting aside to the issue of disallowance to the AO is quashed and accordingly, appeal of the Assessee is allowed.
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2023 (4) TMI 983
TP Adjustment - computation of arms length price in relation to alleged international transactions with 100% subsidiary of the assessee company - addition on account arms length price of loan interest - HELD THAT:- Since ITAT has decided the issue against the assessee on identical facts in assessee s own case for assessment year 2008- 09 [ 2017 (4) TMI 1009 - ITAT AHMEDABAD ] the ground nos. 1 2 of the assessee s appeal are dismissed accordingly. Addition by charging interest @ 7.14% - HELD THAT:- We observe that the ITAT in the assessee s own case for assessment year 2008-09 [ 2017 (4) TMI 1009 - ITAT AHMEDABAD ] has decided the issue by holding that the ALP adjustment is required to be made on the basis of Libor + 2%. Addition on account of disallowance 1/5th of GDR issue expenses claimed by the company as allowable deduction u/s. 35D - HELD THAT:- The issue has been decided against the assessee by Hon ble ITAT for assessment year 2008-09 [ 2017 (4) TMI 1009 - ITAT AHMEDABAD ] as held that one of the conditions in Section 35D(1), as it stood at the material point of time, is that either the eligible expenses should be incurred before the commencement of the business, and, in a situation in which the expenses are incurred after the commencement of business, the expenses should be incurred for extension of his undertaking or setting up of a new industrial undertaking. This condition is clearly not satisfied on the facts of the present case as the expenses are incurred after the commencement of the business and it is not even assessee's case that the expenses are incurred for extension of his undertaking or for setting up of new industrial undertaking. - Decided against assessee. Disallowance of modified value added tax (MVAT) - HELD THAT:- CIT(A) has not erred in facts and in law in dismissing the assessee s appeal. The assessee has not been able to give any evidence in support of his contention that he had incorrectly debited the aforesaid sum to the MVAT receivable account and the assessee has also not been able to establish that there is no credit available in the MVAT receivable account other than wrongly debited entry of Rs. 11,76,706/- for adjustment against purchase when the MVAT receivable account was written off. It is also not clear as to when the assessee came to realize that credit of MVAT was not available to him.- Decided against assessee. Addition on account of foreign exchange derivatives loss while treating it as speculative in nature - HELD THAT:- The issue has now been decided in favour of the assessee by ITAT in assessee s own case for assessment year 2008-09 [ 2017 (4) TMI 1009 - ITAT AHMEDABAD ] on identical set of facts, and accordingly the appeal is to be disposed of in light of the aforesaid order as held all the derivate transactions are specific hedging transactions against foreign exchange transactions of the assessee and are to be treated as integral part of the business transactions of the assessee. These transactions, by no stretch of logic, cannot be treated as standalone transactions, and as such loss on these transactions cannot be treated as loss from speculation business ineligible for set off against normal business profits. As for the CBDT instruction relied upon by the Assessing Officer, such instructions do not bind the appellate authorities, and nothing, therefore, turns on the same- so far as our adjudication is concerned. The losses on account of foreign exchange contracts are bonafide expenses incurred in furtherance of legitimate business interests of the assessee and are to be allowed as deduction under section 37(1) - Decided in favour of assessee. Late remittance of employees contribution towards EPF and ESI u/s 36(1)(va) - HELD THAT:- In our view, the issue is squarely covered against the assessee by the order of Hon'ble Supreme Court in the case of Harrisons Malayalam Ltd. [ 2023 (1) TMI 137 - SC ORDER ] as held where assessee-company failed to pay employees contribution towards EPF and ESI within due date prescribed in respective Acts, deduction under section 36(1)(va) was not allowable. Decided against assessee. Disallowance of loss on account of foreign currency fluctuation on loan for working capital - CIT-A deleted the addition - HELD THAT:- As in the remand proceedings, when the Ld. CIT(A) referred the file back to the AO for his comments on this issue, the AO only relied upon the Supreme Court decision in the case of Goetze India Ltd [ 2006 (3) TMI 75 - SUPREME COURT ] and did not point out any factual or legal infirmity in the claim of loss by the assessee. Further, we find no infirmity in the order of Ld. CIT(A), who on appreciation of the facts of the case of the assessee allowed the assessee s appeal on the ground that the loss on foreign currency loan is on revenue account. As in the case of PCIT v. Vedanta Ltd. [ 2023 (1) TMI 72 - SC ORDER ] SLP dismissed against order of High Court that losses incurred by assessee-company due to foreign exchange fluctuation on export proceeds was to be allowed as business expenditure under section 37(1) - Decided in favour of assessee. Disallowance of loss on account of MTM loss in exports - CIT-A deleted the addition - HELD THAT:- In the case of Emmsons International Ltd. [ 2019 (10) TMI 761 - ITAT DELHI ] where assessee engaged in business of international trading in commodities, suffered foreign currency loss on foreign exchange forward contracts, loss so incurred was to be allowed as business loss. Also in the case of Quality Engineering Software Technologies (P.) Ltd. [ 2015 (1) TMI 869 - ITAT BANGALORE ] where assessee-company entered into forward contracts in order to protect its interest against fluctuations in foreign currency, in respect of consideration for export proceeds and there was an actual contract for sale of merchandise, said transaction would not qualify to be called as speculative transaction and therefore, provision for losses incurred on derivative contracts was an allowable expenditure. Decided in favour of assessee. Disallowance of loss on account of retrenchment compensation paid to workers - CIT-A deleted the addition - HELD THAT:- From the facts placed before us and the observations of ld. CIT(A), we find no infirmity in the order of ld. CIT(A) with respect to this ground of appeal so as to interfere with the same. Notably, even the Assessing Officer in the assessment order for succeeding assessment year 2010-11 has allowed the assessee s claim of expenditure of retrenchment compensation paid to the employees. Addition made being 1/5th of the expenditure of ICICI loan processing fees - CIT-A deleted the addition - HELD THAT:- Department has itself accepted the assessee s claim of allowance of 1/5th of the expenditure. Department has not brought forth any change in facts relating to this assessment year as compared to previous assessment years. The ld. Departmental Representative has further not challenged the genuineness of expenses. Accordingly, we find no infirmity in the order of ld. CIT(A) so as to call for any interference. TDS u/s 194C - Disallowance u/s 40(a)(ia) - non deduction of TDS on payments made to three parties - assessee contended that all these parties were having PAN and therefore TDS was not required to be deducted - HELD THAT:- Before us, assessee submitted that there was no requirement to deduct tax at source under s 194C(6) of the Act on account of TDS on freight expenses since the three parties were having PAN and also were in possession of less than 10 vehicles and therefore there was no requirement to deduct tax at source under s 194C(6) of the Act. Before us, the counsel for the assessee also produced details of PAN of the aforesaid parties - we observe that since the above details were not produced for verification before either the Ld. CIT(A) or the AO, in the interest of justice, this issue is being set aside to the file of AO to carry out the necessary verification.
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2023 (4) TMI 982
TDS u/s 194J - non deduction of TDS from payments made to Guest faculties - determination of relationship between master and servant - counsel submitted that there are two types of payment. One is salary paid to regular staff and another payment is made to Guest faculties recorded under the head Professional and Special Services and concerned persons (guest faculty) have given an undertaking that TDS was not to be deducted as their income would be below taxable limit - HELD THAT:- While the remuneration paid to the regular faculty staff is drawn from salary head and therefore, shown under the head salary for accounting purposes, the remuneration paid to Guest Faculty is drawn from contingency/wages head in the light of the order of the Government of Haryana and thus shown under the head Professional and Special Services in its income and expenditure account. Guest Faculties are rendering the identical services and relationship between the management and the teaching faculties involve an obligation to obey orders and the work to be supervised and consequently the said relationship could not be called contract for services since the teaching staff does not render any professional or technical service. The monthly remuneration paid to the Guest Faculties are in the nature of contract of service between the assessee deductor and its teaching staff appointed on adhoc basis and such adhoc salary paid to them being below taxable limit on individual basis, does not warrant deduction of tax at source and as such non deduction of tax at source does not trigger default under Section 201(1)/201A). Also as decided in Dharangadhra Chemical Works Ltd. vs. State of Saurashtra [ 1956 (11) TMI 33 - SUPREME COURT] a person can be a workman even though he is paid not per day but by the job. The fact that rules regarding hours of work, etc. , applicable to other workmen may not be conveniently applied to them and the nature as well as the manner and method of their work would be such as cannot be regulated by any direct ions given by the Industrial Tribunal , is no deterrent against holding the persons to be workmen within the meaning of the definition if they fulfil its requirement. Assessee cannot be treated as assessee in default in terms of Section 201(1)/201(1A) where the right in the master exists to supervise and control the work done by the Guest Faculties month after month. The issue in the present case is akin to the factual matrix existing in MCM D.A.V. College for Women - Decided in favour of assessee.
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2023 (4) TMI 981
TP Adjustment - comparable selection - HELD THAT:- We direct exclusion of Maple e-Solutions Ltd., Datamatics Financial Services Ltd. (Seg.) and Goldstone Infratech Ltd.(Seg.) on RPT of more or less than 25% or financial results of a company are not reliable due to fraud committed by the directors. Disallowance u/s 14A - A.R submitted that the assessee has received only dividend income from mutual funds and hence the disallowance will be very much on the higher side - HELD THAT:- We agree with the contention of learned AR that the provisions of Rule 8D cannot be applied during the year under consideration, i.e., AY 2006-07 - we also agree with the contention of learned DR that some disallowance is called for, since the assessee would not have earned exempt income without incurring some expenditure. As perused the balance sheet of the assessee and noticed that the assessee held mutual fund units of Grindlays Cash Fund as at the beginning of the year and it is stated that the dividend has been received from the said units. The said unit has also been sold during the year under consideration. Activities carried on by the assessee in the investment portfolio, we are of the view that an adhoc disallowance of Rs. 30,000/- may be made under section 14A of the Act and, in our view, the same would meet the requirement of section 14A . Appeal filed by the assessee is partly allowed.
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2023 (4) TMI 980
TP Adjustment with respect to receivables from the Associated Enterprises (AE) - International transaction - HELD THAT:- As decided in ORANGE BUSINESS SERVICES INDIA SOLUTIONS PVT. LTD., VERSUS. DCIT, CIRCLE-3, GURGAON [ 2022 (12) TMI 1070 - ITAT DELHI] in view of the sequence of events, it would be noted that the decision of Hon ble Delhi High Court in the case of Kusum Healthcare [ 2017 (4) TMI 1254 - DELHI HIGH COURT] is still the binding precedent on the issue of interest on outstanding receivables as held that the inclusion in the Explanation to section 92B of the Act of the expression receivables does not mean that de hors the context every item of receivables appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterized as an international transaction and (ii) With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharacterized the transaction. Needless to mention that the law laid down by the Hon'ble High Court in the case of Kusum Healthcare was followed by the ITAT in case of Global Logic India Ltd. v. Dy. CIT [ 2017 (12) TMI 1052 - ITAT DELHI] , [ 2020 (6) TMI 712 - ITAT DELHI] , [ 2021 (11) TMI 1090 - ITAT DELHI] - Hence, keeping in view, the established position, we hereby deleted the addition made by the Assessing Officer. Appeals of the assessee are allowed.
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2023 (4) TMI 979
TP adjustment - TPO rejecting the audited segmental accounts, the functional analysis conducted by the assessee and by identifying the new comparables in transfer pricing study - HELD THAT:- We find from the impugned order of the Coordinate Bench in assessee s own case [ 2019 (8) TMI 1864 - ITAT KOLKATA] that the issue has been decided in favour of the assessee as held appellant has two separate distinct activities viz., manufacturing of printing inks, blankets and trading in press chemicals. It is well understood that the functions involved in manufacturing activities, risks assumed, assets employed are significantly different and higher than the trading activity. Cross subsidization of the international transactions in a combined approach is impermissible since it results in distorted presentation of facts. Hence if both the manufacturing trading segments of the appellant are aggregated, the combined profit margin would throw up an inappropriate result in as much as it cannot be compared either with companies engaged in manufacture of printing ink or companies engaged in trading activities. Further more in order to benchmark each set of transactions distinctly, it is imperative to use the segmented information of the manufacturing activity and trading activity of the appellant. On these facts we are therefore of the view that the segmented results of the appellant are required to be used for benchmarking the international transactions. We find that the Income-tax Act, 1961 has several provisions, particularly profit-linked deductions etc. wherein assessees are required to carve out and identify separate segmental information and prepare standalone accounts for the eligible unit. It is noted that preparation identification of such segmented results are not linked with AS-17 in any manner and in that view of the matter, we are of the considered view that the lower authorities were unjustified in rejecting the audited segmented results on the frivolous premise that it did not form part of financial statements. Segment results cannot be said to be unreliable. However on perusal of the transfer pricing order, we agree with the ld. DR that these segmented results were never verified by the TPO since he had out-rightly rejected the same. Accordingly we uphold the Ld. DR's alternative claim and set aside the audited segmented results to the file of the AO for the limited purpose of verification and cross- check with the overall audited financial statements of the appellant. Needless to say, the appellant shall be afforded sufficient opportunity of being heard, in this regard. Also on detailed examination of segmented information, this Tribunal had found the transactions involving purchase of traded goods to be at ALP under internal RPM. Nature of expenses - Disallowance of royalty treating the same to be capital in nature - HELD THAT:- Issue decided in favour of assessee as relying on own case [ 2017 (4) TMI 1437 - ITAT KOLKATA] CIT merely made a bald statement by stating that the assessee by using the licensed information had entered into new dimensions of business from time to time and hence the payment of royalty could. not be equated with the nature of royalty paid in earlier years, which statement is absolutely without any basis and without any material on record. The assessee had submitted before the ld. CIT that the royalty was paid in respect of licensed information obtained from DIC Asia Pacific Pte Ltd, Singapore and DIC Corporation, Japan for manufacture of resins and printing inks and the licensed information pertains to these specific items i.e resins and printing inks alone and cannot be used to venture into new business. The nature of royalty, mode and manner of payment thereon had remained the same since financial year 2007-08 / 2008-09 as the case may be, in which these agreements were entered into by the assessee.this royalty payment was a revenue expenditure as no capital assets came into being in the hands of the assessee. - Decided in favour of assessee.
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2023 (4) TMI 967
Taxability of interest income on external commercial borrowings - Indo Netherlands Tax Treaty - What will be tax rate to be applied as per Indo Netherlands Tax Treaty? - DR argued that the said interest income would become business profit of the Indian branch and hence to be taxed in terms of Article 7 of the Indo Netherlands Tax Treaty - HELD THAT:- As perusal of Indo Netherlands Tax Treaty that there is a separate Article provided for taxability of Interest vide Article 11 thereon. There is no dispute that the nature of income that is sought to be taxed is interest income in the instant case. Hence, it would be just and fair to apply the Article 11(2) for the purpose of determining the taxability of the said interest income. Hence, in view of Article 11(2), we direct the Ld. AO to bring to tax interest income @10%. Accordingly, the grounds raised by the Revenue are dismissed.
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Benami Property
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2023 (4) TMI 977
Benami Transaction or not - properties purchased by the father in the name of mother - Plaintiff contended that, her mother was only a benami for her father, and that she did not have any right in her to execute Exts.P3 and P8 settlement deeds. - suit is laid for partition of three items of properties which are described in Schedules A to C in the plaint and plaintiff also seeks a declaration that the two settlement deeds that her mother had executed pertaining to Schedule A and Schedule B items of properties are null and void - HELD THAT:- The person in whose name stamp papers were purchased, more so when they are spouses, can never be considered as a strong piece of evidence to compel an inference conclusively the intent behind a purchase. This Court considers that it is far too inadequate to prove benami . The evidence as has been made available does not preponderate a possibility that the properties purchased under Ext. D-1= Ext.P.17 and Ext.D-2 = Ext.P.18 in the name of Rajeswari Bai are not held benami by her for her husband Bapanna Rao, but on the contrary they suggest that they are the personal properties of Rajeswari Bai. Issue No:1 is therefore, decided against the plaintiff. Consequently, there is no need to consider the Additional Issue on the tenability of pleading benami in the face of statutory bar under the Benami Transaction (Prohibition) Act, 1988 or its current version. Validity of settlement deed - exclusion of plaintiff - mental status of Monther for execution of deed - right of the plaintiff over property under the schedule A category - HELD THAT: - It is true that the plaintiff too has not examined herself. But non-examination of the first defendant is critical since she alone could provide the facts pertaining to the mental status of Rajeswari Bai at the time of Exts.P.3 and P.8, more so when the mental state of the 2nd defendant is suspect. They at least could have examined any physician who had treated Rajeswari Bai with supporting medical records but that was ignored. This Court now has little option than to hold that Rajeswari Bai would not have been in sound mental state sufficient enough to understand what she was doing and that Exts.P.3 and P.8 are not the product of her free will. Issues 3, 5 and 6 are decided accordingly. It may have to be stated that the basic theory which the defendants plead for justifying the execution of settlement deeds is not without any merit. After all, the first defendant has been caring both her ailing mother and brother besides caring her nephews, and given the circumstances, it would be only natural for Rajeswari Bai to execute the settlement deeds in their favour, but the point is not about the availability of circumstances for justifying the exclusion of plaintiff and her branch from the settlement deeds, but it is about her mental capacity to execute them. Here the defendants are seen wanting in their efforts when they chose to withhold the first defendant from being examined as a witness. It has come on record that in the 'A' schedule property, the defendants have put up a substantial structure at considerable expenses. Therefore, they must have a fair chance of retaining the same by adjusting the equities vis-a-vis their shares in other two schedules of properties. However, they may have to wait for another day when final decree is passed. Order: Ext.P3 settlement deed executed by Rajeswari Bai are set aside as null and void and Plaintiff's 1/3 share in all the schedules of suit properties are hereby declared.
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Customs
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2023 (4) TMI 976
Levy of Anti-Dumping Duty - Failure on the part of the respondent authority to impose Anti Dumping Duty on imports of Low Density Polyethylene (LDPE) from foreign countries - HELD THAT:- It is opined that the petitioner is entitled to an interim order. Accordingly we direct pending final disposal of this petition, as an interim measure, respondents shall impose a provisional Anti Dumping Duty under Section 9A (2) of the Tariff Act at the rate determined by respondent No. 2 in its Final Finding vide Notification dated 31.03.2022 published in Extraordinary Gazette of India. The levy of such Anti Dumping Duty shall be subject to final adjudication in these proceedings.
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2023 (4) TMI 975
Classification of imported goods - digital cameras - to be classified under tariff item 8525 8090 of First Schedule to Customs Tariff Act, 1975 or tariff item 8525 8020 of First Schedule to Central Excise Tariff Act, 1975? - burden to prove - denial of notification no. 12/2012-Cus dated 17th March 2012 (at serial no 428A) and notification no 50/2017-Cus dated 30th June 2017 (at serial no 502) - recovery of duty short-paid under section 28 of Customs Act, 1962, along with applicable interest under section 28 AA of Customs Act, 1962. HELD THAT:- The appellant has claimed the benefit of notification no. 12/2012-Cus dated 17th March 2012 (at serial no 428A) for imports effected against bills of entry filed before 1st July 2017 and notification no. 50/2017-Cus dated 30th June 2017 (at serial no. 502) thereafter. The eligibility for the notification is, first and foremost, claim of classification within the description corresponding to tariff item 8525 8020 of First Schedule to Customs Tariff Act, 1975 and, thereafter, to conformity with digital still image video camera describing the article to which the exemption may be allowed. It must be categorically stated, and contrary to the submissions made by Learnt Authorised Representative as well as references in the impugned order, that the technical specifications for limiting the eligibility of article for exemption had ceased to exist by the time the impugned imports were effected. Its continued inclusion in other notifications, not adduced to in the bills of entry, and in circulars elaborating such other notifications, or even the impugned notification before amendment for exclusion of the Explanation, are not germane to determination of eligibility for exemption of the impugned goods from duties of customs. For technical exposition, cited on behalf of Revenue as respondent in these appeals, on the specific description in the exemption notification to be tenable implies the possibility that tariff item 8525 8020 is also a likely description of the impugned goods which runs contrary to the finding in the impugned order of tariff item 8525 8090 to be the most apt description of the impugned goods. Consequently, there is disbarment of proposition of Revenue that the impugned goods must conform to some technical specification for eligibility to the exemption notification. In the absence of such bar, the potential for being left without any appropriate tariff item is significantly so high as to render the entire exercise under section 12 of Customs Act, 1962 to be non-starter. Hence, while appreciating the diligence and erudition of Learned Authorised Representative in his grasp of details of cameras, the limitations thereof must also be placed on record. The only three elements of the last of the sub-headings are separately enumerated as three tariff items leaving no scope, in the absence of reference to any composite mix of products in the description corresponding to the heading, for a fourth within it. In the absence of a finding in the impugned order that could, possibly, place the impugned goods within such general, and residual, description of others , the responsibility of customs authorities to initiate rejection of a declared classification has not been fulfilled. The declared classification, against tariff item 8525 8020 of First Schedule to Customs Tariff Act, 1975, cannot be substituted in these circumstances. There is nothing on record to indicate that the imported goods do not conform to the description that entitles them to the benefit of exemption in the impugned notification. The rescinding of the Explanation therein has done away with any technical specification that may, at some in the past, have served to segregate digital still image video camera as eligible and ineligible for the exemption. The confirmation of demand under section 28 of Customs Act, 1962, therefore, has no basis in law. The confiscation under section 111(m) of Customs Act, 1962 in the impugned order is vacated along with consequential redemption fine, if any, as well as any penalties under section 112 of Customs Act, 1962, section 114A of Customs Act, 1962 and section 114AA of Customs Act, 1962. The appeals are allowed.
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FEMA
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2023 (4) TMI 974
Foreign Contribution Regulation - Non-filing of the returns - annual returns for the years 2019-2020 were to be uploaded in Form FC-4 for which SBI account as of 31st March, 2020 was needed, the details of the SBI bank account could not be given - Petitioner seeking directions to the Respondent Ministry of Home Affairs, Union of India to allow the Petitioners to fill and upload Form FC-4 on the Respondent s portal in order to enable them to file the annual returns for the financial year 2019-2020 - whether the SBI bank account could have been sought for as of 31st March 2020, when the amendment itself came into effect later i.e., in September 2020? - HELD THAT:- In view of the reasoning given in the said order in WNS Cares Foundation [ 2023 (1) TMI 944 - DELHI HIGH COURT] as held receipt of foreign contribution as on 31st March of the year ending has to be provided and the bank account has to be in the SBI, Sansad Marg branch. Since the Petitioner No.1 opened its account in August, 2021 and in any case, as on 31st March, 2020, the Foreign Contribution Regulation (Amendment) Act, 2020, had not come into effect, there appears to be some justification in the Petitioners case.Petitioner No.1 having opened its FCRA account in August, 2021 is, accordingly, permitted to fill up the said details of its FCRA account in serial no.7 of the Form FC 4 and submit the same. In this case the Petitioners also having already opened their bank accounts with SBI Sansad Marg Branch, the Petitioners are permitted to upload their annual returns for the year 2019-2020 by specifying the SBI account number of the account which was subsequently opened by them.
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Service Tax
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2023 (4) TMI 973
Levy of Service Tax - royalty for Intellectual Property Rights (IPR) services - Section 68(2) of the Finance Act, 1994 - HELD THAT:- The issue is decided in the case of M/S. ASIA CRYO CELL PVT. LTD. VERSUS CCE ST, CHENNAI [ 2018 (2) TMI 149 - CESTAT CHENNAI ] where it was held that In the present case, the IPR is not registered for enforcement under any law including Trade Mark Act in India. This is an admitted fact. IPR now under consideration can be construed to be recognized by the Indian Law, if he satisfies the requirement of IPR as per law. Registration is not a requirement - the appellant cannot be held liable for service tax under IPR. By the above, it appears that the CESTAT Benches have consistently held that the payment of royalty for IPR services was not liable to tax in India. Following the above ratio decidendi, therefore, the demands raised are not proper, for which reason the impugned orders are set aside. Appeal allowed.
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2023 (4) TMI 972
Manufacture or service - activity of job work rendered by the appellant - process of powder coating on job work basis to M/s. Kanchi Fabrications (P) Ltd. - whether the activity rendered by the appellant would amount to manufacturing activity so as to take the same out of the purview of business auxiliary service under Section 65 (19) of the Finance Act, 1994? HELD THAT:- The Learned Larger Bench of the CESTAT in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI ] has held that the Service Tax liability of a sub-contractor would never cease, even when the main contractor remits Service Tax. Thus, the contention of the appellant that there was no Service Tax liability on the part of the appellant, being a sub-contractor, would not hold any water in view of the decision of the Learned Larger Bench. Thus, on merits, the appellant has no case. Revenue Neutrality - HELD THAT:- The aspect of revenue neutrality need not be perused since the same depends on the facts of each case, as held by the Hon ble Apex Court in the case of M/S. STAR INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) , RAIGAD [ 2015 (10) TMI 1288 - SUPREME COURT ] and the Learned Five-Member Bench of the CESTAT in JAY YUHSHIN LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [ 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI ]. Appeal dismissed.
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2023 (4) TMI 971
Levy of Service tax - GTA service or not - hiring tankers on monthly basis - no consignment notes issued - HELD THAT:- It is not in dispute that the appellants are paying fixed tanker hiring charges on monthly basis. The appellant appellants are paying in addition to the fixed hiring charges, a certain amount for each kilometre run as well as the toll tax paid by the vehicles - the transporter is taking the entire responsibility of the goods for the route and transporter is not issuing any LRs for the purpose of these goods. The appellants are issuing delivery challans. From the above background, it is apparent that no consignment notes are issued by Girish Logistics, i.e. the supplier of vehicles. Since no consignment notes are issued to transporter no GTA service has been provided. The demand is set aside - appeal allowed.
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Central Excise
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2023 (4) TMI 970
Recovery of Central Excise Duty alongwith interest and penalty - under-valuation - footwear components for use within the factory and in their own factories at other places as well as for use by their job workers for manufacture of complete footwear - determination of assessable value of the said goods in terms of Section 4 of the Central Excise Act, 1944 read with Central Excise (Valuation) Rules, 1975 for the period of April 1996 to August 1998 - extended period of limitation - HELD THAT:- The cost of raw material vary depending upon the raw material used and hence a variable item like raw material cannot be the basis for working out the overhead charges . The Appellant arrived at the overhead charges as a percentage of wages which appears to be more appropriate than adopting raw material cost, to arrive at the overhead charges . The Appellant has already paid duty on the basis of the cost arrived at based on the method cited above. Thus, there is no under-valuation in the costing of the product adopted by the Appellant. Accordingly, the demand does not survive. As the demand is not sustainable, the demand of interest and penalty also not sustainable. Extended period of limitation - HELD THAT:- Since the issue is already held that on merit itself the demand is not sustainable, issue of Limitation is not examined further. Appeal of Revenue dismissed.
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2023 (4) TMI 969
Entitlement to area based exemption - benefit of exemption Notification No. 50/2003 dated 10.06.2003 read with Notification No. 34/2005 dated 30.09.2005 - respondent s unit located at Hadbast No. 110 Khasra No. 147 - HELD THAT:- Khasra Nos., on which the respondent s unit is located, have been substituted by Notification No. 34/2005-CE dated 30.09.2005 and in the said notification Hadbast Khasra Nos. 110 (1 to 418) have been substituted in place of the original Hadbast Khasra Nos. 110 (1 to 41). Since these Khasra Nos. have only been substituted and as per the settled principle of legal interpretation, substitution leads back to be original notification by which the respondent was entitled to the benefit of these notifications. It is pertinent to reproduce the findings recorded in para no. 13 in the case of Madhu Sudan Mittal [[ 2022 (9) TMI 1006 - JHARKHAND HIGH COURT] ] where it was held that it is evident that both the amendments, i.e., amendment dated 1-3-2016 and 6-6-2016, are by way of substitution. Since, both the amendments are by way of substitution and the amendment by way of substitution relates back to the original document, as has been held by Hon ble Apex Court in GOVERNMENT OF INDIA VERSUS INDIAN TOBACCO ASSOCIATION [ 2005 (8) TMI 113 - SUPREME COURT ] , both the amendments by way of substitution of the provision as contained in the original notification will be deemed to have applicable with effect from the date of notification dated 20.06.2012. Further, the settled principle that exemption notification has to be construed strictly, is not disputed but in the present case, it is found that Notification No. 34/2005 dated 30.09.2005 which was issued by way of a substitution and the respondent s unit which was located in the said Hadbast and Khasra Nos. 110 (1 to 418) have been substituted and the Revenue Authority of the State has also clarified that the respondent is entitled to benefit of said notification. There is no force in the appeal of the Revenue - Appeal of Revenue dismissed.
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Indian Laws
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2023 (4) TMI 978
Corruption and money laundering - Allegations against the IRS and his wife - holding assets which are disproportionate to the known sources of income - HC quashed the FIR - contention of the Respondents that the High Court had applied a 'non-existent legal test' was refuted by terming it as entirely misleading - HELD THAT:- The law of the land abhors any public servant to intentionally enrich himself illicitly during the tenure of his service. Increase in the assets of such a public servant tantamount to constitutionally impermissible conduct and such conduct is liable to be put under the scanner of the P.C. Act. The Constitution Bench of this Court in its decision in LALITA KUMARI VERSUS GOVT. OF UP. ORS. [ 2013 (11) TMI 1520 - SUPREME COURT ], inter alia, while observing that cases in which preliminary inquiry is to be conducted would depend upon the facts and circumstances of each case, also categorized cases (though not exhaustively) where preliminary inquiry, before registration of a first information report, could be conducted and included 'corruption cases' in such category. A preliminary inquiry or probe, we believe, becomes indispensable in a complaint of acquisition of disproportionate assets not only to safeguard the interest of the Accused public servant, if such complaint were lodged with some malice, but also to appropriately assess the quantum of disproportionate assets should there be some substance in this complaint. The complaint that US lodged with the Chief Minister does specifically allege that although AS came from a very humble background, as evident from his Annual Property Return filed at the time of joining IRS, he has managed to amass disproportionate assets of more than 2500 crores contrary to his legal sources of income . One could view it as a tall claim, which is thoroughly unsubstantiated. However, it cannot be wished away because of the revelations of the preliminary inquiry which led to registration of the FIR and have formed part thereof - Moving forward, it is found on perusal of the FIR that although not specifically mentioned, 2004 to 2018 is the check period during which AS and YS have acquired property disproportionate to their known sources of income. There are certain calculations projecting the quantum of money that both AS and YS received towards salaries, interest and value for properties sold. Particulars of immovable properties acquired by AS and YS at different locations with particulars of price also find mention therein. It is thereafter stated that in addition to these properties, there is possibility of there being other properties in other places of the country in the names of AS and YS. Thus, it being the settled principle of law that when an investigation is yet to start, there should be no scrutiny to what extent the allegations in a first information report are probable, reliable or genuine and also that a first information report can be registered merely on suspicion, the High Court ought to have realized that the FIR which, according to it, was based on probabilities ought not to have been interdicted. Viewed through the prism of gravity of allegations, a first information report based on probability of a crime having been committed would obviously be of a higher degree as compared to a first information report lodged on a mere suspicion that a crime has been committed - The High Court failed to bear in mind these principles and precisely did what it was not supposed to do at this stage. We are, thus, unhesitatingly of the view that the High Court was not justified in its interference on the ground it did. The High Court was not justified in its interference with the investigative process and committed an error of law in quashing the FIR on the grounds it did. Challenge to the FIR on the ground that it is vitiated by malafides - HELD THAT:- The considerations that could apply to quashing of first information reports pertaining to offences punishable under general penal statutes ex proprio vigore may not be applicable to a P.C. Act offence. Majorly, the proper course for the high courts to follow, in cases under the P.C. Act, would be to permit the investigation to be taken to its logical conclusion and leave the aggrieved party to pursue the remedy made available by law at an appropriate stage. If at all interference in any case is considered necessary, the same should rest on the very special features of the case. Although what would constitute the special features has necessarily to depend on the peculiar facts of each case, interference could be made in exceptional cases where the records reveal absolutely no material to support even a reasonable suspicion of a public servant having intentionally enriched himself illicitly during the period of his service and nothing other than mala fide is the basis for subjecting such servant to an investigation. We quite appreciate that there could be cases of innocent public servants being entangled in investigations arising out of motivated complaints and the consequent mental agony, emotional pain and social stigma that they would have to encounter in the process, but this small price has to be paid if there is to be a society governed by the Rule of law - While we do not intend to fetter the high courts from intervening in appropriate cases, it is only just and proper to remind the courts to be careful, circumspect and cautious in quashing first information reports resting on mala fide of the nature alleged herein - there are no option but to hold that there are no cogent grounds for quashing the FIR in the present case even on the ground of mala fide.
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2023 (4) TMI 968
Grant of Letters of Administration - Owner of subject property - factum of execution of the Will, not in the knowledge of respondent - specific defence set up by the respondent was that the Will was false, fabricated and created by obtaining signatures of the testatrix in blank papers, under threat and coercion exercised by the father of the appellants. Whether the Will dated 06.03.2005 has been duly proved in the manner known to law, satisfying the requirements of Sec.63(c) of the Indian Succession Act,1925 r/w Sec.68 of Indian Evidence Act, 1872? - HELD THAT:- It is clear that the Will was indeed executed by the testatrix in the presence of two attesting witnesses viz., the second appellant and the respondent on 06.03.2005. The said Will came to be registered on 19.04.2005 before the Joint Sub Registrar, Chennai South. The signature of the testatrix before the Joint Sub Registrar at the time of registration is admitted by her daughter, the contesting party viz., the respondent herein. If really the defence set up by the respondent that the father of the appellants obtained signatures of the respondent's mother in blank papers and using the same, fabricated Ex.P1- Will, then the registration of such a Will with the active presence and participation of the testatrix before the Sub Registrar concerned, that too on a much later date, would be most improbable, if not impossible - The respondent is not a novice. She is a Post graduate and also held very high position in BSNL, a public sector undertaking. This Court is unable to believe her version that she and her mother signed blank papers and that such blank papers were misused to bring about Ex.P1-Will. In reference to the relevance of registration of Ex.P1-Will on a subsequent date, this Court is unable to buy the version of the respondent that signatures available in blank papers were used to fabricate Ex.P1-Will. Whether Ex.P1-Will has been duly executed, attested and proved as required under law? - HELD THAT:- The probate Court is not a Court of suspicion, but more a Court of conscience. The Court should endeavour to put itself in the arm chair of the testator and find out whether, in the given circumstances, the testator would have made such bequests, or not - Coming back to the facts of the present case, it is an admitted case that the appellants and their father have alone been residing in the subject property and the testatrix and her daughter were living at a different place. Even the reason assigned by the testatrix in Ex.P1-Will as to why she was giving the property to her brother Ganesan are reasoned and well founded. This also corroborates with the case pleaded by the appellants before the learned Single Judge. The evidence of the attesting witnesses cannot be expected to be given with arithmetical precision. The fact that evidence is being given before the Court after several years after the execution of the Will should also have to be remembered by the Court while assessing the evidence adduced by the parties. This Court has already found that there is more than sufficient evidence available on record to establish the fact that Ex.P1-Will was indeed executed by the testatrix, in the presence of the second appellant and the respondent herself - The learned Single Judge has proceeded mainly on the footing that D.W.1 had totally denied her signature in Ex.P1-Will, which this Court has already found to be not the correct position, after reassessing the entire evidence on record. This Court, therefore finds and holds that Ex.P1- Will has been duly executed and attested and the proof required to be adduced U/s. 63(c) of the Indian Succession Act, 1925 r/w. Sec.68 of the Indian Evidence Act,1872 has been satisfactorily complied with. Point 1 is answered accordingly. Whether the appellants can claim right to the property taking shelter under a benami transaction and whether the Will is hit by the provisions of Benami Transactions Prohibition Act, 1988? - HELD THAT:- The entire money for purchase of the property came only from the appellants father Mr.Ganesan, which factum also was admitted to by the respondent in cross examination. Possession of the property has also been only with the appellants and before them, with their father. The testatrix never questioned the assertion of right and title over the subject property by her brother, during her life time. Only after her life time, the respondent has taken all kinds of pleas that her mother permitted her uncle to stay on a nominal rent as it was safer to give it to a known person rather than an unknown tenant and thereby property would be secured. The respondent admitted that no steps were ever taken by her even after her mother's life time, questioning the right and possession of the appellants. All these factors would clinchingly establish that the recitals in Ex.P1-Will are only true and genuine. Therefore, there is absolutely no reason for this Court to hold that Ex.P1-Will is hit by the provisions of the Benami Transactions (Prohibition) Act, 1988. The conduct of the respondent in this regard also assumes relevance because there has been no challenge to either the claim of title to the subject property by her uncle Ganesan or for possession of the subject property being with her uncle and the appellants for several years. If really, the defence set up by the respondent was probable, especially given her educational background, the respondent would have never remained a silent spectator throughout, allowing her uncle to enjoy the property and even after his demise, the appellants to continue to enjoy the same without taking any legal steps to recover possession or challenge the title to the property. Whether there are any suspicious circumstances surrounding the execution of the Will dated 06.03.2005, in order for the Court to come to a conclusion that the Will is not free and genuine? - HELD THAT:- This Court would like to state that there is no straight jacket formula to ascertain or assess suspicious circumstances. All or any suspicion cannot be treated as a suspicious circumstances, thereby calling upon the propounder to dispel the same. The suspicious circumstances, raised by the Caveator seeking to attack the genuineness of the Will should be germane and surrounding the execution of the Will alone. Caveators cannot cite circumstances that are not material or relevant to execution of the Will and try to pinpoint circumstances, that have arisen post execution of the Will, like in the present case where, the Caveator has alleged that the Will was registered during lunch time or, in other cases, by trying to take advantage of any conflict in evidence adduced by the propounder or the witnesses, as long as they do not touch upon the facts surrounding due execution and attestation of the Will. Courts should apply the arm chair rule and see to it that unrelated and unwarranted circumstances are not projected to defeat the solemn wishes of a testator/testatrix. The defence set up by the respondent was that the Will was brought about by undue influence and coercion. In such cases, on the propounder discharging the initial burden required to prove the Will, the onus shifts to the Caveator to prove the allegations of undue influence and coercion. This Court has already found that the Caveator has not adduced any evidence whatsoever aiding her defence that the signatures of her mother and herself were obtained in blank papers and using the said papers, the Will was brought about - It is very unfortunate that the respondent having attested the Will has chosen to put forth a false case in order to challenge the Will and deny the benefits of the bequests made under the Will in very natural circumstances, by her mother, which have also been clearly explained in the recitals of Ex.P1-Will also. Appeal allowed.
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