Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 28, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking grant of regular bail - alleged amount of evasion of GST is less than Rs. 5 crores - Considering the total custody of the petitioner which is more than 1½ years, this Court deems it fit and proper to grant regular bail to the petitioner - HC
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Jurisdiction of proper officer to issue summon - the Secretary of the club has been summoned under Section 70 of the Central Goods and Services Tax Act, 2017 to give evidence and produce documents including statement showing details of payment received under different heads/services - club services - HC refused to interfere with.
Income Tax
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Rectification of mistake u/s 154 - disallowing the excess depreciation - As per the assessee itself, the machinery purchased was put to use in February, 2007 and this fact was not noticed by the AO while passing the impugned order - In the said order, 100% depreciation was given by taking the date of putting the machinery to use by 21.08.2006. - Rectification proceedings are valid - HC
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Claim of excessive manufacturing loss on converting old gold into new gold - addition @ 15% applied for making the impugned addition - Looking at the nature of business are inclined to uphold that atleast that there is a manufacturing loss of 7.5% on such conversion. - AT
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Validity of Revision u/s 263 - Assessment framed without carrying out detailed enquiries and verifications is indeed an erroneous one causing prejudice to the interest of Revenue which duly entitles the prescribed authority to assume its section and pass necessary orders thereupon as it thinks fit. - Revision proceedings sustained - AT
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Reopening of assessment u/s 147 - Assessment of trust - There is a direct live link between the rental income received by the trust and the income shown by the beneficiaries in the respective returns as per their respective share of rental income as specified in the trust deed and, therefore, there is no escapement of income at all. We hold that the reopening of the assessment is bad in law. - AT
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Credit of tds denied - TDS deducted but deposited by the other party - Once, the assessee has discharged the onus imposed on her, the onus shifted upon the revenue to disprove the contention of the assessee based on the documentary evidence. - Revenue cannot absolve from its duty merely on the reasoning that the other party (Diductor) is not responding to the notices issued upon it. - Benefit of section 205 allowed - AT
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Disallowance being payment of Provident Fund and ESI u/s.36(1)(va) - The auditor in the audit report specifies the due date as prescribed u/s. 36(1)(va) of the Act and the date on which deposit has been made, then in the computation of income, the same cannot be claimed as deduction, because the law envisages that such payment is disallowable, because it has not been paid within the due date. - AT
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Exemption u/s 11 - it is seen that the appellant has received donation against which expenses on account of donation paid have been shown. Since donation is a voluntary contribution, no expenditure can be allowed for earning such income. However, in case of donations paid, the said amount is to be allowed as deduction u/s 80G in case donations paid are to entities which are approved for the purpose of section 80G. - AT
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Revision u/s 263 by CIT - There is no such finding about the payment to the dependent agent being less than the arm’s length price of services rendered by the dependent agent, in the present case, even though there is a finding about questioning the DAPE’s FAR analysis. The Commissioner ought to have examined the arm’s length price determination in respect of the services rendered by the dependent agent, in this context. That exercise has also not been done. - Revision order set aside - AT
Customs
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Seeking condonation of delay of 470 days in filing the review petition - The issue was decided against the revenue [2018 (10) TMI 709 - DELHI HIGH COURT] - It is well-settled that each day of the delay is required to be explained. In the present case, the delay is substantial and no particulars to explain the delay have been provided. - The application is dismissed. - HC
Corporate Law
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Opportunity to be heard to ICA Lenders not provided - ‘person concerned’ - the NCLT has denied an opportunity to be heard to ICA Lenders on the ground that insofar as section 71(10) of the Companies Act, 2013 is concerned, they do not have a right to be heard - this is an incorrect reading of the requirement of hearing of ‘person concerned’ as is laid down in section 71(10) of the Companies Act, 2013 and ‘any other person interested in the matter’ as required in Rule 73(3) and 73(4) of the NCLT Rules, 2016 - in view of public interest as is stipulated in Rule 74(4) and the involvement of public money in the Company, though the public sector banks, public interest also demands that ICA Lenders be given opportunity of hearing - AT
Indian Laws
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Smuggling of huge quantity of contraband - vicarious liability of owner of the truck - In the case in hand, the prosecution has failed to produce any material on record to show that the vehicle in question, if was used for any illegal activity, was used with the knowledge and consent of the Appellant. Even presumption as provided for under Section 35 of the NDPS Act will not be available for the reason that the prosecution had failed to discharge initial burden on it to prove the foundational facts. - SC
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Execution of decree - The limitation period would commence only with the decree becoming enforceable and thus is capable of being executed. In the instant case, the relevant date from which the period of limitation will begin only with effect from 31.03.1994. The period of twelve years is computable from the said date, hence the Execution Application made on 17.07.1995 is within Limitation. - SC
IBC
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Admitting Section 7 application - Initiation of CIRP - where the Corporate Debtor did not file any reply and also did not file application for recall of order dated 23.11.2021 forfeiting right to file reply, the Adjudicating Authority did not commit any error in admitting Section 7 application.- AT
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Jurisdiction for deciding on the eviction - the ‘status- quo’ order was obtained from the Small Causes Court by the Appellant without placing full and complete facts regarding its occupation and possession of the said premises and without impleading the Liquidator as a necessary party - the NCLT possesses the correct jurisdiction in considering an application for vacation of the premises in question and that the NCLT was correct in passing the Impugned Order - AT
Service Tax
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Extended period of limitation - GTA - The appellants had mostly undertaken carrying food and other items as part of PDS. So it cannot be said that appellant has wilfully suppressed any facts and so demand in respect of GTA invoking extended period cannot be sustained. As such, penalties imposed under Sections 77 & 78 of the Finance Act, 1994 are not warranted. - AT
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Levy of Service tax - Forfeiture of earnest money deposit on account of contractors failure to honor the terms of the contract - The Circular dated 28.02.2023 issued by the Central Board of Indirect Tax and Customs also provides that service tax cannot be levied on the amount collected for the said purpose - thus demand on contractual agreement do not sustain. - AT
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Refund of Service Tax paid on input services - appellant performs the role of intermediary for the overseas service receiver - place of provision of services - export of services or not - s the sub-contracting agreement for the services being provided by the appellant to overseas entity as the main contractor and thus, under no stretch of imagination, it can be held that the appellant is an agent or intermediary, engaged for facilitating business of overseas entity. - Refund allowed - AT
Central Excise
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100% EOU - Since it is an admitted fact that the respondent assessee had achieved value addition norms of about 25% and if we go by the minimum percentage of value addition prescribed in the exim policy, it is found that there has not been any substantial violation of value addition norms by the respondent’s 100% EOU. Thus there are no violation of the conditions of the exemption notification. - No demand can sustained - AT
VAT
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Levy of penalty - Detention of goods alongwith vehicle - tax evasion - levy of tax with penalty - it was only before the First Appellate Authority that some documents issued by one M/s Dhingra Cold Storage were tried to be shown by the appellant though at stage, such document could not be taken into consideration as Section 33 (3) of the Act, 2003 specifically bars acceptance of the same in appeal proceedings. - Demand confirmed - HC
Case Laws:
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GST
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2023 (4) TMI 1126
Seeking grant of regular bail - alleged amount of evasion of GST is less than Rs. 5 crores - bailable offence - petitioner is in custody for 1 year, 6 months and 16 days and the case is still at the summoning stage on the basis of the complaint filed by the GST authorities - there are number of accused in the present case and most of the accused have already been extended the benefit of regular bail including co-accused namely, Rohit Mehta and Gurbax Lal who have already been granted default bail. HELD THAT:- The quantum of amount which the petitioner is involved is yet to be decided at the time of trial. Under Section 132 of the GST Act even if the amount is more than Rs. 5 crores, the maximum sentence is five years as per the learned counsel for the parties. The petitioner has already faced incarceration for more than 1 years. The complaint is still at the summoning stage. The other two accused have already been extended the benefit of default bail and one more co-accused namely Harsimranjot Singh Bambhi has been granted regular bail by this Court vide Annexure P-2 who is stated to be at parity with the present petitioner. Considering the total custody of the petitioner which is more than 1 years, this Court deems it fit and proper to grant regular bail to the petitioner - The petitioner shall be released on regular bail subject to furnishing bail bonds/surety to the satisfaction of the learned trial Court/Duty Magistrate concerned - Petition allowed.
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2023 (4) TMI 1125
Setting aside show-cause notice for cancellation registration in Form GST REG-31 - HELD THAT:- There is no gainsaying that the notice since is issued for cancelling the GST registration of the petitioner, if the final order against the petitioner is to be adverse, it will operate to the detriment and prejudice to the petitioner. Therefore, the process of adjudication post issuance of show-cause notice would necessitate observance of natural justice and providing reasonable opportunity to the petitioner to defend his case and submit appropriate facts and details in relation to the show-cause notice. Before proceeding further pursuant to the show-cause notice, the petitioner shall be given four weeks time to file reply and also shall be given personal hearing for which the date shall be intimated to the petitioner - After filing the reply and personal hearing is given, the authority shall decide the issue of cancellation of GST registration. Petition disposed off.
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2023 (4) TMI 1124
Cancellation of GST registration of petitioner - reason for cancellation is Ceased to be liable to pay tax - HELD THAT:- There is merit in the petitioner s contention that in the present case the petitioner was at a loss as to how to respond to the impugned show cause notice as it did not disclose any intelligible reason for proposing cancellation of the petitioner s registration. The impugned show cause notice is set aside. The petitioner s GST Registration is restored - Petition allowed.
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2023 (4) TMI 1123
Cancellation of registration of petitioner - cancellation on the ground that the petitioner did not file Goods and Service Tax returns - HELD THAT:- It is observed that when the competent authority considers the issue of revocation of cancellation of petitioners GST registration under the aforesaid notification, the petitioners shall be entitled to lodge its claim for availment of Input Tax Credit in respect of the period from the cancellation of the registration till the registration is restored. Petition disposed off.
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2023 (4) TMI 1121
Cancellation of GST registration of petitioner - registration has been obtained by means of fraud, willful misstatement or suppression of facts or not - SCN challenged by the petitioner on the ground that the same is one line cryptic notice and principles of natural justice has not been followed by the respondent authority by not giving of any opportunity of being heard - HELD THAT:- The respondent authority issued another show cause notice for cancellation of registration. The said show cause notice is on record. In view of the developments and the situation emerging i.e. issuance of second show cause notice of even date, ends of justice would be served if this petition is disposed of by passing the following directions: (i) The petitioner shall be given time of 15 days from the date of this order to submit reply and documents in support of reply. (ii) The date of personal hearing within a period of 15 days thereafter also be fixed to provide a reasonable opportunity of being heard to the petitioner. (iii) Once the reply and personal hearing is complete, the authority within a period of three weeks thereafter shall render decision on merits. Petition allowed.
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2023 (4) TMI 1120
Constitutional Validity of levy of IGST on ocean freight paid by the petitioners in view of Sr. No. 9(ii) of Notification No. 8/2017- IT(Rate) dated 28.6.2017 read with Sr. No. 10 of Notification No. 8/2017-IT (Rate) dated 28.06.2017 read with Sr. No. 10 of Notification No. 10/2017-IT (Rate) dated 28.06.2017 - seeking refund of amount paid by the petitioners as IGST on ocean freight of goods imported during July, 2017 to December, 2019 along with appropriate interest for delayed refund. HELD THAT:- The Division Bench of this Court vide judgment and order dated 23.1.2020 [ 2020 (1) TMI 974 - GUJARAT HIGH COURT ] passed in the captioned writ petition along with other writ petitions allowed the writ petitions and declared Entry No. 10 of Notification No. 10/2017- IGST (Rate) dated 28.6.2017 as ultra vires the Act - the notifications impugned in this petition have already been declared ultra vires. Therefore, the said prayer in this petition did not require any further consideration. Refund of the amount of Rs. 6,98,00,420/- paid by the petitioner as IGST on ocean freight of goods imported during July, 2017 to December, 2019 - HELD THAT:- The competent authority of the respondents is directed that if such amount of IGST has been collected by the authorities, the same shall be refunded to the petitioner within six weeks from the date of receipt of this order alongwith the statutory rate of interest. Petition allowed.
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2023 (4) TMI 1119
Jurisdiction of proper officer to issue summon - Validity of summons issued - the Secretary of the club has been summoned under Section 70 of the Central Goods and Services Tax Act, 2017 to give evidence and produce documents including statement showing details of payment received under different heads/services - club services - principles of agency and principles of mutuality - HELD THAT:- It can be easily culled out from the plain reading of Section 70 of the CGST Act that it confers upon the proper officer the power to summon any person whose attendance is considered to be necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 - In view of the wide scope of Section 70 of the CGST Act, we are not inclined to interfere with the impugned summons. Application disposed off.
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Income Tax
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2023 (4) TMI 1118
Validity of reopening of assessment u/s 147 - Increase in share capital - As it is the petitioner s case, that insofar as the allegation with regard to the increase in share capital was concerned, this aspect was scrutinized by the AO while passing the order u/s 143(3) of the Act. Also allegation made in the notice issued under Section 148A(b) of the Act, and the order passed u/s 148A(d) does not seem to have etched out clearly, as to what is the connection in increase in share capital, and the transaction that the petitioner allegedly has entered into with RCI. HELD THAT:- Since a show-cause notice has been issued, and the reply is stated to be on the record, the AO will take the same into account, before he proceeds further in the matter. As noticed above, further reply was filed. In case the said reply is not on the record, the AO will give leave to the petitioner to have the aforesaid reply placed on record. The AO will take the said reply into account as well. Since the period for completing the assessment, we are told, is coming to an end on 31.03.2023, eight weeks are granted to the AO, to take a decision in the matter, commencing from the date of receipt of the copy of the judgement. Petitioner unreservedly, says that objections with regard to limitation having been passed, will not be put against the respondents/revenue. Writ petition disposed of.
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2023 (4) TMI 1117
Rectification of mistake u/s 154 - disallowing the excess depreciation claimed on account of machinery being put to use in March, 2007 - assessee had claimed and allowed full depreciation and additional depreciation of substantial part of addition, which was allowable @50% as the assessee had put these assets to use in February, 2007 and the period of less than 180 days for the assessment year 2007-08 - HELD THAT:- As per the order passed u/s 147 assessee had claimed benefit of depreciation for the whole year for purchase of new machinery. Reference was made to Section 36(1)(iii) of the Act, which provided that any amount of interest paid in respect of capital borrowed for acquisition of an asset, shall not be allowed as deduction till the date on which, such asset was first put to use. As per the assessee itself, the machinery purchased was put to use in February, 2007 and this fact was not noticed by the AO while passing the impugned order - In the said order, 100% depreciation was given by taking the date of putting the machinery to use by 21.08.2006. Assessee had produced the Fixed Assets Register for the financial years 2005-06 and 2006-07 showing the date of purchase, installation and date of put to use of these assets; certificate of M/s Power Tracks approved Chartered Engineers, to prove the date of installation of the new plant and machinery; and certificate of Central Excise Department regarding installation of new plant and machinery, which showed that the assets were installed by August, 2006 and details of WIP provided by the assessee showed that the above said machinery was capitalized in the month of February, 2007 and it had been put to use in less than 180 days. The above said evidence was sufficient to return a finding of fact that the claim on depreciation had to be allowable at 50% due to less use during the assessment year in question. No occasion to conduct further investigation with regard to putting of use of this machinery for less than 180 days as the evidence before the AO showed that the machinery had been put to use in February, 2007, as per the details provided by the assessee. In these circumstances, it is held that proceedings u/s 154 of the Act were correctly initiated.
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2023 (4) TMI 1116
Reopening of assessment u/s 147 - validity of notice issued u/s 148A(b) - principal allegation against the petitioner is, that the Work Contract Tax (WCT), as compared to the previous Financial Years (FYs), has increased substantially, and that no payment has been made by the petitioner. HELD THAT:- As petitioner categorically took the position, that the statutory liability for the AY in issue i.e., AY 2016-17, had been paid in the subsequent year. It was also asserted, that the petitioner had not claimed as expenditure the taxes, which were payable, and had remained unpaid in the period in issue i.e., AY 2016-17. For this purpose, the relevant documents, including the balance sheet for AY 2016-17 as on 31.03.2016, were furnished to the AO. Besides this, we are told, that challans concerning liquidation of the aforementioned statutory liability were also furnished. In sum, it was the petitioner s stand, that statutory dues concerning withholding tax, service tax and outstanding labour cess, in no circumstances, would constitute income chargeable to tax which had escaped assessment. We may note, that these are aspects which have not been dealt with by the AO, while passing the order u/s 148A(d) of the Act - observations made by the AO missed the crucial fact, which is the petitioner s stand, that it never claimed deductions concerning unpaid taxes adverted to hereinabove. The impugned order passed under Section 148A(d) of the Act is set aside - AO will carry out a de novo exercise.
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2023 (4) TMI 1115
Penalty u/s 271(1)(c) - defective notice u/s 274 - shorter period of less than 24 hours - Non affording the opportunity of hearing to the parties, which has resulted into imposition of huge amount of penalty - HELD THAT:- Notice u/s 274 read with section 271(1)(c) of the Act had been issued and the petitioner was asked to appear in person or through a duly authorised representative at 11:00 a.m. on 29.11.2022. This show cause notice as to why the order imposing penalty be not made u/s 271(1)(c) of the Act gives less than 24 hours to the petitioner, whereby it had asked the petitioner to appear in person or through a duly authorised representative. This shorter period of less than 24 hours can be termed as a pure and simple breach of principles of natural justice. It appears that on 28.11.2022, request was made for adjournment and the same is also reflected from the portal of the Tribunal and that such a request had been made to adjourn the hearing by few days. Without paying any heed to the same, when the order impugned has been passed, the Court requires to interfere. the petition is allowed. The impugned order of penalty is quashed and set aside.
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2023 (4) TMI 1114
Revision u/s 263 - Admissibility of deduction u/s 54B - whether the twin test which are required to be fulfilled for invoking the power under Section 263 of the Act stands attracted? - HELD THAT:- Tribunal has found that the very basis on which the PCIT had invoked its power under Section 263 of the Act was absent. Tribunal took note of the term record occurring in explanation (1)(b) of the Section 263 of the Act and held that the record shall include all documentary evidences which were submitted before the assessing officer and also those submitted before the PCIT in response to the show-cause notice issued u/s 263. PCIT is required to examine all documentary evidences including those which were before the assessing officer and submitted before him. On fact the Tribunal found that the assessee in the return of income as well as the computation of income did not make any claim for exemption u/s 54B - Tribunal found that PCIT did not record any satisfaction based on correct and verifiable set of facts relating to the claim of deduction found u/s 54B and reflect of agricultural income in the return to fulfil the mandatory requirement of Section 54B for the land put to agricultural use. Therefore, the learned Tribunal came to the conclusion that exercise of the jurisdiction under Section 263 of the Act is totally erroneous - No substantial questions of law
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2023 (4) TMI 1113
Claim of excessive manufacturing loss on converting old gold into new gold - estimated addition representing the manufacturing loss to the extent of 1060.738 grams for the conversion of old gold into new gold - addition @ 15% applied for making the impugned addition - HELD THAT:- It is an admitted fact that when the old jewellery is converted into new jewellery there are certain inherent impurities in the old jewellery which are cleaned or washed out during the course of conversion. Though, the facts are not clear to the extent that whether old jewellery is first converted into pure gold and then new jewellery is made or that only the old jewellery is cleaned and polish into new jewellery. Looking at the nature of business are inclined to uphold that atleast that there is a manufacturing loss of 7.5% on such conversion. We therefore, direct the AO to sustain the addition applying the rate of 7.5% as against 15% applied for making the impugned addition. We therefore, set aside the findings of the ld. CIT(A) and the issue raised by the assessee in ground no. 3, 4 5 is partly allowed. Valuation of excess stock of gold jewellery found during the course of survey - Difference in stock based on the survey report - at course of survey u/s. 133A stock verification was carried out - Excess stock of 13262 grams of gold jewellery was found and the same was accepted by the assessee but in the return of income assessee disclosed the excess stock of 12810.920 grams of gold jewellery only - HELD THAT:- AO has not found any discrepancy in the books of accounts nor has he rejected the book results. The addition made by the Assessing Officer is purely based on the statement given by the assessee during the course of survey but the same does not have any evidentiary value as consistently held by Hon ble courts. The alleged addition is only on account of the rates applied by the AO which is higher to the rate adopted by the assessee. From perusal of the calculation of AO, we notice that he has totally ignored the cost of the precious and semi - precious stones and other metals which are necessary to make gold jewellery. Under this given facts and circumstances of the case, the details filed by the assessee based on the records, books of accounts maintained cannot be ignored and therefore, alleged addition made by the Assessing Officer deserves to be deleted - Decided in favour of assessee.
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2023 (4) TMI 1112
Disallowance of interest expenditure u/s. 40(a)(ia) for non furnishing Form 15G / Form 15H - HELD THAT:- As no TDS has been deducted by the payer on the interest and no supportive documents were filed before the Ld.AO. As in case of CIT vs. Sri Marikamba Transport Co. [ 2015 (6) TMI 181 - KARNATAKA HIGH COURT] has held that no disallowance of interest paid to persons who furnish form 15G/H can be made in the hands of the assessee u/s. 40(a)(ia) of the Act. As in case of JCIT vs. Karnataka Vikas Grameena Bank [ 2018 (5) TMI 1627 - ITAT BANGALORE] has held that filing of form 15G/H with prescribed authority is only procedural and cannot result in a disallowance. This Tribunal also held that to the extent that payment of interest relates to the government and exempted category of persons, no disallowance is warranted. As in the present facts, the assessee is directed to furnish Form 15G/H to the Ld.AO. AO is directed to consider the same and to consider the claim of assessee by carrying out necessary verification after affording proper opportunity of being heard. Ground raised by assessee stands allowed for statistical purposes.
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2023 (4) TMI 1111
Validity of Revision u/s 263 - assessee had failed to prove genuineness and creditworthiness of all these heads of expenses and credits - revision proceedings have been initiated on the basis of audit party - HELD THAT:- We find no force in assessee s instant first and foremost legal argument as there is no such embargo in section 263 regarding exercise of revision jurisdiction on the basis of any proposal coming from the field authorities. We further note that there is no indication either in the PCIT s section 263 twin show cause notices or in his detailed discussion that he had simply accepted the proposal than applying his independent mind on the facts and circumstances of the case. Once there is no statutory restriction placed in exercise of section 263 jurisdiction at the prescribed authorities instance, we must adopt stricter construction going by Commissioner of Customs vs. Dilip Kumar Co [ 2018 (7) TMI 1826 - SUPREME COURT] to interpret the impugned jurisdiction in wide terms only. The assessee fails in his instant first and foremost argument. We find from the perusal of case files that the learned counsel could not place any material before us during the course of arguments that the Assessing Officer had carried out all his details enquiries whilst disallowing/adding the relevant heads of expenses and credits (supra) in part than in entirety once it was a fit case wherein he had already held this taxpayer to have failed in proving identity, genuineness and creditworthiness by way of filing cogent evidence. Assessment framed without carrying out detailed enquiries and verifications is indeed an erroneous one causing prejudice to the interest of Revenue which duly entitles the prescribed authority to assume its section and pass necessary orders thereupon as it thinks fit. We thus uphold the PCIT s revision directions herein in the given facts and circumstances of the case. We find no merit in the assessee s instant last argument as well in light of hon ble apex court s decision in CIT vs. Shri Arbuda Mills Ltd. [ 1996 (1) TMI 11 - SUPREME COURT] that the above exclusion clause regarding prescribed authority exercising section 263 revision jurisdiction does extends to such matters as had not been considered and decided in such appeal . We make it clear that there is no material before us which could indicate the CIT(A) to have considered and decided the assessee s grievance to this extent. We thus reject the assessee s instant argument as well. PCIT has wrongly directed the Assessing Officer to finalise proceedings u/s 144 only whilst passing his consequential order - We find no substance in the assessee s instant concluding arguments as well once it has come on record that the Assessing Officer had himself decided all these corresponding issues after holding that the assessee had failed to prove genuineness and creditworthiness of all these heads of expenses and credits; as the case may be, by filing cogent supportive evidence. We therefore hold that there is no prejudice caused to the assessee in light of PCIT s directions to the Assessing Officer u/s 144. The assessee fails in all her arguments thereof. The PCIT s revision order under challenge is upheld. Decided against assessee.
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2023 (4) TMI 1110
Addition u/s 69A - search seizure operation u/s 132 - assessee could not explain the source of cash found at the business premises of the assessee on the date of search - CIT (A) deleted partial amount holding the same to be available on the date of search as per books of account of the company and Director of the company and sustained the balance amount - HELD THAT:- A perusal of the assessment order shows that the Assessing Officer basically made the addition on the basis of the statement of the Accountant Shri Tikaram Sharma. However, it is neither coming from the assessment order nor from the order of the CIT (A) or from the Paper Book filed by the assessee as to whether the statements of the Directors of the assessee company were recorded or not and whether they have been asked any question or not on this issue either during the course of search or during the course of assessment proceedings especially when Mr. Ramesh Agarwal, on behalf of all family members and the companies had declared Rs.100 crores as undisclosed income. Since the facts in the instant case are identical to the facts of the case in the case of Ankit Biscuits (P) Ltd [ 2023 (3) TMI 1233 - ITAT HYDERABAD] we deem it proper to restore the issue to the file of AO with a direction to adjudicate the issue afresh in the light of the direction given in the case of Ankit Biscuits (P) Ltd and in the light of the declaration of additional income of Rs.100 crores by Mr. Ramesh Agarwal on behalf of all family members and the companies as additional income. Appeal filed by the assessee is allowed for statistical purposes.
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2023 (4) TMI 1109
Disallowance of deduction u/s 80(P)(2)(d) - interest and dividend income earned from other cooperative societies - HELD THAT:- This component of income is allowable for deduction u/s 80P(2)(d) of the Act and this issue is covered by a series of decisions of Division Bench of this Tribunal as well as by the decision of Hon'ble Jurisdictional High Court. AO is directed to verify the interest and dividend income if earned from cooperative society, the assessee be allowed full relief to the assessee. Deduction u/s 80(P)(2)(a)(iv) - Complete bifurcation is not discernable from the various documents filed by the ld. AR of the assessee, though, the assessee in its computation of income has mentioned the figure, therefore, this issue is also restored back to the file of AO to verify the fact and pass the order in accordance with law. Assessee is also directed to furnish complete details of such deduction with its bifurcations. AO shall grant reasonable and fair opportunity of hearing to the assessee. The assessee is also directed to provide complete details and evidences on this issue to the Assessing officer. The grounds raised by the assessee in this appeal is allowed for statistical purposes.
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2023 (4) TMI 1108
Reopening of assessment u/s 147 - Assessment of trust - undisclosed rental income received by the assessee trust - assessee trust has not filed return of income for the AY 2010-11 and, therefore, there is escapement of income in respect of rental income received by the assessee trust from the property - HELD THAT:- On perusal of the Income tax returns of the beneficiaries which were also available with the Assessing Officer at the time of reassessment proceedings as has been recorded a finding in the reassessment order that the assessee has produced the Income tax returns of the beneficiaries. As noticed that the beneficiaries have shown their share of rental income of the property held under the trust and in such case there is no escapement of income by the assessee trust as the trust was formed as a specific trust for the benefit of the beneficiaries of the family of Late Shri Gyan Chand Khanna. There is a direct live link between the rental income received by the trust and the income shown by the beneficiaries in the respective returns as per their respective share of rental income as specified in the trust deed and, therefore, there is no escapement of income at all. We hold that the reopening of the assessment is bad in law. We set aside the order of theCIT(Appeals) and quash the reassessment made by the Assessing Officer u/s 143(3) r.w.s. 147 - Decide in favour of assessee.
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2023 (4) TMI 1107
Reopening the assessment for years other than the current assessment year - Jurisdiction of the ld. CIT(A) in directing the AO for the years impacted by the claim for depreciation - Claim of unabsorbed depreciation - how could assessment for preceding years, since finalised, be revisited? - if the appellate authority, in directing the AO to consider reopening the assessment for years other than the current assessment year, i.e., the years impacted by the assessee s claim of unabsorbed depreciation, being AY 2010-11, and AY 2012-13 onwards, had exceeded his jurisdiction? HELD THAT:- A carry forward of a claim, subject to the conditions therefor being satisfied, could only be where the same stands assessed and determined for an earlier year in the first place - That is, there is no claim for the earlier year/s which, on account of it not being able to be given effect to on account of inadequacy of profits, could be carried forward to a subsequent year. This in fact is the AO s case in substance (refer para 2). Rather, as we observe, even if the claim for depreciation on the assets of the erstwhile business were to hold, as where there has been a resumption of the aqua farm culture business of which there is though no whisper, the same would only be on the basis of the closing WDV for AY 1998-99, i.e., as on 31.3.1998. That is, there is no question of any claim for depreciation for the earlier years, so as to claim its carry forward to a later year. We state this as a matter of abundant caution, even as there is no case for resumption of the said business, nor indeed of the assets thereof having been deployed and put to use for the property development business. CIT(A) did not issue any direction for disallowance for the other years, which, where given effect to, is liable to be assailed for those years, but only directed for, in view of absence of any factual or legal basis, taking remedial course of reassessment for disallowing the set off of claim of UAD for AY 1998-99 onwards in the assessments for the years for which the claim had been made by the assessee. How, pray, could that be faulted with? The assessee s challenge is wholly without merit. His findings, which we endorse, as was by the Tribunal in the first round, again remain unassailed. The claim of the assets being kept in a ready-to-use state for the intervening years is no more than a bogey, without any factual basis, and sufficiently impugned by the ld. CIT(A), whose findings remain uncontroverted before the Tribunal, both in the first and second round. The same in fact conforms to the undisputed facts of the case. The answer to the question arising, as delineated in one word, is: No . CIT(A) is clearly within his rights to require the AO to take remedial action for the other years. We have already noted an absence of any challenge before us on the merits of the decision by the ld. CIT(A), even as we have, as a matter of abundant caution, expressed our opinion thereon. Decided against assessee.
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2023 (4) TMI 1106
Rectification of mistake u/s 154 - non-granting of TDS credit to the extent claimed - Merging of orders - HELD THAT:- A.O. while passing the rectification order u/s 154 r.w.s. 143(3) of the I.T.Act dated 09.06.2022, had enhanced the TDS credit, however, did not grant TDS credit to the extent of Rs.2,53,123 (Rs.2,99,84,276 2,97,31,153). Therefore, the issue raised in ground 4 and its sub-grounds had already merged with rectification order dated 09.06.2022. If at all the assessee is aggrieved for non-granting of TDS credit to the extent of Rs.2,53,123, it is for the assessee to file a fresh rectification application, if so advised. With the above observations, we reject ground No.4 and its sub-grounds. Incorrect levy of interest u/s 234C of the I.T.Act and non-granting of interest u/s 244A - We find that the above were not subject matter of rectification application u/s 154 of the I.T.Act. The assessee in its grounds of appeal before the CIT(A) had raised ground relating to issues of incorrect levy of interest u/s 234C of the I.T.Act and non-granting of interest u/s 244A of the I.T.Act. Therefore, the CIT(A) was not justified in dismissing the issue raised in grounds 2 and 3, by observing that the same has been merged with the order passed u/s 154 r.w.s. 143(3) of the I.T.Act. Hence, grounds 2 and 3 are restored to the files of the CIT(A). The CIT(A) is directed to decide the issues raised.
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2023 (4) TMI 1105
Disallowance of expenses on ad-hoc basis - Ad-hoc Disallowance @ 10% - Assessee is a Project Office of a foreign company set up in India to provide engineering consultancy services and incurred expenses like rent, professional fee, travelling and conveyance etc during the course of business - HELD THAT:- We hold that no disallowance of expenses on ad-hoc basis is called for. Reliance is placed on the decision of the Coordinate Bench of ITAT in the case of M/s. Cheminova India Ltd. [ 2016 (9) TMI 545 - ITAT MUMBAI] wherein held that without pointing out specific defects in the documents furnished by the assessee, disallowance made on the ground that the assessee failed to furnish all the documentary evidence is not acceptable. Decided in favour of assessee. TDS u/s 195 - disallowance u/s 40(a)(i) - Professional Fee Payment/salary made by the assessee to its AEs treating the same as FTS, on which TDS u/s 195 has not been deducted by the assessee - HELD THAT:- Since, the provisions of TDS has been duly observed on the payment no addition is called for on this account. Payment to TPF Getinsa Eurostudios S.L. Spain on account of professional fee expenses - Since the aforesaid amount was only receipt from Indian service provider and further payment to head-office, whereby the entire receipts, received after deduction of tax at source, has been fully reflected as income on the receipt side, the forwarding payment to head-office deserved to be allowed as deduction. The entire receipt from Indian Service Provider, is included under the head other income / Management Fee at Note 14 of the audited financial statements - disallowance of said expenditure, which is otherwise correspondingly included in other income, deserves to be allowed as deduction. TDS, the aforesaid management fee did not involve any provision of technical knowledge / knowhow of TPF Spain to Segmental much less to assessee, who was only collecting the said fee from Segmental for further remittances to Head Office/ TPF Spain - the income in the nature of fee for technical services is not taxable in India if the same did not make available technical knowledge or knowhow of such non-resident recipient, as per the provisions of Article-13 of INDO-SPAIN DTAA read with protocol thereof - no default on part of the assessee in not deducting tax at source (TDS) on the aforesaid remittance. Salary to Expatriates of TPF Getinsa Eurostudios SL Spain - TPF Spain has incurred costs on behalf of the assessee in terms of the salary of the expatriates for assisting the Assessee in executing services to NHAI. The assessee had only reimbursed actual cost of such employees on the basis of time spent and time cost of such employees, which was incurred by head-office. No markup has been charged by TPF Spain and there is no profit element in the said costs. Also, the provision of the act seeks to levy income tax in respect of the income' of every person. The term income has been exhaustively defined to include various types of gains, profits, accretion, value addition, etc. It is submitted that in absence of any profit-related element, a receipt cannot be classified as income in the hands of recipient of the money. In this scenario, any reimbursement cannot be treated as income, and therefore, cannot be subject to Income tax. The Hon ble High court of Karnataka in the case of Flipkart Internet P. Ltd [ 2022 (6) TMI 1251 - KARNATAKA HIGH COURT] held that the assessee would be eligible for Nil tax deduction certificate under section 195(2) of the Act with respect to payments of salaries of the deputed expatriate employees which were in the nature of pure reimbursements . We hold that no withholding of tax is warranted from the payments of Rs.2,18,66,000/-. The appeal of the assessee on this ground is allowed.
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2023 (4) TMI 1104
Complete scrutiny assessment through CASS - Unexplained cash credit - cash deposit during demonetization period unexplained money/cash deposits u/s 69A - As argued no opportunity of heard was granted as prescribed u/s 250(1) and 250(2) - HELD THAT:- The purpose of framing scrutiny assessment u/s 143(3) of the 1961 Act is, inter-alia, to see that the assessee is maintaining proper records, books of accounts etc. and compliance of various applicable provisions of the 1961 Act are made, to finally arrive at income chargeable to tax and compute tax liability of the tax-payer within the mandate of the provisions of the 1961 Act. In case of non compliances of various applicable provisions of the 1961 Act, consequential penal provisions are prescribed in the 1961 Act itself which will get attracted and which has direct bearing on computing income chargeable to tax. CIT(A) in the first round of appeal accepted replies/explanations/submissions/ evidences etc. filed by the assessee without calling for remand report/comments from the AO in breach of Rule 46A of the 1962 Rules and even no opportunity of heard was granted as prescribed u/s 250(1) and 250(2) of the 1961 Act, and granted substantial relief to the assessee. The assessee did not filed any appeal before tribunal against the additions confirmed by ld. CIT(A).We have set aside the appellate order of ld. CIT(A) on the grounds raised by Revenue in its appeal before tribunal, and appeal is now restored at its original level. Needless to say that powers of ld. CIT(A) are coterminus with the powers of ld. AO - Thus the appeal of the Revenue is allowed for statistical purpose, in the manner indicated above
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2023 (4) TMI 1103
Assessment u/s 153A - addition u/s 68 - whether incriminating material was found and seized during the course of search? - HELD THAT:- Assessee has filed the original return of income under section 139 of the Income Tax Act and assessment was framed u/s 143(3) and no addition was made qua bogus share application. After the search, such an assessment can be disturbed or could be construed as abated only if incriminating material was found and seized during the course of search. Thus in the present case nothing was discovered during the course of search about this share application money. Taking the advantage of search, AO is reassessing the income of the assessee, which has already assessed in an assessment order u/s 143(3). The factum of share application money is already available in the books. It has to be assumed as examined in a scrutiny assessment. For buttressing this point, the judgment of the Hon ble Supreme Court in the case of CIT vs.- Kelvinator India Limited[ 2010 (1) TMI 11 - SUPREME COURT] can be put into service - this addition is not sustainable, hence it is deleted. Disallowance of provision of expenses - AO has disallowed the deduction of this provision and correspondingly did not exclude from the work-in progress - CIT(Appeals) concurred with the ld. Assessing Officer by observing that assessee had claimed certain expenses, which were found to be in the nature of provisions and being unascertained liabilities, they cannot be allowed to the assessee - HELD THAT:- A provision is being made in the accounts for contingent liability. Sometime a liability is discernible but its complete crystallization cannot be ensured on the basis of material available and therefore, a provision of certain expenses are being made and if a provision is found genuine reasonable qua need of the business based on earlier years feed back, then it can be allowed as a deduction namely in the case of assessee under Head No. 5 provision of Bank interest has been made. AO has disallowed the deduction of this provision and correspondingly did not exclude from the work-in progress. Both these things cannot be permitted simultaneously. There is no finding at the end of the ld. Assessing Officer that expenses are not genuine. He did not make any enquiry qua the nature of expenses and whether they can be termed as genuine or not. He simply took a short-cut method by treating the provision as disallowed. He has to verify if this provision has been included in the WIP or not. If included then it is to be adjudicated once it has not been allowed as a deduction then it is to be excluded from the WIP also. This expense be carried out after going through the detailed explanation of the assessee and ledger account, we are of the view that this issue be remitted to the file of ld. AO for fresh adjudication. Undisclosed investment - Statement recorded u/s 132(4) relied upon - HELD THAT:- The CBDT is of the view that oftenly officials used to obtain confession from the assessee and stop further recovery of material. Such confessions have been retracted and then the addition could not withstand the scrutiny of higher authorities because no material was found supporting such addition. the Board has restrained the authorities from taking confession under section 132(4) of the Income Tax Act. There are a large number of decisions which suggest that without corroborating evidence, addition ought not to be made on the basis of a declaration made under section 132(4) of the Income Tax Act. A perusal of the above questionnaire reveals that name of the assessee is not discernable in the table of investor from Serial No. 1 to 6, neither it is reflected in the answer. In the answer, a declaration of the Director is confined which is relatable to six individuals alongwith HUF, so even there is no disclosure on behalf of the Company i.e. M/s. Agrim Infraproject Pvt. Limited. Therefore, this addition is not sustainable in the eyes of law. The addition is accordingly deleted.
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2023 (4) TMI 1102
Credit of tds denied - Demand order of the AO without considering the provision of section 205 - Discharge of onus - whether the deductor actually deducted tax from payments made to the appellant or if deducted whether it was deposited into Government Account? - second round of litigation before us - HELD THAT:- ITAT on earlier occasion while setting aside the file to the AO casted obligation on him (the AO) to cross verify the evidences furnished by the assessee and find out the fact that tax was deducted or not by the party M/s Jain Infraproject Ltd. AO in the set aside proceedings failed to comply with the directions of the ITAT in its true sense. As such, the AO after receiving report from DDIT(Inv.) Unit-6 Kolkata that the party has not responded to the notices issued did not try to adopt any other means to verify and determine the fact whether tax at source was deducted or not against the invoices issued by the assessee. Assessee has discharged her onus by furnishing the necessary details to justify that the party i.e. M/s Jain Infraproject Ltd has deducted the TDS. Even on consideration of the circumstantial evidences, the difference between the amount of the invoices raised and the amount received by the assessee from the party is exactly matching with the amount of TDS. Once, the assessee has discharged the onus imposed on her, the onus shifted upon the revenue to disprove the contention of the assessee based on the documentary evidence. However, we find that the Revenue despite of having enough powers under the statute failed to disprove the contention of the assessee as wrong based on the cogent information. Revenue cannot absolve from its duty merely on the reasoning that the other party i.e. M/s Jain Infraproject Ltd. is not responding to the notices issued upon it. In view of the above, we hold that the assessee is entitled for the benefit of the provisions specified under section 205 of the Act. Hence, the ground of appeal of the assessee is allowed.
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2023 (4) TMI 1101
Reopening of assessment u/s 147 - cash deposit in saving bank unexplained - assessee and her son are joint owner of a saving bank account - HELD THAT:- The assessee and the son of the assessee does not have taxable income during the year and therefore, they have not filed any return of income. The family of the assessee are having some agricultural income and small income from share transactions. The assessee is residing in very small village where no private bank are available also no core banking is available during the year under consideration. Therefore, the assessee and their family members used to deposit their cash in this account and apply for initial public issue. It is pertinent to note that the reasons recorded in assessee and her son s case are identical and the Assessing Officer has recorded the reasons stating therein that the assessee has entered into monetary transaction i.e. cash deposited in the saving bank account and no return of income was filed by the assessee. But the basic fact that assessee is not eligible for filing return of income was not taken into account and therefore, there was no application of mind while recording the reasons for reopening. Decided in favour of assessee.
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2023 (4) TMI 1100
TP provisions applicability on assessee s income as chargeable to tax as per Tonnage Tax Scheme - HELD THAT:- We observe that the assessee has opted for tonnage tax scheme in respect of its income from operating the ships in terms of approval granted to it by the Addl. CIT, range-1, Kolkata vide letter dated 29.03.2017 for a period of 10 years. We have also perused the presumptive scheme as envisaged by the provisions of Section 115BB of the Act and also the decision cited by the assessee in the case of Van Oord India Pvt. Ltd. [ 2019 (6) TMI 1176 - ITAT MUMBAI] Thus where the assessee has opted for tonnage tax scheme and has offered the income on presumptive basis, no TP adjustments are required to be made. Late payment of employees contributions beyond the time as prescribed under the Provident Fund - HELD THAT:- We are of the views that the issue is covered against the assessee by the decision of Chekmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] Accordingly ground of assessee dismissed. Dis-allowing the deduction in respect of education cess and secondary and higher secondary education cess for the purpose of computing profits and gains from business or profession - HELD THAT:- In terms of explanation 3 as inserted by Finance Act ,2022 to section 40(ii) of the Act, it has been provided tax shall include and shall be deemed to have always included any surcharge or cess by whatever name called on such tax. Considering the above position we are of the considered view that education cess and Secondary and higher Secondary Education cess are also part of the tax and not deduction is available to the assessee. Accordingly the ground raised by the assessee is dismissed.
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2023 (4) TMI 1099
Validity of proceedings u/s 153C - amendments inserted in Section 153C vide Finance Act, 2014 - HELD THAT:- As per section 153C along with Section 153A of the Act, which was introduced by Finance Act, 2014 w.e.f. 01.10.2014, the six assessment years immediately preceding the AY relevant to the previous year in which search is conducted or requisition is made will come into the purview of block assessment years. In the present case the date of search being 10.03.2015 (previous year 2014-15) and the assessment year being 2015-16 the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made are the AY 2014-15, 2013- 14, 2012-13, 2011-12, 2010-11, 2009-10 . The year under consideration being 2009-10 indeed falls within the purview of law in view of the amendments inserted in Section 153C vide Finance Act, 2014. As date of search is post- amendment of Section 153A and 153C i.e. on 10.03.2015 therefore, CIT(A) has committed an error in quashing the assessment order. Accordingly, by upholding the validity of proceedings u/s 153C of the Act on the legal issue and we direct the ld CIT(A) to decide the appeal filed by the assessee on merit. Appeal filed allowed for statistical purposes.
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2023 (4) TMI 1098
TP Adjustment - payment of development expenses capitalized - Depreciation on the capitalized amount has been claimed - HELD THAT:- We are of the view that the issue regarding claim of depreciation in AY 2012-13, 2013-14, 2014-15 and 2016-17, to which the present appeals pertain, cannot be decided until the dispute regarding capitalization of aforesaid expenses in assessment order is decided. The aforesaid dispute regarding capitalization of expenses is restored to the file of the Ld. CIT(A). In the fitness of things, therefore, in the facts and circumstances of the present appeals before us, the issues in dispute in the present four appeals before us should also be restored to the file of the Ld. CIT(A) for fresh order in accordance with law, consistent with the view taken by Ld. CIT(A) in AY 2011- 12. Ground allowed for statistical purposes.
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2023 (4) TMI 1097
Deduction u/s 54F - purchase of residential property at Hyderabad - DR had submitted that the assessee had not purchased any residential property within a period of two years from the date of sale of capital asset and as such, the assessee is not entitled to the relief u/s 54F - assessee stated that he had made the payment partially upto the date of filing of return of income to Builder/Developers - HELD THAT:- In the present case, though the assessee had paid more than 80% of the payment to the builder, yet a substantial amount of more than rupees Rs.1 crore was to be paid by the assessee to the builder, the balance payments were made beyond the time provided by the Act. In the light of the above, it has to be decided on the facts whether the assessee had purchased the residential house within four corners of section 54F or not. Though there are various decisions which are mentioned hereinabove in the submissions of the assessee, however, those are required to be examined by the lower authorities in the light of new facts namely, registration of sale deed dt.01.12.2021. In view of the above, we are of the opinion that the matter is required to be remanded back to the file of the Assessing Officer for examining afresh. Essential for the assessee to prove that she does not have more than a residential house at the time of claiming deduction u/s 54F - The documents produced before us clearly mentions the address of the assessee as 133A, Road No.15, Jubilee Hills, Hyderabad, Telangana 500003. This aspect has not been brought to the notice of the Assessing Officer by the assessee. As per the contention of the ld. DR, the ld.CIT(A) while deciding the issue had relied upon various documents produced before him at the time of appellate proceedings. For the above said purposes, we may fruitfully refer order of CIT(A) wherein the ld.CIT(A) had mentioned that the assessee had produced SRO Certificate, Municipal Taxes and GST receipts to show that the property mentioned in the return of income filed by the assessee were in the nature of commercial property and was not in the nature of residential property. As the case may be, without giving any finding on the above said facts, in the interests of justice, the case is required to be remanded back to the file of Assessing Officer with a direction to examine afresh having regard to the SRO Certificate, GST and Municipal Tax Receipts and to record a categorical finding as to for what purposes the facts were approved by municipal authorities. AO shall decide the issue in accordance with law after affording due opportunity of hearing to the assessee in accordance with law - Appeal of the Revenue is allowed for statistical purposes.
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2023 (4) TMI 1096
Difference in stock (difference in physical stock on the date of survey and the stock shown in stock register - assessee was maintaining stock register for silver ornaments/jewellery, while no stock register was maintained for Gold Jewellery and Silver Bullion dealt with by the assessee - HELD THAT:- There are two parties before ld. CIT(A) and principles of nature justice demand that fair hearing be granted to both the parties. Reference is drawn to Section 250(1) and 250(2) as well Rule 46A of the Income-tax Rules, 1962 - one more opportunity is required to be granted to the assessee to rebut through cogent evidences the valuation report of the registered valuer as to both weighment of the silver ornaments found during survey as also as to the purity of silver ornaments adopted by the registered valuer - it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess stock of silver ornaments found during survey vis- -vis stock recorded in stock register, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the authorities are set aside on this issue of silver ornaments, and matter so far as additions made based on silver ornaments found at Mirzapur HO during survey, is restored to the AO for denovo assessment on merit, after giving proper and adequate opportunity of being heard to the assessee. Gold jewellery at Mirzapur HO - Assessee claimed that stock as per books of accounts as on 24.02.2012 was 1033.80 gms but no working was submitted. Thus, we are restoring this matter back to the file of the AO for verification of the claim of the assessee on merit, after giving proper and adequate opportunity of being heard to the assessee. We order accordingly. Gold ornaments found during the survey on 24.02.2011 - As based on facts and circumstances of the case and in the interest of justice, the appellate order passed by ld. CIT(A) granting relief to the assessee w.r.t. 850 gms of gold ornaments found during survey allegedly belonging to his wife Mrs. Suman Agrawal is set aside and matter is restored to the file of the AO for fresh adjudication on merit, after providing opportunity of being heard to the assessee. The burden is heavy on assessee as claim is set up that personal jewellery of the wife is kept at business premises and that too without making any entry in the business records. 202 gms of gold ornaments found during survey belonged to one Mrs. Poonam Tripathi who gave the same for valuation purposes to the assessee s employee Mr. Sharad Agrawal on 24.02.2012 at 10.30 AM as the assessee was not available at that time, is merely an afterthought, as during the course of survey proceedings, the assessee never stated that the said gold ornaments weighing 202 gms belonged to Mrs. Poonam Tripathi. Even initial statement of Mr. Sharad Agrawal was recorded on the date of survey on 24.02.2013, but he never disclosed that 202 gms of gold ornaments were received by him on 24.02.2012 itself at 10.30 AM allegedly from Mrs. Poonam Tripathi for valuation purposes and the same is to be excluded while determining the stock of the assessee, it is completely unbelievable. Thus, after considering the entire material on record, we uphold the appellate order of ld. CIT(A) in upholding the addition w.r.t. 202 gms of gold ornaments claimed to be allegedly belonging to Mrs Poonam Tripathi, by holding that this is the undisclosed stock of gold ornaments of the assessee. Thus, the addition made by the AO and as confirmed by ld. CIT(A) is sustained. We order accordingly. Silver Bullion of 6.18 Kgs physically found during survey on 24.02.2012 at business premises of the assessee - As one more opportunity is required to be granted to the assessee to rebut through cogent evidences the valuation report of the registered valuer as to both weighment of the silver ornaments found during survey as also as to the purity of silver ornaments adopted by the registered valuer, as also assessee is required to prove the claim of stock of 5.751 kgs of Silver ingot in stock on date of survey. So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess stock of silver bullion(silver ingot) was found during survey vis- -vis stock recorded in stock register, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the authorities are set aside on this issue of silver bullion, and matter so far as silver bullion at Mirzapur HO is restored to the AO for denovo assessment, after giving proper and adequate opportunity of being heard to the assessee. Differences in Stock at Varansi B.O. - Explanation of alleged purchase of 177.50 kgs of artificial silver ornaments being Gillet Payal is merely an afterthought by the assessee to wriggle out of tax liability. Thus, we set aside the appellate order passed by ld. CIT(A) and uphold/sustain the addition as was made by the AO. So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess stock of silver ornaments was found during survey vis- -vis stock recorded in stock register, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the ld. CIT(A) is set aside on this issue of excess silver ornaments and the assessment order is upheld. We order accordingly. Difference of stock of gold jewellery found during Survey on 24.02.2012 at Varanasi, U.P. of 128 gms vis- -vis no stock shown in the stock register - No infirmity in the orders passed by authorities below, and we sustain the appellate order passed by ld. CIT(A) and the addition is sustained, on the touchstone of preponderance of human probabilities as the explanation offered by the assessee is held to be mere after thought to wriggle out of tax liability. So far as legal precedents relied upon by the assessee, it is not the case of surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of stock of gold ornaments was found during survey for which no satisfactory explanation could be given by the assessee, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The order passed by ld. CIT(A) on this issue is upheld. 4.958 kgs of silver Bullion found during survey u/s 133A on 24.02.2012 at Varanasi BO vis- -vis no stock shown in the stock register - It is incomprehensible to believe that Mr. Shiv Bachan Yadav, Manager of the assessee of Varanasi BO could not disclose these material facts during survey on 24.02.2012 (i.e. one day after alleged receipt of 4.958 kgs of Silver Bullion from Mr. Ghurahu Yadav on 23.02.2012), to the department official who conducted survey as well to the valuer who weighed and valued the silver bullion on 24.02.2012 that this silver bullion belonged to and owned by Mr Ghurahu Yadav. No ledger account of Silver Bullion was found during survey proceedings at Varanasi BO. We do not find any infirmity in the orders passed by authorities below, and we sustain the appellate order passed by ld. CIT(A) and the addition is sustained. So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of stock of silver bullion which was found during survey for which no satisfactory explanation could be given by the assessee, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the ld. CIT(A) on this issue is upheld. Unexplained Cash Deposits in Cash book - AO rejected the contentions of the assessee, as the credibility of source of cash in the proprietary concern could not be proved - CIT(A) accepted the contentions of the assessee, as sources of cash receipts as entered in its cash book, were held to be substantiated by ld. CIT(A) - HELD THAT:- Both the concerns are proprietary concern and assessment was framed by the AO after including, inter-alia, income of both the concerns. The records were available before the AO during assessment proceedings, and these entries were made prior to the date of survey. Thus, We do not hold infirmity in the appellate order passed by ld. CIT(A) deleting addition with respect to cash received by one proprietary concern of the assessee namely M/s Raj Shree Jewellers from another proprietary concern of the assessee namely M/s Raj Shree Palace. The appellate order passed by ld. CIT(A) deleting addition is confirmed. Excess Cash found During Survey - HELD THAT:- As affidavits filed are self serving and are not corroborated with any evidence found during survey. Even, receipts which ought to have been issued at the time of receipt of cash were not issued( no such receipt found during survey) and no evidence whatsoever was found during survey to substantiate the contentions of the assessee, and it is merely an afterthought to wriggle out of tax liability and stand rejected, and we hold that the cash found at Varanasi during survey after excluding as recorded in cash book, is an undisclosed income of the assessee. The appellate order passed by ld. CIT(A) w.r.t. unexplained cash found at Varanasi BO stands confirmed. So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess cash was found during survey for which no satisfactory explanation could be given by the assessee, and additions were made based on the incriminating material ( being excess cash) found during survey conducted u/s 133A. The orders of the ld. CIT(A) on this issue is upheld. Rejection of Books of accounts by invoking provisions of Section 145(3) - HELD THAT:- We uphold the rejection of books of accounts u/s 145(3) by authorities below, keeping in view facts and circumstances of the case that the books of accounts were not updated as on the date of survey as well that there were discrepancies in the stock as well cash physically found on the date of survey vis- vis as recorded in the records/books of accounts, and we have already confirmed additions on both the account of differences in cash as well stock vide this order. Additions with respect to unexplained Sundry Creditors - HELD THAT:- All the constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can make additions u/s. 68 of the Act as an income of the tax-payer. Regarding one creditor Mr. Sati Ram, the balance appearing was the opening balance with no transaction reported for the year under consideration, and claim is made that the said amount is written back and offered for taxation in the next year, but, however no evidence to that effect is filed on record - entire matter regarding unexplained sundry creditor need to be restored back to the AO for fresh adjudication. Addition on account of Unsecured loans raised by assessee - HELD THAT:- It is true that the assessee received loans from the aforesaid persons vide cheques which stood credited in his bank account and confirmations were filed, ITR etc. were filed( except in the case of Mr. Gopi Nath Agrawal) but the cheque issued by the lenders is preceded by cash deposit in their bank account, and hence onus is very heavy on the assessee. Thus, in the facts and circumstance of the case and in the interest of justice and in all fairness to both the parties, we are setting aside the appellate order passed by ld. CIT(A) and restore the matter back to the file of the AO for fresh adjudication of this issue on merits. Chargeability of Interest u/s 234B and 234C - HELD THAT:- Merely because there is an clerical error in the ITNS 150 will not vitiate the liability of the assessee to pay interest u/s 234B and 234C, which is mandatory and consequential to assessment framed by the AO. Reference is drawn to provisions of Section 292B of the 1961 Act. Thus, we do not find any merit in the contention of the assessee and uphold levy of interest u/s 234B and 234C and dismiss the ground raised by the assessee.
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2023 (4) TMI 1095
Disallowance being payment of Provident Fund and ESI u/s.36(1)(va) - intimation u/s 143(1) - incorrect claim apparent from any information in the return - as per assessee payments have not been made within the due date of 15 day of next months as per the respective Act but made much before the due date of filling of return income - HELD THAT:- Hon ble Supreme Court in the case of Checkmate Services Private Limited [ 2022 (10) TMI 617 - SUPREME COURT] has decided this issue against the Assessee. Once the Hon ble Supreme Court has held that if the payment has been made with respect employees contribution after the due date, the same has to be disallowed and cannot be allowed as deduction and therefore, adjustment has rightly been made If there is any incorrect claim apparent from any information in the return, then adjustment is permissible. Here in this case, once the claim of deduction as per the law in not allowable, same can be disallowed in the intimation u/s 143(1). The judgment of Hon ble Supreme Court is a law, which has to be interpreted that this was the position of law from the date of enactment of provision. The auditor in the audit report specifies the due date as prescribed u/s. 36(1)(va) of the Act and the date on which deposit has been made, then in the computation of income, the same cannot be claimed as deduction, because the law envisages that such payment is disallowable, because it has not been paid within the due date. Accordingly, we hold that such an adjustment is permissible under the scope of section 143(1) of the Act Decided against assessee.
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2023 (4) TMI 1094
Reopening of assessment u/s 147 - Assessee had paid the annual premium which is much higher than the total income declared by the assessee in the return of income - information received from the insurance company in respect of premium paid by the appellant - misreporting of the insurance company - HELD THAT:- As it is brought to our notice that assessee has no doubt made the insurance premium from the bank account maintained by the assessee in Punjab and Maharashtra Cooperative Bank Limited in Fort branch and HDFC, Andheri (W) branch. Subscription of insurance is concerned assessee has accepted and brought on record that assessee has in fact made the payment and not through the bank reported by the Insurance Company and it is from the branch in which assessee is maintaining bank account. Payments of premium is concerned assessee has clearly brought on record that assessee has in fact made the payment. With regard to source of funds there is no doubt on the statements and financial record submitted by the assessee that assessee has enough funds to make the above said insurance payment. Therefore, the reason for reopening of the assessment is already clarified and addressed by the assessee. However, the issue was complicated because of the misreporting of the insurance company. Therefore, the ground raised by the assessee is accordingly, allowed.
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2023 (4) TMI 1093
Disallowance of purchase related expenses - assessee is a company engaged in power transmission - HELD THAT:- Assessee claimed that the expenditure is incurred relating to petrol, oil, lubricants for the employees of divisional office for necessary purchase for urgent work and line maintenance. AO without finding any defect in such claim made ad-hoc disallowance and the same is confirmed by ld. CIT(A) also. Assessee being a limited company subjected to statutory audits, regular books are maintained and the alleged expenses are towards petrol oil lubricants for the employees of divisional office do not find any reason to doubt the genuineness of the said expenditure. We, therefore, reverse the finding of ld. CIT(A) and delete the said ad-hoc disallowance of purchase related expenses - Hence, ground no. 1 raised by the assessee is allowed. Disallowance u/s 40(a)(ia) for non-deduction of tax at source - assessee submitted that since information about deduction of tax at source on the alleged sum is not available and therefore, the case of the assessee falls u/s 40(a)(ia) therefore, in view of the amendment made in Section 40(a)(ia) of the Act, from AY 2015-16 the disallowance may be restricted only to the extent of 30% - HELD THAT:- Through Finance Act-II, 2014 w.e.f. 01.04.2015 the amendment is brought in Section 40(a)(ia) and as per the said amendment 30% of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in Section 139(1) the said sum subjected to proviso to Section 40(a)(ia) shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession . Since the year under appeal is AY 2016-17 therefore, the said amendment is applicable and therefore, the disallowance u/s 40(a)(ia) needs to be sustained only to the extent of 30% as has been requested by assessee to which there is no dispute at the end of the Revenue. Thus, ground no. 2 raised by the assessee is partly allowed. Disallowance of bad debts written off - HELD THAT:- We notice that before us the claim of the assessee is that the alleged sum has not been debited to profit and loss account but is linked to the reversal of opening balance lying in provision for doubtful debts and therefore, disallowance was uncalled for. Since this claim was not made by the assessee before ld. CIT(A), we deem it proper to restore this issue to the file of AO before whom the assessee shall file necessary evidence in support of its claim that the alleged sum has not been claimed as expenditure in the profit and loss account towards the provision of bad doubtful debts. Difference in reconciliation between associated companies receivable vis- -vis outstanding position - The claim of the assessee is that the said difference cannot be treated as income since the same is running account and is not in the nature of income - HELD THAT:- We notice that the said addition has arisen since the assessee failed to reconcile the balances - said addition is only towards inter-company receivables shown of the associate concerns of MeECL, MePTCL and MePGCL. Assessee has not filed any reconciliation statement. Since it is an admitted fact that there is a discrepancy in the inter-company payable and the inter-company receivable, we deem it proper to restore this issue to ld. AO before whom the assessee shall file complete reconciliation statement so as to explain that there is no difference of the alleged amount - In case the assessee is able to reconcile the said difference to the satisfaction of ld. AO, the alleged addition shall stand deleted. Ground no. 3 is allowed for statistical purposes. Disallowance of total expenditure claimed by the assessee in the profit and loss account - HELD THAT:- Assessee company being owned by the Govt. of Meghalaya and the various changes brought in from 01.04.2012 on account of The Meghalaya Power Sector Reforms Transfer Scheme, 2020 the financial statements have been prepared. AO ought to have considered this factual aspect before disallowing the total amount of expenditure claimed in the profit and loss account. We, thus, restore this issue to the file of ld. AO for afresh adjudication after considering the submissions of the assessee who shall be granted sufficient opportunity of being heard. Thus, ground allowed for statistical purposes. Disallowance u/s 14A - assessee has not offered any suo moto disallowance and AO on observing that the investments being made, computed the disallowance u/s 14A - HELD THAT:- Exercise needs to be carried out by ld. AO in this regard as to what are the investments which have fetched exempt income and only those should be considered for computing the disallowance u/s 14A - in no case such disallowance should exceed the exempt income earned by the assessee. The assessee is directed to file necessary details before ld. AO who shall examine the issue afresh in light of the settled judicial precedence after giving the assessee reasonable opportunity of being heard. Therefore, this ground raised by the assessee is allowed for statistical purposes. Disallowance of interest expenditure - assessee has claimed the expenditure towards accrued interest on G.P.F. subscriptions - AO firstly computed the disallowance u/s 14A and thereafter, while dealing with the interest expenditure came to a conclusion that the said expenditures are not allowable as the assessee did not have any business which generated any revenue - HELD THAT:- Basis of disallowance by the Revenue authority that there is no nexus between the interest expenditure and the income earned thereon is not acceptable because the assessee is a G.P.F. Trust and is an association of persons. Source of funds are from the subscriptions collected from its employees on account of provident fund. These funds are invested for earning income and part of such funds are given as loan and advance to the holding company. One cannot question the fact that there is no nexus between the funds received and the funds applied towards investments. Therefore, outrightly the disallowance of the total interest expenditure is uncalled for - assessee also raised an issue that no show cause notice was issued to the assessee before the enhancement of the addition made by ld. CIT(A). This being a violation of principles of natural justice, we direct ld. CIT(A) to give proper opportunity to the assessee and examine the issue afresh.
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2023 (4) TMI 1092
Penalty u/s 271F - Deduction u/s 80P denied - Delay in filling return - due tax was deposited on 11.11.2019 but return was filed on 04.09.2022 - HELD THAT:- Coordinate Bench in case of Shankar Lal Kumawat [ 2020 (7) TMI 683 - ITAT JAIPUR] wherein the Coordinate Bench has held that where assessee had not filed its return of income on ground that his income did not exceed maximum non-taxable amount as his income was exempt under section 54, in view of fact that assessee s total income without giving effect to provision of section 54 came to an amount which exceeded maximum amount not chargeable to tax, assessee was required to file his return of income, and the penalty under section 271F levied upon him was justified. When the assessee is not filing the return of income in the proceedings before the lower authorities and did not file justification for the same the levy of penalty by the lower authorities sustained. Appeal of the assessee is dismissed.
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2023 (4) TMI 1091
Exemption u/s 11 - CIT(E) held that since exemption under section 11 is not to be allowed to the assessee as per the decision of the Hon ble Delhi High Court in appellant s own case, the said income has to be taxed under the head Income from other sources and while computing income under the head Income from other sources any expenditure (not been in the nature of capital expenditure) laid out or expended for the purpose of making or earning such income is to be allowed as deduction as per the provisions of section 57(iii) - HELD THAT:- As seen that no income has been earned for some of the expenses incurred Sl. Nos. 7 to 15 of the table. Hence, expenditure incurred on these counts cannot be allowed in computing income from other sources. Since income from agricultural activity is exempt from tax, expenditure incurred on such activity is also not be allowed as expenditure. From the details it is also seen that the appellant has received donation against which expenses on account of donation paid have been shown. Since donation is a voluntary contribution, no expenditure can be allowed for earning such income. However, in case of donations paid, the said amount is to be allowed as deduction u/s 80G in case donations paid are to entities which are approved for the purpose of section 80G. Accordingly, the Assessing Officer is directed to- i. assess the income of the assessee with respect to activities categorized as charitable activities in the assessment order as income from other sources after verifying the expenditure incurred against SI. No. 1 to 4; ii. no expenditure is to be allowed with respect to items at Sl. No. 7 to 15 since no income has been earned as per of section 57(iii); iii. allow deduction tinder section 80G for donations paid amounting to Rs. 20,15,171/- after verifying that the entities to whom donations have been given are approved for the purpose of section 80G and to the extent of donations paid to entities approved under section 80G as per the relevant provisions of the Income Tax Act. iv. not allow expenditure on agricultural activity since the said income is exempt from tax; and v. allow set off of business income with loss computed under the held Income from sources after examining the applicability of the same as per the provisions of the Income Tax Act. Revenue authorities have duly allowed the depreciation and other expenses as directed to be considered by the Hon ble High Court. The revenue authorities have also allowed to set off of the business income with loss computed under the head income from other sources which is in tune with the provisions of the Income Tax Act. Since, exemption u/s 11 is not to be allowed as per the orders of the Hon ble High Court, the expenditure on which is unrelated to the earning of the income only has been disallowed. We decline to interfere with the order of the ld. CIT(E). The appeal of the revenue stands dismissed.
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2023 (4) TMI 1090
TP adjustment - international transaction of Payment of Management fees with transacted value - HELD THAT:- Here is a classic case in which the TPO did not compute the ALP of the international transaction but simply proposed the transfer pricing adjustment on the basis of some working done by him to the value of international transaction. The course of action adopted by the TPO has no sanction of law inasmuch as it is mandatory to determine the ALP under one of the six prescribed methods for ascertaining if the international transaction was at ALP. Further, a common thread running through all the six methods is that the benchmark always has a reference to the comparable uncontrolled transactions. TPO dispensed with the adoption of any of the methods. Neither any comparison of the Payment of Management Fee in an uncontrolled situation was made nor even the allocation of the third component on the basis of head count was done by considering any comparable uncontrolled instance. Such a course of action adopted by the TPO is contrary to the mandatory statutorily stipulated procedure and hence, cannot be countenanced. If the working of the TPO, which is not in accordance with the law, is removed from the scene, what remains is the ALP determination done by the assessee of the international transaction of its Transfer pricing study report. Such determination has not been adversely commented upon by the TPO, which, ergo has to be accepted as correct. ALP determined by the assessee in its Transfer pricing study report deciphers that the transaction was carried out at the ALP - Thus delete the addition made in the international transaction of Payment of Management Fee . Appeal of assessee allowed.
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2023 (4) TMI 1089
Revision u/s 263 by CIT - profits attributable to Appellant s Permanent Establishment ( PE ) in India - As per CIT-A method of computing profits attributable to PE as adopted by appellant is inappropriate - HED THAT:- As decided in [ 2022 (10) TMI 151 - ITAT MUMBAI ], order cannot be said to be prejudicial to the interest of the revenue unless there is a categorical finding that the payment to the dependent agent is not an arm s length price vis- -vis functions performed, assets employed and risks assumed by the dependent agent. While doing so, one also has to bear in mind that DAPE is not anything distinct from the DA, in the light of the binding judicial precedents holding the field as of now, and the taxability of the dependent agent s remuneration in the hands of the DA brings an end to the taxability of the DAPE also. There is no such finding about the payment to the dependent agent being less than the arm s length price of services rendered by the dependent agent, in the present case, even though there is a finding about questioning the DAPE s FAR analysis. The Commissioner ought to have examined the arm s length price determination in respect of the services rendered by the dependent agent, in this context. That exercise has also not been done. Unless the order sought to be revised cannot be said to be prejudicial to the interest of the revenue, its being erroneous, even if that be so, cannot be said to reason enough to invoke section 263 of the Act, and the order cannot be said to be prejudicial to the interests of the revenue unless there is a categorical finding that the dependent agent has not been paid arm s length remuneration for the functions performed, assets employed and risks assumed by the dependent agent. Order being prejudicial to the interest of the revenue, inasmuch as the payment to the dependent agent not being at an arm s length, is a sine qua non for holding that the order is prejudicial to the interest of the revenue. This exercise has clearly not been done on the facts of this case. For this short reason alone, we must set aside the impugned revision order. Appeals of the assessee are allowed.
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2023 (4) TMI 1088
Income taxable in India - PE in India - Receipts on account of Software (Prime) License Fee - Taxability under Article 13 India-UK DTAA under the head FTS - HELD THAT:- Having gone through the agreement since the user has no right to make copies or commercially exploit the right in the copyright of such software the ld DRP following the ratio laid down by Hon'ble Supreme Court in the context of Business Income/Royalty in Engineering Analysis Centre of Excellence Private Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ] directed to exclude receipts relating to sale of software licenses in accordance with and to the extent covered under the applicable categories contained in Hon'ble Supreme Court decision. DRP held that there is no dispute regarding the fact that the assessee does not have a permanent establishment in India. Accordingly, such receipts will constitute business income under Article 7 of the DTAA in line with the above-mentioned decision of Hon ble Supreme Court and will not be taxable in India in the absence of PE. Receipts on account of provision of other related services - The services are in respect of training programme and updations in connection with utilization of the software PRIME. Hence, we hold that when software itself is not taxable, the training and the related activities concerned with utilization and installation cannot be held to be FTS. Further, simply latching on to use of words Make Available in the agreement, it cannot be said that conditions of Article 13(4)(c) are satisfied. Burden is on the Revenue to demonstrate that make available condition is satisfied. Appeal of the assessee on Ground Nos. 4 and 5 are allowed. Addition of reimbursement - We find that the ld DRP has remanded the matter to the AO to examine travelling and lodging expenses reimbursed. AO has wrongly taxed the same under FTS. Hence, the action of the AO cannot be supported. The addition made is hereby directed to be deleted.
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2023 (4) TMI 1087
Deduction u/s. 35D - Denial of claim in respect of its Steel Division which was sold in the financial year 2000-01 on the ground that once the unit is transferred, no such deduction would be admissible - HELD THAT:- As we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2004-05 [ 2019 (2) TMI 2078 - ITAT MUMBAI] as held that on a perusal of section 35D shows that the Act is silent in the case when a unit is sold. Section 35D(5) of the Act refers to the transfer before the expiry of the period of 10 years to another Indian company in a scheme of amalgamation and section 35D(5A) refers to the transfer before the expiry of the period in a scheme of demerger. There is no clause in the section which debars the assessee from claiming the expenses as a write off on sale of the undertaking. We, therefore, do not find any reason for declining the claim of the assessee - Decided in favour of assessee. Determine the annual value of the property - CIT(A) upholding that to determine standard rent of property under the Bombay Rent Control Act the reasonable rate of return should be @12% of market value of land and investment in building as against 6% on land and 7% on investment in building as per the report of architects - HELD THAT:- We observe from the record that identical issue is decided for the A.Y.2004-05 [ 2019 (2) TMI 2078 - ITAT MUMBAI] assessee s contention is that the direction should be given in accordance with the earlier year ITAT order that the annual value of the property should be 12% of the cost and the land and building. In this regard, we note that it is the plea of the Revenue that making an annual value as a percentage of the cost of the land and building forever will lead to annual value fixed for eternity which can never be permitted. We find that the ITAT earlier had confirmed the same direction. The matter is already before the Hon'ble Jurisdictional High Court. We do not find any cogent reason to depart from the earlier order of the Tribunal in the assessee s own case. Hence, we follow the same and direct that the ITAT s order in assessee s own case on this issue be followed, as the same has not been reversed by the Hon'ble Jurisdictional High Court - Decided against assessee. Disallowance u/s.14A - Assessee submitted that there is no nexus between money borrowed and investment made in the earlier years and the investments were made out of sale proceeds, therefore no interest can be disallowed u/s. 14A - HELD THAT:- Various investments were made by the assessee in earlier Assessment Years which is backed with the details of the non interest borrowing funds available with the assessee in the respective years. Therefore, assessee has brought to our notice clearly that assessee has enough funds at their disposal to make various investments in the sister concerns as well as with the various investments. As assessee has utilized non interest borrowing funds for making the various investments. Therefore, the Assessing Officer cannot invoke Rule 8D(2)(ii) of I.T. Rules to disallow the interest expenditure u/s. 14A of the Act, accordingly, ground raised by the assessee is allowed. MAT - Addition of provision of doubtful debt and advances to book profits of the assessee u/s. 115JB - HELD THAT:- We observe from the method of account followed by the assessee is that it created provision every year and carry forwards the same amount to the subsequent year and if there are any actual bad debts it is adjusted during the year. Therefore, from this method of accounting adopted by the assessee clearly indicates that it is only a provision not actually bad debts written off by the assessee. As assessee has created merely a provision for doubtful debts without there being any actual bad debts which needs to be claimed as bad debts. Therefore, the conclusion reached by the tax authorities are just and proper. Therefore, the ground raised by the assessee is accordingly dismissed. TP Adjustment - Disallowance of commission payment paid to its Associate Enterprise being Jaykayorg AG - HELD THAT:- The benchmarked commission payment by applying the (TNMM) method which has been accepted by the TPO can be applied in the present assessment year considering the fact that no transfer pricing adjustment was proposed by the assessee and also the method proposed by the assessing officer is also not one of the approved method u/s 92C and Income Tax Rules. No reason not to accept the subsequent year findings in the impugned assessment year. In our view, the assessee also not submitted any study and adopting the tested method in the subsequent year in assessee s own case will justify the proper calculation of ALP for this transaction. Benchmark for agency commission adopted by the TPO in the subsequent year should be the base for the present assessment year under consideration. Therefore, we direct the AO/TPO to adopt the TNMM method for benchmarking for this assessment year also. Hence, the ground raised by the assessee is allowed. Enhancement of assessment by disallowance of an amount in respect of swap charges - HELD THAT:- We observe that the assessee had charged to profit and loss on account of interest swap charges paid to Bank of America for relevant period and also incurred interest expenditure, which was payable to State Bank of India and Citibank against the borrowed funds though ECB. These liabilities are ascertained liabilities and period cost for the year end. The nomenclature used by the assessee as Provision, whereas in reality it is ascertained liabilities for the period and the respective banks have charged the interest as well as swap charges considering the billing period. What is relevant is the ascertainment of liability for the period not the nomenclature used to charge the same to the profit and loss statement. Even the Ld CIT(A) while dealing with the Book Profit u/s.115JB, considered the same provisions as ascertained liabilities. One cannot apply two rules to interpret the same nature of expenditure. Delete the enhancement proposed by the Ld CIT(A) in his order. In the result, the ground raised by the assessee is allowed. Increase of book profit by the amount of provision for redemption of debentures - HELD THAT:- We observed that similar issue was considered and adjudicated by the Hon'ble Jurisdictional High Court in assessee s own case for the A.Y.1997-98 in the case of CIT v. Raymond Ltd. [ 2012 (4) TMI 128 - BOMBAY HIGH COURT ] and decided the issue in favour of the assessee as held mere fact that a Debenture Redemption Reserve is labeled as a reserve will not render it as a reserve in the true sense or meaning of that concept. An amount which is retained by way of providing for a known liability is not a reserve. Consequently the Tribunal was correct in holding that the amount which was set apart as a Debenture Redemption Reserve is not a reserve within the meaning of Explanation (b) to Section 115JA of the Income Tax Act, 1961 - Decided against revenue.
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Customs
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2023 (4) TMI 1122
Seeking condonation of delay of 470 days in filing the review petition - Sufficient reason for delay provided or not - whether the review petition has to be filed in the case or not? - Benefit of advance license - The issue was decided against the revenue [ 2018 (10) TMI 709 - DELHI HIGH COURT ] - HELD THAT:- It is stated that the file was put up for approval of the Chief Commissioner in the third week of July, 2019 and he immediately granted the approval. The review petition was drafted and filed at the first possible opportunity . It is relevant to note that the review petition was filed on 28.09.2019, which is two months after the final approval was stated to be granted. It is well-settled that each day of the delay is required to be explained. In the present case, the delay is substantial and no particulars to explain the delay have been provided. There are no grounds to condone the delay in filing the review petition. The application is dismissed.
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2023 (4) TMI 1086
Seeking amendment in the bills of entry - non-availability of the decision in the case of M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) , NEW DELHI [ 2015 (4) TMI 561 - SUPREME COURT] at the time of the clearance of the goods pertaining to the Bills of Entry in the present case - re-assessment, pertaining to a different period has not been considered by the 2nd respondent - assessment of the Bills of Entry - appealable order or not. It was held by Telangana High Court that The impugned order passed by the 2nd respondent cannot be sustained and is violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India and also the Customs Act, 1962, and it is accordingly set aside. HELD THAT:- The impugned judgment and order of the High Court need not be interfered with. SLP dismissed.
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2023 (4) TMI 1085
Seeking release of consignment of the petitioner imported by the petitioner - refund of detention and demurrage charges, if any - imposing of condition of furnishing bond of full value of the goods with furnishing of the Bank Guarantee of differential duty calculated at 200% of Basic Customs Duty and Integrated Goods and Service Tax - HELD THAT:- When the goods arrived at the destination port Mundra in 10 containers, a bill of lading dated 31.07.2021 was also issued, recorded therein the details of the consignment. The consignment was imported under bill of Entry No. 4961272, as stated above. It appears that inquiry was initiated by the authorities in respect of the import of magnesite lumps made by the petitioner. While the case of the petitioner was that the country from which the import originated was Turkey, the inquiry revealed that in that regard no details were available. Not only that the authorities suspected that the country of original was different and could be the Pakistan - It was on the aforesaid ground that the goods imported by the petitioner under the above description and Bill of Entry came to be detained by the Customs Authorities. For the purpose of the release of the goods, the condition as above, as reflected in Communication dated 25.10.2021 of respondent no. 2 was imposed. In BESTO TRADELINK LIMITED VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS [ 2022 (5) TMI 590 - GUJARAT HIGH COURT] , the petitioner had prayed for release of the consignment of the goods imported in Bill of Exchange No. 4964569. The goods were the same in respect of which the inquiry was undertaken in relation to the country of origin and it was suspected by the authorities that they were from different country Pakistan, than the the country indicated by the petitioner - As in the case of Besto Tradelink Limited, in the present case also, the inquiry is underway by the authorities and it may take further time before it may be concluded. The Court in Besto Tradelink Limited, in set of similar facts directed provisional release of the goods upon compliance of the conditions by the petitioner. In view of the operative facts and in light of the decision in Besto Tradelink Limited, competent respondent authority is directed to provisionally release the goods of the petitioners, provided the petitioner satisfies the conditions imposed - petition disposed off.
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2023 (4) TMI 1084
Review order - error apparent on the face of record or not - scope of review - Maintainability of petition - pre deposits for filing the appeal as provided in Section 129-E of the Customs Act, 1962 - HELD THAT:- On due consideration and submissions and on perusal of the documents filed on record as also the decision rendered by the Supreme Court, in the case of Chandra Shekhar Jha [ 2022 (3) TMI 606 - SUPREME COURT ] also the Supreme Court has held that the provisions of the aforesaid Section are not discretionary and the appellant is bound by the aforesaid provision. Taking note of the fact that in the order under review this Court has already referred to Section 129E of the Customs Act, there is no error apparent on the face of the order, which may call for the review of the same - Petition dismissed.
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Corporate Laws
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2023 (4) TMI 1083
Seeking grant of anticipatory bail - fraudulent transfer of shares - forged and alleged share certificates and share transfer forms are fabricated documents - forged signatures - HELD THAT:- Parameters for grant of anticipatory bail in a serious offence are required to be satisfied and further while granting such relief, the court must record the reasons therefor. Anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been enrobed in the crime and would not misuse his liberty. The applicant no. 1 as per Status Reports did not provide the requisite original Share certificates and also gave evasive replies during investigation. It is also appearing as surfaced during investigation that the applicant no. 1 who is managing director of the accused no. 1 could not produce any proof regarding request of the applicant no. 2 made to the accused no. 1 for payment of Rs. 6,25,000/- to the complainant on her behalf and said amount was actually credited in the loan account of the complainant. The applicant no. 1 also could not produce Jumbo share certificates which were stated to be issued on 29.1.2018 in lieu of 62,500 shares of the complainant and stated to be bearing the signature of Gulshan Jhurani as Director of the accused no. 1. Gulshan Jhurani in his statement dated 30.07.2022 also stated that he did not sign the share certificate/Jumbo share certificate after 2012. It also came into investigation that original share transfer deed between the complainant and Roohi Reshi for transfer of share certificate no. 31269 for 300 shares was executed on 12.12.2017 whereas new certificate no. 31269 was issued on 13.12.2017. The respondent/State prayed for custodial interrogation of the applicants on grounds that they have not provided requisite documents and gave evasive replies during investigation. It is also alleged that there are contradictions in replies given by the applicants as mentioned in Status Reports and also argued by the Additional Public Prosecutor and the learned Senior Counsel for the complainant. The issue which needs judicial assessment and consideration is that whether the applicants can be subjected to custodial interrogation merely the applicants as per investigating agency did not produce documents as sought by the investigating officer and gave evasive and contradictory replies during investigation. It was also surfaced during investigation that the complainant is having financial transactions with the accused no. 1 for the last 15-20 years. The bail applications filed by the applicants were dismissed by the court of Additional Sessions Judge-02, Patiala House Courts, New Delhi, vide order dated 28.05.2022 wherein it was observed that none including the complainant has appeared before the court with truth and conduct of the applicants is also shrouded in suspicion and appears to be much more tainted and stained as compared to the complainant - It appears that the concerned court minutely examined material collected during investigation in manner as deciding case on merits after conclusion of trial which was not warranted at time of consideration of bail applications. The Supreme Court in relation to power to grant anticipatory bail and power of investigating agency to investigate in P. Chidambaram also observed that the judicial discretion to be properly exercised after application of mind as to the nature and gravity of the accusation; possibility of applicant fleeing justice and other factors to decide whether it is a fit case for grant of anticipatory bail. The custodial interrogation of the applicants is not warranted under given facts and circumstances of the present case and after evaluation of the available material against the applicants and particularly only to recover certain documents pertaining to the share transfer and contradictions in the replies given by the applicants during investigation. There is no direct and apparent apprehension that the applicants may flee or avoid further investigation. The applicants cannot be remanded to custodial interrogation in the absence of convincing material which warrants that certain documents and evidence pertaining to present FIR cannot be recovered without custodial interrogation of the applicants. After considering all facts, the bail applications bearing no. 1696/2022 and 1697/2022 filed by the applicants Naresh Garg and Nirmala Aggarwal respectively are allowed, subject to conditions imposed.
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2023 (4) TMI 1082
Opportunity to be heard to ICA Lenders not provided - requirement of hearing of person concerned as is laid down in section 71(10) of the Companies Act, 2013 - Whether the ICA Lenders led by Bank of Baroda were entitled to be intervenor and be heard in the company petition filed by the Debenture Trustee and if they had a right to be heard, then whether the Impugned Order turning down the Intervention Application correct in law, and further Impugned Order-I which was passed without hearing the ICA Lenders liable to be set aside? HELD THAT:- Section 71(10) of the Companies Act, 2013 uses the word may in the context when the Tribunal has to pass order on the application of any or all of the debenture holders or debenture trustee. Further, sub-section 10 of section 71 also lays down that the Tribunal may pass orders after hearing the parties concerned - the question of proceedings to be in personam or in rem is also made clear by the fact that in the Company that is facing financial stress and for which a resolution plan is under consideration, 23 debenture holders who are among those represented by the Debenture Trustee are also part of ICA Lenders, though a majority of the retail debenture holders are not signatories to the ICA. The contention of the Respondent Debenture Trustee is that the requirement of sub-section 10 of Section 71 of the Companies Act, 2013 is that the Tribunal should pass an order only keeping in view its satisfaction and what is necessary to safeguard interest of the company or debenture holders. He has contended that the issue of public interest and financial condition of the company are not necessary factors to be look into by the Tribunal while passing the order - While considering the above argument of the Learned Counsel for the Respondent-Debenture Trustee, we note that the provision under section 71 (3) and section 71(10) of the Companies Act, 2013 stipulates that NCLT shall, before making any order, give a reasonable opportunity of being heard to the Company and person concerned in the matter. Rule 73(3) and Rule 73(4) of the NCLT Rules, 2016 which are applicable for an application under section 71(10) of the Companies, 2013 provide that Tribunal shall, before making any order under this rule, give an reasonable opportunity of being heard to Company or any other person interested, in the matter. It is quite clear from a reading of sub-rule (3) and sub-rule (4) of Rule 73 that the company is an important party because the company has to redeem the debentures and pay the interest on the principal amount. The Company s financial condition and health would, therefore, also become relevant factors while hearing an application under section 71(10). The ICA Lenders, who have all signed the Inter Creditor Agreement, have also taken steps for financial rejuvenation and revitalization of the Company through a resolution plan - the ICA Lenders are also important parties insofar as financial resolution of the Company is concerned, and therefore they should be afforded an opportunity to be heard in the company petition as the redemption of NCDs shall have an impact on the financial condition of the Company and would deeply affect the implementation of the resolution plan, which is for resolution of the Company. Thus, the NCLT has denied an opportunity to be heard to ICA Lenders on the ground that insofar as section 71(10) of the Companies Act, 2013 is concerned, they do not have a right to be heard - this is an incorrect reading of the requirement of hearing of person concerned as is laid down in section 71(10) of the Companies Act, 2013 and any other person interested in the matter as required in Rule 73(3) and 73(4) of the NCLT Rules, 2016 - in view of public interest as is stipulated in Rule 74(4) and the involvement of public money in the Company, though the public sector banks, public interest also demands that ICA Lenders be given opportunity of hearing - the Impugned Order-II dated 27.5.2021 is incorrect and is set aside. The Impugned Order-I dated 21.6.2021 which was passed by the NCLT suffers from the infirmity that ICA Lenders were not afforded an opportunity to be heard while passing Impugned Order-I - the matter is remanded to the NCLT, Mumbai - Appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2023 (4) TMI 1081
Admitting Section 7 application - Initiation of CIRP - default in payment of guaranteed amount by the Corporate Debtor - Whether application filed under section 7 by the Bank being barred by time ought not to have been admitted? - time limitation. Whether default in payment of guaranteed amount by the Corporate Debtor is the same default as is committed by the Principal Borrower and the period of limitation for both the Principal Borrower and the Corporate Guarantor shall be same for the purposes of filing Section 7 application for the Bank? - Whether in the facts of the present case, the application filed by the Bank on 17.03.2020 was barred by limitation against the Corporate Guarantor? - Whether the order of the Adjudicating Authority admitting Section 7 application is unsustainable? HELD THAT:- The scheme of I B Code clearly indicate that both the Principal Borrower and the Guarantor become liable to pay the amount when the default is committed. When default is committed by the Principal Borrower the amount becomes due not only against the Principal Borrower but also against the Corporate Guarantor, which is the scheme of the I B Code. When we read with as is delineated by Section 3(11) of the Code, debt becomes due both on Principal Borrower and the Guarantor, as noted above. The definition of default under Section 3(12) in addition to expression due occurring in Section 3(11) uses two additional expressions i.e payable and is not paid by the debtor or corporate debtor - It is well settled that the loan agreement with the Principal Borrower and the Bank as well as Deed of Guarantee between the Bank and the Guarantor are two different transactions and the Guarantor s liability has to be read from the Deed of Guarantee. Although the Guarantor immediately become liable on any default committed by the Principal Borrower but for initiating any action against the Guarantor, a demand is to be made. Without there being any demand to the Guarantor, it cannot be accepted that period of limitation against the Guarantor shall commence. In the present case, Section 7 application filed by the Bank has been brought on the record as Annexure A-49. When we look into the Part IV of the application, the date of NPA i.e. 31.03.2017 has been mentioned in Part IV and total amount in default as on 31.12.2019 has been computed. The Application under Section 7 thus proceeds on date of NPA - default on the part of the Guarantor cannot be treated to be on 31.12.2016, when the Principal Borrower committed Default. It is also relevant to notice that the Corporate Debtor did not file any reply in Section 7 application despite giving opportunity by the Adjudicating Authority and right to reply was also forfeited - In the facts of the present case, where the Corporate Debtor did not file any reply and also did not file application for recall of order dated 23.11.2021 forfeiting right to file reply, the Adjudicating Authority did not commit any error in admitting Section 7 application. The application filed by the Bank on 17.03.2020 was not barred by limitation - The order of the Adjudicating Authority admitting Section 7 application is sustainable. Appeal dismissed.
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2023 (4) TMI 1080
Maintainability of petition - initiation of CIRP - Default in payment of term loan - Financial Creditors - one time settlement scheme (credit facilities) - stand of the Appellant is that, the Term Loan, is repayable over 90 monthly instalments, beginning from April 2016 and entire Loan, will get Repaid, only in October 2023, hence, on 01.06.2019, the Sum in Default, cannot not be Rs.107.48 Crores, at all - on behalf of 1st Respondent / Bank, it is projected that when there is a clear Admission of Liability, and there was an undertaking, to discharge, the Loan Liability, under One Time Settlement, the Appellant, is not justified, in coming out with vexatious and frivolous issues - existence of debt due and payable or not? HELD THAT:- The very fact that the Corporate Debtor, had admitted its Liability, cementing on the One Time Settlement dated 18.12.2021, the same unequivocally, points out the factum, of Financial Debt, (as per ingredients of Section 5 (8) of the I B Code, 2016), which is due and liable to be paid by it, to the 1st Respondent / Bank / Financial Creditor, (as per Section 5 (7) of the Code) - The very fact that the Loan Account of the Corporate Debtor / Company, slipped into the category of Non Performing Asset, on 01.06.2019, in accordance with the guidelines of the Reserve Bank of India, the contra plea taken on behalf of the Appellant that the Default, took place before the Covid-19 Pandemic, is turned down, by this Tribunal. Admittedly, the main CP (IB) / 279 (CHE) / 2021, preferred by the 1st Respondent / Bank / Financial Creditor, under Section 7 of the Code on 27.10.2021, before the Adjudicating Authority / Tribunal. The Corporate Debtor s Loan Account, was declared as NPA, on 01.06.2019. As such, the main CP (IB) / 279 (CHE) / 2021, was filed well within the Limitation Period, by the 1st Respondent / Bank / Financial Creditor / Petitioner, and the point, is so answered. In the present case, it cannot be lost sight of that the One Time Settlement, dated 18.12.2021, amounting to Rs.84.81 Crores was rejected, by the 1st Respondent / Bank on 18.12.2021 itself, whereby and whereunder the Corporate Debtor / Company, was requested to raise the OTS Sum, which is a clear cut pointer, about the Existence of Financial Debt and Default - in the instant case, the Corporate Debtor s Financial Debt, with the 1st Respondent / Bank / Financial Creditor, is established by means of a Default, committed by the Corporate Debtor. The available material records projected on the side of the 1st Respondent / Bank, supports the case of the Bank that the Corporate Debtor, had committed Default, in respect of the Debt, due and payable. Suffice it, for this Tribunal, to pertinently make a mention that as the Debt, due and payable by the Corporate Debtor, is not interdicted by any Law, and this Tribunal, on being subjectively satisfied as to the Default, committed by the Corporate Debtor, in respect of the Financial Debt, due and payable, then, the view arrived at, by the Adjudicating Authority/Tribunal, in holding that the Financial Debt of the Corporate Debtor, was proved by the 1st Respondent / Bank / Financial Creditor, is free from any Legal Flaws. Appeal dismissed.
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2023 (4) TMI 1079
Jurisdiction for deciding on the eviction vested with the Small Causes Court or the NCLT where liquidation was underway - Appellant was a tenant or a licensee or an illegal occupant - putting the premises under lock and key of the Liquidator once a status-quo order has been passed by the Small Causes Court, Mumbai - HELD THAT:- Once a property was part of the liquidation state of the Corporate Debtor under liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law which was inconsistent with the IBC. In the matter of Embassy Properties Developments [ 2019 (12) TMI 188 - SUPREME COURT ], the Hon ble Supreme Court has held that if asset owned by a third party in possession of the Corporate Debtor held under contractual arrangements, is specifically kept out of the definition of the term assets Further, in a situation where a contractual arrangement is ongoing, the Resolution Professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). These judgements are distinguished on the basis of the fact that no contractual arrangement existed between the Appellant and the Corporate Debtor after 02.07.2020, when the extended Leaves and Licence Agreement expired and therefore the ratio in these judgements cannot provide support to the case of the Appellant. The residuary jurisdiction is relevant during the CIRP when the insolvency resolution of the corporate debtor is taking place, whereas in the present case the liquidation of the corporate debtor is being considered and the liquidator has taken recourse to its powers under section 33(5) to get control and custody of the asset of the corporate debtor. The NCLT order notes the contention of the Liquidator that Respondent No. 1 had obtained status-quo order from the Small Causes Court, Mumbai by suppressing facts and without making the Liquidator as a necessary party. We therefore, are of the opinion that the status- quo order was obtained from the Small Causes Court by the Appellant without placing full and complete facts regarding its occupation and possession of the said premises and without impleading the Liquidator as a necessary party - the NCLT possesses the correct jurisdiction in considering an application for vacation of the premises in question and that the NCLT was correct in passing the Impugned Order which would be necessary to put the premises in question with the Liquidator and pending the final disposed of I.A. No. 1635 of 2020 - The Impugned Order does not need any intervention. The NCLT possesses the correct jurisdiction for considering an application for vacation of the premises in question in the circumstances of the present case, and the NCLT was correct in passing the Impugned Order which would be necessary to place the custody of the premises in question with the Liquidator pending the final disposal of I.A. No. 1635 of 2020 so that the liquidation process is completed timely and in accordance with legal provisions - Appeal dismissed.
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PMLA
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2023 (4) TMI 1078
Seeking grant of Regular Bail - Money Laundering - pecuniary advantage/illegal gratification was obtained by the accused out of the funds received from UAE Red Crescent meant for flood victims in Kerala though Life Mission Project - reception of bribe in foreign currency and rooting of the sam e through the diplomatic channel - case of petitioner is that the entire case is built up as a political hit by the Enforcement Directorate to falsely implicate the petitioner and by extension, the executive head of the State and his family members - bail sought also on medical grounds (Section 45 of PMLA). HELD THAT:- Since this Court is considering bail plea at the instance of the petitioner in the instant crime on scrutiny of the relevant materials in the present case, this Court cannot consider the said aspect without going into niceties of the facts of the two cases in detail. Therefore, I leave the said question to be decided at an appropriate stage after referring all the materials in both these crimes meticulously. As of now, for the just disposal of the bail application, I am inclined to accept the argument tendered by the learned ASGI that a portion of the bribe being converted into foreign currency and taken to diplomatic channel to the foreign country, emanated from the predicate offence as pointed out by the learned ASGI, and the said aspect is a matter within the ambit of PML Act for which detailed investigation shall go on. Whether the petitioner is liable to be released on bail by resorting to proviso to Section 45(1) of PML Act? - HELD THAT:- It is interesting to note that the Act doesn't define the term either `sick' or `infirm'. The term `sick' as per the Oxford English dictionary means, affected by illness; unwell, ailing . Similarly, the term `infirm' means not physically strong or healthy; weak; feeble, especially through old age . Therefore, the `sick' or `infirm' condition of a person has to be inferred from the materials available in each individual case. However, it is pertinent to note that the statute provides release of an accused on bail, who are covered by the proviso reading the same disjunctively and the statute used the word `may'. Thus it has to be held that release of a person covered by the proviso to Section 45(1) of PML Act is not mandatory and the same is the discretion of the court. Three judgements of Supreme Court referred - STATE THRU DY. COMMISSIONER OF POLICE SPL. BRANCH DELHI VERSUS JASPAL SINGH GILL [ 1984 (6) TMI 264 - SUPREME COURT ], DIRECTORATE OF ENFORCEMENT VERSUS SHRI ASHOK KUMAR JAIN AND VICE-VERSA [ 1998 (1) TMI 529 - SUPREME COURT ] and State of U.P. v. Gayatri Prasad Prajapati [ 2020 (10) TMI 1281 - Supreme Court ] - Reading the ratio of the above decisions, if the jail authorities or the prosecution agency could arrange proper and adequate treatment, even a sick person need not be released on bail. No doubt, crime No.ECIR/KCZO/31/2020 arose out of predicate offence registered by the Vigilance and Anti-corruption Bureau and CBI and the present crime arose out of predicate offence in OR.No.7/2020, registered by the Customs (Preventive) Commissionerate of Cochin and Crime No.2/2020, registered by NIA and, therefore, as I have already pointed out, there is no reason to hold at this stage that registration of this crime is bad in law. In the instant case, the petitioner could not be held as a person who would flee from trial. However, his propensity to tamper with the evidence and to influence witnesses could be foreseeable, since the petitioner is a person having very much influence in the ruling party of Kerala, particularly with the Chief Minister of Kerala. It is apposite to refer that even after his initial arrest and subsequent release on bail, the petitioner was reinstated in service w.e.f 6.1.2022 and he continued the same till his retirement holding pivotal post in the State of Kerala, ignoring his involvement in serious crimes. That is to say, his involvement in serious crimes prior to this crime, in no way affected his official stature because of his authority in the State Government. - Since it has been discussed that the petitioner is not cooperating with the treatment offered, I am not inclined to release him on medical ground since his sickness would be addressed by the prosecution agency/jail authorities by providing adequate treatment. Similarly, his chance of propensity to tamper with evidence or influencing witnesses, is very much there, since the petitioner is a person having very much influence in the ruling party of Kerala, particularly with the Chief Minister of Kerala. In this matter, the investigation is at the initial stage. Many accused are yet to be arrested including Smt.Swapna Prabha Suresh. Why the prosecution is delaying the arrest of Swapna Prabha Suresh is also a matter of serious concern, though she had an active role in the present crime - Bail application dismissed.
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Service Tax
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2023 (4) TMI 1077
Levy of Service tax - Auctioneer s Service - Business Support Services - Goods Transport Agency Service - suppression of facts or not - extended period of limitation. Auctioneer s Service - marketing and other services rendered for selling agricultural produce of its farmer members - HELD THAT:- A numerous judicial decisions have already gone into the differences between Auction and Tender. The Tribunal in M/S. THE SALEM STARCH SAGO MANUFACTURERS SERVICE INDUSTRIAL CO-OPERATIVE SOCIETY LTD. VERSUS CCE ST, SALEM [ 2018 (3) TMI 192 - CESTAT CHENNAI] , has analysed the differences between auction and tender and held that in the traditional method of auctioneering, apart from the auction process per se the auctioneer also provides a gamut of other related services like providing a facility, advertising or illustrating the goods in auction, engage in pre-auction estimates, short term storage services, etc. - while both sale by tender and sale by auction may have a common intendment of selling the goods, the modalities and the processes involved in each are very different and demand do not sustain. Further, Learned Advocate has drawn our attention to M/s. Attur Agricultural Producers Co-operative Marketing Society Ltd. Vs. CCE, Salem, [ 2019 (8) TMI 262 - CESTAT CHENNAI ] wherein it has been held This is not service rendered to anybody at all. It is true that, in turn, the appellant has been borrowing money from their bank but it does not mean that the appellant is supporting service of the bank. They are borrowing money from the bank on their account and in turn lending it to their members. In view of the above, we find that demands on both these counts are not sustainable and need to be set aside. The facts in these two appeals are identical. The marketing and other services rendered by the appellant to their farmer members in selling their agricultural produce through tender process would not be coming under Auctioneer s Service under Section 65 (105)(zzzr) of the Finance Act, 1994 - demand do not sustain. Business Support Services - appellants are taking loans from M/s. Salem District Central Co-operative Finance Bank and utilizing this money in providing jewel loans to their farmer members - HELD THAT:- The services rendered by the appellant are relatable only to its members and not to the bank and the charges collected for appraising jewels before sanctioning of loans are in the nature of cost incurred by the appellant for sanctioning of loans. As such, there is no BSS rendered in the instant case. As such, the demands raised under the impugned orders demanding service tax under Auctioneer Service and BAS are not maintainable. GTA Services - Non-payment of service tax on transport of goods by road - appellants have undertaken the work of lifting and delivering of goods to the ration shops under the Public Distribution System - period from April, 2006 to March, 2011 - HELD THAT:- Reportedly the appellant has undertaken transportation of not only food grains and pulses but also sugar and other articles. The exemption for transport of food grains and pulses is available only with effect from 29th February, 2010. There is a finding in the Order-in-Original that the appellant has failed to give any evidence in order to claim exemption under Notification No. 32/2004-ST which provides for 75% abatement if the transporter has certified as to non-availment of cenvat benefit and also the benefit of Notification No. 34/2004-ST where freight paid on individual consignment upto Rs. 750/- and multi-consignment freight upto Rs. 1500/- exempted from payment of tax. The appellants have failed to submit consignment notes, freight vouchers, ledger account details etc. in order to substantiate their claim for these exemptions. Appellant has relied upon the decision rendered in the case of M/s. Mutual Industries Ltd. Vs. Commissioner of CST, Vapi [ 2016 (1) TMI 889 - CESTAT MUMBAI ], wherein it was held that denial of benefit of 75% exemption under GTA services for want of endorsement on the consignment note to the effect of non-availment of Cenvat credit is not maintainable - Considering this decision, it is held that the appellant is eligible for the benefit of Notification No. 32/2004-ST dated 03.12.2004 in computation of the demand of service tax payable for GTA service rendered - demand of service tax in respect of GTA Service provided is confirmed for the normal period which needs to be computed after according the benefit of Notification No. 32/2004-ST dated 03.12.2004. Extended period of limitation - Suppression of facts or not - HELD THAT:- The appellants have put forth that no malafide can be attributed to evade payment of service tax and non-payment of service tax was due to the bonafide belief and there was no deliberate intention for not paying tax and it is the responsibility of the Revenue to discharge the burden that the appellants have deliberately omitted to pay tax. GTA service was introduced w.e.f. January 2005 and the understanding was that individual truck owners engaged would not fall under GTA service - The appellants had mostly undertaken carrying food and other items as part of PDS. So it cannot be said that appellant has wilfully suppressed any facts and so demand in respect of GTA invoking extended period cannot be sustained. As such, penalties imposed under Sections 77 78 of the Finance Act, 1994 are not warranted. Thus, the demands confirmed against the appellant under Auctioneer s Service and Business Support Service are not justified. Consequently, demand of interest and imposition of penalties are also set aside - However, demand of service tax in respect of GTA Service provided is confirmed for the normal period which needs to be computed after according the benefit of Notification No. 32/2004-ST dated 03.12.2004. Appeal allowed in part and part matter on remand.
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2023 (4) TMI 1076
Non-payment of Service Tax on commissions paid by the Appellant for external commercial borrowings - alleged mis-match of freight charges reflected in ST-3 vis- -vis the books of account of the Appellant - HELD THAT:- CBIC has vide Instruction No.1083/04/2022- CX9 dated 23.05.2022 has laid down the guidelines (SOP) for NCLT cases - it was held in the Circular that A timeline of 90 days from the insolvency commencement date is available for filing of claims. However, it has been observed that there is an inordinate delay in filing of claims by Customs and GST authorities. This leads to their claims not being admitted and extinguished once a resolution plan is approved. It is also observed that the authorities then litigate on the rejection of each claims, despite the settled position that no claims can be raised once the plan is approved and no demands can be raised on the Resolution Application who has taken over the company through such a resolution plan. It is found that from the date of approval of the Resolution Plan by the NCLT, the Appeal filed by the Appellant has abated and this Tribunal has become functus officio in the matters relating to this Appeal. Further it is also settled that the impugned Order-in-Appeal has got merged in the order of the NCLT approving the Resolution Plan. The Appeal stands abated as per Rule 22 of the CESTAT Procedure Rules, 1982 w.e.f. the date of approval of the Resolution Plan by the NCLT, i.e., 24.02.2023. Appeal disposed off.
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2023 (4) TMI 1075
Levy of Service tax - amount booked as contractual adjustments towards contractor s failure to lift and sell the prescribed quantity of material from the mines during the currency of contract - Forfeiture of earnest money deposit on account of contractors failure to honor the terms of the contract like delayed/non-payment, further sale of material at more than the prescribed ceiling rate, execution of contract fraudulently by giving incorrect information - Amount booked as other receipts which included aforesaid two amount. HELD THAT:- The impugned order has observed that the appellant has received the amount as consideration for the failure on the part of the contractors to honor the terms of the contract or violating the conditions of the contract. Accordingly, the amount have been held to be taxable under clause (e) of section 66E of the Finance Act. In M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI ], the Tribunal held that liquidated damages recovered on account of breach or non-performance of contract are not consideration in view of any service but are in the nature of deterrent imposed so that such a breach or non-performance is not repeated. The Circular dated 28.02.2023 issued by the Central Board of Indirect Tax and Customs also provides that service tax cannot be levied on the amount collected for the said purpose - thus demand on contractual agreement do not sustain. Alleged short-payment of tax to the extent of dead rent/surface rent paid by the appellant to the State Government - reverse charge mechanism - HELD THAT:- For the purpose of levying service tax, the taxable event is construed as the time when the service is provided or agreed to be provided. Thus, in order to determine whether levy of tax is applicable on a particular activity, it is necessary to determine the point of time when such activity is provided or agreed to be provided. In the present case, the agreement between the appellant and State Government for grant of mining rights was executed on 02.01.2016 and on this date, the transactions involving assignment of right to use natural resource was not taxable - prior to 01.04.2016, barring a few exceptions, all services provided by the Government were covered under the negative list and accordingly, not subjected to service tax. With effect from 01.04.2016, however, section 66D(a)(iv) of the Finance Act was amended and 'all services provided by the government to a business entity were excluded from the negative list of services. Thus, services rendered by the government to a business entity became chargeable to service tax with effect from 01.04.2016 - In the present case, the appellant received services in relation to assignment of right to use natural resources from the State Government by virtue of the agreement dated 02.01.2016 and, therefore, the provisions of service tax, as were in force prior to 01.04.2016, would be applicable. Grant of natural resources was not excluded from the scope of negative list prior to 01.04.2016 and so no tax implication can be fastened on the appellant for such period - demand do not sustain. Consideration regarding the fee paid to the Directors by the joint venture company - HELD THAT:- In this connection, it needs to be noted that the amount was only held by the appellant on behalf of the joint venture/Directors and cannot be treated as income against provision of any service. Even otherwise, the transaction pertaining to this amount is between the joint venture company and the Directors and the appellant has no role to play. Whether the appellant provided any services to the State Government against the area development charges? - HELD THAT:- For a service to be taxable, it is necessary that there should exists a service provider and service recipient relationship between the two parties. On a careful perusal of order dated 30.12.1996 issued by the State Government, it is apparent that the appellant was made entitled to 30% of the area development charges received by the State Government. These charges were paid to the appellant for meeting its administrative expenses, especially since the appellant is operating as a public sector undertaking of the State Government. There is no mention of any service which would be performed by the appellant in exchange of such amount. Thus, allocation of area development charges by the State Government can be regarded as income of the appellant, but it cannot be treated as consideration towards a service. It is, therefore, not possible to sustain the impugned order dated 27.03.2019 passed by the Principal Commissioner - Appeal allowed.
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2023 (4) TMI 1074
Refund of Service Tax paid on input services - appellant performs the role of intermediary for the overseas service receiver - place of provision of services - export of services or not - HELD THAT:- The relationship between the appellant and the overseas entities are that of Principal to Principal, and there is no otherwise relationship namely joint venture, partnership or agencies. It is not the case of revenue that the appellant had failed to export the taxable output service or failed to receive the payment for such services in convertible foreign exchange. Thus, the condition of Rule 6A (1) ibid have been fulfilled by the appellant for consideration of the disputed services as export of service for the purpose of grant of benefit of refund provided under the Rule 5 ibid read with notification issued thereunder. Further, it is also found that the concept of intermediary appearing in the Rule 2(f) of the POPS Rules, 2012 has been dealt with by the CBIC under the GST regime. The concept of intermediary appearing in the Rule 2(f) of the POPS Rules, 2012 has been dealt with by the CBIC under the GST regime by Circular No. 159/15/2021-GST dated 20.09.2021 - though the said circular was issued under the GST regime but for the purpose of consideration of such phrase under the service tax regime, it should apply mutatis mutandis - the said circular has been issued on the basis of representations received, citing ambiguity caused in interpretation of the term Intermediary services , and after examination of the difficulties faced by the trade and industry, the said circular was issued, with a view to ensure uniformity in the implementation of the provision of the law across field formations. In an identical case, this Tribunal in the case of M/S. BLACK ROCK SERVICES INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CGST, COMMISSIONER OF CENTRAL EXCISE SERVICE TAX GURGAON, HARYANA [ 2022 (8) TMI 874 - CESTAT CHANDIGARH ] has defined the true meaning and purpose of the phrase intermediary holding that the appellant therein cannot be considered as an intermediary and accordingly, allowed the benefit of refund provided under Rule 5 ibid. - Rather, the contract referred in the case is the sub-contracting agreement for the services being provided by the appellant to overseas entity as the main contractor and thus, under no stretch of imagination, it can be held that the appellant is an agent or intermediary, engaged for facilitating business of overseas entity. There are no merit in the impugned order, in so far as it has upheld the rejection of refund benefit to the appellant. Therefore, by setting aside impugned order, the appeal is allowed in favour of the appellant.
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Central Excise
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2023 (4) TMI 1073
CENVAT Credit - capital goods - M.S. Plates - MS Sheets/Aluminium Coil - Joist/Square/joist Challen/HR Plates/Shapes Sections/MS Channels - Angels - Welding electrodes CRSS Patti/HRSS Plates/HR Coil/Sheets etc. - period 15.05.2006 to 31.03.2010 - HELD THAT:- A consistent view has been taken that benefit of Cenvat credit is to be given in respect of the goods like angles, joists, beams, bars, plates, which go into fabrication of structures embedded to earth, which are to be treated inputs for capital goods. In the judgment of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] , the Chhattisgarh High Court has examined the term capital goods defined in Cenvat Credit Rules, 2004. Finally, the benefit of Cenvat Credit has been extended to the assessee for using the goods as inputs. The respondent-assessee has a right to claim Cenvat Credit in the items in question. The impugned order has been rightly passed after appreciating the facts in the right perspective and no ground is made out to interfere in the same. No substantial question of law arises in the present appeal. Appeal dismissed.
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2023 (4) TMI 1072
Method of Valuation - be assessed under Section 4A or under Section 4 of the CEA 1944 - table top wet grinders - institutional consumers or industrial consumers? - 1000 Table top wet grinders cleared to TNCSC in December 2012 without payment of any duty was proper - invocation of extended period of limitation - HELD THAT:- As per the Explanation to the Rule 3 prior to its amendment, Institutional consumer means institutional consumer like Transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution. This rule has subsequently been amended. As per the amendment brought to Rule 3 by G.S.R.359(E) Notification Dated 06/06/2013, published in the Gazette of India on 06/06/203, the definition of industrial consumers or industrial consumers has been made adding clauses (bb) and (bc) to Rule 2 and omitting the explanation given in Rule 3. Since the period covered by the impugned order is from December 2012 to December 2015, the law as it stood pre and post amendment will be both relevant in deciding the matter. Pre-amendment period of Rule 2 and 3 - HELD THAT:- Sub section 4 of Section 4A states that where the manufacturer removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Hence the appellant has correctly applied Section 4A of CEA 1944 for clearance of the impugned goods during this period. Post-amendment (notification dated 06/06/2013) - HELD THAT:- The amended Rule 2 and 3 of LMPCR, 2011, was not made a part of the show cause notice, for the relevant period and the appellants were not required to meet that legal challenge. This being so the demand by quantifying the duty based on the value of goods determined under Section 4 of CEA 1944, for the post amendment period must also fail - The demand for duty on the impugned goods quantified under section 4 of CEA 1944 for the entire period covered by the impugned order is not legal and proper. With duty not payable the penalty imposed, on the foundation of the incorrect valuation of goods, is also not legally sustainable. Hence the demand for duty quantified under section 4 of CEA 1944 and the penalty imposed in this regard are set aside. Whether the 1000 Table top wet grinders cleared to TNCSC in December 2012 without payment of any duty was proper? - HELD THAT:- The duty was payable on the 1000 Table top wet grinders cleared to TNCSC in December 2012, is not in dispute. The valuation for the same would also be as per section 4A of CEA 1944. Hence the appropriation of the amounts paid during investigation is hence correct and is upheld. Extended period of limitation - HELD THAT:- Having found that no differential duty, as was quantified in the impugned order, is payable for the entire period, the question, whether the invocation of extended period for issue of show cause notice will be attracted in the present case, loses relevance. It is however noticed that the appellant during the hearing, in pursuance of their submissions against invocation of extended period, has relied on audit report Gr.3/November 2012/CBE II Division Coimbatore II-B Range wherein, purportedly as per Advisory Note VII, by the Central Excise Department they were advised to follow Sec. 4A price for the branded goods for future clearance. It is found that this important matter, involving a critical document that would be fatal to the departments allegation of suppression of facts, was not agitated by the appellants before the Lower Authority. It does not find mention in the impugned order nor was it a point in the appeal filed by them before this Authority. Suddenly, it is found that the document (copy) being introduced at the end of oral submissions through the Synopsis submitted by the appellant. No petition was filed by the Learned Counsel to accept the document at the appellate stage as per the relevant provisions of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982. Moreover, it is found that the so-called audit report is neither addressed to anyone nor is it issued under the letter head of the Central Excise Department or signed by any authority. It has also not been authenticated by the Learned Counsel or the appellant, making the whole thing very suspicious and unreliable. Advocates / consultants / departmental representatives all represent their respective parties to help the Tribunal in the administration of justice. They owe a duty to their parties and can, following the proper procedure, place before the appellate forum all that can be fairly, reasonably and legally submitted on behalf of the parties and not more. We sincerely hope that we do not come across another such occasion in future. Appeal allowed as per law, except for the amounts confirmed in the impugned order relating to 1000 table top wet grinders cleared to TNCSC in December 2012 - appeal allowed in part.
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2023 (4) TMI 1071
Levy of Excise duty - intermediate excisable goods (Sugar syrup) which emerges during the process of manufacture of biscuits - demand on the ground that final product i.e. biscuits are exempted from Central Excise Duty - HELD THAT:- The department has not come up with any evidence to prove that the Sugar Solution arising at the intermediate stage in the course of manufacturing of biscuits is marketable. In the absence of any such evidence and considering the fact that the condition in which sugar solution emerges has very short life and thus not marketable in the condition in which it emerges during process of manufacture. This issue has been settled by this tribunal in catena of decisions - reliance can be placed in the case of M/S DISHA FOODS PVT LTD, M/S ANAND FOOD PRODUCTS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD - II [ 2019 (7) TMI 1462 - CESTAT HYDERABAD] where it was held that There are no sufficient evidence to show that the sugar syrup manufactured by appellant is a marketable commodity. In the case of M/S. LUCKY BISCUIT COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE, PATNA [ 2017 (7) TMI 235 - CESTAT KOLKATA] it was held that CBEC Circular dated 7.11.1994 relied upon by the lower authorities has been issued in respect of sugar syrup produced in the manufacture of aerated water and ayurvedic medicines. Hence, the same cannot be applied to the sugar syrup being produced for the biscuits without establishing that the two products are identical. Since, the facts of the matter at hand are similar to one which have been cited, the same is followed and it is held that the impugned Order-In-Appeal is not sustainable - appeal allowed.
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2023 (4) TMI 1070
100% Export Oriented Unit for the manufacture of Ultra fine magnet wire 45-52 AWG - Non-fulfilment of Export Obligation (condition of value addition) - short fall in the value addition by 45% during the period covering financial years 1994-95 to 1998-99 - recovery of Customs Duty [condition no. 6(iv) of Notification No. 53/92-Cus dated 04.06.1997] and Excise Duty [condition no. (c)(d) of notification no. 1/95-CE dated 04.01.1995] - whether the respondent assessee has violated the condition of above notifications - HELD THAT:- N/N. 53/97-Cus dated 03.06.1997 provides exemption to the capital goods imported for the purpose of manufacture of articles for export by 100% exported oriented unit - It can be seen that the 100% EOU has to fulfill the export obligation and conditions as mentioned in the export-import policy for the relevant period. The appendix which have been provided to Rule 97 does not have specific entry Ultrafine Magnetic Wires as a electronic item however, the same is to be governed by norms which have been prescribed for the computer software-hardware - It can be seen from the Appendix-1 for the exim policy 2002-2007 that electronic hardware does not have any minimum value addition norms, it need to be only a positive value addition. Since it is an admitted fact that the respondent assessee had achieved value addition norms of about 25% and if we go by the minimum percentage of value addition prescribed in the exim policy, it is found that there has not been any substantial violation of value addition norms by the respondent s 100% EOU. Thus there are no violation of the conditions of the exemption notification. To decide whether there has been any violation of relevant exim policy by any Export Oriented Unit, the most appropriate authority to decide the violation of the policy are the officers of the Ministry of Commerce and Industry and as can be seen from the above orders, they have categorically found that there has been no violation on the part of the respondent assessee of any provisions of the import-export policy and it has very categorically been provided that no statutory requirement of achieving any minimum value addition and therefore as a corollary no violation of any provisions of the exim policy. For demanding the forgone customs duty under the notification no. 53/97-Cus dated 03.06.1997 there need to be violation of the conditions of the import-export policy of the relevant period. Since the relevant authorities implementing the import export policy provisions have categorically found that there has not been any violation of the conditions therefore, no conditions of the exemption notification no. 53/97-Cus dated 03.06.1997 and notification no. 1/95-CE dated 04.01.1995 has been violated by the respondent assessee - relevant period taken for judging export performance was very short i.e. 18 months only which they were to achieve the entire export obligation in 5 years. The fact is also noted that the Export Oriented Unit was continuously engaged in the export of their final product hence, no conditions of the exemption notification as well as exim policy has been violated by them and therefore, there are no short coming in the impugned order-in-original under challenge. Appeal dismissed.
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2023 (4) TMI 1069
Extended period of limitation - determination of value after claiming abatement of 35%, even after the same was revised by Notification dated 24.12.2008 - appellant has pleaded that the error in computing the assessable value was bonafide error for which extended period of limitation cannot be invoked - HELD THAT:- In the case of ZENITH COMPUTERS LTD. VERSUS UNION OF INDIA [ 2003 (12) TMI 62 - HIGH COURT OF JUDICATURE AT BOMBAY] , Hon ble Bombay High Court has held that the period of limitation prescribed under the Rule 6 has nothing to do with the contract regarding the export but it essentially refers to the date of actual export and admittedly, the applications were filed beyond the period of sixty days from the date of each of the exports. In the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. PETER MILLER PACKERS [ 2015 (3) TMI 737 - MADRAS HIGH COURT] , Hon ble Madras High Court has held that The element of mens rea is one of the components that will be relevant for the purpose of invoking proviso to Section 11A of the Central Excise Act. In the present case, merely pleading ignorance of law, the assessee cannot wriggle out of the duty liability for the larger period. The Tribunal has been kind enough to remand the matter for de novo adjudication on a claim of Modvat credit and that has been allowed. However, the fact remains that duty liability has to be worked out for the larger period if the ingredients of Section 11A has been made out. In view of the above decisions of Hon ble Bombay High Court and of Hon ble Madras High Court, we do not find any merits in this appeal. Appeal dismissed.
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2023 (4) TMI 1068
Adjustment of Excess Excise duty paid - whether adjustment of duty excess paid during the period of provisional assessment is permitted at the time of finalisation of assessment in terms of rule 7 of the Central Excise Rules when the appellants had neither take the refund of said excess nor had ever availed Cenvat Credit of duty liability discharged? HELD THAT:- The Larger Bench of this Tribunal in the case of HINDUSTAN ZINC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2015 (11) TMI 953 - CESTAT NEW DELHI (LB)] has decided this issue - It was held that If on finalisation of assessment, assessee required to pay shortfall duty during a particular period and denied excess payment made during another period of same financial year, entire purpose of keeping assessment provisional would become a futile exercise. In that case, it becomes a case of short paid/assessed duty for that period and ending with recovery of same. Further, adjustment of excess paid duty against short payment not to be denied on taking of Cenvat credit by sister unit inasmuch as it is assessee s total duty liability after adjustment of short paid duty with excess paid duty which would be available as credit to other unit. The Tribunal, Mumbai Bench in the case of M/S MERCEDES-BENZ INDIA PVT. LTD. VERSUS CCE, PUNE-II [ 2016 (10) TMI 79 - CESTAT MUMBAI] also held that Adjustment of excess duty paid is allowable at the time of finalization of provisional assessment even when goods supplied to sister unit, who availed Cenvat Credit. The Tribunal, Mumbai Bench in another case of CENTURY RAYON VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-I [ 2014 (12) TMI 157 - CESTAT MUMBAI] has held Adjustment of excess duty paid against short duty paid is allowable at the time of finalization of provisional assessment if the assessee is able to establish that such excess payment has not been passed on but borne by the assessee. In the present case, Unit II is not even the sister concern. Appellant admittedly has not taken Cenvat Credit. These admissions when are read with above discussed settled legal position, it stands clear that the adjustment of excess duty paid is liable at the time of finalisation of the provisional assessment. No Cenvat Credit ever been taken, admittedly, by the appellant. The question of any unjust enrichment of the appellant does not at all arise. In view of these observations, it is held that the Adjudicating Authorities below have wrongly denied the adjustment of excess duty of the amount of Rs. 2,17,328/- paid by the appellant to the amount of duty confirmed. Appeal allowed.
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CST, VAT & Sales Tax
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2023 (4) TMI 1067
Detention of goods alongwith vehicle - failure to produce any document and failure to explain the manner in which the goods were being transported from Delhi to Haryana - case of tax evasion - levy of tax with penalty - HELD THAT:- The arguments raised by the appellant lack any merit. Admittedly, the goods i.e. kabuli chana kept in 330 bags was being transported by the appellant from Delhi to Kundli, District Sonepat i.e. in the State of Haryana. It has come on record that when the goods were brought from Delhi to State of Haryana, no original Form DVAT-33 which was required to be statutorily issued had been shown by the driver. When the authorized representative of the appellant had appeared before the Detaining Authority, even at that time only photocopy of Form DVAT-33 had been shown which was not found to be complete as neither the serial number of the vehicle in which the goods were transported, signatures of the consignor and consignee nor the goods receipts accompanying the transaction showing the destination of the goods to be delivered were shown. As such, the stand taken by the appellant that the goods were being sent for storage purposes only had not at all been substantiated. It is revealed from the impugned order as passed by the Tribunal that it was only before the First Appellate Authority that some documents issued by one M/s Dhingra Cold Storage were tried to be shown by the appellant though at stage, such document could not be taken into consideration as Section 33 (3) of the Act, 2003 specifically bars acceptance of the same in appeal proceedings. The Tribunal after considering all facts and circumstances had passed a well reasoned order which for the reasons mentioned, calls for no interference - Appeal dismissed.
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Indian Laws
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2023 (4) TMI 1066
Smuggling of huge quantity of contraband - failure to prove that the truck was not being used for any illegal activities - vicarious liability of owner of the truck - HELD THAT:- The basic facts of the case as have been noticed above are not in dispute. The Appellant who is the registered owner of the truck was not arrested from the spot. A case was set up by the prosecution that Joginder Singh and Gurmail Singh were driver and cleaner of the truck. Even they were not arrested from the spot. Their identity was established on the basis of the information furnished to the police party by Ram Sarup (PW-6) and Naresh Kumar (PW-10). However, when appeared in Court, they were declared hostile. Joginder Singh and Gurmail Singh were acquitted. The Appellant is owner of the truck. He was not arrested from the spot. Section 25 of the NDPS Act provides that if an owner of a vehicle knowingly permits it to be used for commission of any offence punishable under the NDPS Act, he shall be punished accordingly. In the case in hand, the prosecution has failed to produce any material on record to show that the vehicle in question, if was used for any illegal activity, was used with the knowledge and consent of the Appellant. Even presumption as provided for under Section 35 of the NDPS Act will not be available for the reason that the prosecution had failed to discharge initial burden on it to prove the foundational facts. In the absence thereof, the onus will not shift on the accused. The issue was considered by this Court in BHOLA SINGH VERSUS STATE OF PUNJAB [ 2011 (2) TMI 1350 - SUPREME COURT] . It was opined that unless the vehicle is used with the knowledge and consent of the owner thereof, which is sine qua non for applicability of Section 25 of the NDPS Act, conviction thereunder cannot be legally sustained. The case sought to be set up by the prosecution was that the driver and the cleaner of the truck made extra judicial confession before Balwan Singh s/o Chatar Singh. Ram Mehar who is the author of the FIR appeared as PW-8. In his statement also, nothing was stated against the Appellant. He also referred to the statement of Balwan Singh s/o Chatar Singh recorded during investigation, who was not produced in evidence. The appellant in his statement recorded under Section 313 CrPC denied all the suggestions. In the entire evidence led by the prosecution, no material was produced against the Appellant to discharge initial burden to prove the foundational facts that the offence was committed with the knowledge and consent of the Appellant. It is a case in which he was not with the vehicle nor was he arrested from the spot when the accident occurred or when truck and contraband were taken into custody - The Trial Court had put entire burden of defence on the Appellant being the registered owner of the vehicle. The Court held that the driver and cleaner of the vehicle being poor will not take risk of smuggling such huge quantity of contraband without the connivance of the owner and it was for the appellant to clear his stand. In the case in hand, the primary error committed by the Courts below while convicting the Appellant is that the onus is sought to be shifted on him to prove his innocence without the foundational facts having been proved by the prosecution. Hence, the conviction of the Appellant cannot be legally sustained. Appeal allowed.
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2023 (4) TMI 1065
Execution of decree - Period of limitation of 12 years - execution application was filed after 12 years from the date of the decree - whether the date on which the compromise decree dated 26.04.1960 was entered into in Civil First Appeal No.11/1959 or the date when the final decree was passed by the Civil Court in Suit No. 30 A/87 i.e. 31.03.1994, will be considered for establishing the period of limitation under the Limitation Act, 1963 for instituting execution proceedings? HELD THAT:- The facts of the instant appeal reveal that the cause of action to execute the compromise decree arose when the premises were taken away from the possession of the Decree holders (Respondents Nos.1 to 4). The dispossession of the Respondents was confirmed vide final decree passed by the Civil Court in Suit No.30 A/87 when rights in favor of third person, namely, Mr. Malik Ram, were finally determined. Hence in our considered view, the cause of action would arise only on 31.03.1994. The prerequisite for enforceability of clause 6 is the dispossession of the defendants, de facto or de jure. The limitation period would commence only with the decree becoming enforceable and thus is capable of being executed. In the instant case, the relevant date from which the period of limitation will begin only with effect from 31.03.1994. The period of twelve years is computable from the said date, hence the Execution Application made on 17.07.1995 is within Limitation. It is also noted that during the pendency of this appeal, the opportunity for compromise was given to the parties. But, no compromise could be arrived at - the Courts below rightly held that the Execution Application is within Limitation. Appeal dismissed.
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