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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 8, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Articles GENERAL PROVISIONS FOR DGFT PLACING AN ENTITY ON DENIED ENTITY LIST FINANCE ACT, 2022 – CHANGES IN TDS PROVISIONS News Delhi Customs seize 5.85 kg cocaine, the biggest at any airport in India, on 6th April 2022 night Ten States get additional ₹ 28,204 crore for undertaking power sector reforms Education will act as a bridge between India and Australia, says Shri Piyush Goyal Notifications Companies Law G.S.R. 279 (E) - dated 6-4-2022 - Co. Law Companies (Management and Administration) Amendment Rules, 2022 Customs 20/2022 - dated 6-4-2022 - Cus Amendment to the Notification No. 40/2015-Customs dated 21.07.2015 to substitute the name of M/s International Institute of Diamond Grading & Research India Pvt Ltd by M/s De Beers India Pvt Ltd GST - States G.O. Ms. No. 8 - dated 31-3-2022 - Puducherry SGST Amendment in Notification G.O. Ms. No. 26, dated 13th March, 2019 G.O. Ms. No. 2/2022-Puducherry GST (Rate) - dated 31-3-2022 - Puducherry SGST Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC G.O. Ms. No. 1/2022-Puducherry GST (Rate) - dated 31-3-2022 - Puducherry SGST Amendment in Notification G.O. Ms. No. 1/2017-Puducherry GST (Rate), dated 29th June, 2017 G.O. Ms. No. 6 - dated 30-3-2022 - Puducherry SGST Amendment in Notification G.O.Ms.No. 9, dated the 1st April, 2020 S.O. 18/P.A.5/2017/S.168/PGSTR/2017/R.61/2022 - dated 29-3-2022 - Punjab SGST Specifies the conditions for furnishing the return in FORM GSTR-3B electronically through the common portal for the month of July, 2017 Income Tax 28/2022 - dated 6-4-2022 - IT Income-tax (8th Amendment) Rules, 2022 Circulars / Instructions / Orders DGFT 02/2015-20 - dated 7-4-2022 Amendment in details of an authorized agency under Appendix 2E of FTP, 2015-2020 Highlights / Catch Notes GST Demand of tax alongwith interest and penalty - absence of required documents at the stage of interception of the goods and physical verification - In view of the lack of enquiry and lack of reasonable doubt, the continued seizure and confiscation as also the demand of tax and penalty is based solely on presumptions and conjectures. While the mistake claimed by the petitioner gave rise to the valid suspicion with the revenue authorities inside State of U.P. as to the genuineness of the transaction as an inter-state sale claimed (at that stage orally), however, upon furnishing of the original tax invoices at the stage of the show cause notice itself, initial onus that rested on the assessee was discharged. - HC Visit to Get Source It is settled law that if a public functionary acts maliciously or oppressively and the exercise of power results in harassment and agony then it is not an exercise of power but its abuse. No law provides protection against it. Harassment by public authorities is socially abhorring and legally impermissible which causes more serious injury to society. In modern society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention for compliance of order of this Court, linger on leaving the petitioner to run from one end to other with no result. Therefore, award of compensation for unauthorised, arbitrary and illegal detention of the truck of the petitioner by the respondent authorities would not only compensate the petitioner for loss suffered by him but it would also help in improving work culture and public confidence in rule of law. - HC Visit to Get Source Cancellation of registration of petitioner - petitioner firm express their willingness to pay the defaulted tax amount - Although there may be an inherent power of the Court under Article 226 of the Constitution of India to use a discretion but at the same time when it is statutorily provided by the departmental authorities that the maximum permissible installments be 36 (thirty six), the Court ought not to randomly extend such installments beyond 36 (thirty six) in the guise of exercising discretionary power but at the same time, it is also noted that if further installments are not allowed to the petitioner firm, they would be unable to pay the tax due and it may result in a sustenance of the order of cancellation of their registration. If it is so, there would be an end of their business in the present form that they are undertaking and it would also be the end of the Department to have any tax from the petitioners in the form of the present business any further. - HC Visit to Get Source Income Tax Notice in name of the transferor or amalgamating company - corporate death of an entity upon amalgamation - Curable defect u/s 292B - Amalgamated company through its representatives participated in each proceedings - This Court notes and holds that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. - in the facts of this case, the conduct of the assessee, commencing from the date the search took place, and before all forums, reflects that it consistently held itself out as the assessee. - SC Visit to Get Source Reopening of assessment u/s 147 - It is apparent that the respondent has invoked the provisions of Section 150 of the IT Act for issuing the impugned notices. This invocation was in turn based on an order dated 16.01.2013 made by CIT (Appeals). This order dated 16.01.2013 contains no direction as contemplated by Section 150 of the IT Act. Even assuming that this order dated 16.01.2013 contains a finding affecting the petitioners, it is apparent that such a finding came to be recorded without granting the petitioners any opportunity of being heard. Such finding, therefore, was not only in breach of principles of natural justice and fair play, but also contrary to Explanation 3 to Section 153 of the IT Act and could not have formed the basis for invoking the provisions of Section 150 of the IT Act. - HC Visit to Get Source Interest on refunds u/s 244A - Having availed the time for rectifying the defects and claiming interest for the defect rectification time is unavailable. Such an interpretation does not fit into the requirement of filing a return fully compliant with the order of assessment, levy of interest, refund etc. The period taken by the assessee for curing the defects cannot be excluded while calculating interest; then, for no fault of the Department, the Department is called upon to compensate by way of interest. - HC Visit to Get Source Disallowance of deduction of commission expenses - Although a steep rise of an expenditure during a year would raise serious doubts as regards the genuineness of the claim for deduction of the same by the assessee, but then, as observed by us hereinabove, the allowability or not of the same has to be tested as per the mandate of Section 37 of the Act; and not on the touchstone of satisfaction of the “benefit test” as had been done by the A.O in the present case. - AT Visit to Get Source Disallowance of interest u/s 36(1)(iii) - proof of sufficient cash generation to advance loans - CIT(A) deleted the impugned additions - Assessee is successful in establishing that there was sufficient cash generation to make the aforesaid investments. - In the present case, the loans have been advanced in furtherance of assessee’s business interest and the assessee has sufficient cash generation to fund those advances. - AT Visit to Get Source Disallowance of expenditure claimed under the head "Business" - proof of commencement of business - the generation of actual business income was not an essential element to allow the business expenditure. - What is required to be seen is whether one of the essential activities for the carrying on of the business of the assessee company as a whole was or was not commenced. When a business is established and is ready to commence, then it can be said that business has been set-up. The business would be set-up when the necessary infrastructure was acquired by the assessee and the assessee started paying salaries and allowance of the experts. - AT Visit to Get Source Exemption u/s 11 - Violation of provisions of Section 13(1 )(c) and 13(1)(d) - loans and advances to interested persons - We are of the considered view that the learned CIT appeal has been wrong interpretation of provisions of section 13(1)(d) and 13 (3) of the Act, qua the peculiar facts of the instant case. In our view, the appellant trust has violated the provisions of section 13(1)(c) and 13(1)(d) of the Act. Thus, the appellant is not entitled for exemption u/s 11 of the Act to that extent. - AT Visit to Get Source Addition made by the AO by treating the agriculture income as income from other sources - The genuineness of the additional document filed by the assessee has nowhere been doubted. AO in his order has himself admitted the agriculture income per hectare, therefore we are of the view that the assessee should not be deprived of the benefit available to him merely on the reasoning that the assessee failed to furnish the correct information during the proceedings. Accordingly, we hold that income earned by the assessee from the agricultural activity. - AT Visit to Get Source Income deemed to accrue or arise in India - Royalty receipt - All the equipments and machines relating to the service provided by the assessee are under its control and are outside India and the subscribers do not have any physical access to the equipment providing system service which means that the subscribers are only using the services provided by the assessee. - the subscriber fees received by the assessee do not fall within the ambit of royalty u/s 9(1)(vi) of the Act nor under Article 12 of the India – Singapore DTAA. - AT Visit to Get Source Disallowance u/s 10(25) - Claim of interest income - A perusal of all these documents would reveal that the assessee has erroneously calculated the alleged interest income which is not supported by any documentary evidence. On the other hand, the interest income discernable from the LIC Certificate is of a lesser amount. Therefore, we deem it appropriate to remit this issue to the file of the Assessing Officer for a fresh adjudication. - AT Visit to Get Source Addition under section 56(2)(viia) - aggregate FMV of the shares of IHPL and VDPL, exceeding the consideration added as Income from Other Sources - - The Rules in this regard contained in section 11UA are already reproduced by us earlier. The same clearly provide for taking the book value of shares as in the balance sheet for the computation. The same was amended by the Income Tax Rules 2017 with effect from 1.4.2018 where instead of book value, fair market value of shares is mentioned. The Act does not provide that this amendment is retrospective. It is clearly mentioned that this amendment is with effect from 1.4.2018. Hence, Assessing Officer’s adoption of fair market value for making the computation which is not in accordance with the extant provisions has rightly been deleted by the learned CIT(A). - AT Visit to Get Source Undisclosed investment - Addition based on loose sheet found in search - if ₹ 10.10 crores is added in the hands of the assessee, as done in the impugned assessment, the project cost and the work-in-progress have to be enhanced by that amount, and consequently the profit would go down or the project would end up in loss and that the effect of addition made in the hands of the assessees firm as made in the assessment order would get neutralized/nullified over the period of the project. On this count also the addition made is not correct. - AT Visit to Get Source Disallowance of foreign travelling expenses incurred by the Directors of the company to China, Germany and other countries - having regard to entire factual scenario and the nature of business assessee’s business i.e. being pharmaceutical company, we are of the view that impugned foreign travel expenses incurred by the assessee are genuine requirement and for business purpose, and therefore, the impugned addition is directed to be deleted. - AT Visit to Get Source Customs Interpretation of statute - Section 108 as well as Section 114(i) of the Customs Act, 1962 - smuggling - psychotropic substance - Alprazolam - fictitious and non-existing companies - scope of appeal u/s 130 of CA, 1962 - It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained on the confessional statement. - The statement made before the customs officials is not a statement recorded under Section 161 of the Code of Criminal Procedure, 1973 and, therefore, it can be said to be a material piece of evidence collected by the customs officials under Section 108 of the Customs Act. - HC Visit to Get Source 100% EOU - validity of demand u/s 28A - Heading of Section 28A gives ‘power’ not to recover duties not levied or short levied as a result general practice, Section 28 carries the heading “recover of duties not levied or not paid or short levied or short paid or erroneously refunded” - It is found that the demand has been made under a wrong provision and hence the same has become not enforceable. - It is clear that the Customs Authorities lack jurisdiction - AT Visit to Get Source Indian Laws Dishonor of Cheque - drawer of the cheque versus authorised signatory - One can easily visualise the object of Section 138 of the Negotiable Instruments Act, 1881, will be defeated, If the proposition canvassed by the petitioner is held legally valid. Fraudsters will open the Bank Account in the name of Proprietor concern by one individual and another individual will be nominated as Authorised Signatory. Allow the cheque drawn by the authorised signatory gets bounced and pleads that he is only the drawer of the cheque, but not the person maintaining the account. - HC Visit to Get Source Service Tax Levy of Service Tax - rendering cleaning service mostly to non- commercial organizations, government hospitals, educational institutes - As the cleaning service has been exempt from payment of service tax in terms of the negative list to the Notification No. 25/2012- ST dated 20 June 2012, therefore, the appellant is not liable to pay service tax on cleaning services - If the same is excluded from the taxable service quantify by the Adjudicating Authority on the basis of gross value of services shown by the appellant in balance sheet, the appellant has paid service tax for supply of the para-medical services i.e. manpower recruitment and supply agency service. - AT Visit to Get Source Central Excise CENVAT Credit - inputs - goods which is used even not in the manufacture directly but even if it is used in relation to the manufacture and indirectly, the said goods qualify as inputs - Therefore, in the present case all the goods which are specialized goods used for storage and safety of the gold, these are considered to be inputs used in relation to the manufacture of the final product i.e. gold indirectly - credit allowed on all inputs. - AT Visit to Get Source Case Laws: GST 2022 (4) TMI 352 Demand of tax alongwith interest and penalty - absence of required documents at the stage of interception of the goods and physical verification - goods imported into the State of U.P. in contravention of law or not - Section 20 of the Central Goods and Services Tax Act 2017 and Section 129(3) of the Uttar Pradesh Goods and Services Tax Act 2017 - HELD THAT:- There is no dispute to the fact that the documents that were produced by the petitioner though at the stage of the show cause notice were original tax invoices issued by the petitioner. No enquiry was made to doubt the genuineness of such tax invoices or to doubt the date of issue of such invoices. Thus, all tax invoices produced by the petitioner to cover the disputed goods are dated 31.07.2021. No enquiry appears to have been made from the revenue authorities in the State of Punjab to confirm if the transactions were genuine. Then, it is not the case of the revenue that the goods found transported were different from the goods disclosed in the tax invoices produced by the petitioner. No enquiry was conducted by the respondent authorities either from the purchasing dealers or the Assessing Authority to doubt the transaction at the end of the consignee. In view of the lack of enquiry and lack of reasonable doubt, the continued seizure and confiscation as also the demand of tax and penalty is based solely on presumptions and conjectures. While the mistake claimed by the petitioner gave rise to the valid suspicion with the revenue authorities inside State of U.P. as to the genuineness of the transaction as an inter-state sale claimed (at that stage orally), however, upon furnishing of the original tax invoices at the stage of the show cause notice itself, initial onus that rested on the assessee was discharged. The petitioner is a registered dealer. He has issued tax invoice after charging Integrated Goods and Services Tax. That evidence being undoubted, the seizure and confiscation and consequent demand of tax and penalty is based on no cogent material and evidence - though the detention did not suffer from any illegality, however, the further orders of the seizure etc. are found to be not based on any material or evidence on record. Petition allowed. 2022 (4) TMI 351 Seeking release of detained goods alongwith the vehicle - allegation is that some of the goods loaded in the truck are over and above the goods covered by invoices - Section 130 of the CGST/UPGST Act, 2017 - order of Confiscation passed without affording any opportunity of hearing to the petitioner - violation of principles of natural justice - HELD THAT:- Once the order of confiscation dated 29.11.2020 and the order of first appellate authority dated 28.06.2021 were quashed by this Court by judgment dated 15.11.2021, the order of confiscation stood eclipsed from the very date of issuance. There is no order of confiscation in existence and, yet, the truck of the petitioner is being unauthorisedly and illegally detained by the respondent no.2. About 18 months have passed since the detention of the aforesaid truck without any valid order for confiscation or any proceeding of confiscation in existence, yet, the truck in question is being detained by the respondent no.2 arbitrarily, illegally and un-authorisedly, resulting in harassment of the petitioner. It is settled law that if a public functionary acts maliciously or oppressively and the exercise of power results in harassment and agony then it is not an exercise of power but its abuse. No law provides protection against it. Harassment by public authorities is socially abhorring and legally impermissible which causes more serious injury to society. In modern society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention for compliance of order of this Court, linger on leaving the petitioner to run from one end to other with no result. Therefore, award of compensation for unauthorised, arbitrary and illegal detention of the truck of the petitioner by the respondent authorities would not only compensate the petitioner for loss suffered by him but it would also help in improving work culture and public confidence in rule of law. Thus, as per pleadings, the petitioner is suffering financial loss of ₹ 5000/- per day since the date of detention of truck, i.e. 14.10.2020. Since determination of loss due to arbitrary, illegal and unauthorised detention by the respondent no.2, is a question of fact, therefore, the Commissioner of Commercial Tax, U.P., Lucknow is directed to determine the financial loss of the petitioner in respect of the truck in question, within three weeks from today after affording opportunity of hearing to the petitioner and pay it to the petitioner within next one week through account payee bank draft. The respondents are directed to release forthwith the truck bearing registration no.HR 55 S 1171 - petition allowed. 2022 (4) TMI 350 Maintainability of petition - availability of alternative remedy of appeal - time limitation - opportunity of hearing provided or not - Violation of of principles of natural justice - HELD THAT:- It is very much evident that an opportunity of hearing is required to be given where a request was made in writing to the person chargeable with taxes and penalty or where any adverse decision is contemplated against such person. Therefore, when the authority contemplates to pass an adverse order against any assessee, an opportunity of hearing is required to be given. Failure to do so amounts to violation of principles of natural justice. In the instant case, admittedly no notice was given to the petitioner before contemplating to pass an adverse order. Such a course of caution is prejudicial to the interest of assessee and the same would be in violation of Sub-Section (4) of Section 75 of C.G.S.T. Act, 2017. The matter to respondent no.1 for consideration of the issues and for passing appropriate orders in accordance with law afresh after giving notice of hearing to the petitioner - Petition allowed by way of remand. 2022 (4) TMI 349 Cancellation of registration of petitioner - petitioner firm express their willingness to pay the defaulted tax amount plus the interest and the penalty as may be assessed by the department but because of the precarious financial condition they are unable to pay it in one go - requesting to be allowed to make the necessary payments in 48 installments - Circular No. 996/3/2015-CX dated 28.02.2015 - HELD THAT:- Although there may be an inherent power of the Court under Article 226 of the Constitution of India to use a discretion but at the same time when it is statutorily provided by the departmental authorities that the maximum permissible installments be 36 (thirty six), the Court ought not to randomly extend such installments beyond 36 (thirty six) in the guise of exercising discretionary power but at the same time, it is also noted that if further installments are not allowed to the petitioner firm, they would be unable to pay the tax due and it may result in a sustenance of the order of cancellation of their registration. If it is so, there would be an end of their business in the present form that they are undertaking and it would also be the end of the Department to have any tax from the petitioners in the form of the present business any further. Without taking any specific view on the aforesaid aspect and in order to provide some succor to the petitioner firm so that they can remain in the business they are presently undertaking, it is provided that the amount of ₹ 2,58,30,801/- plus the interest and the penalty that may be applicable under the law be evaluated by the department and the assessed amount be determined. The said amount be equally divided by 48 and the monthly amount payable by the petitioner firm be determined and communicated to the petitioner. Upon such determination the petitioner firm shall pay the determined monthly installments within the 7th of every month - the determination of the equal monthly installments to be paid by the petitioner firm be determined by the Assistant Commissioner, Guwahati, Division-2 on or before 28.02.2022 and in doing do, the petitioner firm may also be given a hearing and the petitioner firm shall cooperate with the authority. Upon such determination, the requirement of payment shall start from 1st of March, 2022 Petition disposed off. 2022 (4) TMI 348 Seeking grant of Bail - failure to file to file GSTR3B till date - indulging in fraudulent transactions by issuing tax invoices to the registered persons enabling them to utilize the input tax credit by filing Form GSTRIO - non-discharge of tax liability resulting in loss of revenue to State and Central exchequer - HELD THAT:- Taking into consideration the fact that this crime was registered in 2020; petitioner has been languishing in jail from the last 48 days, and police have already sought custody of the petitioner for a period of four days, this Court deems it appropriate to grant bail, on certain conditions. Petitioner Accused No.2 shall be enlarged on bail on his executing a personal bond for a sum of ₹ 20,000/- with two sureties for a like sum each to the satisfaction of XII Additional Chief Metropolitan Magistrate, Nampally - petition allowed. Income Tax 2022 (4) TMI 347 Notice in name of the transferor or amalgamating company - corporate death of an entity upon amalgamation - Curable defect u/s 292B - Amalgamated company through its representatives participated in each proceedings - HELD THAT:- Amalgamation was known to the assessee, even at the stage when the search and seizure operations took place, as well as statements were recorded by the revenue of the directors and managing director of the group. A return was filed, pursuant to notice, which suppressed the fact of amalgamation; on the contrary, the return was of MRPL. Though that entity ceased to be in existence, in law, yet, appeals were filed on its behalf before the CIT, and a cross appeal was filed before ITAT. Even the affidavit before this court is on behalf of the director of MRPL - the assessment order painstakingly attributes specific amounts surrendered by MRPL, and after considering the special auditor s report, brings specific amounts to tax, in the search assessment order. That order is no doubt expressed to be of MRPL (as the assessee) - but represented by the transferee, MIPL. All these clearly indicate that the order adopted a particular method of expressing the tax liability. AO, on the other hand, had the option of making a common order, with MIPL as the assessee, but containing separate parts, relating to the different transferor companies (Mahagun Developers Ltd., Mahagun Realtors Pvt. Ltd., Universal Advertising Pvt. Ltd., ADR Home D cor Pvt. Ltd.). The mere choice of the AO in issuing a separate order in respect of MRPL, in these circumstances, cannot nullify it. Right from the time it was issued, and at all stages of various proceedings, the parties concerned (i.e., MIPL) treated it to be in respect of the transferee company (MIPL) by virtue of the amalgamation order and Section 394 (2). Furthermore, it would be anybody s guess, if any refund were due, as to whether MIPL would then say that it is not entitled to it, because the refund order would be issued in favour of a non-existing company (MRPL). Having regard to all these reasons, this court is of the opinion that in the facts of this case, the conduct of the assessee, commencing from the date the search took place, and before all forums, reflects that it consistently held itself out as the assessee. This Court notes and holds that whether corporate death of an entity upon amalgamation per se invalidates an assessment order ordinarily cannot be determined on a bare application of Section 481 of the Companies Act, 1956 (and its equivalent in the 2013 Act), but would depend on the terms of the amalgamation and the facts of each case. In view of the foregoing discussion and having regard to the facts of this case, this court is of the considered view, that the impugned order of the High Court cannot be sustained; it is set aside. 2022 (4) TMI 346 Reopening of assessment u/s 147 - Order disposing of the objections relies upon the directions of the CIT (Appeals) to make Section 150 of the Income Tax Act applicable to reject the objections - deemed dividend addition u/s 2(22)(e) - whether AO has incorrectly invoked the provisions of Section 150 of the IT Act because in this case there was neither any direction nor any finding to reassess the returns filed by the petitioners? - HELD THAT:- It is quite clear that CIT (Appeals) in his order cannot be said to have issued any direction as contemplated by Section 150 read with Explanation 3 of Section 153 of the IT Act. This is because the CIT (Appeals) after deleting the addition of deemed dividends in the hands of DTRPL, only made the following observations that decision leaves it open for the Assessing Officer to make an assessment of such deemed dividend in the hands of the shareholders as held by Hon ble Bombay High Court in the case of CIT vs Universal Medicare (P) Ltd [ 2010 (3) TMI 323 - BOMBAY HIGH COURT] Following the law laid down in Murlidhar Bhagwan Das [ 1964 (1) TMI 5 - SUPREME COURT] and Rajinder Nath [ 1979 (8) TMI 3 - SUPREME COURT] the aforesaid observations cannot be called a direction based upon which the impugned notices can be sustained. Whether there is any finding in the order dated 16.01.2013 made by CIT (Appeals) based upon which issuance of the impugned notices could be sustained? - It is apparent that the respondent has invoked the provisions of Section 150 of the IT Act for issuing the impugned notices. This invocation was in turn based on an order dated 16.01.2013 made by CIT (Appeals). This order dated 16.01.2013 contains no direction as contemplated by Section 150 of the IT Act. Even assuming that this order dated 16.01.2013 contains a finding affecting the petitioners, it is apparent that such a finding came to be recorded without granting the petitioners any opportunity of being heard. Such finding, therefore, was not only in breach of principles of natural justice and fair play, but also contrary to Explanation 3 to Section 153 of the IT Act and could not have formed the basis for invoking the provisions of Section 150 of the IT Act. The impugned notices are liable to be set aside and are hereby set aside. 2022 (4) TMI 345 Interest on refunds u/s 244A - Refund of amount after the rectification of ITR by the assessee - Revenue did not accept the appellant s interest claim while refunding the excess amount received for the return period - delay in finalisation of return - HELD THAT:- The construction principles are well established and familiar enough that by applying the golden rule of construction, the section must receive a meaning, as spelt out in the enactment. Section 244A, when construed by the golden rule of interpretation, we hold that refund of any amount firstly becomes due to the assessee upon order of assessment made by the assessing officer. In addition to a refund of excess tax received or collected, the assessee is also entitled to interest on the excess refunded by order of assessment; however, the period of interest is governed by Section 244A (2). Section 244A (2) provides that the period taken by the assessee to cure the defects in finalising the assessment is excluded for interest calculation. As it stood for the applicable assessment years, sub-Section (2) merely refers to reasons attributable to the assessee. Therefore, omission or commission in the return filed by the assessee resulting in a delay in assessment is attributable to the assessee; hence, the time taken to cure those omissions and defects is excluded for interest calculation. Having availed the time for rectifying the defects and claiming interest for the defect rectification time is unavailable. Such an interpretation does not fit into the requirement of filing a return fully compliant with the order of assessment, levy of interest, refund etc. The period taken by the assessee for curing the defects cannot be excluded while calculating interest; then, for no fault of the Department, the Department is called upon to compensate by way of interest. For the above discussion, and by relying on judgments of the Supreme Court in Tata Chemicals Limited . [ 2014 (3) TMI 610 - SUPREME COURT] and Sandvik Asia Ltd [ 2006 (1) TMI 55 - SUPREME COURT] we hold that the assessee is not entitled to interest for the period taken by the assessee for curing the defects or omissions in the return or in the annexures filed along with the returns. In other words, the interregnum period, i.e., the period taken by the assessee for rectifying the defects or curing the omissions, does not entail the receipt of interest. Appeal dismissed. 2022 (4) TMI 344 Reopening of assessment u/s 147 - Whether provisions u/s 56(2)(vii)(c)(ii) will not be attracted, in the fact of the case? - HELD THAT:- Provisions under Section 56 would reflect that Section 56 mentions about the income from other sources. Section 56(vii) talks about the income received by an individual or a Hindu undivided family in any previous year. Petitioner is a company and in view of specific provision under Section 56(2)(vii) relied by the AO for issuance of notice will not be applicable to the petitioner who is a company. For issuance of notice u/s 148 there should be tangible material and mandatory compliance of Section 147 - Proceedings of reassessment has been initiated against company after lapse of 4 years of submission of return, which is not in dispute. Under first proviso to Section 147 of the I.T. Act, for starting the reassessment proceedings after lapse of 4 years, AO has to record his conclusion that there was failure on the part of assessee in not disclosing fully and truly all material facts necessary for assessment of that particular assessment year, which is not appearing from the reading of the Annexure i.e. reasons for issuance of notice. Reason assigned for issuance of notice and provisions mentioned therein, in the opinion of this Court, there was no reason/ground available with Assessing Officer to issue notice under Section 148 of the I.T. Act. Issuance of notice under Section 148 to petitioner is not in accordance with the first proviso to Section 147 of the I.T. Act, therefore, it is not sustainable, which is liable to be quashed and it is hereby quashed. - Decided in favour of assessee. 2022 (4) TMI 343 Validity of assessment order u/s 144B - Denial of grant of personal hearing - HELD THAT:- Respondent in fairness states that the grievance raised by petitioner in the petition appears to be justified and the court may grant prayer clause (a) and remand the matter for denovo consideration. Petitioner, naturally has no objection. Accordingly, the order dated 30th September 2021 is quashed and set aside and the matter is remanded for denovo consideration. The concerned authority shall strictly comply with the provisions of Section 144B of the Income Tax Act 1961 and also grant a personal hearing before passing any order. Notice of personal hearing to be given to petitioner at least 7 days in advance. After completing the above proceedings, the final assessment order shall be passed within 12 weeks from the date of this order being uploaded. 2022 (4) TMI 342 Assessment of trust - taxability of corpus donation received by assessee trust for a specific purpose - HELD THAT:- In the present case, it is evident from the record that there is no dispute that the assessee is trust registered with Maharashtra State Board of Wakf . It has also not been disputed that assessee is not registered u/s 12A and thus not entitled to any benefit u/s 11 - AO rightly proceeded to disallow the erroneous claim made by the assessee u/s 11, which is available only to a trust registered under section 12A - before the CIT(A), the assessee agreed that it had made wrongful claim under section 11 even when assessee is not registered under section 12A of the Act and submitted that despite not being registered u/s 12A the corpus donation received specifically for the purpose of purchase of property/Dargah is not taxable being capital receipt in nature. Assessee filed various documents in support of its submission that corpus donations were received by the assessee for the purpose of purchase of property/Dargah and therefore is in nature of capital receipt . The assessee also furnished the details of donors along with their PAN card, on sample basis. The assessee also filed copy of deed of conveyance in respect of purchase of property/Dragah in financial year 2018 19. Neither these documents were examined by the CIT(A) nor any report was sought from the AO and merely by erroneous understanding of order passed in Bank of India Retired Employees Medical Assistance Scheme [ 2017 (2) TMI 602 - ITAT MUMBAI] fresh plea of the assessee was rejected by the CIT(A). As no scrutiny proceedings were initiated by the Revenue and return filed by the assessee was processed vide intimation under section 143 (1) these documents also could not be verified by the AO. We deem it appropriate to set aside the order passed by the CIT(A) and remand this issue to the file of CIT(A) for de novo adjudication after necessary verification of all the details / documents in respect of claim of the assessee. We further direct that if it is found that donations were received with respect to corpus of the trust for the purpose of purchase of property/Dargah then to that extent the same be not taxed being in the nature of capital receipt . Correct head of income - treating the rental income as Income from House Property instead of Income from Other Sources - HELD THAT:- As the issue is only pertaining to classification of rental income under the correct head of income, we deem it appropriate to remand this issue to the file of CIT(A) for de novo adjudication, as per law. We further direct the assessee to file all the details for adjudication of this issue. Needless to mention that the CIT(A) shall have the liberty to call for remand report, if any, from the jurisdictional Assessing Officer while deciding this issue. Further, no order shall be passed without affording reasonable opportunity of hearing to the assessee. As a result, ground No. 2 in assessee s appeal is allowed for statistical purpose. 2022 (4) TMI 341 Disallowance of deduction of commission expenses - steep rise of an expenditure during a year - whether or not the same had been incurred by the assessee wholly and exclusively for the purpose of its business and; that the same is not in the nature of a capital expenditure? - HELD THAT:- As per the mandate of law the allowability of an assessee s claim for deduction of an expenditure which may had witnessed an increase as in comparison to that of the preceding year is not dependant upon a corresponding increase in the sales/profits during the year, but solely on the fact that as to whether or not the same had been incurred by the assessee wholly and exclusively for the purpose of its business and; that the same is not in the nature of a capital expenditure; nor an expenditure incurred in the personal field; nor an expenditure incurred for any purpose which is an offence or prohibited by law. Interestingly, we find that not only both the lower authorities had by erroneously referring to the benefit test disallowed the assessee s claim for expenditure, but most surprisingly and rather beyond comprehension had restricted the said claim for deduction in the same ratio i.e., 5.44% in which sales for the year under consideration had witnessed an increase as in comparison to that of the immediately preceding year. We are unable to comprehend much the less subscribe to the aforesaid novel method adopted/subscribed to by the lower authorities, which we would not hesitate to observe is nothing short of an arithmetical formula adopted by the Assessing Officer for partly declining the assessee's claim for deduction of commission expenses. Although a steep rise of an expenditure during a year would raise serious doubts as regards the genuineness of the claim for deduction of the same by the assessee, but then, as observed by us hereinabove, the allowability or not of the same has to be tested as per the mandate of Section 37 of the Act; and not on the touchstone of satisfaction of the benefit test as had been done by the A.O in the present case. Thus as the disallowance of the assessee s claim for deduction of commission expenses is not based on any material or observations which would lead to an irrefutable conclusion that the said expenditure was either not genuine or; was not incurred wholly and exclusively for the purpose of assessee s business within the meaning of section 37(1) of the Act, therefore, we set-aside the order of the CIT(Appeals) and delete the addition made by the AO. Appeal of assessee allowed. 2022 (4) TMI 340 Revision u/s 263 - claim of deduction u/s.54 without carrying out any examination and verification of the genuineness of the said claim for deduction - HELD THAT:- We find substance in the view taken by the Pr. CIT that the Assessing Officer had summarily accepted the assessee s claim for deduction u/s.54 i.e, investment made by her towards construction of a new house at Nehru Nagar, Korba. As the summarily acceptance of the assessee s claim for deduction u/s.54 by the AO i.e., without making any enquiry or necessary verification which should have been made by him, clearly falls within the sweep of Clause (a) of Explanation 2 to Section 263 of the Act, therefore, we concur with the view taken by the Pr.CIT that the assessment order passed by the Assessing Officer u/s.143(3) r.w.s 147 is erroneous in so far as it is prejudicial to the interest of the revenue under Section 263. But then, as a word of caution, we may herein observe, that as the assessee had admittedly sold the property for a consideration of ₹ 65 lacs, therefore, her disentitlement for claim of deduction u/s.54 of the Act has to be restricted considering the said actual sale consideration and the capital gain arising therefrom. In sum and substance, though the provision of Section 50C would override the normal provisions for the purpose of quantification of the amount of long-term capital gain, but then, we cannot remain oblivious of the fact that the entitlement of the assessee for claiming deduction u/s.54 of the Act would continue to remain dependant on the amount of actual consideration received by the assessee on sale of the property in question. We, thus, subject to our aforesaid observations uphold the order passed by the Pr. CIT u/s. 263 of the Act. - Decided against assessee. 2022 (4) TMI 339 Deduction u/s 80P - As per DR assessee invested in Cooperative Bank and the interest earned from the Cooperative Bank is not eligible u/s 80P(4). Section 80P(4) only restricted investment in the Cooperative Society not in bank - HELD THAT:- Section 80P(2)(d) of the Act allows whole deduction of income by way of interest or dividend derived by Cooperative Society from its investments with any other co-operative society. This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by co-operative society from in his investment with a co-operative society. So the Revenue is not required to look another of investment whether it was formed as required within time or otherwise. We have heard the considered of the case of Totagars Co-operative Sales Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] which was relied by the Ld. DR and find that the Hon ble Apex Court has dilapidated on the issue of deduction u/s 80P(2)(a)(i) but not on section 80P(2)(d). We also observed that in the case of Totagars Cooperative Sales Society Ltd [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] itself the Hon ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d) vide order dated 05.01.2017. We hereby hold that the investment of assessee in cooperative bank is eligible investment u/s 80P(2)(d) of the Act. The interest of the said investment related to Cooperative Society, assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the appeals of the assessee are allowed. 2022 (4) TMI 338 Disallowance of interest u/s 36(1)(iii) - proof of sufficient cash generation to advance loans - CIT(A) deleted the impugned additions - DR advanced arguments to submit that the test of commercial expediency was not satisfied by the assessee - HELD THAT:- A part of the loans and equity investments have been made in M/s TVS Infotech Ltd. which facilitated IT operations for the assessee. The earlier loans as granted to M/s SFZL were utilized to expand overseas market. It is also an undisputed fact that all these entities generated dividend and the assessee was benefitted by way of dividend, capital appreciation and ease of operations. The test of commercial expediency, in our opinion, was duly satisfied by the assessee. It could be said that the investments were made in furtherance of business interest and the ratio of decision of Hon ble Supreme Court in the case of CIT V/s S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] would favor the case of the assessee. In this decision, it was held that once nexus was established between the expenditure and the purpose of the business, which need not necessarily be the business of the assessee itself, revenue could not disallow the claim assuming what was reasonable. Assessee is successful in establishing that there was sufficient cash generation to make the aforesaid investments. In fact, overall interest free loans have reduced from ₹ 3605.38 Lacs to ₹ 3337.22 Lacs during the year. As against this, there was sufficient cash generation to source this investment. Therefore, as per the ratio of Hon ble Supreme Court in the case of CIT V/s Reliance Industries Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] it could be presumed that the investments were made from interest free funds available with the assessee. the assessee has sufficient cash generation to advance loans. In the present case, the loans have been advanced in furtherance of assessee s business interest and the assessee has sufficient cash generation to fund those advances. These facts have already been noted by us in the preceding paragraphs. - Decided against revenue. 2022 (4) TMI 337 Addition u/s.68 - cash deposits as cash credits - HELD THAT:- None appeared on behalf of the assessee despite notice. We note that in explanation for the cash deposit in the bank account assessee, whose income is only from tuitions fees and job work submitted that she was having huge cash balance. Authorities below have duly analyzed the details and have granted part relief of ₹ 4 lacs and thereafter upheld the addition of balance. In my considered opinion, on the facts and circumstances of the case, assessee has been granted sufficient credit for opening balance in justification of cash deposit. Revenue is not in appeal against the same. Hence, in my considered opinion, there is no need of interference in the orders of the authorities below. Capital gain computation - Cost of improvement claimed by the assessee - HELD THAT:- From the details, it is evident that assessee is claiming cost of improvement, which are consumable items on account of furnishing sofa etc. The authorities below are correct that these items cannot be considered as cost of improvement for computation of capital gain. The reliance on case SHRI SACHINDER MOHAN MEHTA [ 2014 (12) TMI 192 - DELHI HIGH COURT] is also germane and applies on the facts of the case. Hence, we uphold the orders of the authorities below. Appeal of the assessee stands dismissed. 2022 (4) TMI 336 Disallowance of expenditure claimed under the head Business - proof of commencement of business - CIT(A) held that the appellant has not commenced business activities and that the appellant had just started preliminary work to set up power plant - plea of the assessee is that the business had already been set-up but commencement did not take place due to long gestation period - HELD THAT:- Though the assessee s business had not commenced but the business had already been set-up and the assessee undertook all preliminary steps to commence the business. The gestation period, in the kind of business in which the assessee was engaged, would generally be long and it is quite natural that it would take substantial time to start the actual business operations and generate business income. Quite clearly, without necessary approvals and agreements, the assessee could have never been able to commence its business. All these documents were road-map to starting of actual business operations. Nevertheless, the business was established by procurement of land, staff etc. The assessee had recruited technical personnel for setting-up the power projects. The assessee had all the approvals, permissions in-hand and was in the process of commencing the business. The assessee had deployed technical personnel, obtained various approvals, placed purchase orders and also signed long-term Power Purchase Agreements with the clients. The signing of all these agreement would be important activity and very much integrated to the activities of the business of the assessee. AO has based his reasoning solely on the fact that assessee-company s bio-mass power plant was synchronized to grid only from 04.07.2011. Therefore, the assessee was not ready to produce the power till 04.07.2011 and hence, the business was not set-up. However, the said reasoning stresses the proposition that expenditure could not be allowed till the generation of income. The said reasoning overlooks the various vital documentary evidences furnished by the assessee in support of the fact that the business had already been set-up. We are of the considered opinion that the generation of actual business income was not an essential element to allow the business expenditure. What was required to be seen was whether the business had been set-up or not. In view of our observations in the preceding paragraphs as well as keeping in view the ratio of various judicial pronouncements as cited before us by Ld. AR during the course of hearing (preceding para-2), it could safely be said that the assessee s business had set-up during AY 2009-10 itself and therefore, the expenditure as claimed by the assessee would be allowable deductions. As decided in DAIMLER INDIA COMMERCIAL VEHICLES (P) LTD. [ 2019 (7) TMI 877 - MADRAS HIGH COURT] merely because the manufacturing did not take place, it could not be said that the business had not been set-up. The manufacturing activity of the assessee was part of composite business activities and the same had not commenced because the construction of building and installation of plant machinery was in progress. We find that similar analogy is applicable in the present case. What is required to be seen is whether one of the essential activities for the carrying on of the business of the assessee company as a whole was or was not commenced. When a business is established and is ready to commence, then it can be said that business has been set-up. The business would be set-up when the necessary infrastructure was acquired by the assessee and the assessee started paying salaries and allowance of the experts. The assessee, in the present case, had achieved the process of establishing the business. - Decided in favour of assessee. 2022 (4) TMI 335 Exemption u/s 11 - Violation of provisions of Section 13(1 )(c) and 13(1)(d) - loans and advances to interested persons - Managing Trustee and Founder of the Appellant Trust is also Proprietor of Sri Vekkaliamman Builders and Promoter to whom advances paid - HELD THAT:- CIT appeal has not controverted the finding of the AO that Sri. Madurai Karthikeyan, managing director and founder member of the appellant trust has not been benefited by way of receiving advance of ₹ 24,78,316 to Sri Vekkaliamman Builders and Promoters, proprietor concern and an amount received and lying as outstanding loans and advances with Meru Shipping Lines Private Ltd. and likewise, a sum of is lying with Southern Academy of Maritime Studies Private Ltd as a substantial stake holders being benefited persons referred to in section 13(3) of the act. Hon ble Juridictional Madras High Court in the case of St. Xavier Educational Trust [ 2021 (6) TMI 143 - MADRAS HIGH COURT] exemption has delivered a verdict that the denial of exemption under section 11 should only be too the extent of income which is violative of section 13(1)(d) and total denial of exemption and accordingly revenue was to only forfeit exemption under section 11 in respect of opening payments. Madras High Court in the case of Ms. V.G.P. Foundation [ 2002 (10) TMI 26 - MADRAS HIGH COURT] held, under exactly similar circumstances that the trust would not be entitled to exemption us.11 of the IT Act, 1961, since the amount advanced was without interest and also without adequate security. Hence, the same set of transactions involved with interested persons are also violations u/s.13(1)(d) as well. We are of the considered view that the learned CIT appeal has been wrong interpretation of provisions of section 13(1)(d) and 13 (3) of the Act, qua the peculiar facts of the instant case. In our view, the appellant trust has violated the provisions of section 13(1)(c) and 13(1)(d) of the Act. Thus, the appellant is not entitled for exemption u/s 11 of the Act to that extent. According, the order of the learned CIT appeal is reversed and the assessment order is restored. Appeal of the revenue is allowed. 2022 (4) TMI 334 Addition u/s. 69 as unexplained investments - difference in closing stock was survey conducted in the business premises of the assessee on 26.08.2015 - HELD THAT:- AO has completed the assessment for the AY 2014-15 u/s.143(3) of the Act dated 08.08.2016 and has accepted additional income offered by the assessee on account of difference in stock in trade found during the course of survey - once the AO has accepted the fact that the assessee has admitted difference in stock in trade as on 31.03.2014 and further, the same had been admitted for the AY 2014-15, he ought not to have made additions for the very same difference in stock in trade for the AY 2015-16. No matter, the survey must have taken place on 26.08.2015, but the fact needs to be considered, is difference in stock in trade pertains to which assessment year. In this case, the AO had worked out the difference in stock in trade for the AY 2014-15 (FY 2013-14) and the assessee had also admitted the additional income for the AY 2014-15. Assessee has rightly offered additional income on account of difference in stock in trade for the AY 2014-15 and the AO has rightly assessed the same for the AY 2014-15. CIT(A) after considering the relevant facts has rightly deleted the additions made by the AO towards unexplained investment on account of difference in stock in trade for the AY 2015-16 including business profit on account of difference in stock in trade. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. 2022 (4) TMI 333 Levying fees u/s 234E for late filing of quarterly TDS return - appeal was dismissed on the ground of limitation - HELD THAT:- CIT(A) has dealt with the issue of limitation in a very exhaustive manner. To seek condonation of inordinate delay of as many as 1065 days, it was incumbent on the assessee to show sufficient cause for late filing of the appeal. This is more important when the orders, notices etc. were readily available in the digital mode on TRACES as noted by Ld. CIT(A) in para- 5.1 of the order. The assessee could not demonstrate any sufficient cause for late filing of the appeal. Similar is the position before us wherein no new material could be adduced by the assessee in support of its submissions. Therefore, the appeal has rightly been dismissed by Ld. CIT(A) and we see no reason to interfere in the same. Accordingly, the appeal stands dismissed. 2022 (4) TMI 332 Addition u/s 68 - unexplained cash credit - HELD THAT:- Additions made by the AO for the loan received from the parties namely Shri Parshottambhai Mohanbhia Patel and Shri Kalpeshkumar Parshottambhai Patel is hereby deleted and the addition on account of loan from the other parties for the amount is hereby confirmed. Hence the ground of appeal of the assessee is partly allowed. Addition made on account of investments made in different properties - HELD THAT:- Assessee has discharged his primary onus imposed under the provisions of section 68/69 - Accordingly, the onus shifted upon the revenue to disprove the contention of the assessee which was possible by way of carrying out necessary verification of the details furnished by the assessee. But we find that, the authorities below, despite having sufficient powers in the hands, have not exercised their authorities provided under the provisions of section 131/133(6) of the Act to carry out necessary verification. In our considered view the assessee has discharged the onus and the assessee is not under the obligation to justify the source of money in the hands of the respective hands. We are unable to convince ourselves with the contention of the assessee. It is for the reason that the assessee on one hand claims to have invested in the impugned properties bearing survey No. 125 and 124 out of the money received from the 3 parties and in the event of non-furnishing the necessary details on the other hand AR changed his stand by submitting that the impugned loan can be treated as the utilization against the gift received by the assessee. Thus in our view, the assessee failed to discharge the onus and therefore we confirmed the addition to the extent of ₹ 19 lacs. Regarding the investment in the property taluka Dhanduk bearing survey number 143 we note that it was the onus upon the assessee to justify the source of money in pursuance to the provisions of section 69A - we find that, the assessee failed to do so. Rather the assessee has changed his stand by contending that the investment the properties can be assumed out of the gift which is not acceptable in the absence of necessary evidences. Accordingly we do not find any reason to interfere in the finding of the authorities below and therefore confirmed the addition by adding to the total income of the assessee. In view of the above and after considering the facts in totality, the ground of appeal of the assessee is partly allowed. Addition made by the AO by treating the agriculture income as income from other sources - HELD THAT:- At the outset we note that the learned CIT-A has been empowered under rule 46A(4) to call for the additional evidences for the disposal of the appeal. Considering the nature of the addition made by the AO, we are of the view that the learned CIT-A should have exercised his power by resorting to the Rule 46A(4) of income tax rule. Considering the amount involved in the dispute, we admit the additional document filed by the assessee. The genuineness of the additional document filed by the assessee has nowhere been doubted. AO in his order has himself admitted the agriculture income per hectare, therefore we are of the view that the assessee should not be deprived of the benefit available to him merely on the reasoning that the assessee failed to furnish the correct information during the proceedings. Accordingly, we hold that income earned by the assessee from the agricultural activity. Hence ground of appeal of the assessee is allowed. Addition sustained under the provisions of section 68 - investments under section 69 - HELD THAT:- Total amount credited in the bank account of the assessee in the year under consideration stands which was treated as unexplained cash credit under section 68 of the Act by the AO. However, the AO in his finding has concluded that out of such sum, an amount has been utilized in making the investment in the properties. Accordingly, the AO did not make any addition on account of unexplained properties under the provisions of section 69 as it was representing the application of the unexplained cash credit under section 68 of the Act. Now the balance amount being unexplained cash credit under section 68 of the Act which can only be considered for the purpose of the telescoping as contended by the learned AR for the assessee at the time of hearing. Accordingly, we direct the AO to allow the benefit of telescoping to the assessee to the tune while making the addition for the investments in the unexplained properties. It is for the reason that there is no information available on record suggesting that impugned amount has been used for any other purpose. In the absence of relevant information, we are inclined to assume that such amount has been utilized by the assessee for making the investment in the properties which were subject to the addition under the provisions of section 69. Hence the ground of appeal of the assessee is allowed. 2022 (4) TMI 331 Late payments towards EPF and ESI under section 36(1)(va) - Payment before furnishing the return of income under section 139(1) - HELD THAT:- It is not in dispute that the assessee deposited the contribution of PF ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM [ 2021 (11) TMI 370 - ITAT CHANDIGARH] wherein addition on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee. 2022 (4) TMI 330 Non deposited Employees Provident Fund (EPF) with the prescribed authority within stipulated time - HELD THAT:- As per the judgment of the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Company [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] the issue had already been decided by the Hon'ble Court against the assessee - we note that jurisdiction ITAT, Ahmedabad in the case of M/s Unicorn Remedies Pvt. Ltd [ 2019 (1) TMI 1969 - ITAT AHMEDABAD] wherein the similar issue has been remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the outcome of the judgment of the Hon'ble Supreme Court. Appeals filed by the assessee are allowed for statistical purposes. 2022 (4) TMI 329 Revision u/s 263 by CIT - unsecured loans obtained - HELD THAT:- AO made the requisite enquiries, therefore, it is not a case of no enquiry and if the CIT was not satisfied with the enquiries made by the AO, he should have conducted the enquiries himself to record the findings that the assessment order was erroneous and he should not have simply set aside the order passed by the AO directing him to conduct the further enquiries. AO had made enquiry regarding unsecured loans and had also enquired into the issue of melting loss and the assessee too had responded to the query and had submitted details and evidences in support of its contention before the AO. The same was duly brought to the notice of the Ld. PCIT also in response to the show cause notice issued u/s.263 - PCIT did not consider the submissions of the assessee to be of any good. There was a due application of mind on the part of the AO and that adequate and proper enquiries had been conducted by the AO in this regard and, therefore, the impugned order passed u/s. 263 has no feet to stand on. Accordingly, we hold that the proceedings u/s. 263 were bad in law and we quash the revisionary proceedings for the reason that he AO had already made adequate enquiries on the issues raised by the PCIT and further the PCIT had not conducted any independent enquiry on his own before coming to an incorrect conclusion that the assessment order was erroneous as being prejudicial to the interest of the revenue and was liable to be set aside. Appeal of assessee allowed. 2022 (4) TMI 328 Revision u/s 263 by CIT - assessee's claim of exemption u/s. 54 - case was selected for limited scrutiny under CASS guidelines on the issue of Deduction claimed under the head Capital Gain - HELD THAT:- AO made the requisite enquiries, therefore, it is not a case of no enquiry and if the Ld. Pr. CIT was not satisfied with the enquiries made by the AO, he should have conducted the enquiries himself to record the findings that the assessment order was erroneous and he should not have simply set aside the order passed by the AO directing him to conduct the further enquiries. In the present case, as we have been observed earlier, the Assessing officer had made due inquiries about the capital gain earned on sale of agricultural land as well as the assessee's claim of exemption u/s. 54 of the Act and the assessee too had duly responded by the query raised by the Assessing officer and had submitted details and evidences in support of his claim before the Assessing officer. This was also brought to the notice of the Ld. PCIT in response to the show cause notice issued u/s. 263 of the Act but the same did not find favour with the Ld. PCIT. Thus there was due application of mind on the part of the Assessing officer and that adequate and proper enquiry had been conducted by the Assessing officer in this regard and, therefore, the impugned order passed u/s. 263 of the Act cannot be upheld. Accordingly, we hold that the proceedings u/s. 263 of the Act were bad in law and we quash the revisionary proceedings for the reason that the Assessing officer had already made adequate inquiries on the issue raised by the Ld. PCIT and further the Ld. PCIT himself had not raised any independent inquiry on his own before coming to an incorrect concussion that the assessment order was erroneous and prejudicial to the interest of Revenue. Appeal of the assessee stands allowed. 2022 (4) TMI 327 Income deemed to accrue or arise in India - Royalty receipt - treatment of subscription fees received by the assessee as falling within the ambit of royalty u/s 9(1)(i) of the Income-tax Act, 1961 r.w and/or under Article 12 of the India Singapore DTA - CIT-A held that services rendered by the assessee are in the nature of imparting of information concerning commercial expediency - AO alleged that the assessee has been providing services in the form of Web services and is made available to users over a network, which is normally through the web/internet - HELD THAT:- Assessee provides web-based online access to its customer s data hosted on servers located in data centers maintained by the assessee outside India. The assessee does not have any data centers in India and hence it cannot be considered to have a fixed place of business in India. The assessee neither has a place of management in India nor has any equipment or personnel in India. This fact has also been accepted by the ld. CIT(A) in his order. Therefore, in the absence of granting any control over the equipment belonging to the assessee to its customers, the allegation of the AO that the amount so received will constitute Royalty is not acceptable. Assessee does not provide any information concerning industrial, commercial, scientific experience. The assessee only processes the proprietary data of the customers and provides the result in form of desired reports etc. On this count also, it cannot be said that consideration for CRM services are in the nature of royalty. If the services have been rendered de hors imparting of knowledge or transfer of any knowledge, experience or skill, then such services will not fall within the ambit of Article 12 of the treaty. By granting access to the information forming part of the database, the assessee neither shares its own experience, technique or methodology employed in evolving databases with the users, nor imparts any information relating to them. The income earned by the assessee from the Indian customers with respect to the subscription fees for CRM cannot be taxed as royalty as per section 9(1)(vi) of the Act as well as Article 12(3) of the treaty. As in light of the Master Subscription Agreement, we are of the considered view that the customers do not have any access to the process of the service provider i.e. the assessee, and the assessee does not have any access except otherwise provided in the master subscription agreement to the data of the subscriber. All the equipments and machines relating to the service provided by the assessee are under its control and are outside India and the subscribers do not have any physical access to the equipment providing system service which means that the subscribers are only using the services provided by the assessee. We have no hesitation to hold that the subscriber fees received by the assessee do not fall within the ambit of royalty u/s 9(1)(vi) of the Act nor under Article 12 of the India Singapore DTAA. The Assessing Officer is accordingly directed to delete the impugned additions. Appeal of assessee allowed. 2022 (4) TMI 326 Characterization of income - addition on account of undisclosed income by treating the agricultural income as income from undisclosed source - HELD THAT:- We find that the ld. CIT(A) confirm the action of Assessing Officer by taking view that in absence of compliance he has no reason to differ with finding of Assessing Officer CIT(A) fixed the hearing on varies date and ultimately fixed the hearing on 13.02.2018. It is recorded by ld. CIT(A) that no compliance was made by the assessee. However, find that the ld CIT(A) has not recorded his satisfaction that the notice sent through speed post was duly served on the assessee or not for hearing fixed on 13.02.2018. We find that the order of the ld. CIT (A) is not in accordance with mandate of section 250(6) of the Income Tax Act. Section 250(6) of the Act mandates that the Ld. CIT (A) while deciding the appeal is required to pass order on points of determination (grounds of appeals), decision therein on and reasons for such decision. Therefore, considering the facts and circumstances of the case, the appeal of the assessee is restored back to the file of the ld. CIT (A) to decide all the grounds of appeal on merit in accordance with law. Appeal of the assessee is allowed for statistical purpose. 2022 (4) TMI 325 Employees' contribution to PF and ESI was deposited well within the due date of filing of the return - Scope of amendments - HELD THAT:- The amendments carried out by the Finance Act, 2021 in Section 36(1)(va) and 43B were considered by the First Appellate Authority to be clarificatory in nature, hence, retrospective in operation. We have seen that this issue has been considered by the jurisdictional High Court in the case of CIT vs. Hemla Embroidery Mills (P) Ltd. [ 2013 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT] wherein it has been held that Second Proviso to Section 43B omitted by F.A, 2003 with effect from 1.4.2004 was clarificatory in nature and was to operate retrospectively. Once that is so, the respondent-assessee was entitled to deduction in respect of employer and employee's contribution to ESI and Provident Fund as the same had been deposited prior to the filing of the return u/s 139(1). - Decided in favour of assessee 2022 (4) TMI 324 Disallowance u/s 10(25) - Claim of interest income disallowed approval granted by the Competent Authority under section 10(25)(iv) was not filed by the assessee - HELD THAT:- If an assessee fulfils the conditions contemplated in the above clause, then it will not be included in the total income. As observed by AO the assessee failed to submit the requisite certificate issued by the Competent Authority in order to claim the exemption of the interest income. We have perused the balance-sheet of earlier years and subsequent years. We have perused the LIC Certificate available. A perusal of all these documents would reveal that the assessee has erroneously calculated the alleged interest income which is not supported by any documentary evidence. On the other hand, the interest income discernable from the LIC Certificate is of a lesser amount. Therefore, we deem it appropriate to remit this issue to the file of the Assessing Officer for a fresh adjudication. AO would calculate the interest income earned by the assessee-Trust and thereafter make a disallowance. While doing so, ld. AO will grant sufficient opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes. 2022 (4) TMI 323 Addition u/s 56(2)(vii)(b) - premium on preference shares which are unquoted - consideration received for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares, the difference is to be taxed as income - HELD THAT:- As noted prescribed method for unquoted shares is not any specific method but it provides that assessee may obtain valuation report from merchant banker or accountant. In this case the assessee has obtained valuation report of the accountant. To this extent, valuation adopted by the assessee cannot be said to be not in accordance with law. Valuation method adopted by the assessee - Assessing Officer has adopted net asset value method which has been lifted from the method adopted for valuation of equity shares in Rule 11UA(c)(a). This is not at all a method prescribed for other shares and securities in which category the present issue of preference shares falls. The method applicable in the present case is as contained in Rule 11UA(C)(c). Hence the Assessing Officer s adoption of this method does not have the sanction of law. Once it is clear that the method adopted by the Assessing Officer is not permissible in law and the method adopted by the assessee is one permissible in law which has not been cogently rebutted by the Assessing Officer. It is crystal clear that the addition in this case has been made by the Assessing Officer on whims and fancies not sustainable in law. In this view of the matter valuation obtained by the assessee is as per the mandate provided under 56(2)(vii)(b) read with rule 11UA of the Act. Assessing Officer s substitution thereof is not in accordance with law and the same is not sustainable. Hence, we do not find any infirmity in the order of learned CIT(A). Hence, we uphold the same. Addition of depreciation under section 32(1)(ii) - A.O.'s action in denying depreciation on goodwill u/s. 32(1)(ii) arising to the Appellant pursuant to a scheme of amalgamation sanctioned by the Jurisdictional High Court, contending that the denial of depreciation ought to be restricted to the claim made by the Appellant in its books of accounts - HELD THAT:- We note that learned CIT(A) has decided the issue in favour of the assessee by placing reliance on the decision of the Hon'ble Supreme Court in the case of Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] . We agree with learned CIT(A) that the same is fully applicable in the present case. Hence, on this issue also we uphold the well reasoned order of learned CIT(A). Addition under section 56(2)(viia) - aggregate FMV of the shares of IHPL and VDPL, exceeding the consideration added as Income from Other Sources - assessee pointed that application of valuation method adopted by the Assessing Officer is not applicable for A.Y. 2015-16 and the said method is applicable only from A.Y. 2018-19 and CIT(A) has rightly held that it cannot be applied retrospectively - HELD THAT:- The fair market value which has been computed by the Assessing Officer is not as per the extant Rules. The Rules in this regard contained in section 11UA are already reproduced by us earlier. The same clearly provide for taking the book value of shares as in the balance sheet for the computation. The same was amended by the Income Tax Rules 2017 with effect from 1.4.2018 where instead of book value, fair market value of shares is mentioned. The Act does not provide that this amendment is retrospective. It is clearly mentioned that this amendment is with effect from 1.4.2018. Hence, Assessing Officer s adoption of fair market value for making the computation which is not in accordance with the extant provisions has rightly been deleted by the learned CIT(A). It is not disputed that when the book value of the shares is adopted as per the extant rules the addition will not be justified. Hence, we do not find any infirmity in the same. We note that nothing has been brought before us by the revenue as to why the Assessing Officer has applied the same retrospectively. Hence, we do not find any infirmity in the order of learned CIT(A). Accordingly, we uphold the same. Addition under section 14A r.w.r. 8D - Sufficiency of own interest funds - HELD THAT:- We note that as regards the disallowance under Rule 8D(ii) of the Act learned CIT(A) has given a finding that the assessee has sufficient interest free funds. The same has not been disputed by the revenue. In this view of the matter no disallowance under rule 8D(2)(ii) can be done on the touchstone of the Hon'ble Bombay High Court decision in the case of Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank Ltd.[ 2016 (3) TMI 755 - BOMBAY HIGH COURT] . As regards rule 8D(2)(iii) is concerned learned CIT(A) has directed to take average value of the investment on which no exempt income has been earned for making the computation. This view is supported by Special Bench decision of ITAT in the case of Vireet Investments[ 2017 (6) TMI 1124 - ITAT DELHI] . Hence we do not find any infirmity in the order of learned CIT(A) in this regard. Hence, we uphold the same. 2022 (4) TMI 322 Late payments towards EPF and ESI u/s 36(1)(va) - payment before furnishing the return of income u/s 139(1) - HELD THAT:- It is not in dispute that the assessee deposited the contribution of PF ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM [ 2021 (11) TMI 370 - ITAT CHANDIGARH] wherein addition on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s. 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee. 2022 (4) TMI 321 Undisclosed investment - Addition based on loose sheet found in search - HELD THAT:- AO has not made any further enquiry with any other parties and made the addition based only on the loose sheet of paper found during course of survey action. AO has made addition as unexplained investment which is not sustainable in law. Further, it can be seen from the loose sheet that working made are stated to be estimation only that cannot be a base for making addition by the AO under section 69 of the Act. As held by the Ld. CIT(A) in his order, the partnership firm has been constituted on 3.2.2011 with no business and no receipt of any booking for the project, cannot have the fund at its disposal to have the amount to the tune of ₹ 10.10 crores to pay to Smt. Nitaben Patel. Therefore, this particular hypothesis does not hold water and stand the probability. We also concur with the finding that the Ld. CIT(A) that, if ₹ 10.10 crores is added in the hands of the assessee, as done in the impugned assessment, the project cost and the work-in-progress have to be enhanced by that amount, and consequently the profit would go down or the project would end up in loss and that the effect of addition made in the hands of the assessees firm as made in the assessment order would get neutralized/nullified over the period of the project. On this count also the addition made is not correct. During the search action under section 132 on 7.1.2014 in Bafna Panchal group of cases which covered the residential premises of Smt. Nitaben Patel, there is no record to show any incriminating materials relating to the purchase of this land was seized by the Revenue/Income Tax Department. Therefore, the addition made u/s. 69 of ₹ 10.10 is not sustainable in law and we are in conformity with the orders passed by the Ld. CIT(A) on this issue.- Decided against revenue. 2022 (4) TMI 320 Disallowance of maintenance expenditure to plant machinery - Allowable revenue expenses or capital expenditure - HELD THAT:- On perusal of the material placed by the assessee before us, it indicates these are parts which require occasional replacement for smooth and efficient operation of main machineries. By incurring expenditure for purchase of such items, no new separate and distinct asset came into existence, and that there is no replacement of existing machinery as a whole so to consider the same to capital expenditure. The revenue was simply carried away by the size amount rather than nature and import of the items purchased. There is no basis with the revenue authorities, which indicates that the impugned expenditure was in the nature of capital. Therefore, keeping in view overall nature of items purchased by the assessee, we are of the considered view that whatever expenditure incurred for purchasing of these items were the business expenditure, and wholly and exclusively incurred for running day-to-day operational necessity in order to keep the entire plant machinery functional and efficient. We allow claim of the assessee to treat the impugned expenditure as revenue expenditure. Disallowance of foreign travelling expenses incurred by the Directors of the company to China, Germany and other countries -HELD THAT:- The factum visit to China and Germany, and the nature of the business engaged by the assessee have not been disputed by the Revenue. Assessee has submitted a list of parties to whom the business has business relation in China and Germany, Greece, Span, Belgium Italy, Japan etc. were furnished. Details of tickets, visa, bills etc. were also furnished to support its case about the genuineness and necessity of undertaking such foreign trips. were also furnished. Revenue authorities have not brought anything on record to show that either details provided by the assessee were bogus or the claim of the assessee that it has imported material from other countries for its production line was found to be incorrect. Therefore, having regard to entire factual scenario and the nature of business assessee s business i.e. being pharmaceutical company, we are of the view that impugned foreign travel expenses incurred by the assessee are genuine requirement and for business purpose, and therefore, the impugned addition is directed to be deleted. Appeal of the assessee is allowed 2022 (4) TMI 319 Exemption u/s 11 - Assessee has failed to explain the amount of investment made out of set apart funds in the income tax return as well as in the audit report and in Form 10 - HELD THAT:- Admittedly, the appellant assessee society has filed Form 10 during the course of assessment proceedings [Page 9, CIT(A) order]. It is seen that the amount of accumulated funds for the year under appeal itself were invested in the modes specified u/s. 11(5) of the Act as evident from the Balance Sheet which were on record with both Ld. AO and Hon'ble CIT(A) and further CIT(A) itself stated that ₹ 1.70 cr has been invested in various banks. It is well settled that income derived from trust property has to be determined on commercial principles where adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against income earned by the trust in the subsequent year may be regarded as application of income of the trust for charitable and religious purposes in the subsequent year. Such an adjustment made having regard to the benevolent provisions contained in s. 11 of the Act will have to be excluded from the income of the trust u/s 11(1)(a) Contention of the Ld. AR that expenditure incurred in the earlier year can be met out of the income of the subsequent year and utilization of such income for meeting the expenditure of the earlier year, would amount to such income being applied for charitable or religious purposes is as per law. Thus, the excess expenditure incurred by the Assessee society in earlier assessment years amounting to ₹ 58,78,070/- [Pg 6 of CIT(A) order] could be allowed to be set off against income of subsequent years by invoking s. 11 of Income Tax Act. CIT (Appeal) has failed to appreciate the facts of the case and the contentions raised by the appellant before him regarding determination of income on commercial principles by invoking provisions of section 11 of the act in the case of trust and charitable institutions. The addition sustained in mechanical manner merely on conjectures and surmises without consideration of law is not is illegal and unjustified. Proposition of law has been decided in favour of the assessee in the case of CIT(E) vs. Subros Educational Society [ 2018 (4) TMI 1622 - SC ORDER] where it was held that any excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking s. 11 of the act. - Appeal of assessee allowed. 2022 (4) TMI 318 Dismissal of appeal as assessee opted for Vivad Se Vishwas Scheme - HELD THAT:- We find the Ld. CIT(A) has erroneously dismissed the above three appeals on the ground that the assessee has opted for the Vivad Se Vishwas Schme and the PCIT, Dehradun has issued Form No.5 after the due taxes were paid. However, according to the assessee, the assessee has not opted for the Vivad Se Vishwas Scheme. Since the Ld. CIT(A) has erroneously dismissed the appeals of the assessee without deciding the appeals on merit, therefore, we deem it proper to restore the above three appeals to the file of the ld. CIT(A) with a direction to decide the appeals on merit. Needless to say that the Ld. CIT(A) shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The grounds raised by the assessee are accordingly allowed. 2022 (4) TMI 317 Exemption u/s 80P(2)(a)(vi) - assessee, Indian Coffee Board Workers Co-Op Society is a co-opertive society which is running restaurants in the name and style of Indian Coffee House - HELD THAT:- Objective of the assessee is to conduct coffee houses and restaurants for employment of the workers retrenched from the Coffee Board and the members of the society - after examining the bylaws he also confirmed that the society itself is constituted by the workers for their own mutual benefit and they themselves do the work and run the coffee house. Revenue has not been able to produce any evidence to dislodge this finding. That would not in any way violate the objective of the society. CIT(A) gives a finding that no other person is employed in the society and the income is wholly derived from the collective disposal of labour of its members only. Even this finding has not been dislodged nor any evidence produced to the contrary. CIT(A) mentions that the requirements of the proviso to Section 80P(2)(a)(vi) are also satisfied in the case of the appellant society because the voting rights are confined to the individuals who contribute their labour. Here the bylaws show that the society was constituted by the workers for their mutual benefit consisting of the workers who were retrenched from the Coffee Board and the members of the society. We are of the view that the findings of the learned CIT(A) in directing the AO to grant deduction under Section 80P(2)(a)(vi) of the Act is clearly in line with the facts and calls for no interference. - Decided against revenue. Customs 2022 (4) TMI 316 Interpretation of statute - Validity and scope of confessional statement - Section 108 as well as Section 114(i) of the Customs Act, 1962 - smuggling - psychotropic substance - Alprazolam - fictitious and non-existing companies - scope of appeal u/s 130 of CA, 1962 - question of law or question of facts - HELD THAT:- Although the expression substantial question of law has not been defined in any Act or in any of the statutes, yet the true meaning and connotation of this expression is now well-settled by various judicial pronouncements - It was observed by the Supreme Court in SIR CHUNILAL VERSUS MEHTA AND SONS, LTD. VERSUS THE CENTURY SPINNING AND MANUFACTURING CO., LTD. [ 1962 (3) TMI 77 - SUPREME COURT] that a question of law would be a substantial question of law if it directly or indirectly affects the rights of parties and/or there is some doubt or difference of opinion on the issue . But if the question is settled by the Apex Court or the general principles to be applied in determining the question are well-settled, mere application of it to a particular set of facts would not constitute a substantial question of law. - Where the determination of an issue depends upon the appreciation of evidence or materials resulting in ascertainment of basic facts without application of any principle of law, the issue raises a mere question of fact. In the case of AN GUHA CO. VERSUS COLLECTOR OF CENTRAL EXCISE, BHUBANESWAR [ 1994 (6) TMI 113 - CEGAT, CALCUTTA] , the CESTAT, West Zonal Branch, Mumbai held that it is not necessary for the department to establish a fact with mathematical precision. Once the presumption as to the existence of a fact is raised against the assessee that the input has not been transported in the vehicle mentioned in the invoices, it is reasonable to say that the inputs were not received in the factory. In VINOD SOLANKI VERSUS UNION OF INDIA ANR. [ 2008 (12) TMI 31 - SUPREME COURT] , the Supreme Court considered the effect of retraction of the statement in proceedings of penalty under Foreign Exchange Regulation Act, 1973. The Supreme Court held that indisputably a confession made by an accused would come within the purview of Section 24 of the Indian Evidence Act, 1872. The proceedings under the Act are quasi criminal in nature. Section 50 of the Act is penal provision. It prescribes that in the event of contravention of any of the provisions of the Act or the Rules, directions or order penalty in exceeding 5 times of the amount of value involved in any such contravention may be imposed - Sub-section (2) of Section 71 places burden of proof upon an accused or proceedee only when the foreign exchange acquired has been used for the purpose for which permission to acquire it was granted and not for mere possession thereof. The Parliament advisedly did not make any provision placing the burden of proof on the accused/ proceedee. There is no prohibition under the Evidence Act to rely upon retracted confession to prove the prosecution case so as to make the same the basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out whether there were any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained on the confessional statement. The Court is required to examine whether the confessional statement was voluntary; in other words whether it was not obtained by threat, duress or promise. If the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true - However, prudence and practice require that the Court would seek assurance getting corroboration from other evidence adduced by the prosecution. What would constitute an 'attempt'? - HELD THAT:- Section 113(d) can be divided into two parts. The first part speaks about the goods attempted to be exported and the second part speaks about the goods being brought within the limits of any customs area for the purpose of being exported. In the case on hand, the second part has not come into play because indisputably, the goods, i.e. 25 kgs. of the Ketamine Hydrochloride Powder, were not brought within the limits of the customs area for the purpose of being exported, contrary to the prohibitions. If the goods have come with such an intention within the limits of the customs area, then the second part would definitely be attracted - the first part of Section 113(d) covers a larger area. Even, without being brought within the limits of the customs area, there can be an attempt to export the goods in contravention of the prohibitions. To attract the first part of Section 113(d), the process of movement of the goods for the purpose of taking them out of India must be shown to have began. Incriminating materials on record - HELD THAT:- The attempt to export prohibited goods should be appreciated from the point of inquiries from the foreign buyers for the prohibited substance consequent upon which the respondents made arrangements for procuring the same from Aurangabad. After the arrangements were made, the goods were in fact transported from Aurangabad albeit as the Benzahydrol Powder for onward exports via Vapi, when the same were intercepted and seized pursuant to the intelligence inputs - The overt act of physical movement of the prohibited substance was proximate to the intention of respondents to take them out of India which thus constitutes an attempt to export as per Section 113(d) of the Customs Act, 1962. The intention of the statute is to proceed against the offender attempting to export goods contrary to the provisions of the Act. Similarly, a personal penalty is on a person who, in relation to the goods, does or omits to do any act, which act or omission of such an act, shall render the goods liable for confiscation under Section 113 or abets the doing or omission of such an act has been provided in Section 114 of the Customs Act. Section 138C of Customs Act, 1962 - HELD THAT:- The truth or the relevance of the documents has been admitted in no uncertain terms by the respondents in their statements recorded under Section 108 of the Act 1962. In such circumstances, it is too much for the respondents to say that the electronic evidence could not have been taken into consideration. In fact, the electronic evidence on record fortifies what has been stated by the respondents in their statements recorded under Section 108 of the Act. The Appellate Tribunal in its impugned order had held that the misdeclaration of the customs value in respect of the past clearances made under 32 Bills of Entry was established in view of the recovery of certain invoices/commercial invoices pertaining to the goods imported from laptop and mobile phones during the course of the search indicating procurement of goods from the foreign supplier at significantly higher prices than the amount declared to the department at the time of filing the Bills of Entry. These facts and the payment of money through extra banking channels were admitted during the investigations - the Adjudicating Authority rightly rejected the transaction value of the goods in terms of rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Thus, it can be summarised as follows:- The statement made before the customs officials is not a statement recorded under Section 161 of the Code of Criminal Procedure, 1973 and, therefore, it can be said to be a material piece of evidence collected by the customs officials under Section 108 of the Customs Act. If a statement recorded under Section 108 of the Customs Act incriminates the accused, inculpating him in the contravention of the provisions of the Customs Act, it can be considered as a substantive evidence to connect the accused/individual with the contravention of the provisions of the Customs Act. In the case on hand, the statements recorded of various individuals including the respondents under Section 108 of the Customs Act were rightly relied upon by the Commissioner (Customs) as substantive evidence connecting the respondents herein with the contravention of the provisions of Section 113(d) of the Act. The Tribunal, in the case on hand, has not examined the Order in Original passed by the Commissioner (Customs) in the manner required of it and also failed to look into the cogent, convincing and thumping evidence on record to find out if the crucial findings of the Commissioner (Customs) were justified - It is true that the order of the Tribunal cannot be said to give rise to a substantial question of law merely because the High Court is of the view that it would have come to a different conclusion on the same evidence; however, where the appreciation of the evidence is wholly unsatisfactory and the crucial aspects of the evidence have been missed, it is case of finding or conclusion which no person properly instructed on the facts and the legal position would have reached. That is what has happened in the present case. The Tribunal committed an error in disturbing the order passed by the adjudicating Commissioner - substantial question of law as framed by this Court is answered in favour of the Revenue and against the respondents-assessees - Appeal allowed. 2022 (4) TMI 315 Jurisdiction - power of Additional Director General DRI to issue SCN - proper officer under section 28 of the Customs Act to issue the notice, or not - Mis-declaration of description of goods - under-valuation of goods - whether the Additional Director General, DRI had the jurisdiction to issue the notice? - HELD THAT:- This precise issue was examined by the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . The Supreme Court observed that the nature of the power to recover the duty not paid or short paid after the goods have been assessed and cleared for import is a power that has been conferred to review the earlier decision for assessment. This power which has been conferred under section 28 of the Customs Act on the proper officer, must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods. Thus, the Additional Director General, DRI did not have the jurisdiction to issue the show cause notice. It would thus be seen that the Supreme Court in Canon India held that the entire proceedings initiated by the Additional Director General, DRI by issuance of a show cause notice was without any authority of law and was, therefore, liable to be set aside - Various Benches of the Tribunal have also set aside the orders for the reason that the show cause notices were not issued by the proper officer, since they were issued by the Department of Revenue and Intelligence. Thus, the show cause notice dated 01.09.2017 issued by the Additional Director General, DRI is, therefore, without jurisdiction as the said officer was not the proper officer and, therefore all proceedings undertaken by the Department on this show cause notice is, therefore, without jurisdiction. The order dated 29.03.2019 passed by the Commissioner of Customs (Import), therefore, cannot be sustained. A Division Bench of the Tribunal in M/S BERIWALA IMPEX PVT. LTD. VERSUS COMMR. OF CUSTOMS (PORT) , KOLKATA [ 2022 (3) TMI 120 - CESTAT KOLKATA] , also examined the proposed amendments to section 2(34), 3, 5 of the Customs Act and introduction of the new section 110AA in the Customs Act and held that the impugned order emanating from a show cause notice issued under section 28 of the Customs Act by the Additional Director General DRI cannot be sustained. The order passed by the Principal Commissioner cannot be sustained and it is set aside - Appeal allowed - decided in favor of appellant. 2022 (4) TMI 314 100% EOU - validity of demand under Section 28A under Customs Act - import of duty free goods for being used for the export of software outside India - Telematic Infrastructural Equipments - N/N. 153/93-Cus. dated 13/08/1993 - HELD THAT:- Heading of Section 28A gives power not to recover duties not levied or short levied as a result general practice, Section 28 carries the heading recover of duties not levied or not paid or short levied or short paid or erroneously refunded - It is found that the demand has been made under a wrong provision and hence the same has become not enforceable. It is clear that the Customs Authorities lack jurisdiction - Appeal allowed - decided in favor of appellant. Corporate Laws 2022 (4) TMI 313 Oppression and Mismanagement - Allotment of Shares made in a Board Meeting - validity of Board Meeting - it was alleged that the Board Meeting was without mandatory notice to the Appellant (one of the Directors) - Maintainability of Resolution - HELD THAT:- The Resolution is set aside in its totality, as the name of the first Respondent was not categorically mentioned in the operative portion of the Order. Whether the shares allotted to Smt. Usha Rani in the Board Meeting still hold good and whether she continues to be the shareholder as the last para of the Order does not mention the subject party/i.e., the first Respondent/Ms. Usha Rani? - HELD THAT:- When the Resolution itself is set aside in its totality, merely because the name of the first Respondent was not categorically mentioned in the operative portion of the Order it has to be interpreted in its truest sense as NCLT has categorically set aside the Resolution dated 18/02/2014 whereby the authorised share capital was increased. In pursuance of the Resolution having held to be illegal, the allotment of further shares in favour of Respondent-4 was also set aside. Learned Counsel for the Appellant vehemently contended that only Mr. Surjeet Singh and Mr. Prakash Kumar have equal shareholding of 50% each and that Ms. Usha Rani was not at all a shareholder and therefore she does not have the locus standi to move an Application under Sections 241/242 of the Act. The only reference with respect to Ms. Usha Rani/first Respondent being a shareholder is the copy of an Annual Return MGT 7 dated 27/02/2018 wherein it is shown as the Shareholder/Director having 5,000 shares and the list of shares annexed dated 31/03/2018 showing the Applicant as well as M/s. Prowess International Private Ltd. as Directors and shareholders having 5,000 shares and ₹ 2,01,00,000/- shares respectively, but the same cannot be relied upon. The contention of the Learned Counsel for the first Respondent, that the last para does not mention the subject party/first Respondent and therefore the Order in C.P. 104/2014 does not pertain to the first Respondent is completely untenable - The alleged Board Meeting was without any notice, though the Petitioner No.1 was director of the Company. Therefore, the Impugned Act comes under the purview of oppression and mismanagement and Board Resolution regarding the permission to increase the authorised share capital and allotment of shares to Respondent No. 4 deserves to be set aside. This Appeal is disposed of with the clarification that in the light of the Resolution dated 18/02/2014, having been set aside and having attained finality pertains to the setting aside of the allotment of shares to the first Respondent/Ms. Usha Rani also. In view of this clarification, the matter is remitted back to the NCLT to decide the maintainability of Petition as expeditiously as practicable but not later than two months from the date of this Order. Appeal disposed off. 2022 (4) TMI 312 Oppression and Mismanagement of affairs of the Company - time limitation - quasi-partnership entity - entitlement of families to equal representation in the Board of Directors - appointment of an independent administrator(s) on the Board of Directors of the Company, either in addition to the equal representation of Petitioner No.1 s family and Respondent No.2 s family in the Board of the Company, or in suppression of the current Board of Directors of the Company - Section 164(2) of the Companies Act, 2013 - main submission of Respondent is that the Company Petition is barred by limitation - HELD THAT:- The Bench notes that the decision of 29.12.2015 regarding appointment of Respondent No.3 as additional director of the Company was only regularised on 29.09.2016 in the AGM held on 29.09.2016 when he was appointed as a regular director of the Company therefore for the purposes of limitation the act of oppression should commence from 29.09.2016. Even if we assumes the oppression started from the time of the board meeting held on 29.12.2015 when Respondent No.3 was appointed as Additional Director, it really does not matter as there has been continuous act of oppression against the Petitioners commencing from 29.12.2015 which continued in the various board meeting and AGM s held on 03.03.2016, 23.06.2016, 29.09.2016, 24.01.2017, 18.07.2017 i.e. on several occasions between 2016 and 2018. The contention of the Respondent that for the purposes of limitation, it should be considered from the first act of oppression and not from subsequent several acts of oppression and mismanagement is ill founded and absurd. This Bench is of the view that every act of oppression and mismanagement can be agitated by the petitioner before the tribunal for the purposes of justice. However, in this case there is continuous oppression and mismanagement in the company commencing from 29.12.2015 and the petition is well within limitation. Application stands dismissed filed by Applicant (Respondent in the main Company Petition) regarding limitation of the main company petition. Filing of petition for collateral purposes and for causing obstruction and affairs of the company - HELD THAT:- The other submission of the Respondent is that the Petitioners have filed the petition for collateral purposes and for causing obstruction and affairs of the company is devoid of any merits. It is evident that the petitioner being 50% shareholder of the Company and has no representation of the board of the Company and has not received any benefit from the company in form of remuneration or dividend while the Respondents are getting remuneration from the Company. Thus, this Bench has come to the conclusion that: a. The Respondent No.2 is disturbing the return of quasi partnership of the company by appointment of his sons, Respondent Nos. 3 and 4, as director of the company. b. The Respondents were not conducting the board meetings in a fair manner. The Company all through 2016-18 has passed all major decisions through circular resolution which was subsequently being posted before the board for ex post facto approval as a fait accompli. c. The board meetings were held only for procedural formalities without following practice and norms of Corporate Governance. The Petitioner s side and the Respondent s side in line with their about 50% of the shareholding to have equal number of representations in the board of Directors of the Respondent No.1 Company - Keeping in view that the casting vote have been heavily misused by the Respondent s side, there will not be any casting vote available to either side and all decisions on the board will be taken only when representative of both side (petitioner and respondent) represented in equal numbaer on the board, agree to the Resolution before the Board. Petition allowed. 2022 (4) TMI 311 Sanction of Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 - HELD THAT:- It is concluded that the objections/observations to the Scheme received from RD, RoC, OL, and IT have been adequately replied by the Petitioner Company and hence there is no impediment in approval of the Scheme. The Scheme in question as annexed at Annexure-A is approved and it is declared that the same is to be binding on all the shareholders and creditors of the Transferor as well as Transferee Company - the scheme is approved - application allowed. 2022 (4) TMI 298 Seeking prayer that the socalled counter claims be ordered to be decided before adjudication on the applications - HELD THAT:- The appellant financial creditor attempted to challenge the said order dated 10.08.2021 as passed by the Appellate Tribunal in appeal before us. Having regard to the circumstances, we had passed the said order dated 26.11.2021, as noticed at the outset. It is rather disturbing to note that despite specific orders of the Appellate Tribunal as also of this Court, the Adjudicating Authority has not been able to decide the pending applications and now, the submissions before us on behalf of the respondent No. 1 (applicant) are to the effect that there ought not to be tearing hurry in deciding those applications. Such a proposition on the part of the applicant cannot be countenanced, particularly looking to the previous orders passed in the matter - It is also noticed from the record that though we had restored the said appeal before the Appellate Tribunal so that appropriate and necessary orders could be passed, the Appellate Tribunal has chosen not to pass any other order in the matter, for the reason that the present application was said to be pending in this Court. The application so moved by respondent No. 1 of the appeal is specifically rejected - the Appellate Tribunal is requested to immediately take up the appeal for consideration and to pass such orders as may be deemed fit and necessary, keeping in view the observations and expectations in the order passed by this Court on 26.11.2021. Insolvency & Bankruptcy 2022 (4) TMI 310 Order for transferring from Bench-III to Bench-II - in accordance with Rule 146 of the NCLT Rules, 2016 or not - HELD THAT:- It is prerogative of the President of NCLT to assign a matter to a particular Bench or tag with any other matter. The power under Rule 16(d) has been exercised by the President. There are no merit in the submissions of the Counsel for the Appellant that the order is passed under Rule 146 and opportunity is required to be given before passing the order tagging the case with other two matters. Present is not a case where power has been exercised under Rule 146. The power has been exercised by the President under Rule 16(d). Thus, the submission of the Appellant that he was entitled for opportunity under Rule 146 before disposal of the Application does not have any merit - appeal dismissed. 2022 (4) TMI 309 Seeking a direction to the Resolution Professional to place the Resolution Plan submitted by the Appellant before the Committee of Creditors (CoC) - HELD THAT:- The ratio of the judgment of the Hon ble Supreme Court in ARCELORMITTAL INDIA PRIVATE LIMITED VERSUS SATISH KUMAR GUPTA ORS. [ 2018 (10) TMI 312 - SUPREME COURT ] as is culled out from paras 80 81 is that the Resolution Professional is not to take a decision regarding the ineligibility of the Resolution Applicant. It has only to form its opinion because it is the duty of the Resolution Professional to find out as to whether the Resolution Plan is in compliance of the provisions of the Code or not the Resolution Professional can give his opinion with regard to each plan before the CoC and it is for the CoC to take a decision as to whether the plan is to be approved or not. In para 5 of the impugned order, it is noticed that the direction has been issued to the Resolution Professional to place all the Resolution Plans along with his opinion on the contravention or otherwise of the various provisions of law. The aforesaid direction clearly indicates that the Resolution Professional is free to submit his opinion with regard to contravention or otherwise of the various provisions of law. The aforesaid observations take care of the duties and responsibilities of the Resolution Professional. The Resolution Professional can give his opinion with regard to each Resolution Applicants and further steps are to be taken for the CoC as per the direction issued by the Adjudicating Authority. Thus, various issues regarding ineligibility or eligibility need not be gone into in this Appeal. It is only after the CoC s decision if any question arise regarding eligibility that can be gone into before the Adjudicating Authority in accordance with the law - appeal dismissed. 2022 (4) TMI 308 Liquidation in process - application filed against Personal Guarantors - Section 95(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- All the defences raised by the Corporate Debtor will be considered at the time when the RP files his report under Section 99 of IBC, 2016 and when the matter is taken up for admission or rejection under Section 100 of IBC, 2016. The Hon'ble NCLAT, Principal Bench, in the matter of RAVI AJIT KULKARNI, PERSONAL GUARANTOR OF PRATIBHA INDUSTRIES LIMITED AND ORS. VERSUS STATE BANK OF INDIA [ 2021 (9) TMI 60 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] has held that once an Application under Section 95 of IBC, 2016 is filed, the Adjudicating Authority has to act on it, and following principles of natural justice, give limited notice to Personal Guarantor to appear referring to the Interim Moratorium that has commenced as per terms of Section 96 and subsequently proceed to the next stage of appointing Resolution Professional as per Section 97 read with attendant Rules and Regulations. The Resolution Professional is required to examine the Application as set out in Section 97(6) of IBC, 2016 and after examining the Application, as per Section 97(7) of IBC, 2016 the Resolution Professional may recommend for the acceptance or rejection of the Application in his report, within a period of 10 days as contemplated under Section 99(1) of IBC, 2016 - Post this matter on 26.04.2022 for filing of Report by the Interim Resolution Professional. Service Tax 2022 (4) TMI 307 Rectification of mistake - error apparent on the face of record or not - demand of service tax under Lease Circuit Service - period 01.01.2008 to 31.03.2011 - HELD THAT:- The Leased Circuit Service (for internet) has remained all along exempt under the exclusion clause in Section 65(109a) of the Finance Act, which defines telecommunication service. Thus, there is no error in the final order dated 05.08.2019 of this Tribunal. The miscellaneous application for rectification of mistake by Revenue is dismissed, being without any merit. 2022 (4) TMI 306 100% software Export Oriented Unit - refund of unutilised cenvat credit - Section 11B of the Central Excise Act, 1944 read with Section 83 of Finance Act, 1944 - HELD THAT:- Almost all input services used by the assessee in the case in hand have been considered by various Benches as well as higher judicial fora. Larger Bench of this Tribunal in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] has held that insofar as refund claims under Rule 5 ibid are concerned, the same have to be taken as the end of the quarter in which FIRCs received, if the refund claims are filed on a quarterly basis. The assertions of the learned advocate are found to be correct insofar as his contentions that the Revenue has not disputed the eligibility or otherwise of the cenvat credit is concerned. Hence, Revenue cannot be disputed the eligibility when the refund of the input service credit is claimed. Appeal allowed - decided in favor of appellant. 2022 (4) TMI 305 Levy of Service Tax - Business Auxiliary Services or not - appellant had provided the services of promotion or marketing of goods/services by engaging himself in carrying advertising, promotional activity, team endorsement provided by M/s. RCSPL/franchisee/co-sponsors - HELD THAT:- The issue is no more res integra as the very same issue was considered by the learned Kolkata Bench of the CESTAT in the case of SOURAV GANGULY VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA (NOW COMMISSIONER OF CENTRAL GOODS SERVICE TAX CENTRAL EXCISE, KOLKATA SOUTH) [ 2020 (12) TMI 534 - CESTAT KOLKATA ] wherein, the issue has been decided in favour of a similarly placed taxpayer. The learned Kolkata Bench has elaborately considered the relevant provisions as well as orders of various Benches of CESTAT and also that of the decision of the Hon ble Bombay High Court in the case of INDIAN NATIONAL SHIPOWNERS' ASSOCIATION VERSUS UNION OF INDIA [ 2009 (3) TMI 29 - BOMBAY HIGH COURT ] wherein it has been held that the activity of the appellant therein could not be subjected to levy of service tax under Business Auxiliary Service prior to July 1st, 2010. Appeal allowed - decided in favor of appellant. 2022 (4) TMI 304 Levy of Service Tax - membership /admission / enrolment fee collected from the prospective members (applicants) who had applied for club membership - activity carried out by one person for another for consideration would come under the definition of service or not - mutuality of interest - Taxability of Guest Fee - applicability of N/N. 6/2005-ST dt. 01/03/2005 - HELD THAT:- All the charges on which demand of service tax was confirmed is squarely covered by the judgment of the Hon ble Supreme Court in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT ]. Therefore, the issue is no longer res integra - It was held in the said case that there has to be an activity carried out by one person for another for consideration which would apply on all fours even in the context of definition of service. Therefore, the transaction between members and the club not amount of rendering of any service by the appellant to their members - Demand do not sustain as no service is taking place. Taxability - guest fee - HELD THAT:- Without going into the issue of taxability, it is found that the appellant is clearly eligible for exemption Notification No.6/2005-ST. According to which, the appellant are entitled for the exemption when the value of taxable service is not exceeding ₹ 4 lakhs. In the present case, after excluding the value of all other services which are not taxable in view of the Hon ble Apex Court s judgment, the value remains well within the threshold limit of the exemption i.e. ₹ 4 lakhs. Therefore, the appellant is otherwise eligible for exemption under the Notification No.6/2005-ST. Accordingly, the guest fee even if taxable is exempted. The demand of service tax in both the appeals are not sustainable - appeal allowed - decided in favor of appellant. 2022 (4) TMI 303 Non-payment of service tax - appellant though had paid freight, but had not paid the service tax for the transportation of sugarcane from the field to the factory - time limitation - Commercial Vehicle or not - Goods Transport Agency or not - invocation of extended period of limitation - HELD THAT:- Revenue has placed reliance in Hon ble High Court of Allahabad High Court in the case of COMMISSIONER CENTRAL EXCISE VERSUS M/S KISAN SAHKARI CHINI MILLS LTD. AND ANOTHER [ 2017 (3) TMI 1786 - ALLAHABAD HIGH COURT ], where it was held that In the present case, transporters transferring sugarcane from Cane Collection Centers to sugar mills and presenting bills for such service, squarely satisfy the requirement of Rule 2(d)(v) read with Section 65(50b) of Finance Act, 1994 - the transporters in the present case are clearly covered by the definition of Goods Transport Agency hence Assessees are liable to pay service tax being within the definition of person liable to pay service tax under Rule 2(d)(v). The only factual difference between the decision of the Hon ble Allahabad High Court and the case on hand are, as noted by the Hon ble High Court, that the sugarcane was transferred to sugar mills by individual truck owners who would charge for such transportation, by presenting bills fortnightly, whereas, here in the case on hand, the agriculturists themselves are transporting the sugarcane to the factory of the appellant and hence, there was no service rendered in relation to transportation of goods by road in a goods carriage. This is because, there was actual transportation and not in relation to, as observed in the order of this Bench in LAKSHMINARAYANA MINING COMPANY VERSUS COMMISSIONER OF CENTRAL TAX BENGALURU SOUTH GST COMMISSIONERATE [ 2019 (7) TMI 917 - CESTAT BANGALORE ]. The demand do not sustain - appeal allowed - decided in favor of appellant. 2022 (4) TMI 302 Levy of Service Tax - rendering cleaning service mostly to non- commercial organizations, government hospitals, educational institutes - demand of service tax for the period April 2009 to March 2013 by invoking extended period of limitation - HELD THAT:- On examining of one of the agreements, between the appellant and the Medical University, Greater Noida. The nature of the work was for charges for cleaning of the central road and the invoice raised by the appellant also confirmed the same that the appellant has been providing cleaning/sanitation services - Another agreement with Allahabad University is also examined, wherein the scope of the contract is of cleaning/ sanitation/removal of garbage from road of campus road of universities of Allahabad. It is found that in balance sheet, the appellant has shown non-taxable service and taxable service separately and in ST-3 returns they have shown taxable services on which they have paid service tax. But without examining the fact that the appellant has also provided the cleaning service, the demand of service tax sought to confirmed against the appellant on the basis of gross value of services provided by the appellant as shown in the balance sheet. The service tax which has already been paid by the appellant has been reduced and the balance amount of service tax demand has been proposed. Time Limitation - HELD THAT:- The demand of service tax is barred by limitation as the service rendered by the appellant were well known to the Department in earlier proceedings, therefore, the subsequent show cause notice cannot be issued by invoking extended period of limitation On merit also, the fact is noted that no service tax was payable on cleaning services in terms of Sl. No. 12 of Notification No. 25/2012 ST dated 20 June 2012 wherein the services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration to Sl. No. 25A, wherein services provided to Government, a local authority or a governmental authority by way of carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation are exempt from payment of service tax . As the cleaning service has been exempt from payment of service tax in terms of the negative list to the Notification No. 25/2012- ST dated 20 June 2012, therefore, the appellant is not liable to pay service tax on cleaning services - If the same is excluded from the taxable service quantify by the Adjudicating Authority on the basis of gross value of services shown by the appellant in balance sheet, the appellant has paid service tax for supply of the para-medical services i.e. manpower recruitment and supply agency service. The demand of service tax is not sustainable against the appellant - appeal allowed - decided in favor of appellant. Central Excise 2022 (4) TMI 301 CENVAT Credit - inputs - Motorised Fire rated rolling shutter - GI Flush, GI Flush Door and Drop Seal - GI Flush partition, GI Flush Door Drop Seal for Flush Door - Wooden Opaque Inpill (part of Megtek Door for Security Purpose) - Main Safe Deposit vault Door - credit of service tax paid on services when availed prior to obtaining Central Excise Registration - credit of service tax paid on services availed during the date of Central Excise Registration to date of plant ready for manufacturing process - time limitation. Inputs - HELD THAT:- These goods were used in the appellant s factory which is engaged in the manufacture of gold. The Adjudicating Authority has denied the credit on the ground that these goods such as shutter, door, flush door, etc are related to building. Therefore, the same is neither capital goods nor input. Whether the goods is input or otherwise it has to be decided on the basis of type of industry and the product manufactured therein - In the present case, the manufacturer is engaged in the manufacture of gold for which the safety of gold is a vital part of the overall manufacturing and trading thereof. It is found that all these goods even though are forming part of building but these are all specialized goods which are normally not installed in normal buildings. In the present case, product being gold, the safety of gold is very important. Accordingly, all these goods are specialized items which are installed for the storage and safety of the final product i.e. Gold. As per the definition of input, input means goods which is used in or in relation to the manufacture of final product, whether directly or indirectly. Therefore, goods which is used even not in the manufacture directly but even if it is used in relation to the manufacture and indirectly, the said goods qualify as inputs - Therefore, in the present case all the goods which are specialized goods used for storage and safety of the gold, these are considered to be inputs used in relation to the manufacture of the final product i.e. gold indirectly - credit allowed on all inputs. Some of the decisions on which reliance can be placed are M/S STEEL AUTHORITY OF INDIA LTD. VERSUS CCE ST, RAIPUR [ 2016 (8) TMI 1110 - CESTAT NEW DELHI] , HINDUSTAN ZINC LTD. VERSUS COMMISSIONER OF C. EX. S.T., JAIPUR-II [ 2015 (11) TMI 1689 - CESTAT NEW DELHI] and COMMISSIONER OF CENTRAL EXCISE NAGPUR VERSUS M/S HYUNDAI UNITECH ELECTRICAL TRANSMISSION LIMITED AND ANOTHER [ 2015 (9) TMI 1083 - SUPREME COURT] . Whether appellant is entitled for CENVAT credit in respect of Service Tax paid on services prior to obtaining the Central Excise registration and also on the issue that services used during the date of Central Excise Registration till the date plant got ready for manufacturing process? - HELD THAT:- The Central Excise registration is not required for availing the CENVAT credit. The CENVAT credit eligibility is on the condition that the services were received by the assessee, the same was used in or in relation to the manufacture of final product and the final product has been cleared on payment of duty. Therefore, the eligibility of CENVAT credit cannot be related to the Central Excise registration - reliance placed in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] - Tribunal in various cases has thus held that even for the services received prior to Central Excise registration allowed the CENVAT credit on the input services. Therefore, this issue is no longer under dispute - credit allowed. Time Limitation - HELD THAT:- Though the appellant made out prima facie strong case on limitation but since the matter is decided on merit itself as discussed no conclusive decision on limitation is required. Appeal allowed - decided in favor of appellant. Indian Laws 2022 (4) TMI 300 Dishonor of Cheque - drawer of the cheque - case of the petitioner is that he is the authorised signatory of the Proprietrix concern to sign cheques, but he is not the drawer of the cheque on the account maintained by him - criminal prosecution under Section 138 of the Negotiable Instruments Act 1881 - HELD THAT:- This Court put a pointed question to the learned counsel for the petitioner, whether if the account not blocked and sufficient fund available in the account, would the bank have cleared the cheque?. The answer was positive. Therefore, the understanding between the account holder, authorised signatory and the bank is that the cheque drawn by the authorised signatory will be honoured, provided there is sufficient fund available in the account. That means, the account opened in the name of the Proprietor concern, is in fact maintained by the authorised signatory and not the person in whose name the proprietor concern stands. One can easily visualise the object of Section 138 of the Negotiable Instruments Act, 1881, will be defeated, If the proposition canvassed by the petitioner is held legally valid. Fraudsters will open the Bank Account in the name of Proprietor concern by one individual and another individual will be nominated as Authorised Signatory. Allow the cheque drawn by the authorised signatory gets bounced and pleads that he is only the drawer of the cheque, but not the person maintaining the account. The Court cannot give an interpretation to the provision of law, which will be contrary to object of the Act and defeat the very purpose of the Act - this Court finds no merit in the petition to quash the complaint under Section 138 of the Negotiable Instruments Act, 1881 against the petitioner being the drawer of the cheque, and drawn the cheque as authorised signatory of the person who opened the account. Petition dismissed. 2022 (4) TMI 299 Dishonor of Cheque - section 138 of NI Act - matter is amicably settled between the parties - HELD THAT:- Matter stands amicably settled between parties. In this regard statements of learned counsel for the petitioner as well as learned counsel for respondent No. 1 have been recorded. Both of them have stated that they are duly authorized to make statement on behalf of their respective clients and to communicate amicable settlement to the Court. It has been communicated by them that as complainant- respondent has agreed to withdraw the complaint for compounding the case against receipt of entire compensation amount, petitioner-accused does not intend to contest the petition on merit and thus prayer has been made to decide the case in terms of compromise. The respondent/complainant is permitted to withdraw the complaint and matter is compounded and complaint arising out of dishonor of cheque, under Section 138 of the Negotiable Instruments Act, is treated to be withdrawn and judgments of conviction and sentence passed by the Courts below are quashed and set aside. Petitioner-accused is acquitted of the accusation framed against him. The petitioner/accused is directed to deposit ₹ 2,000/- as compounding fee with the H.P. State Legal Services Authority, Shimla within six weeks from today - Trial Court is directed to release ₹ 2,50,000/- deposited by the petitioner-accused, along with interest, if any, accrued thereon, in favour of respondent-complainant by remitting the same in bank account of respondent-complainant Tarsem Singh - petition disposed off.
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