Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 4, 2023
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Companies Law
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G.S.R. 242 (E) - dated
31-3-2023
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Co. Law
Companies (Indian Accounting Standards) Amendment Rules, 2023.
Customs
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28/2023 - dated
1-4-2023
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Cus
Exemption to consumables for manufacture of Gem & Jewellery or cut & polished diamonds to holders of Replenishment and Licence and gold and silver imported under specified schemes - Seeks to amend Notifications of G&J and EOU schemes-reg, 2023
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27/2023 - dated
1-4-2023
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Cus
Exemption for import of fabrics (including interlining) under Special Advance Authorization Scheme under para 4.04A of Foreign Trade Policy, 2023 for manufacture and export of garments.
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26/2023 - dated
1-4-2023
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Cus
Regarding implementation of EPCG Scheme under Foreign Trade Policy, 2023
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25/2023 - dated
1-4-2023
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Cus
Materials imported into India against a valid Duty Free Import Authorisation issued by the Regional Authority - Implementation of Duty Free Import Authorisation Scheme under Foreign Trade Policy, 2023
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24/2023 - dated
1-4-2023
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Cus
Implementation of Advance Authorisation Scheme for export of prohibited goods under Foreign Trade Policy, 2023 - exempts materials imported into India against an Advance Authorisation issued under Foreign Trade Policy meant for export of a prohibited item.
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23/2023 - dated
1-4-2023
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Cus
Implementation of Advance Authorisation Scheme for annual requirement under Foreign Trade Policy, 2023, 2023 - Exempts materials imported into India, against a valid Advance Authorisation for Annual Requirement with actual user condition issued by the Regional Authority from the whole of the duty of customs leviable thereon.
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22/2023 - dated
1-4-2023
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Cus
Implementation of Advance Authorisation Scheme for deemed export under Foreign Trade Policy, 2023, 2023 - Exempts materials required for the manufacture of the final goods when imported into India.
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21/2023 - dated
1-4-2023
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Cus
Implementation of Advance Authorisation Scheme under Foreign Trade Policy, 2023 - Exempts materials required for the manufacture of the final goods when imported into India, from whole of the duty of customs leviable thereon.
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25/2023 - dated
1-4-2023
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Cus (NT)
Manner of issue of duty credit for goods exported under the Scheme for Rebate of State and Central Taxes and Levies - duty credit under condition - duty credit ,Cancellation of duty credit, Recovery of amount of duty credit,Recovery of amount of duty credit where export proceeds are not realised
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24/2023 - dated
1-4-2023
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Cus (NT)
Regarding the manner of issue of duty credit for goods exported under the RoDTEP Scheme under Foreign Trade Policy, 2023
DGFT
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02/2023 - dated
1-4-2023
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FTP
Amendment in Export Policy of items under HS Codes 27101241, 27101242, 27101243, 27101244, 27101249, 27101941, 27101944 and 27101949 of Chapter 27 of Schedule 2 of the ITC (HS) Export Policy
Income Tax
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01/2023 - dated
29-3-2023
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IT
Non deduction of income tax u/s 195 - Procedure, format and standards for filling an application in Form No. 15C or Form No. 15D through TRACES notified.
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Denial of credit of TDS - whether the assessee is liable for deposit/payment of the TDS already deducted by the vendee, but not deposited or be given credit of the same? - the assessee should not suffer for the same and due credit of the TDS is to be given to the assessee and action under the provisions of the Act can be taken against the deductor who after deducting the tax has not deposited the same to the credit of the Central Govt. - AT
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TP Adjustment - Interest on delayed receivables - the prime lending rate should not be considered and this reasoning will apply to adopting short term deposit interest rate offered by State Bank of India (SBI) also. The rate of interest would be on the basis of the currency in which the loan is to be repaid. - AT
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Undisclosed income - addition of value of unaccounted assets - search and seizure - It is judicially well settled that when a document is found during the course of search, it has to be relied upon in entirety and there is no discretion available with the assessee or the Department to rely upon a part of the document favourable to it and plead for rejection of the other part which is not favourable to it, or in respect of which no supporting material is found. - AT
Corporate Law
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Anti-Competition Act - Cartelization - Geep Industries is very clearly in a ‘bilateral ancillary cartel’ with the Panasonic, while Panasonic is found to be member of ‘primary cartel’ in the dry cell batteries market. Thus, even though Geep is an extremely small player in the dry cell batteries market which may not be capable of influencing the market in any appreciable manner, the fact that it agrees through the PSA to follow market prices as set by Panasonic makes it clear that such behavior is anti-competitive - AT
Service Tax
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Levy of Service Tax - declared services or not - charging and recovering liquidated damages on account of delay in supply contract and service contract as per written agreement with their supplier - The amount cannot be made liable to tax in the name of it being consideration for providing deemed service. - AT
Central Excise
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Refund claim of pre-deposit - Once the Commissioner (Appeals) has established that the amount in question was a pre-deposit, the legal principle laid down by this Court, which states that the principle of unjust enrichment and Section 11B does not apply to the return of pre-deposits, becomes applicable - HC
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Maintainability of appeal - non-deposit of mandatory 7.5 % pre-deposit - there is absolutely no error in the order passed by the appellant authority in refusing to entertain the appeal on account of mandatory non-deposit of the amount. - HC
Case Laws:
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Income Tax
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2023 (4) TMI 66
Revision u/s 263 by CIT - unexplained cash credit u/s 68 - Tribunal set aside the order passed under Section 263 and remanded the matter back to the PCIT for a fresh decision - While the matter was pending, AO completed the assessment pursuant to the search and seizure operation u/s 153A r.w.s. 143(3) - HELD THAT:- As decided in S.M. Oil Extraction Pvt. Ltd. [ 1990 (10) TMI 33 - CALCUTTA HIGH COURT ] wherein it was held that the Commissioner is entitled for the purpose of exercising his revisional jurisdiction to look into the whole evidence. The Court explained the expression record as used in Section 263 of the Act to be comprehensive enough to include the whole record of evidence on which the original assessment order was based. As held that where any proceeding is initiated in the course of assessment proceedings, having a relevant and material bearing on the assessment to be made and the result of such proceedings was not available with the ITO before the completion of the assessment but the result came subsequently, the revising authority (PCIT) is entitled to look into the search material as it forms part of the assessment records of the particular assessment year. The finding rendered by Tribunal was perfectly justified as in our opinion the PCIT could not have ignored the order passed u/s 153A as being immaterial and irrelevant. Tribunal not stopping with that has also examined as to the exercise undertaken by the AO while completing the assessment u/s 153A and found that the entire records were examined and no adverse inference was drawn against the assessee. Tribunal rightly granted relief to the assessee and the order does not call for any interference. Substantial questions of law are answered against the revenue.
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2023 (4) TMI 65
Net profit estimation - ITAT reducing the Net Profit Percentage from 8% as estimated by CIT (A) to 0.6% - whether Net Profit has arrived at by the Tribunal at 0.6% was just and proper? - HELD THAT:- On going through the order passed by the Tribunal we find that the Tribunal has not only considered the estimation of the Net Profit in respect of the assessee s sister concern but has also taken note of the Net Profit declared by the assessee for the assessment year 2009-2010 to 2011-2012 which were within the range of 0.2% to 0.29% and even in the scrutiny proceeding of the assessee s case Net Profit was estimated below one per cent. Tribunal found on facts that the business during all the years was the same and there was no change and the books of accounts was duly audited and no error was pointed out by the concerned authority. Thus we find that the entire matter is factually correct and no substantial question of law arises for consideration. Hence, the appeal fails and dismissed.
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2023 (4) TMI 64
Revision u/s 263 - CIT considering the date of registration and the date of sale concluded that this cannot be treated as LTCG and has to be taxed as STCG as property is not held for more than three years - claim made by the assessee u/s. 54 needs to be disallowed as deduction u/s. 54 is admissible only on LTCG - HELD THAT:- CIT has ignored the date of agreement of sale entered into by the assessee during the year 2009. As decided in S.R. Jeyashankar [ 2014 (12) TMI 264 - MADRAS HIGH COURT] breach of agreement would only give right to the beneficiary for enforcing the right over the property. We find no reason to differ with the said reasoning. Thus we are of the view that the order of the Ld. Pr. CIT needs to be quashed and allow the appeal of the assessee.
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2023 (4) TMI 63
Validity of reopening of assessment - Reason to believe - as argued reasons recorded for issuance of notice u/s 148 there is no allegation that the assessee had not disclosed fully and truly all material facts necessary for assessment - HELD THAT:- We do not find anywhere in the copy of reasons recorded that there is any allegation upon the assessee regarding not disclosing fully and truly all material facts for completion of assessment which is necessary in the case of reopening beyond the period of 4 years in the case of assessment completed u/s 143(3). Since the case relates to AY 1995-96 and the notice has been issued by the AO on 30.07.2001, we observe from the notice that necessary ingredients, which were required to be mentioned for reopening beyond the period of 4 years has not been mentioned - we uphold that the reasons recorded by the AO for exercising jurisdiction under Section 147 is not in conformity with the provisions of Section 147 - we allow ground raised by the assessee.
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2023 (4) TMI 62
Revision u/s 263 - Relief u/s 90 read with Rule 128 - As per CIT AO has not examined the tax credit vis- -vis sub-rule 8 of Rule 128 and Form No. 67 also not considered - PCIT directed the AO to deny the relief as Form No. 67 was not filed as required under Rule 128(8) - HELD THAT:- As AO has made a detailed enquiry before concluding the assessment under section 143(3) - in so far as relief claimed as per Form No. 67 r.w. Rule 128(8) is concerned, the AO has not examined. It is also a fact that the AO has not followed the Notification No. 9 dated 19.09.2017 issued by the CBDT. Ths the order passed by AO cannot be said that no enquiry was made, in fact, detailed enquiry was made. However, no enquiry was made in respect of Form No. 67 vis- -vis rule 128(8). It cannot be said that the assessment order was totally erroneous and prejudicial to the interest of Revenue. Instead of setting aside the order passed under section 143(3) of the Act and directing the AO to determine the quantum of relief that could be availed under sections 90/91 of the Act and deny relief as Form 67 was not filed as required under Rule 128(8) , PCIT should have been directed the AO to call for the details and decide the issue in accordance with law. PCIT was not correct to direct the AO to deny the relief claimed as per Form No. 67 on the ground that Form No. 67 was not filed in time is not correct. Therefore, we hereby modify the order passed by the ld. PCIT and direct the Assessing Officer to redo the assessment in accordance with law by affording reasonable opportunity of being heard to the assessee without influence of the order passed by the ld. PCIT - Appeal filed by the assessee is partly allowed for statistical purposes.
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2023 (4) TMI 61
Denial of credit of TDS - whether the assessee is liable for deposit/payment of the TDS already deducted by the vendee, but not deposited or be given credit of the same? - HELD THAT:- Revenue cannot deny the TDS credit to the assessee and the only option left for the Revenue is to proceed against the deductor by holding him to be an assessee-in-default. We, therefore, set aside the order of the CIT (A)-NFAC and direct the CPC to give due credit to the assessee. The grounds raised by the assessee are accordingly allowed.
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2023 (4) TMI 60
Computation of capital gains - FMV determination - SRO value as per section 50C should be adopted while computing the capital gains - HELD THAT:- AO has merely relied on the loose sheets seized during the search operations. AO also failed to record any corroborative evidences in his findings with respect to the additions made by him. The fact that the advance received by the assessee is mentioned in the sale deed entered into by the assessee was ignored by the Ld. AO. AO has merely relied on the date of registration of sale deed while making the addition u/s. 50C of the Act which was registered during December, 2016 and January, 2017. Since the agreement to sell has been entered into as early as March 2016, and the consideration agreed and advance of Rs. 80,00,000/- has been received by the assessee, the delay in registering the sale deed, and in the mean time increase in the value for the purposes of Section 50C, shall not alter the agreed consideration. CIT(A) has rightly considered the advances received by the assessee during March 2016 for the sale of 4 plots and accordingly has directed the Ld. AO to adopt the Fair Market Value as on the date of the agreement between the assessee and the vendees. We are therefore in concurrence with the decision of the Ld. CIT(A) and find that no interference is required in the decision of the Ld. CIT(A) on this issue and this ground no.2 raised by the Revenue is dismissed. CIT(A) violated the provisions of Rule 46A by not providing an opportunity to the Ld. AO to examine the fresh evidence - HELD THAT:- CIT(A) in his order has observed that the advance amount was recorded in the sale deeds which was available before the Ld. AO at the time of assessment proceedings. In the absence of any additional evidence filed before the Ld. CIT(A), we find that there is no requirement of complying with the provisions of Rule 46A by the Ld. CIT (A) and hence we find that the Ld. CIT(A) has acted within his powers. Addition towards alleged on-money - AO has relied on the loose sheets as per the screen shot available - HELD THAT:- We find that the loose sheets, extracted as screen shot in the Ld. AO s order, are undated and no details like date of payment or to whom the amount was paid is not mentioned in the loose sheets. Further, the sale deeds executed by the assessee clearly mentions the consideration received and admitted by the assessee while filing the return of income. - We find that the Ld. CIT(A) has relied on the various judicial pronouncements and has deleted the addition made by the Ld. AO in the absence of any corroborative evidence brought in by the Ld. AO. We therefore are of the view that no interference is required in the order of the Ld. CIT(A) on this ground. Addition as Black Money received - AO has relied on the dumb document while making additions - HELD THAT:- CIT(A) again relying on the jurisdictional Bench in the case of Badam Bhogalinga Swamy Others [ 2021 (6) TMI 247 - ITAT VISAKHAPATNAM] has correctly deleted the addition and hence we find no reason to interfere in the order of the Ld. CIT(A) on this ground. Revenue appeal dismissed.
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2023 (4) TMI 59
TP Adjustment - comparable selection - turnover filter - HELD THAT:- We notice that the issue of applying the upper turnover filter of 200 cores has been considered by the coordinate bench in the case of Autodesk India Pvt.Ltd. [ 2018 (7) TMI 1862 - ITAT BANGALORE] - thus we hold that companies listed below whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. TP adjustment towards AMP expenses - TPO held that the AMP expenses incurred by the assessee is a separate international transaction and proceeded to make the TP adjustments towards the same - HELD THAT:- Considering the above facts and respectfully following the decision of the coordinate bench in assessee s own case for AY 2017-18 [ 2022 (9) TMI 1233 - ITAT BANGALORE] we hold that no adjustment is required to be made towards AMP expenses and the same cannot be treated as a separate international transaction when TPO has not otherwise rejected the margins of the assessee in the trading segment. The TP adjustment made in this regard is therefore deleted. Disallowance in respect of employee s contribution to PF - HELD THAT:- We notice that the Hon ble Supreme Court in the case of Checkmate Services [ 2022 (10) TMI 617 - SUPREME COURT] has considered the issue of whether the employees contribution paid before due date for filing the return of income u/s.139(1) whether otherwise allowable u/s.43B, putting to rest the contradicting decisions of various High Court. Thus employees contribution to PF and ESI should be remitted before the due date as per explanation to section 36(1)(va) i.e. on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s.43B. The grounds taken by the assessee on this issue is dismissed.
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2023 (4) TMI 58
TP Adjustment - Comparable selection - application of upper turnover filter - HELD THAT:- We notice that the coordinate bench of the Tribunal in the case BORQS Software Solutions Pvt. Ltd [ 2021 (10) TMI 1351 - ITAT BANGALORE] has considered the issue of TPO failing to apply upper turnover filter and has excluded the following comparable companies on this ground. We notice that in the above decision the Hon ble Tribunal has excluded all the seven comparable companies from the upper turnover filter. Respectfully following the decision of the coordinate bench of the Tribunal we direct the TPO to exclude the above listed companies based on upper turnover filter and recomputed the ALP accordingly. Inclusion of R S Software Ltd., the margins for the assessment years in which the upper turnover filter would fail should be ignored and should not be regarded as comparable. It is ordered accordingly. Exclusion of Rheal Software Pvt Ltd. - We notice that the coordinate bench of the Tribunal in the case of Barracuda Network India Pvt. Ltd [ 2022 (5) TMI 322 - ITAT BANGALORE] has considered exclusion of companies on the ground that related party transactions are more than 15% and has also held that the RPT filter is to be considered on the upper threshold limit of 15% by relying on the decision of the Hon'ble Karnataka High Court in the case of PCIT and Anr. Vs. M.s YODLEE INFOTECH PVT LTD. [ 2018 (6) TMI 1783 - KARNATAKA HIGH COURT] Thus we remit the issue back to the TPO with a direction to verify the RPT transaction of Rheal Software Pvt Ltd and decide the comparability of the company considering the decision above. Exclusion of CG VAK Software and Exports Ltd. - We notice that the coordinate bench of the Tribunal in the case of 3DPLM [ 2014 (12) TMI 612 - ITAT BANGALORE] has held that in the absence of segmental information or details the companies cannot be taken for comparable analysis. As noticed that the assessee has not contended the exclusion of this company before the TPO/DRP - we remit the issue back to the TPO/AO with a direction to consider the issue of exclusion of C G VAK Software and Exports Ltd., afresh. Inclusion of I2T2 India Limited rejected stating that the company fails the turnover filter - We notice that in the case of Huawei Technologies [ 2021 (7) TMI 1401 - ITAT BANGALORE] relied on by the assessee I2T2 was included on that ground that the non-availability of Related Party Transaction (RPT) in the annual report cannot be a reason for exclusion. It is also noticed that in the current year, the turnover of the company is less than Rs.1crore and fails the lower turnover filter. We therefore uphold the exclusion of I2T2. Computation of net margin at the entity level by the TPO - TPO rejected the segmental financials of the assessee and worked out the entity level margins of the assessee while arriving at the TP adjustment for the reason that the cost allocated are not proportionate to the revenue reported in each of the segments - HELD THAT:- TPO had stated that the head count of cost allocation basis has resulted in skewed results and that the assessee has not furnished the details of nature of employees under each segment. Considering the decision of the coordinate Bench and the facts of the present case, we remit the issue back to the TPO/AO for considering the issue afresh keeping in mind the ratio laid down by the coordinate Bench in the case of Cisco Systems India Pvt. Ltd. [ 2014 (11) TMI 849 - ITAT BANGALORE] The assessee is directed to furnish required details and cooperate with the proceedings. Interest on delayed receivables - TPO considered the outstanding receivable as a separate international transaction and charged notional interest using 6 months LIBOR + 450 basis points which worked out to 5.386% and arrived at TP adjustment - HELD THAT:- As decided in case of Barracuda [ 2022 (5) TMI 322 - ITAT BANGALORE] determination of ALP in respect of the international transaction of giving extended credit period for receivables should be directed to be examined afresh by the AO/TPO on the guidelines laid down, after affording Assessee opportunity of being heard - the prime lending rate should not be considered and this reasoning will apply to adopting short term deposit interest rate offered by State Bank of India (SBI) also. The rate of interest would be on the basis of the currency in which the loan is to be repaid. Thus we remit the issue back to the TPO/AO for bench marking of the transaction of interest on delayed receivables and recomputation of ALP.
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2023 (4) TMI 57
Undisclosed income - addition of value of unaccounted assets - addition adopting the figure of unaccounted assets offered by the assessee in the return of income filed under section 153A - DR supporting the order of AO stating that the figure of unaccounted assets /unaccounted capital/ unaccounted liability/ unaccounted sales have been given by the assessee itself and the AO has rightly adopted the highest figure as unaccounted income - CIT- A deleted the addition - HELD THAT:- In the instant case, we find that the AO has not raised any doubt on various figures shown for undisclosed and unaccounted assets/liabilities/capital/sales or the method of computation of undisclosed income. It is judicially well settled that when a document is found during the course of search, it has to be relied upon in entirety and there is no discretion available with the assessee or the Department to rely upon a part of the document favourable to it and plead for rejection of the other part which is not favourable to it, or in respect of which no supporting material is found. We, therefore, under the given facts and circumstances of the case and also the ratio laid down in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] find no inconsistency in the finding of the ld. CIT(Appeals) deleting the addition made by the ld. Assessing Officer wrongly adopting the figure of unaccounted assets in place of the unaccounted capital offered by the assessee in the return of income filed under section 153A of the Act. Grounds No. 1 to 3 raised by the Revenue are dismissed.
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2023 (4) TMI 49
Disallowance of Excise duty on vehicles and R D cess on the vehicles - HELD THAT:- We find that the Co-ordinate Bench of the Tribunal in the earlier assessment year AY 2009-10 [ 2018 (10) TMI 1398 - ITAT DELHI] have considered the identical grounds raised by the assesses in respect of the disallowance in respect of excise duty and R D Cess on vehicles u/s 43B of the Act and granted relief to the assessee. The Revenue has not brought to our notice any other binding precedents contrary to the decisions of the Tribunal in support of the impugned additions. Disallowance u/s 43B in respect of Custom duty paid in respect of inputs imported by the assessee company - HELD THAT:- As gone through the orders of the authorities below. The Revenue has not disputed the fact that the identical issue in earlier years has been decided in favour of the assessee by the Co-ordinate Benches of the Tribunal [ 2009 (5) TMI 1013 - ITAT DELHI] , [ 2012 (10) TMI 1113 - ITAT DELHI] , [ 2013 (8) TMI 594 - ITAT DELHI] , [ 2015 (9) TMI 20 - ITAT DELHI] , [ 2016 (5) TMI 1469 - ITAT DELHI] , [ 2017 (11) TMI 1632 - ITAT DELHI] , [ 2018 (10) TMI 1398 - ITAT DELHI] and the same has been affirmed by the Hon ble Jurisdictional High Court [ 2017 (12) TMI 536 - DELHI HIGH COURT] , [ 2017 (12) TMI 634 - DELHI HIGH COURT] . The Revenue has not brought any contrary binding precedents in support of its contention. Therefore we do not see any good reason to affirm the finding of lower authorities, the Ground Nos.3.5 raised by the assessee is thus allowed and the AO is hereby directed to delete the impugned disallowance. Disallowance in respect of Excise duty actually paid on purchased inputs included in RG 23A Part II - HELD THAT:- We find that under the identical facts, the Co-ordinate Bench of this Tribunal in assessee s case for the Assessment Year 2009-10 [ 2018 (10) TMI 1398 - ITAT DELHI] had remanded back the issue to the file of the AO to verify the claim as per direction of the Hon ble High Court and if found in order deduction be allowed for the amount forming part of RG 23A to the extent, it has been directly paid to custom authorities. The Revenue has not brought to our notice any other contrary binding precedent. Therefore, for the same reasoning, the issue is restored to the file of the AO to verify and give relief of set off of duty forming part of RG 23A balance to the extent duty directly paid to custom authorities in the light of the judgment of Hon ble High Court. Thus, Ground raised by the assessee are allowed for statistical purposes. Disallowance in respect of custom duty paid to be adjusted against excise duty payable on finished products and disallowance in respect of custom duty of the goods in transit/under inspection u/s 43B - HELD THAT:- The similar issues were decided for the Assessment Year 2009-10 and also in earlier assessment years. Therefore, respectfully following the binding precedents as relied by the assessee(supra), Ground Nos. 3.8 to 3.9 raised by the assessee are allowed. The AO is hereby directed to delete the impugned disallowance of custom duty. Disallowance of deduction us 43B - custom duty paid and included in valuation of closing stock - HELD THAT:- Revenue has not disputed the fact that similar issue also arose for consideration of the decision of the Co-ordinate Bench of the Tribunal in assessee s own case wherein the Tribunal has respectfully following the binding precedents as cited supra had decided the issue in favour of the assessee. The Revenue has not brought any contrary binding precedents to our notice to take a different view. Therefore, we do not see any reason to deviate from the finding of Co-ordinate Bench of the Tribunal. Decided in favour of assessee. Custom duty and the sales tax paid under protest - whether deduction u/s 43B of the Act, is allowable to the assessee even if the statutory dues related to custom duty and sales tax are paid under protest? - HELD THAT:- Under the identical facts, the Co-ordinate Bench of this Tribunal in the case of Euro RSCG Advertising (P) Ltd. [ 2012 (7) TMI 525 - ITAT MUMBAI] has held that service tax liability alongwith interest paid on show cause notice issued by Service Tax Authority is allowable deduction u/s 43B of the Act in the year under in which the payment was made irrespective of the fact that such demand was paid under protest and the matter was sub-judiced to the authority. Further, Ld. Counsel for the assessee has pointed out that the Tribunal has decided the issue in favour of the assessee in assessee s own case - Ground Nos. 3.11 to 3.12 raised by the assessee are allowed. Disallowing the claim of the assessee for withdrawal of add back as made in the computation of taxable income being the amounts disallowed in earlier years u/s 43B - HELD THAT:- Therefore, taking a consistent view the issue is hereby restored to AO to decide the issue in the light of directions of the Tribunal in AY 2006-07 [ 2015 (9) TMI 20 - ITAT DELHI] in Asseesse s own case. The grounds of appeal are allowed for statistical purpose. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We do not agree to this submission of assessee regarding disallowance of administrative expenses as per Rule 8D. Looking to the volume of investment made by the assessee company, the assessee company was required to give justification for the suo-moto disallowance made in this regard as to why the disallowance as per Rule 8D of the Rules, should not be made. The contention of the assessee is that for making investment the surplus interest free fund was utilized and no separate infrastructure is required to maintain for overseeing the transaction made out of surplus fund. We are of the considered view that the assessee was required to justify the suo-moto disallowance as to why the provision of Rule 8D of the Rules should not be made applicable on the facts of the present case. Therefore, we restore this issue to the file of AO for a limited purpose to verify the claim of the assessee regarding administrative expenses incurred for maintaining such huge investment. Thereafter, AO would make disallowance as per law. Thus, Ground Nos. 5 to 5.6 raised by the assessee are partly allowed for statistical purposes. Nature of expenses - expenditure incurred on account of royalty holding same to be capital expenditure - HELD THAT:- The Tribunal in [ 2018 (10) TMI 1398 - ITAT DELHI] was pleased to decide the issue in favour of the assessee. Disallowance of R D cess on royalty holding that the cess also partake character of the royalty without appreciating that royalty was paid to SMC wherein R D cess was paid to the Indian Government - HELD THAT:- We find that identical ground was raised by the assessee in the earlier AY in [ 2018 (10) TMI 1398 - ITAT DELHI] decided the issue in favour of the assessee. Disallowance of excise duty paid by the assessee during the relevant previous year - HELD THAT:- As we direct the Assessing Officer to allow the deduction representing the excise duty paid by the appellant during the relevant previous year. Disallowance being the expenditure provided on estimated basis on account of Foreseen Price Increase ( FPI ) - HELD THAT:- We find that identical ground was raised by the assessee in the earlier AY in [ 2018 (10) TMI 1398 - ITAT DELHI] for AY 2009-10. The Co-ordinate Bench decided the issue in favour of the assessee. Disallowance of expenditure incurred on account of discharging Corporate Social Responsibility ( CSR ) - HELD THAT:- As decided in assessee own case the expenditure has to be allowed because ultimately the assessee was publicizing its product at the prominent places by maintaining them such as parks and this has direct impact on the sales promotions of the assessee company. Allowance of club expenditure confirmed. Treating gains from sale and purchase of mutual funds as business income as against the same being declared under the head capital gains by the assessee - HELD THAT:- Law is well settled now that intent is required to be examined whether it is for investment or otherwise for business of course to arrive at any conclusion certain factors need to be kept in mind. If such factors point towards business activity certainly then any surplus arising would partake character of business profit however, if it for parking surplus fund or is mandatorily made under government policy or otherwise then it will fall in category of investment. Therefore, Considering the totality of the facts, to verify the claim of the assessee that the transaction in question are pure investments by the assessee, the impugned disallowance is hereby set aside and the issue is restored back to the file of AO for decision afresh. The AO would consider all the objections of the assessee in the light of binding precedents. Disallowance of provision for warranty - HELD THAT:- We respectfully following the judgement of Hon ble Jurisdictional High Court in assessee s own case [ 2011 (9) TMI 1240 - DELHI HIGH COURT] for the AYs 1998-99 and 1997-98. Therefore, we hereby, direct the AO to allow the claim of the assessee and delete the addition. TDS u/s 195 - disallowance of purchases on account of non-deduction of tax from payment made to SMC by invoking the provision of section 40(a)(i) - HELD THAT:- After considering the totality of facts and in the light of the judicial pronouncements we find merit in the contention of the assessee even if it is assumed that there was PE even then correct attribution of profit is required to be made. To meet the ends of justice we hereby set aside the issue to the file of AO. The impugned disallowance is hereby set aside. The AO is hereby directed to decide the issue afresh after adjudicating all the objections of the assessee. The Ground are allowed for statistical purpose only. Transfer pricing adjustment - international transaction of payment of royalty entered into by the appellant - HELD THAT:- Respectfully following the decision of the Co-ordinate Bench of the Tribunal in AY 2009-10 [ 2018 (10) TMI 1398 - ITAT DELHI] in assessee s own case, we hold that the AO was not justified in making transfer pricing adjustment. We hereby, direct the AO to delete the same. Not allowing credit of TDS certificates - HELD THAT:- AO is directed to verify the claim of the assessee regarding additional TDS certificate and give credit of the same in accordance with law. Thus ground of appeal raised by the assessee is hereby, allowed. Deduction of claim made u/s 35(2AB) - HELD THAT:- We find that Ld. DRP followed the decision of Co-ordinate Bench of the Tribunal [ 2014 (4) TMI 531 - ITAT MUMBAI] wherein Co-ordinate Bench of the Tribunal was pleased to direct the AO to verify the fact and to examine whether any order of approval for in house in R D facility was issued for the relevant Assessment Year. The assessee was also directed to provide all necessary evidences if such an order is available and even if it is signed by the Scientist G on behalf of the Secretary, DSIR, has been issued by the prescribed authority. We do not see any reason to deviate from the view of the Coordinate Bench (supra). Moreover, the Revenue has not brought any other binding precedents to our notice therefore, we do not see any reason to interfere in the finding of Ld.DRP, the same is hereby affirmed. Thus, grounds raised by the Revenue are rejected.
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Corporate Laws
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2023 (4) TMI 56
Anti-Competition Act - Cartelization - Seeking grant of Lesser penalty under Section 46 of the Act r/w Regulation 5 of the Competition Commission of India (Lesser Penalty) Regulations, 2009 - Appellant argued that Geep Industries is a very small player in the dry batteries market having a minuscule share of about 1% whereas the three major players viz. Eveready, Nippo and Panasonic controlled about 98% of the said market - HELD THAT:- Sub-section (1) of section 3 of the Act prohibits an enterprise to enter into any agreement in respect of supply of goods or services which causes or is likely to cause an appreciable adverse effect on competition within India and sub-section (2) of Section 3 of the Act lays down that any agreement entered into in contravention of provisions of sub-section (1) of Section 3 of the Act shall be void. Such an agreement, which directly or indirectly determined purchase or sale price of goods is also presumed to have an appreciable adverse effect on competition as per sub-section 3 of section 3 - once an agreement has been entered into by parties which is in contravention of the provision of sub-section 1 of section 3, shall be presumed to have an appreciable adverse effect on competition, and there such behaviour is anti-competitive that would invite penalty under section 27 of the Act. Geep Industries is very clearly in a bilateral ancillary cartel with the Panasonic, while Panasonic is found to be member of primary cartel in the dry cell batteries market. Thus, even though Geep is an extremely small player in the dry cell batteries market which may not be capable of influencing the market in any appreciable manner, the fact that it agrees through the PSA to follow market prices as set by Panasonic makes it clear that such behavior is anti-competitive, and Geep Industries being in contravention of Section 3 (1), (2) and (3) is clearly established, as has been adjudicated by the CCI in the impugned order. The Proviso to Section 27(B) empowers the CCI to impose upon a cartelizing company a penalty which can be upto three times of its profits for each year of the continuance of such agreement or 10% of its turnover for each year of the continuance of such agreement, whichever is higher. It is not disputed that the duration during which the bilateral ancillary cartel was operating by virtue of the PSA was from 01.10.2010 to 30.04.2016 - the quantum of penalty which the Appellant has argued to be very high and disproportionate to its offensive behavior, and sought reduction in the penalty amount. We note that the impugned order, in paragraph 37, records that Geep Industries is a very small player having insignificant market share in the market for dry cell batteries and was not in a bargaining/ negotiating position with PECIN. Thus, the Impugned Order recognizes that while Geep Industries is an offender of Section 3 of the Act, it was neither in a bargaining position vis- -vis PECIN nor having a significant market share to be able to influence prices in the said market. The market share of the Appellant in the relevant market was only about 1%, and it was barely able to function with meagre profit, an exorbitant fine would have been fatal for the business of the Appellant and may have thrown the Appellant out of the market. In the present case, it is noted that the Appellant has been imposed a penalty @4% amounting to Rs. 9,64,06,682/- which is certainly exorbitant looking to the annual turnover and profits of the Appellant from 2010-11 to 2016-17 as is evident from para 34 of the impugned order. In such a situation, it is felt that this would be a mitigating factor with respect to Geep Industries in the present case. While the quantum of penalty should be such that it acts as a deterrent and regulate anti-competitive behaviour. Geep Industries business dynamics and situation in the market to be such that it was neither in a negotiating strength vis- -vis PECIN nor having a market share that could actually influence the price in the said market. In view of such a situation, and fully conscious of the fact that Geep Industries has turned losses in the first three years under review by CCI of its anti-competitive behavior. The penalties imposed on the respective directors, officers and employees as included in Table-6 in para 43 of the impugned order are commensurate with their offensive behavior as they were the persons responsible for entering into PSA and being knowledgeable persons were supposed to have knowledge and understanding of law in relation to behaviour of corporate entities in a market. Therefore, the penalties imposed on Ms. Pushpa M, Mr. Joeb Thanawala, and Mr. Jainuddin Thanawala by the Impugned Order need no modification. Appeal allowed.
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Insolvency & Bankruptcy
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2023 (4) TMI 55
Initiation of CIRP - existing of pre-existing dispute or not - NCLT admitted the dmitted an application filed u/s 9 - HELD THAT:- It is true that under the provisions of Code if Adjudicating Authority is satisfied with pre existing dispute at the time of entertaining an application filed under Section 9 of the Code there is no reason to initiate the same or admit the application. However, law is settled on the point that there must be pure pre-existing dispute. Meaning thereby that genuine pre-existing dispute must exist in rejecting an application Section 9 of the code. In the present case it is reflected from inspection report of SGB Infra Ltd dated 16.12.2019 which is at page 147 that the Corporate Debtor was asked by the SGB Infra Ltd to remove the flooring. This fact is itself enough to draw an inference that the Corporate Debtor had accepted the delivery of granite slabs made by the Operational Creditor without raising any dispute or objection. Otherwise the Corporation Debtor would have rejected the entire materials at the time of unloading of the same. However, it is clear that the granite slabs supplied by the Operational Creditor were utilised by the Corporate Debtor and had placed the same in the premises of Airport Authority of Jaipur. There may be plausible reasons for SGB Infra Ltd to ask the Corporate Debtor to remove the flooring but fact remains that the Corporate Debtor had accepted the granite slabs supplied by the Operational Creditor without raising any dispute or objection. There is no reason to accept as if there was pre-existing dispute in between the Operational Creditor and Corporate Debtor. Besides this the Operational Creditor before the Adjudicating Authority has already taken a plea that he has filed an application under section 340 of Cr PC in respect of placing and using a document by committing forgery and interpolation and as such there are no ground to interfere with the impugned order nor there are any defect in the said impugned order. Appeal dismissed.
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Service Tax
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2023 (4) TMI 54
Levy of Service Tax - declared services or not - charging and recovering liquidated damages on account of delay in supply contract and service contract as per written agreement with their supplier - applicability of Circular dated 3.08.2022 - HELD THAT:- This issue is no more res integra. This Tribunal in the case of Steel Authority of India Ltd. [ 2021 (7) TMI 1092 - CESTAT CHENNAI] has held activities, therefore, that are contemplated under section 66E(e), when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity. The decision rendered in appellants own case vide Final Order No. 50879/2022 dated 20.09.2022 in Service Tax Appeal No. 50080 of 2019 [ 2022 (9) TMI 1005 - CESTAT NEW DELHI ], however for Bhopal unit with respect to goods and transport service , is also about the same issue holding the receiving liquidated damages due to violation of terms of contract does not amount to any such act as may be called as declared service. The amount cannot be made liable to tax in the name of it being consideration for providing deemed service. Demand set aside - appeal allowed.
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Central Excise
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2023 (4) TMI 53
Refund claim - seeking return of deposit made by the appellants under Section 35F of the Central Excise Act, 1944 - principles of unjust enrichment - violation of principles of natural justice - HELD THAT:- Section 11B the of the Central Excise Act pertains to the refund of duty and interest paid on such duty. If a person seeks a refund of excise duty and interest paid, they may apply for the refund, provided that the principle of unjust enrichment does not apply. This means that the person making the refund claim must not have transferred the burden of payment to the buyers and unjustly enriched themselves - Section 35F of the Central Excise Act states that a specific percentage of the duty or penalty must be deposited before filing an appeal. In the case of Suvidhe [ 1996 (2) TMI 136 - BOMBAY HIGH COURT ], the Division Bench of this Court observed that the amount deposited under Section 35F is not a duty at all but is the deposit of availing a remedy of appeal, and for this amount, Section 11B is not applicable. The Appellate Tribunal, in the present order, has concluded that in an earlier remand proceeding, the Tribunal had directed the Commissioner (Appeals) to re-examine whether the Appellant had passed on the duty burden or not and since this order was not challenged, the issue cannot be considered. However, when the Commissioner (Appeals) re-examined the question upon remand, treated the amount in question as a pre-deposit. The Commissioner's order unequivocally stated that the amounts were towards pre-deposit. Therefore, the factual basis for applying the above mentioned decisions has been established in the present order Once the Commissioner (Appeals) has established that the amount in question was a pre-deposit, the legal principle laid down by this Court, which states that the principle of unjust enrichment and Section 11B does not apply to the return of pre-deposits, becomes applicable - Appeal allowed.
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2023 (4) TMI 52
Maintainability of appeal - non-deposit of mandatory 7.5 % pre-deposit - Infringement of inherent right of appellant to file appeal or not - Section 35G of the Central Excise Act, 1944 - whether the tribunal is justified in insisting on mandatory pre-deposit when nothing was left with the appellant as all the assets and immovable property have been auctioned and the factory was under the orders of liquidation? - HELD THAT:- Section 35F contains specific requirement with regard to the condition of pre-deposit of part of the amount for entertainment of appeal. Since the entertainment of appeal itself is dependent upon pre-deposit of amount specified in this act and there is no provision of exemption, the non compliance of such requirement would clearly render the appeal non-maintainable in law. For the appeal to be entertained, the appellant will have to deposit the amount in terms of the statue. The appellate authority would clearly be justified in refusing to entertain the appeal on account of the failure to deposit the mandatory pre-deposit under the statue. The contention advanced by the appellant that Section 35F is ultra virus also cannot be examined by this Court in exercise of its jurisdiction created under the statue itself. This Court is not exercising its Constitutional jurisdiction under Article 226 of the Constitution of India and being a creature of statue under the Act, the Court would have to abide by provisions contained therein - there is absolutely no error in the order passed by the appellant authority in refusing to entertain the appeal on account of mandatory non-deposit of the amount. The Division Bench judgment of this Court in the case of Writ Tax No. 750 of 2017 [[ 2017 (12) TMI 775 - ALLAHABAD HIGH COURT] ], also would not be of any help to the appellant because this Court was exercising its power under the writ jurisdiction and not under the statue. Appeal dismissed.
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2023 (4) TMI 51
Condonation of delay of 111 days in filing appeal - sufficient cause for delay present or not - Section 35G of Central Excise Act, 1944 - HELD THAT:- Present appeal has been preferred and as such the same may be treated to be filed well within time. Cause shown in the affidavit accompanying the delay condonation application is sufficient. The delay in filing the appeal is condoned. Let the appeal be given regular number. Appeal admitted on substantial question of law.
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2023 (4) TMI 50
Maintainability of appeal - non-deposit of pre-deposit - Section 35F of CEA - HELD THAT:- Appeal admitted on following questions of law: (1) Whether the Hon'ble Tribunal is justified in insisting on mandatory pre-deposit when nothing was left with the appellant. All the assets and immovable properties have been auctioned and the factory was under the orders of Liquidation? (2) Whether the Hon'ble Tribunal is justified in keeping an honest assessee and dishonest assessee on the same footing?
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