Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 16, 2022
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of IGST - zero-rated supply of goods or services or both - as the provisional refund and payment of interest would be subject to resolving the issues around the mismatches now discussed or if any other, there should be no inhibition in law for the aforesaid Nodal officers, as they examine the resolution of the mismatches, to decide on the recommendations in this regard. - HC
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Rejection of application of the petitioner to revise the form TRAN-1 - Admittedly the portal opened only on 15th March, 2018, for filing the TRAN-2 returns and petitioner could realise the inadvertent error only after that. Immediately thereafter, a complaint was made to the GST council. Thus, this Court finds that the mistake in filling up TRAN-1 form is a genuine, and, in the circumstances, the said error should not prevent the petitioner from claiming or being entitled to claim, what is otherwise legally due to it. - HC
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Anti-profiteering - if the benefit of ITC, which was not available earlier, was made available to the Respondent in the post GST period, it was incumbent on the Respondent to pass on such benefit to the Applicant no. 1 by commensurate reduction in price. - this case such benefit has not been passed on by the Respondent to the Applicant No. 1 by way of commensurate reduction in the price. - NAPA
Income Tax
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LTCG - Exemption of capital gains in terms of Section 54EC - Assessee should not suffer where no default was committed by him in submitting the application under Section 119[2][b] of the Act on 24.05.2011 i.e., when there was no period of limitation prescribed. No application could be denied on technical grounds. - HC
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Addition u/s 69 - purchases made but not recorded the same in regular books of account - the assessee had shown such purchases from different parties only for the purpose of showing the purchases from multiple sellers to the bank. This was done to obtain higher spending limit from the bankers. - No additions - HC
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Addition u/s 56 - addition in respect of allocation of 1,03,000 rights shares - valuation - since the shares were allotted before Balance Sheet for AY 2013-14 was finalized, in our view Ld. CIT(Appeals) has not erred in computing the FMV per share considering the previous balance sheet which was approved in the AGM for valuation of FMV of the shares. - AT
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Deduction u/s 80IAB - The statute or the provisions contained u/s 80IAB does not make any distinction that if the income has been derived from approved activities in SEZ, the same has to be classified under a particular head and then only deduction would be allowed - It is immaterial that whether the income derived has been shown from house property or business income or any other head. Thus, we hold that income derived from approved activity from the SEZ is liable to be allowed as deduction u/s 80IA. - AT
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Permanent Establishment (PE) in India - attribution of profit to the PE - Revenue authorities have not brought any material on record to demonstrate that the activities of DHR India are wholly devoted on behalf of the assessee and as such it does not have any independent status and was not acting in the ordinary course of its business. - there cannot be any PE under Article 5(8) and 5(9) of the Indian Singapore Tax Treaty. - AT
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TDS u/s 195 - Outsourcing charges payable treated as 'fees for technical services' - These individuals are employees of iRunway Inc. and fulfill the criteria of the relevant US statutory requirements to be able to access the protective information. None of these individuals are employees of the assessee as incorrectly alleged by the revenue. AO failed to appreciate that owing to the legal restrictions in the US, iRunway Inc. or its employees did not have an opportunity or any occasion to 'make available' any technical knowledge to the assessee or its employees while rendering services. - AT
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Revision u/s 263 - Assessment u/s 153A - addition of unaccounted receipts found in 15 red colored notebooks - The initiation of 263 proceedings based on the invalidation of manual return filed by the assessee u/s. 153C is not proper, considering the fact that same income cannot be added in two Assessment Years. - AT
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Addition u/s 41(1) - creditors treated as ceased/waived liability - recalling of appeal - the Assessing Officer issued summons to the alleged trade creditors and recorded their statements, wherein they have denied of any payment due to the assessee - The appeal recalled to the extent of examining the two decisions, is accordingly dismissed. - Additions confirmed - AT
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Protective addition made in the hands of the assessee - income surrendered by the assessee in the sworn statement - the surrender was not blanket surrender as presumed by the tax authorities. We also noticed that the surrender was couched with various caveats. In any case, the surrender of income without any basis is against the circular issued by CBDT . We also noticed that the assessee has explained later before the AO that the capital gain was in his mind while making surrender. - Additions deleted - AT
Customs
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Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver - Notification
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Seizure of mobile phones - violation of the principles of natural justice - sufficient and reasonable opportunity to the petitioners provided or not - the petition must be allowed quashing the impugned order and restoring the appeals to the file of the second respondent for reconsideration without much ado to ensure that the proceedings are decided strictly on merits and upon consideration of all material dispassionately in accordance with law after due opportunity. - HC
DGFT
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The Export Policy of Onion Seeds has been put under 'Restricted' category, with immediate effect. - Notification
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The expert policy of wheat against the above mentioned HS codes is "Prohibited" with immediate effect except for shipments fulfilling the conditions mentioned in Para 2 - Notification
SEBI
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Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Circular
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Related party transaction - Listing Obligations and Disclosure Requirements - The view, as taken by the Appellate Tribunal, in the given set of facts and circumstances of the present case, appears to be a plausible view of the matter. In fact, nothing of ill-intent on the part of the respondents has been established in the present case. - SC
Service Tax
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Refund claim - time limitation - Whether the statutory time prescribed under section 11B shall be applicable to the amount erroneously deposited by the appellant despite having no liability to deposit the same? - reverse charge mechanism - at the time of the payment the payment had no colour of liability as already discussed above section 11B of Excise Act is not applicable - AT
Central Excise
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Reversal of CENVAT Credit - clearance of LPG, which was produced as joint petroleum product with other dutiable petroleum product by chemical reaction/fraction of common blend of raw material is proper - byproduct or not - since the assessee could not have manufactured gelatin (dutiable final product) using a lesser quantity of hydrochloric acid, Rules 6(1) and 6(2) of the CCR would not come into play. - HC
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Clandestine removal - The standard of evidences need not be as high as in criminal proceedings, where the charges are required to be established beyond reasonable doubts. But in the present case, the allegation of clandestine manufacture and clearance has not been substantiated by any tangible evidences - the law as to whether the third party records can be admitted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. - AT
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Benefit of exemption notification - galvanised solar structure - mounting structure - It is clear that experts in the field consider the Module Mounting Structure as an integral and essential component of the solar power systems and the Ministry implementing the projects also considers the same as components of the solar power plants and hence were covered by the notifications. - AT
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Violation of principles of natural justice - Evasion of duty - the presumption as to the truth and evidentiary value of the documents is available to the Revenue, if the document relied upon is recovered and seized from the premises of the assessee. However, where any incriminating documents are recovered from the premises of third party, such third party should also be jointly prosecuted by being added as co-noticee in the show cause notice. - Revenue has failed to establish the charge of clandestine removal. - AT
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Interest on delayed refund - relevant date for calculation of refund - No justification for the bifurcation have been given while sanctioning the interest only on the amount of pre deposit has been given in the order. It is also observed that the findings of the claim to be barred by time are also not correct as the relevant date for recovery period is considered as date of filing the appeal (i.e. 01.09.2014). Inspite of date of communication of the final order entitling the appellant from the impugned relief, 30.6.2017. - Claim of interest allowed - AT
Case Laws:
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GST
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2022 (5) TMI 699
Grant of anticipatory bail - illegal activities of passing fraudulent Input Tax Credit (ITC) by generating fake firms - Sections 132(1) (b), 132 (1) (i) C.G.S.T. Act, 2017 - HELD THAT:- The instant matter is pertaining to large evasion of tax and to investigate the matter in depth the possibility of custodial interrogation of the applicant could not be ruled out. The offences pertaining to tax evasion or economic in nature are having a class of their own as they are effecting the economy of the country. In the considered opinion of this Court, for the reasons stated herein before the custodial interrogation of the applicant could not be ruled out and thus having regard to all the facts and circumstances of the case it does not appear to be a fit case where anticipatory bail may be granted to the applicant/ accused. The anticipatory bail application moved on behalf of the applicant Shishir Gupta @ Parul Gupta is hereby rejected.
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2022 (5) TMI 698
Desealing of business premises - release goods lying in the business premises - enforcement of petitioner fundamental right guaranteed under Article 19(1)(g) of the Constitution - awarding of cost for malicious prosecution - Section 67(4) and Section 67(10) of the CGST/DGST Act - HELD THAT:- The authorized representative of the petitioner will present himself/herself with the relevant documents before the concerned officer tomorrow i.e., 13.05.2022, albeit latest by 11:00 A.M. -The respondents/revenue will de-seal the subject premises tomorrow i.e., 13.05.2022 by 07:00 P.M. - In case the documents produced by the petitioner are found to be deficient, appropriate steps, in accordance with the law, will be taken.
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2022 (5) TMI 697
Seeking restoration of cancelled registration of petitioner - HELD THAT:- The show cause notice and the impugned order are as vague as anything. The issue is now covered by the decision of this Court in the case of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT ] where it was held that In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the writ applicant having made a fervent request for condonation of delay in filing appeal seeking revocation of cancellation of registration. The impugned order cancelling the registration and the show cause notice is hereby quashed and set aside. The registration stands restored - application allowed.
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2022 (5) TMI 696
Refund of IGST - zero-rated supply of goods or services or both - mismatch in the accounts details between the details available with the PFMS and ICEs - Sections 54(5) and 54(7) of the Central Goods And Services Tax Act, 2017 - HELD THAT:- This Court is of the considered opinion that, keeping open all questions on the mismatches for decision by the Nodal Officer now suggested by Sri. Amit A. Deshpande, the petition must be disposed of directing the Nodal Officers to consider the petitioner s request for resolving the mismatch issues. The jurisdiction of the Customs Officers to decide on the claim for provisional refund and payment of interest under the provisions of the CGST Act would be a moot question, as the reasons for mismatches are yet to be resolved pursuant to this Court s order. But, as the provisional refund and payment of interest would be subject to resolving the issues around the mismatches now discussed or if any other, there should be no inhibition in law for the aforesaid Nodal officers, as they examine the resolution of the mismatches, to decide on the recommendations in this regard. The petitioner s authorized representative shall appear before Mr. Rajiv Kittur, the Nodal Officer for the Inland Container Depot, Whitefield on 25.04.2022 at 10:30 a.m., and the petitioner s authorized representative shall be heard on the mismatches pending before the Bangalore City Commissionerate and Inland Container Depot by this Nodal Officer - Application disposed off.
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2022 (5) TMI 695
Maintainability of appeal - time limitation - appeal came to be rejected on 30.7.2021 on the ground that it was filed beyond the period of limitation - Rule 108(1) of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The appeal is required to be filed in an electronic mode only and if any other mode is prescribed, then, the same is required to be notified by way of a notification. There is nothing on record to show that any notification was issued prescribing any other mode by which an appeal could be filed. Therefore, the argument of the learned counsel for the petitioner that the time period for filing appeal would start only when the order is uploaded in GST portal cannot be brushed aside more so, in view of the Division Bench Judgment of the Gujarat High Court in GUJARAT STATE PETRONET LIMITED VERSUS UNION OF INDIA THROUGH SECRETARY [ 2020 (9) TMI 427 - GUJARAT HIGH COURT ], which has been placed before this Court. Thus, filing of appeal by the petitioner on 03.12.2020 is within the period of limitation - the matter is remanded back to respondent No.2 for adjudicating the dispute on merits in accordance with law.
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2022 (5) TMI 694
Rejection of application of the petitioner to revise the form TRAN-1 - petitioner cannot fill details in Table 4 of TRAN-2 - Central Goods and Services Tax Act, 2017 - HELD THAT:- The fact that petitioner had sought to correct the mistake in the details supplied in TRAN-1 immediately on becoming aware of the error, is evident from Ext.P3 dated 16-03-2018. The statutory limitation prescribed for correcting errors that occurred during the initial stages of transition ought not to be used as an iron handle to deny the legitimate claims of taxpayers, especially for claims relating to transitional input tax credit. When it is apparent from the circumstances, that, the mistake was a bonafide error and arose on account of an error in perception and comprehension of minute details of the new formats to be submitted, denying the relief of correcting the error can only be termed as arbitrary and unreasonable. In such instances, this Court cannot shy away from its constitutional obligation of enforcing equal protection of all laws within the territory of India, contemplated under Article 14 of the Constitution of India. Admittedly the portal opened only on 15th March, 2018, for filing the TRAN-2 returns and petitioner could realise the inadvertent error only after that. Immediately thereafter, a complaint was made to the GST council. Thus, this Court finds that the mistake in filling up TRAN-1 form is a genuine, and, in the circumstances, the said error should not prevent the petitioner from claiming or being entitled to claim, what is otherwise legally due to it. The respondents are directed to facilitate revising of form GST TRAN-1 submitted by the petitioner on 01-09-2017 and to file form GST TRAN-2 by making necessary arrangements on the web portal - petition allowed.
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2022 (5) TMI 693
Classification of goods - rate of tax - Tyre Pyrolysis Oil - Appellant has not provided the details regarding the chemical composition of the impugned product - HELD THAT:- Appellant, in their grounds, have contended that they have submitted the Test Reports consisting the chemical composition of the impugned Product during the course of the proceedings before the MAAR along with the details of the manufacturing processes carried out to obtain the impugned product. In such circumstances wherein the Appellant and the MAAR are contradicting each other factually and considering the plea of the Appellant that they may be permitted to present the Test Reports of the impugned product along with other required documents afresh before the Advance Ruling Authority to get the required Advance Ruling, it is opined that issue under question may be heard by the Advance Ruling Authority on merit after calling for all the required documents as it may deem fit to pronounce its ruling in the matter. The case may be decided on merit after calling for all the required documents from the Appellant - the case is remanded back to the Maharashtra AAR for passing the advance ruling in respect of the questions asked by the Appellant - Appeal disposed off.
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2022 (5) TMI 692
Classification of goods - rate of tax - works contract executed - composite supply or not - eligibility for concessional rate of GST under Sl. No.3 (vi) of notification 11/2017-CT (CR) dated 28.06.2017 - What is the effective date of applicability of 12% tax rate and whether this concessional rate shall be applicable prospectively or retrospectively - HELD THAT:- Unless a specific effective date is mentioned in a notification the date from which rate of tax is applicable is the date of issuance of such a notification. The notification No. 11/2017 CT(R) dated 28-06-2017 which prescribes the applicable tax rate of 12% on work contract service provided to IIT Bhubaneswar which is an educational institution is effective form the date of notification. The said notification being come into force with effect from 1st July 2017, we are of the view that the concessional rate of GST of 12% pertaining to the case of applicant is effective retrospectively.
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2022 (5) TMI 691
Anti-profiteering - failure to pass the benefit of ITC - supply of 04 goods - Anutone Serge Astral Lay-in Aluminium Unperforated Aquila 595*595*0.6mm - Anutone Serge Astral Lay-in Aluminium Unperforated Aquila 1200* 1200*0.6mm - Anutone Serge Astral Lay-in Aluminium Perforated Mensa (2.5 mm dia) 595*595*0.6mm - Anutone Serge Astral Lay-in Aluminium Perforated Mensa (2.5 mm dia) mm - Respondent had not reduced the basic price of the said goods commensurate with the ITC of IGST paid at the time of import available with the introduction of GST w.e.f. 01.07.2017 - any benefit of ITC to the Respondent after implementation of GST w.e.f. 01.07.2017 or not - contravention of section 171 of GST Act - HELD THAT:- This Authority finds that, Section 171 of the CGST Act, 2017 mandates that, the supplier should pass on the benefit of reduction in rate of tax or the benefit of ITC availed by the supplier to the recipients by way of commensurate reduction in prices. The investigation by the DGAP was conducted under the provisions of Section 171 of the Act read with Rule 129 of the CGST Rules, 2017, on the recommendation of the Standing Committee on Anti-Profiteering and the Investigation Report was submitted to this Authority under Rule 129(6) of the Rules in terms of the mandate of law. Therefore, this Authority finds that, there has been no violation of the principles of natural justice and the Notice issued by the DGAP under Rule 129(3) of the Rules is perfectly legal and maintainable and hence there is no merit in this submission of the Respondent. This Authority has examined the sequence of events and the documents placed on record. This Authority finds that, the supply of goods by the Respondent to the Applicant no. 1 was made as per the order placed during February 2017 on the prices agreed as per the offer of the Respondent given during November 2016. In such offer and quote, the amount of Additional Duty of Customs (referred as CVD), payable at the time of import and on which no ITC was then available, was necessarily factored into the prices. As per the mandate of Section 171 of the CGST Act, 2017, if the benefit of ITC, which was not available earlier, was made available to the Respondent in the post GST period, it was incumbent on the Respondent to pass on such benefit to the Applicant no. 1 by commensurate reduction in price. This Authority finds that, while arriving at profiteering in terms of Section 171 of the CGST Act, 2017, the DGAP has correctly examined as to whether the Respondent had benefited by any additional amount of ITC, and if so, the quantum thereof, and whether the Respondent had passed on the said benefit to the Applicant No. 1 by commensurate reduction in prices. The Authority also finds that, Section 171 of the CGST Act 2017 itself defines, the term profiteered which means the amount determined on account of not passing on the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services or both - This Authority holds that, the DGAP has correctly calculated, as mandated by the law, the amount profiteered by the Respondent in this case. This Authority is obligated by Section 171 of the CGST Act, 2017 to ensure that the benefit of the reduction in the rate of tax and/ or benefit of ITC is passed on to the recipients by the suppliers. This Authority finds, as per the discussion and findings that, in this case such benefit has not been passed on by the Respondent to the Applicant No. 1 by way of commensurate reduction in the price. Therefore, the submission made by the Respondent has no basis in law. This Authority also finds that, such discounts were offered to increase the sales of the Respondent in the normal course of their business which do not constitute passing on of the benefit which accrued to the Respondent on account of availability of ITC of IGST paid at the time of import during the GST period. The Respondent is legally bound to pass on the above benefit through commensurate reduction in prices. Hence, the Authority holds this contention of the Respondent devoid of any merit. This Authority finds that the Respondent has profiteered by an amount of Rs. 12,79,304/- during the period of investigation i.e. 01.07.2017 to 30.09.2019. The above amount of Rs.12,79,304/- (including 18% GST) that has been profiteered by the Respondent from Applicant No. 1, shall be refunded by him, alongwith interest @18% thereon, from the date when the above amount was profiteered by him till the date of such refund, in accordance with the provisions of Rule 133 (3) (b) of the GCST Rules 2017 - this Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
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Income Tax
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2022 (5) TMI 690
Exemption of capital gains in terms of Section 54EC - LTCG - Assessing Authority having opined that the investment should have been made on or before 03.02.2003 denied the benefit of Section 54EC of the Act and had brought to tax the capital gains - period of limitation for filing the application under Section 119[2][b] - As argue delay in investing the amount in bonds was only of two days and a genuine ground was put forth for condoning the said delay of two days which was unintentional - HELD THAT:- Indisputably, application under Section 119[2][b] of the Act was filed by the appellant assessee on 24.05.2011 before the respondent No.1. Had the respondent No.1 considered the said application before issuance of the Circular dated 09.06.2015, certainly the said application would not have been rejected on the ground of delay i.e., beyond the period of six years as specified in the Circular dated 09.06.2015. It is also not in dispute that no provisions of the Act and Rule prescribes the period of limitation for filing the application under Section 119[2][b], it is only by virtue of the Circular dated 09.06.2015, period of limitation of six years has been prescribed for the first time. It would be beneficial to refer to the judgment of the Hon'ble Apex Court in the case of Gemini Distilleries [ 2017 (10) TMI 1275 - SUPREME COURT] wherein the CBDT Circular dated 09.02.2011 was considered inasmuch as its retrospective operation and held that the CBDT cannot issue any Circular having retrospective operation. No doubt, the validity of the Circular dated 09.06.2015 was not challenged directly by the appellant, applicability of the said Circular was the main issue before the Writ Court. In all fairness, if the matter is perceived in the angle of delay caused in adjudicating the application filed on 24.05.2011 much before the Circular dated 09.06.2015 coming into force, the resultant effect obviously would have been different. For the reasons best known to the Revenue, the said application was not disposed of within a reasonable period. Assessee should not suffer where no default was committed by him in submitting the application under Section 119[2][b] of the Act on 24.05.2011 i.e., when there was no period of limitation prescribed. No application could be denied on technical grounds. Given the circumstances, without dwelling upon this issue further, to balance the scales of justice, we deem it appropriate to set aside the order of the learned Single Judge as well as the order dated 13.12.2017 impugned and remand the matter to the respondent No.1 for re-consideration of the application filed on 24.05.2011 to take an appropriate decision on the merits of the case in accordance with law. This view is fortified by the judgment of the Hon'ble Apex Court in the case of Gemini Distilleries supra.
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2022 (5) TMI 689
Reopening of assessment u/s 147 - Appellant capitalized the Foreign Exchange Loss (Forex Loss) and claimed depreciation - HELD THAT:- It could be seen from the order impugned herein that the learned Judge after analysing the legal position qua reopening the assessment, has categorically opined that the appellant has produced all the material facts and evidences, however, the assessing officer in the original assessment order dated 08.02.2013, has not considered many details and passed the said order in a cryptic manner. Having observed so, the learned Judge ought to have set aside the notice for reopening the assessment and remanded the matter to the assessing officer for fresh consideration. On the other hand, it was erroneously concluded that it is a deemed case where income chargeable to tax has escaped assessment and hence, the reassessment proceedings must go on. This court, without expressing any opinion on the merits of the case, is inclined to set aside the orders impugned herein as well as in the writ petition and are accordingly, set aside. Consequently, the matter is remanded to the assessing officer to decide the decision for reopening the assessment under Section 147 of the Act, afresh, by passing a speaking order, after considering all the documentary evidence and materials placed by the appellant without being influenced by any observations made by the learned Judge in the impugned order [ 2021 (9) TMI 249 - MADRAS HIGH COURT]
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2022 (5) TMI 688
Addition u/s 69 - purchases made but not recorded the same in regular books of account - Commissioner (Appeals) and the Tribunal however deleted this addition on the ground that the purchases were reflected in the books of accounts by the assessee and were not made from unexplained sources - HELD THAT:- It could thus be seen that the entire issue is based on facts. The Commissioner (Appeals) and the Tribunal concurrently came to findings of facts which are not perverse. The Tribunal in the above quoted portion of the order has accepted the explanation of the assessee that the entire purchase was made from M/s. Maximum Synthetics Pvt. Ltd. and it was also duly recorded in the regular books of accounts. However, the assessee had shown such purchases from different parties only for the purpose of showing the purchases from multiple sellers to the bank. This was done to obtain higher spending limit from the bankers. No question of law arises.
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2022 (5) TMI 687
Exemption u/s 11 - application for grant of recognition u/s.80G(5)(vi) rejected - HELD THAT:- The objects talk of upliftment of all the sections of the society coming from any religion, caste or creed. Explanation 3 to section 80G simply states that charitable purpose does not include any purpose the whole or substantially the whole of which is of a religious nature. This shows that at least some part of activities of a trust, which are of religious nature, are permitted. This fact is further fortified by sub-section (5B) of section 80G which provides that institution or fund which incurs expenditure during any previous year, which is of a religious nature for an amount not exceeding 5% of its total income in that previous year, shall be deemed to be an institution or fund to which the provisions of this section apply. From the break-up of `Religious expenses furnished by the assessee, as incorporated in the impugned order, it is manifest that the religious expenditure is less than the prescribed percentage. The ld. DR could not controvert the narration of expenses given against them as tabulated in the impugned order. In view of the above statutory provisions and the factual panorama obtaining in the extant case, we are satisfied that the assessee deserves recognition u/s.80G(5)(vi) of the Act, which is hereby accorded. Assessee appeal allowed.
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2022 (5) TMI 686
Exemption u/s 11 - refusing to grant registration U/s 80G - registration u/s 12AA is already granted - HELD THAT:- As decide in own case [ 2016 (2) TMI 460 - ITAT DELHI] wherein specific direction was given to the Ld. CIT(E) to grant registration U/s 80G of Income Tax Act to the assessee trust. Commissioner of Income Tax, Departmental Representative was present for Revenue, at the time of hearing. We heard him. He could not justify the rejection of assessee s application for registration u/s 80G(5) of Income Tax Act; having regard to specific direction given in the aforesaid order - Neither side has brought any materials for our consideration, to persuade us to take a view different from the aforesaid order of Co-ordinate Bench of ITAT, Delhi Thus direct the Ld. CIT(E) to grant registration to the assessee u/s 80G(5) - Decided in favour of assessee.
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2022 (5) TMI 685
TP Adjustment - adjustment in respect of corporate guarantee - amount guarantee provided by Havells Holdings Ltd. was Rs.143.13 crores against which the TPO has calculated guarantee fee @ 1.3 % amounting to Rs.1.86 crores - HELD THAT:- Keeping in view, the judgments of the Hon ble Bombay High Court Everest Kento Cylinders Ltd [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] and Thomas Cook (India) Ltd. [ 2019 (9) TMI 473 - BOMBAY HIGH COURT] in the absence of any other judgment contrarily brought to our notice, we hereby direct that the adjustment in respect of corporate guarantee provided to AEs be determined at date of 0.5 % instead of 1.3% determined by the revenue. Disallowance in respect of provision made for sales incentive under Shahenshah Scheme - HELD THAT:- This issue stands covered in the case of the assessee by the order of the Co- ordinate Bench of the Tribunal [ 2021 (1) TMI 741 - ITAT DELHI] . As a result, the appeal of the assessee on this ground is allowed and it is to be kept outside the purview of Section 115 JB. Denial of claim of deduction u/s 80IC on interest income - HELD THAT:- We find that the Hon ble Delhi High Court in the case of PCIT vs. Bharat Sanchar Nigam Ltd. [ 2016 (8) TMI 270 - DELHI HIGH COURT] and the Co- ordinate Bench of Tribunal in the case of M/ s. NHPC Ltd. [ 2019 (5) TMI 1664 - ITAT DELHI] has held that the Revenue was not justified in denying the claim of deduction on such income. Before us, Revenue has not pointed any contrary binding decision in its support. We therefore, hold that AO not justified in denying the claim of deduction u/ s 80IC of the Act and thus direct the AO to grant deduction u/ s 80 IC on the interest income earned by the assessee.
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2022 (5) TMI 684
Revision u/s 263 - Incorrect source of the money showed as receipt from the sale of such fruits and vegetables - non-inquiry by AO -HELD THAT:- We find that though 7/12 extracts was before the A.O where the assessee has shown having received income from sale of watermelon, vegetables, chana but the reality was there was no cultivation of these crops in the said 7/12 extracts submitted by the assessee. This fact was only brought out by the ld. Pr. CIT in his inquiry. The non-inquiry in this case by the A.O has resulted the order to be erroneous so as to be prejudicial to the interests of revenue since the source of the money showed as receipt from the sale of such fruits and vegetables has clearly turned out to be incorrect and the source of such money is still to be ascertained in the given facts and circumstances of this case, meaning thereby the tax which was lawfully excisable has not been imposed or that by application of the relevant statutes on an incorrect and incomplete interpretation a lesser tax than what was just has been imposed. The order becomes erroneous simply because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. In the said judgment, Hon ble Delhi High Court has referred to earlier decisions of the Hon ble Supreme Court in the case of Rampyari Devi Saraogi [ 1967 (5) TMI 10 - SUPREME COURT] and Tara Devi Aggrawal [ 1972 (11) TMI 2 - SUPREME COURT] wherein it has been held that where the A.O has accepted a particular contention/issue without any inquiry or evidence whatsoever, the order is erroneous and prejudicial to the interests of the Revenue. The aforesaid observation has to be understood in the light of the present case, where the A.O has not conducted any inquiry or examined the said 7/12 extracts which were in front of him. Therefore, this case has to be seen differently from the case where the A.O has conducted inquiry but the findings were erroneous. In the present facts it s a case of lack of inquiry by the A.O and not inadequate inquiry. CIT was justified in assuming revisionary jurisdiction and passing an order u/s 263 of the Act which is hereby upheld. - Decided against assessee.
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2022 (5) TMI 683
Addition u/s 56 - addition in respect of allocation of 1,03,000 rights shares - HELD THAT:- On plain reading of section 56(2)(vii)(c) of the Act, the term used is receives and the said term cannot in our view be restricted to receipt by way of transfer alone. The section does not indicate anything towards such a restricted interpretation, when using the term receives . Further, 56(2)(vii)(c) nowhere speaks of the word transfer or receives by way of transfer , so as to give a restricted interpretation to section 56(2)(vii)(c) of the Act. Allocation of 1,03,000 rights shares allotted to the assessee below FMV, proportionate to his shareholding in the company - Once the shares have been issued proportionate to existing shareholding, 56(2)(vii)(c) of the Act cannot be invoked. This issue has been dealt with and various Tribunals who have consistently taken the position that allocation of rights share proportionate to current shareholding would not attract provisions of section 56(2)(vii)(c) of the Act. See SUDHIR MENON HUF VERSUS ASST. CIT-21(2), MUMBAI [ 2014 (3) TMI 534 - ITAT MUMBAI] as held as long as there is no disproportional allotment of shares, there was no scope for any property being received by the tax payer as there was only an apportionment of the value of the existing shareholder over a larger number of shares, and hence no addition u/s 56(2)(vii)(c) of the Act would arise. If the shares are allotted strictly on proportionate basis based on existing shareholding, then though the provisions perse are applicable, but will not operate adversely. This is because the gain accruing on allotment of fresh shares will be offset by the loss in value of existing shares. Thus we are of the view that provisions of section 56(2)(vii)(c) do not apply in respect of allocation of 1,03,000 rights shares allotted to the assessee proportionate to his shareholding in the company. Whether section 56(2)(vii)(c) of the Act can be invoked in respect of additional 82,200 shares received by the assessee since the assessee s wife and father did not exercise the rights issue and renounced the right in favour of the assessee? - It is a well settled principle of law that what cannot be done directly cannot be done indirectly as well. Had the wife and father of the assessee directly transferred their rights shareholding in favour of the assessee, provisions of 56(2)(vii)(c) of the Act could not have been invoked since wife/ father are falling within the definition of relatives , which are excluded from within the purview of operation of section 56(2)(vii)(c) of the Act. Consequently, such renunciation of rights shares, by way of not exercising the right to subscribe to them in favour of the assessee, in our view, would not attract the provisions of section 56(2)(vii)(c) The Vishakhapatnam ITAT in the case of Kumar Pappu Singh [ 2018 (12) TMI 525 - ITAT VISAKHAPATNAM] held that since transaction of transfer of shares was within family and close relatives, proviso to section 56(2)(vii)(c) could not be applied for taxing income under head 'income from other sources'. Thus we are of the considered view that section 56(2)(vii)(c) of the Act cannot be invoked in respect of additional 82,200 shares received by the assessee, on account of renunciation of rights issue the by assessee s wife and father in favour of the assessee. Section 56(2)(vii)(c) invoked in respect of 14,800 allotted to the assessee as a result of third party shareholders declining to apply for rights shares in favour of the assessee - Renunciation of rights shares by third party shareholders in favour of the assessee, allowing the assessee to gain controlling interest has resulted in disproportionate allocation of rights shares in favour of the assessee and therefore, in respect of these shares, section 56(2)(vii)(c) of the Act shall apply, and income would taxable in the hands of the assessee. It would have been a different matter had the other parties not exercised their right of subscription to these rights shares, resulting in higher or controlling shareholding resulting in hands of the assessee. That, in our view, would not be disproportionate allocation, since the shareholders were allocated shares in proportion to their shareholding and only because some shareholders decided not to subscribe to rights shares offered to them in proportion to their shareholding, this itself would not make the allocation disproportionate, even if by way of non-exercise of rights, the assessee s shareholding has substantially increased as compared to other shareholders. However, in the instant case, renunciation of rights in favour of the assessee by third party (unrelated shareholders) does lead to disproportionate allocation in favour of the assessee, thereby leading to invocation of section 56(2)(vii)(c) - See SUDHIR MENON HUF VERSUS ASST. CIT-21(2), MUMBAI [ 2014 (3) TMI 534 - ITAT MUMBAI] upheld the principle that section 56(2)(vii)(c) of the Act cannot be invoked only in the event the allotment of shares is not disproportionate, but in case allocation is disproportionate, section 56(2)(vii)(c) of the Act would come into operation. Accordingly, in our view, section 56(2)(vii)(c) of the Act would apply in relation to 14,800 allotted the assessee as a result of third party shareholders renouncing their rights shares in favour of the assessee. Reducing the valuation of shares to Rs. 205.55 per share by computing the FMV per share on date of allotment taking into consideration the book value as on 31-03-2012 and adding further consideration received on account of issuance of additional shares - CIT(Appeals) has not erred in facts and in law in computing the FMV of shares on the above lines. The ITAT in the case of ACIT v. Y. Venkanna Choudary [ 2020 (1) TMI 1012 - ITAT VISAKHAPATNAM] held that in case the balance sheet was not drawn up on the date of allotment, the previous balance sheet which was approved in the AGM has to be considered for valuation of FMV of the shares. Thus, ITAT held that for arriving the FMV of shares previous Balance sheet which is audited and approved in the AGM has to be taken into consideration, before the allotment of shares. In the present case, since the shares were allotted before Balance Sheet for AY 2013-14 was finalized, in our view Ld. CIT(Appeals) has not erred in computing the FMV per share considering the previous balance sheet which was approved in the AGM for valuation of FMV of the shares.
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2022 (5) TMI 682
Trading in derivatives on recognised stock exchanges - Securities / shares derivative transactions treated as speculative transactions in terms of Sec.73 - set-off of the same has been denied from normal business income earned by the assessee - HELD THAT:- We find that Hon ble Apex Court in Snowtex Investment Ltd. Vs Pr. CIT [ 2019 (5) TMI 1165 - SUPREME COURT] has observed that the provisions of Sec. 43(5) were amended by Finance Act, 2005. Prior to the amendment, Section 43(5) defined a 'speculative transaction' to mean a transaction in which a contract for the purchase or the sale of any commodity including stocks and shares is settled otherwise than by the actual delivery or transfer of the commodity or scrips. The impact of the amendment by the Finance Act, 2005 was that an eligible transaction on a recognized stock exchange in respect of trading in derivatives was deemed not to be a speculative transaction. With effect from 01/04/2006, by deeming fiction, trading in derivatives was not to be regarded as speculative transaction when it was carried out on a recognized stock exchange.The CBDT Circular dated 27/02/2006 indicated that this amendment was occasioned by the changes which were introduced by SEBI both at the legal and technological level for bringing in greater transparency in the market for derivatives. In the present case before us, the assessee has incurred losses in derivative segment and claims the set-off of the same from normal business income. It is undisputed fact that the derivative transactions are eligible transactions carried out on recognized stock exchange and the same are eligible transactions which are deemed to be non-speculative in nature. This is as per amendment brought in by Sec.43(5) w.e.f. AY 2006-07 which provide that the derivative income / losses are to be deemed as non-speculative in nature. The trading in derivatives in shares could not be held to be at par with trading in shares since the legislatures has intended to treat them differently. The above case law of Hon ble Supreme Court clearly supports the case of the assessee. Therefore, there is no hindrance for the assessee to claim the set-off of losses of impugned eligible transactions from normal business income. We direct Ld. AO to allow the set-off and re-compute assessee s income.
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2022 (5) TMI 681
Disallowance of depreciation on intellectual property rights, being software used in the business of the assessee - HELD THAT:- It is clear from the remand report as well as purchase order issued by M/s. Satyam Computers dated 18.10.2005 that iAllwayTM MIFS Server License has been acquired and the IPR has been used in the assessee company business for a period of 12 months, which falls under the assessment year of 2007-08. Once the depreciation on IPR is not in dispute, there is clear cut evidence of purchase order is on the record and moreover, the iAllwayTM Server License was used in the assessee company business, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to allow depreciation as claimed by the assessee for the assessment year 2007-08. So far as claim of depreciation on IPR for the assessment year 2008-09 is concerned, in the remand report, the Assessing Officer has stated that the assessee has not contested this issue by way of fresh evidence and therefore, no report on this issue was submitted before the ld. CIT(A). Since the assessee has not furnished renewal of iAllwayTM Server License in subsequent period either before the ld. CIT(A) or before the Tribunal, we are not inclined to interfere with the order of the ld. CIT(A) in confirming the disallowance made by the Assessing Officer. Accordingly, the ground raised by the assessee for the assessment year is dismissed. Disallowance towards unsecured loan given by the Director to the company - HELD THAT:- It is not the case of the Department that the assessee has not availed any loan and more so, the assessee has produced all details available to the extent 89% of loan amount, which shows that the assessee has availed unsecured loans and moreover, loan receipt entry is very much available in the ledger accounts of Shri R. Srinivasan. Under the above facts and circumstances, the addition confirmed to the extent of ₹.2,48,000/- by the ld. CIT(A) is deleted. Thus, the ground raised by the assessee is allowed. Disallowance of loan - HELD THAT:- We have perused the appellate order and find that in para 5.5 under addition on account of cash deposits to the tune of ₹.5,66,000/-, the submissions of the assessee about receipt of loan of ₹.5,00,000/- from M/s. Shreyas Investment through Shri R. Srinivasan and its repayment along with interest through Shri R. Srinivasan was not doubted by the ld. CIT(A) inasmuch as the assessee had shown the ledger account for interest payment and accordingly, directed to delete the addition of ₹.5,00,000/- . The same submissions of the assessee made towards addition has been rejected by the ld. CIT(A) and confirmed the addition is not correct. Under the above facts and circumstances, the addition confirmed by the ld. CIT(A) is deleted.
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2022 (5) TMI 680
Disallowance u/s. 14A r.w.r. 8D - HELD THAT:- Upon perusal of documents on record, it could be seen that the assessee maintain separate accounts for personal transactions and for M/s Vinayaka Tea Company. In personal account, the only deduction claimed in the computation of income is interest paid - The credit side of Profit Loss consist of dividend, rental income and short term capital gains which are assessable under separate heads. Therefore, this interest payment has no correlation with the business of the assessee and the same is to be disallowed in full. The Profit Loss Account of M/s Vinayaka Tea Co. is for business transactions of the assessee. No exempt income has been credited by the assessee in this account. All the expenditure is related to the business of the assessee. No significant interest has been debited in the Profit Loss Account. Therefore, no disallowance u/s 14A is warranted here - we direct Ld. AO to restrict disallowance u/s 14A to Rs.29,711/-. The ground stand partly allowed. Unexplained cash credit u/s 68 - Addition made on the ground that the sales being refelected by the assessee were fabricated to accommodate the cash deposits and credits are appearing in the account of Ms. Maya Dalmia (wife of the assessee) on various dates - HELD THAT:- We find that M/s Vinayaka Tea Company has admitted sale of Rs.34.26 Lacs and earned profit of Rs.3.43 Lacs during the year. The same has been accepted by Ld. AO which would lead to a conclusion that the sale could not be termed as fabricated. Proceeding further, the assessee has received loan on various dates from the wife which is partly in cash and partly through banking channels. The loan aggregated to Rs.28.10 Lacs and the same has fully been repaid by the assessee during this year itself. Therefore, the genuineness of the same could not be doubted. Ms. Maya Dalmia has filed here return of income declaring income of Rs.3.07 Lacs. Therefore, no doubt could be raised on these transactions. Lastly, it could be noted that the assessee has furnished its cash book to prove the source of cash deposit. The cash has been reflected in assessee s cash book and the books of accounts have not been rejected. No defect could be pointed out in the cash book - The explanation of the assessee, in our considered opinion, has to be accepted. The impugned addition does not have any legs to stand. By deleting the same, we allow this ground of appeal. Travelling Expenses disallowance - AO made adhoc disallowance of 30% to personal element which resulted into another addition of Rs.0.98 Lacs in the hands of the assessee - HELD THAT:- Considering that the correct figures are Rs.2,99,960/-, we direct Ld. AO to disallow 10% of the same to account for personal element. The addition stand restricted to Rs.30,000/- and the balance addition stand deleted. This ground stand partly allowed.
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2022 (5) TMI 679
Levy of penalty under section 271(1)(c) - unexplained cash credit under section 68 - HELD THAT:- After giving an opportunity to substantiate the claims and evidence filed during the course of remand proceedings and examining the facts and the documents relied upon by the assessee, the Assessing Officer came to conclusion that the evidence submitted by the assessee was not correct. On perusal of the order passed by the ld. CIT(A), we find that the ld. CIT(A) has not at all narrated anything available in the remand report and what was incorrect found by the Assessing Officer in the documents furnished by the assessee during the course of remand proceedings. The ld. DR also could not able to explain in detail on the observations of the Assessing Officer on the documents furnished by the assessee during the course of remand proceedings. Under the above facts and circumstances, the penalty levied under section 271(1)(c) of the Act is deleted. - Decided in favour of assessee.
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2022 (5) TMI 678
Reopening of assessment u/s 147 - Bogus purchases - HELD THAT:- Information as received by Ld. AO consequent to search action would lead to formation of reasonable belief that the income had escaped in the hands of the assessee. This would be so because the assessee had carried out certain purchase transactions with M/s Sun Diam and that entity was said to be mere accommodation-entry providing entity of that group. At the stage of formation of belief, only prima-facie opinion is required. The sufficiency or correctness of the material is not to be considered at this stage as held in the case of Raymond Woollen Mills Limited Vs ITO [ 1997 (12) TMI 12 - SUPREME COURT] . The factual matrix would reveal that Ld. AO had, prima-facie, this material to reach a reasonable belief that income had escaped assessment. We do not concur with the argument of Ld. AR that there is no live link between the information received by Ld. AO and consequent belief formed by Ld. AO on the basis of that information. Another argument of Ld. AR is that the assessee had produced books of account and other information during the course of regular assessment proceedings and there was no allegation by Ld. AO that income escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment Explanation-1 to Sec.147 makes it very clear that production before the AO of account books or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily amount to disclosure within the meaning of foregoing proviso. The same squarely applies to the fact of the present case since the information received by Ld. AO was a subsequent event which was not available at the time of regular assessment proceedings. At the time of original assessment proceedings, no such information was available with Ld. AO and there was no question of formation of any belief on the issue. Therefore, this plea is also to be rejected. We would confirm the impugned order upholding the validity of reassessment proceedings. Bogus purchases - The purchases were taken in the inventory and accounted for in the books of accounts for which the assessee filed copies of extracts from ERP system. The assessee also filed ledger extracts of M/s Sun Diam, copies of purchase orders, copies of invoices, bank statements evidencing payment through banking channels etc. Upon perusal of all these documents, it could be well said that the assessee had discharged the onus of establishing the genuineness of the purchase transactions. As against this, the sole basis to make additions by Ld. AO is the findings of investigation wing which are based on third party statements. It could be gathered that no independent investigation, whatsoever, has been carried out by Ld. AO to verify the genuineness of the purchase transactions. No notice or summons etc. is shown to have been issued to the supplier to confirm the transaction. It is trite law that no addition could be made on mere presumptions, conjectures or surmises. Accordingly, the action of Ld. AO in making the addition, in aforesaid manner, could not be upheld in the eyes of law. Therefore, in the light of the aforesaid observations, the impugned addition is not sustainable as per settled legal position. By deleting the same, we allow the grounds on merits - Assessee appeal partly allowed.
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2022 (5) TMI 677
Reopening of assessment u/s 147 - reopening was within 4 years - disallowance u/s 14A - case was reopened on the allegation that the assessee had not commenced its business activities and therefore pre-commencement expenses should have been capitalized - HELD THAT:- AO had asked for various details which were duly responded to by the assessee. The Ld. AO, after considering the same, chose to make disallowance u/s 14A and accepted all the other particulars filed by the assessee. Subsequently, the case has been reopened on same set of material as available before Ld. AO. Evidently no fresh tangible material has come to the possession of Ld. AO subsequent to conclusion of regular assessment proceedings. Under such factual matrix, the ratio of cited decisions, as enumerated in preceding paragraphs, is squarely applicable to the facts of the case. Therefore, we would hold that reassessment proceedings were nothing but based on mere change of opinion which is impermissible. The assessment is set-aside as without jurisdiction. The assessee s cross-objections stands allowed. Commencement of business - So far as the merits of the case are concerned, it could be seen that the assessee was incorporated on 20.03.2007 and became public limited company in September, 2007. Initially the assessee was engaged in development of SEZ. However, the object of the assessee had undergone change w.e.f. 31.01.2008. As per revised object Clause, the main objects to be pursued by the assessee are to deal in land, buildings for the purpose of development and for carrying out development activities. In essence, the assessee s main object includes real estate development and construction activities. As per the object clause, the assessee could purchase, hire, lease or exchange or acquire any immoveable properties for carrying on the business of developers, builder, realtors, contractors and dealer and to sell or transfer the immoveable property whether as a developed or undeveloped plots. The assessee had already started various activities such as purchase of land, making advances to the parties, laying roads, building construction etc. In a huge project like the one being undertaken by the assessee revenue generation may take time but the same could be a reason to construe as to non commencement of business. The purchase of land was done, advances were given to parties, the land was registered in assessee s name, roads have been laid, buildings have been under construction. All these facts would prove that the assessee has started business activities. All these findings remain undisputed before us. Therefore, it could be seen that the assessee had already initiated certain activities towards fulfillment of its objectives and already procured land which would be very vital to start real estate development. Therefore, the conclusion that the assessee had commenced business could not be said to be perverse in any manner. Tribunal erred in holding that merely because the manufacturing and sale of the vehicle did not take place, the business of the assessee has not been set up. The manufacturing activity of the assessee was a part of the composite business activities of the assessee and the same had not commenced because the construction of the building and installation of plant and machinery was in progress. Accordingly, Hon ble Court confirmed the first appellate order. The ratio of this decision is applicable to the merits of the case. Therefore, we would concur with adjudication on merits, in the impugned order. The revenue s appeal stands dismissed.
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2022 (5) TMI 676
Deduction u/s 80IAB - I ncome has been derived from any activities in the SEZ duly approved by the Board of Approval under the SEZ Act - whether the assessment of lease income from commercial space in SEZ, should be taxed under the head Income from house property or as business income ? - HELD THAT:- It is an undisputed fact that assessee is a co-developer of commercial properties under the SEZ and has been approved as a co-developer and the name of the developer has already been mentioned above and each developer has got the separate approval from the Board of Approval, Ministry of Commerce for setting up of Information Technology and IT Enabled Services SEZ on the land parcel owned by the Developer. The assessee had approached the Government of India to seek approval of being a co-developer in respect of the above mentioned SEZs which was granted by the Department of Commerce (EPZ Section), Ministry of Commerce Industry and the details of approval has already been noted above. The assessee was required to provide infrastructure facilities and to undertake, operation and maintenance in relation to the aforesaid projects and the activities have already been mentioned above. The assessee had converted the bare shell buildings into warm shell and providing other facilities and has let out the units purely for rental income. Income earned from lease rentals for renting out a property per se, ostensibly falls under the head income from house property , unless it is shown that there was some systematic activity falling into the nature of business. Whence, the lease rental income of the assessee has been accepted to be assessed under the head income from house property in AY 2012-13 and again in AYs 2017-18 2018-19, then we do not find any reason as to why the income from the same activity is not to be classified under the head income from house property in these years. Hon ble Supreme Court in the case of CIT-I vs. Reliance Energy Ltd.[ 2021 (4) TMI 1237 - SUPREME COURT] in the context of section 80IA, held that the scope of section 80IA (5) is limited to determine the quantum of deduction under sub-section (1) of section 80IA by treating eligible business for only source of income and same cannot be pressed into service for reading a limitation of deduction under subsection (1) only to business income - while computing the deduction, what is required to be seen is that the only source of income derived from eligible business, is eligible for deduction and same cannot be limited to only business income. Here in this case also, there is no dispute that the income which has been derived by the assessee is derived from approved activity under SEZ which is the only source of income for which the deduction u/s 80IA(b) is to be allowed. It is immaterial that whether the income derived has been shown from house property or business income or any other head. Thus, we hold that income derived from approved activity from the SEZ is liable to be allowed as deduction u/s 80IA. No reason to deviate from this finding and moreover the lease rental incomes received by the assessee are otherwise liable to be taxed under the head income from house property . The statute or the provisions contained u/s 80IAB does not make any distinction that if the income has been derived from approved activities in SEZ, the same has to be classified under a particular head and then only deduction would be allowed, albeit it only says that where the gross total income of the assessee, being a developer, includes any profits and gains derived by an undertaking from any business of developing a SEZ, therefore, income has been derived from any activities in the SEZ duly approved by the Board of Approval under the SEZ Act is allowable for deduction u/s 80IAB. Accordingly, the order of the ld. CIT (A) is confirmed and the Revenue s appeal for AY 2013-14 is dismissed.
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2022 (5) TMI 675
Addition on account of unexplained liability - outstanding balances of two parties M/s. Aarti Jewelers and M/s. Prakash Gold held to be bogus - HELD THAT:- As outstanding balance relating to M/s. Prakash Gold amounting to Rs. 12,05,026/-, the addition having been made finding it to be bogus, since the consistent finding of fact is that the transaction was entered into by the assessee with the said party not in the impugned year but in earlier year i.e in A.Y. 2014-15 ,the addition in any case could not have been made in the impugned year but only in the year in which the liability arose i.e. A.Y. 2014-15. Therefore the addition on account of outstanding liability pertaining to Prakash Gold is directed to be deleted. As for the liability on account of M/s. Aarti Jewelers, the ld. Counsel for the assessee has contended that the said liability was discharged in the succeeding years through banking channels. Copy of the ledger account of the parties was also placed before us. In view of the same therefore there is no question of holding the said party to be ingenuine and the addition made on this count is directed to be deleted. Appeal of assessee allowed.
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2022 (5) TMI 674
Permanent Establishment (PE) in India - attribution of profit to the PE - whether the assessee has a PE in India? - assessee is a company incorporated in Singapore and is a tax resident of that country as engaged in the business of manufacturing and sale of scientific research instruments and peripheral - AO has treated DHR Holding India Pvt. Ltd., an associated enterprise of the assessee based in India, as the fixed place PE, agency PE and dependant agent PE under Article 5(1), 5(8) and 5(9) of India Singapore DTAA - legal relationship and real nature of the transaction between the assessee and DHR India - HELD THAT:- As allegation of the AO that the assessee utilizes the premises of DHR India as a warehouse to stock its goods and sales outlet is not borne out from the materials on record. The facts on record clearly reveal that the assessee s employees have never visited India. Direct sales to Indian customers were made from Singapore through shipment. The sales effected by DHR India are on its own independent status. Therefore, the products purchased by DHR India under the Distribution Agreement and kept in its inventory cannot be considered to be the products belonging to the assessee, as, they are sales transaction on principal to principal basis for resale by DHR India to Indian customers. Further, clause 11.1 and 11.2 of Sales Commission Agreement makes it clear that any replacement of products/spares under warranty/maintenance has to be provided by DHR India out of its own inventory and DHR India will have the right to either get a replacement from assessee or cross charge the cost to the assessee. Therefore, the terms of the agreements make it clear that assessee does not have a warehouse or sales outlet in India to constitute a fixed place PE in India under Article 5(1) of the Treaty. Thus, in our view, the conclusion drawn by the Assessing Officer that the assessee has fixed place PE or dependant agent PE is not borne out from any cogent material/evidence brought on record. Unfortunately, DRP has not properly appreciated the facts and simply adopted the version of the Assessing Officer. There is nothing on record to suggest that the assessee is utilizing the premises of DHR Holding India Pvt. Ltd. either as warehouse for storage of its products or as a sales outlet for soliciting/procuring orders from Indian customers. Further, there is no cogent material on record to demonstrate that DHR Holding India Pvt. Ltd. habitually exercises authority to conclude contracts on behalf of the assessee or maintains stock of goods or merchandise from which it regularly deliver goods to Indian customers on behalf of the assessee or it habitually secures orders in India wholly and exclusively for the assessee. Thus, none of the ingredients of Article 5(8) are satisfied. The terms of the agreement as well as the conduct of parties do not make out a case for the Revenue that the premises of DHR India would constitute either a fixed place PE or agency PE. Revenue authorities have not brought any material on record to demonstrate that the activities of DHR India are wholly devoted on behalf of the assessee and as such it does not have any independent status and was not acting in the ordinary course of its business. We have noted, from the stage of assessment proceeding itself, the assessee has consistently urged that DHR India is having its own independent status and business and its activities are not wholly devoted to the assessee - departmental authorities have rejected the claim of the assessee without bringing any contrary material on record to demonstrate that the activities of DHR India are wholly and exclusively devoted to the assessee. That being the factual position, it cannot be said that DHR India constitutes dependant agent PE of the assessee. Thus, in our view, conditions of Article 5(9) of India Singapore DTAA are not fulfilled. As regards DHR India constituting the dependant agent PE, we have already deliberated on the issue and have held that no material has been brought by the departmental authorities to demonstrate that the Indian entity habitually exercises its authority to conclude contract etc. in terms of Article 5(8) or its activities are wholly devoted on behalf of the assessee. Thus, there cannot be any PE under Article 5(8) and 5(9) of the Indian Singapore Tax Treaty. Thus, applying the legal principle to the facts emerging on record, we hold that the assessee does not have any PE in India. Therefore, in absence of PE, the business profits of the assessee cannot be taxed in India. Accordingly, the additions made by way of attribution of profit to the PE in India deserve to be deleted. - Decided in favour of assessee.
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2022 (5) TMI 673
Taxability of sale of software products - receipts as royalty and Fees for Technical Services (FTS) - sale of copyrighted article v/s copyright - income earned by the Appellant from sale of software products and software related support services as taxable in India as royalty under Section 9(1 )(vi) of the Act and under Article 12 of the India- Singapore Tax Treaty - assessee submitted, the amount received on sale of software and provision of software related maintenance services cannot be treated as royalty under Article 12(3) of the India Singapore Tax Treaty, as, what the assessee has sold is a copyrighted article and not copyright. - HELD THAT:- Undisputedly, during the year under consideration, the assessee had sold certain software products to customers in India and has also provided software related maintenance services. The first issue which arises for consideration is, whether the amount received by the assessee towards sale of software products and software related maintenance services can be treated as royalty under Article 12(3) of India Singapore Tax Treaty. In case, it does not come within the ambit of royalty as defined under the Treaty, there is no need to go into the provisions of the Act. On a perusal of the assessment order it is noticed that the Assessing Officer has not factually examined the nature of transaction between the assessee and the Indian Customers. The Assessing Officer relying upon certain judicial precedents has straightway assumed that the assessee has sold a copyright. However, neither the sample agreement nor any other material available on record demonstrate that the assessee has transferred/sold the use or right to use a copyright and not copyrighted article. What the assessee has sold is copyrighted article and not the copyright. It is also observed, while treating the payment received by the assessee as royalty, the departmental authorities have been greatly influenced by the decision of Samsung Electronics Pvt. Ltd. [ 2011 (10) TMI 195 - KARNATAKA HIGH COURT] . However, the issue is no more res integra in view of the decision of Hon ble Supreme court in case of Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] - Since, the factual matrix clearly reveals that the assessee has sold a copyrighted article and not the copyright, the ratio laid down by the Hon ble Apex Court in the decision referred to above would squarely apply. Accordingly, we hold that the amount received by the assessee from sale of software and provision of software related services cannot be treated as royalty under Article 12(3) of the India Singapore DTAA. Insofar as the issue of treating the amount received towards provisions of software related services as FTS, we have noticed that the Assessing Officer has not brought any cogent material on record to demonstrate that while providing the software related maintenance service, the assessee has made available any technical knowledge, knowhow, skill etc. so as to enable the recipient of such service to use it independently in exclusion of the assessee. Therefore, in our considered opinion, the conditions of Article 12(4)(b) of the Treaty are not satisfied. That being the factual position emerged on record, the amount received cannot be treated as FTS. Therefore, the addition made is deleted. Levy of education cess on the ground that as per the definition of tax under Article 2, being in the nature of surcharge, would be included in the tax rates prescribed in the Treaty - HELD THAT:- We are of the view that the issue has become, more or less, academic, since, we have deleted the additions made by the Assessing Officer. However, the Assessing Officer is directed to compute the tax liability strictly in terms with the Treaty provision
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2022 (5) TMI 672
Validity of reopening of assessment - assumption of jurisdiction by the Assessing Officer - Application of mind while recording satisfaction - no return of income was filed by the assessee for the year under consideration - bogus purchases - HELD THAT:- As no return of income was filed by the assessee for the year under consideration. In third paragraph of reasons recorded also, the Ld. Assessing Officer emphasized that the assessee had not filed return of income for the year under consideration. In the last para, the Assessing Officer is referring to omission on the part of the assessee in filing the return of income. In our opinion, the word filing is missing in that sentence. Therefore, only on the basis of the fourth para to presume that he did not apply his mind while recording reasons, is not justified. The Assessing Officer has duly recorded the fact of non-filing of the return of income, not once but twice. Accordingly, we reject the contention of the Ld. Counsel of the assessee that AO has not applied mind, while recording reasons. In the instant case, assessment has been reopened in view of the information of bogus purchases by the assessee exceeding Rs. 80 lakh, and therefore it was not of the case that income escaped was below taxable limit. In view of the clear statement of income more than the taxable limit, the decision relied upon is distinguishable as GENERAL ELECTORAL TRUST VERSUS INCOME TAX OFFICER 20 (1) (2) , MUMBAI OTHERS [ 2016 (8) TMI 959 - BOMBAY HIGH COURT] No reference of source of information for reopening the assessment except that information was available on record - According to the Ld. DR, said information was duly provided to the assessee by the Assessing Officer during the course of the assessment proceeding after filing return of income in response to notice under section 148 of the Act. However, the Ld. counsel has not produced any evidence to support that source of the information was asked from the Assessing Officer. It was the onus of the assessee to file necessary evidence in support of its claim that such information was asked from the Assessing Officer and he had not supplied. In absence of any such evidence before us, no adverse inference can be drawn against the Revenue. There was no requirement in the law for the Assessing Officer to presume that the assessee is an honest entity and will not enter into transactions of the accommodation entry. Further, deed to no return of income being on record, the Assessing Officer cannot presume that it was having huge bank loans or hundred percent tax exemption unit or a loss-making unit. These arguments of the Ld. counsel of the assessee are accordingly rejected. We are unable to find as when this letter was addressed to the Assessing Officer. More so, it does not appear from the said letter that assessee had asked for source of the information or copy of the material relied upon. Under the procedure laid down by the Hon ble Supreme Court in the case of GKN Drive Shafts (India) Limited [ 2002 (11) TMI 7 - SUPREME COURT] the assessee can claim copy of reasons recorded after filing the return of income and the assessee had been duly provided copy of reasons recorded. Therefore, to presume that no material was available with the Ld. AO at the time of recording reasons is baseless. We reject the contention of the Ld. Counsel of the assessee challenging the jurisdiction of the Assessing Officer in issuing notice as well as completing the assessment. Plea that if addition on the issues other than the issues of reopening are not sustainable, if there is no addition on the issue of the reopening - In our opinion the contention of the Ld. counsel of the assessee that no addition has been made in respect of the basis on the which assessment was reopened, is not correct and therefore his request for considering the decision on the issue that no other addition could be made if the Assessing Officer has not made addition on the issue for which the assessment was reopened, is also rejected. Legality of the assessment on the ground that no notice under section 143(2) of the Act was issued - HELD THAT:- DR filed copy of the notice under section 143(2) of the Act dated 10/03/2015 issued by the ITO Ward 8(3)(3) and notice dated 11/01/2016 issued by the ACIT - 8(3)(2). The Ld. DR has also filed report of the service of these notices. The Ld. counsel of the assessee could not controvert this factual finding of issue and service of the notice under section 143(2) of the Act. The ground has been filed by the assessee in very casual manner without verifying its records. The action of the assessee is highly deplorable. Therefore, the additional ground raised by the assessee is accordingly dismissed. Deduction under section 10AA - Whether income of the assessee is assessed into profit, the exemption under section 10AA of the Act should be allowed as assessee fulfilled the eligibility criteria for said exemption? - HELD THAT:- In our opinion, if the assessee is otherwise eligible for deduction under section 10AA of the Act and fulfilling all the criteria as laid down in the relevant section, then there is no reason as why the assessee should be denied the deduction under section 10AA of the Act. If the income of the relevant unit is finally positive, then assessee may be considered for deduction under section 10AA if the assessee so satisfies the terms and conditions specified therein. The ground of the appeal of the assessee is accordingly allowed for statistical purposes. NP estimation - applying of net profit rate of 3% on the turnover by the Ld. CIT(A) as against the net profit rate of 5% applied by the Assessing Officer - plea of the assessee is that as per the data of the textile industry there was an average net loss of 4% on turnover across the textile industry - HELD THAT:- The assessee has not provided any instances of other companies along with their asset base and turnover, which could form a basis for estimating the profit of the assessee for the year under consideration. The Ld. CIT(A) has observed that while estimating net profit rate at the 5% of turnover, the Assessing Officer as relied on the book result for assessment year 2007-08 and assessment year 2010-11 - we set aside the finding of the Ld. CIT(A) on the issue in dispute and uphold the finding of the Assessing Officer. Further, the direction of the Ld. CIT(A) to exclude the export incentives from the non-operative income is also not justified . The Assessing Officer has applied the net profit rate of assessment year 2010-11 worked out on the basis of audited accounts. If the said incentive has been separately considered as part of the non-operative income in assessment year 2010-11, same cannot be considered as part of book result for the year under consideration. Accordingly, we direct the Assessing Officer to examine the addition of export incentive as non-operative income on comparative book results for assessment year 2010-11. Accordingly, the ground No. two of the appeal of the assessee is dismissed, whereas solitary ground No. one of the appeal of the revenue is allowed. Interest payment received - HELD THAT:- We are of the opinion that when the Assessing Officer has applied the book results for AY 2007-08 and 2010-11 for estimating the book results for the year under consideration, then treatment for the interest income has also to be given in the year under consideration, what has been given by the assessee in assessment year 2007-08 and 2010-11. Before us, the assessee has not substantiated that said interest income for assessment year 2010-11, was not part of business operations. In absence of any supporting evidence by the assessee, the action of the Ld. CIT(A) in directing to add the interest income from fixed deposit to the estimated profit from business operation is justified and accordingly upheld. The ground No. three and additional ground of the appeal are accordingly dismissed. Disallowance u/s 40(a)(ia) of the Act for non-deduction of tax at source on various expenditure incurred - HELD THAT:- No disallowance under section 40(a)(ia) Act is called for when invoking section 145(3) of the Act net, profit rate has been applied for estimation of profit. The ground No. four of the appeal of assessee is accordingly allowed. Addition of loan outstanding held as unexplained - HELD THAT:- We are of the opinion that as far as estimation of the income is concerned, the computation of the profit by the assessee has been rejected, which does not mean that entries of unsecured loan recorded in those books of accounts are of no relevance. The addition for unsecured loan is made in terms of section 68 of the Act where the assessee failed to explain source and nature of the credit in its books of accounts. The credit in books of accounts shown as received by way of unsecured loan are independent from estimation of profit from business operation. It is for the assessee to explain source of the said credit and in failure to do so, said credit is liable to be added under section 68 of the Act. We find that Tribunal Hyderabad Bench in the case of Smt. Shoba Gupta [ 2013 (8) TMI 756 - ITAT HYDERABAD] has discussed this issue in detail and held that addition u/s 68 of the Act can be made along with estimation of income unless the assessee establish that unexplained cash credit was arising out of the profit of business of assessee.
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2022 (5) TMI 671
Employees contribution to ESIC and EPF u/s 43B read with 36(1)(va), paid after the due date but before the filing of the income tax return - HELD THAT:- There is no dispute between the parties regarding the date of deposit of PF ESI, which clearly is beyond the prescribed date of deposit as applicable under the relevant section of the I.T. Act. Further, there is no dispute between the parties that the deposits were made before the filing of return of income for the relevant assessment year. As decided in SAGUN FOUNDRY PRIVATE LIMITED VERSUS COMMISSIONER OF INCOME TAX, KANPUR [ 2016 (12) TMI 1479 - ALLAHABAD HIGH COURT] when contribution had been paid, prior to filing of return under Section 139(1), Assessee/employer would be entitled for deduction and since deletion of Second Proviso and amendment of First Proviso is curative and apply retrospectively w.e.f. 01.04.1988. Irrespective of the fact that deduction in respect of sum payable by employer contribution was involved, but Court did not restrict observations, findings and declaration of law to that context but looking to the objective and purpose of insertion of Section 43B applied it to both the contributions. It also observed clearly that Section 43B is with a non-obstante clause and therefore over ride even if, anything otherwise is contained in Section 36 or any provision of Act 1961. Therefore, we are clearly of the view that Section 43B is rightly applied in respect to both contributions i.e. employer and employee - Decided in favour of Assessee.
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2022 (5) TMI 670
TDS u/s 195 - Outsourcing charges payable treated as 'fees for technical services' - assessee took a stand that the said charges did not qualify as 'Fees for Technical Services' (FTS) under the Act as well as 'Fees for Included Services' [FIS] under the India-US Tax Treaty, and therefore did not constitute 'sum chargeable to tax' in India for it to be subjected to TDS - HELD THAT:- AO has incorrectly interpreted that the US Court's Protective order provided access to confidential source code to counsel's support personnel which includes assessee's employees, although no reference to the access being granted to the assessee or its employees has been made in the Protective order. In this regard, one cannot forget the fact that 'Undertaking of Experts or Consultants regarding Protective order' signed by the relevant employees of iRunway Inc. who were given access to the protective information under the protective order specifically provides that the authorized person will not divulge information to anyone. These individuals are employees of iRunway Inc. and fulfill the criteria of the relevant US statutory requirements to be able to access the protective information. None of these individuals are employees of the assessee as incorrectly alleged by the revenue. AO failed to appreciate that owing to the legal restrictions in the US, iRunway Inc. or its employees did not have an opportunity or any occasion to 'make available' any technical knowledge to the assessee or its employees while rendering services. As far as agreement for services with McKool Smith entered by the assessee for providing services in relation to patent litigation matters, do not mention about outsourcing of any kind of services including protective order clearance. The conclusion of the revenue authorities that iRunway Inc., made available technical knowledge to the assessee or its employees is neither correct nor sustainable. The other services rendered were purely litigation oriented or services with regard to patent registration or patent search process and these services by no stretch of imagination can be considered as making available any technical knowledge to the assessee. In view of the fact that the services provided by iRunway Inc., did not make available any technical knowledge to the assessee, the same cannot be regarded as taxable in India. Consequently, there was no obligation on the part of the assessee to deduct tax at source at the time of making payment. Hence, the disallowance made u/s. 40(a)(ai) of the Act cannot be sustained and is directed to be deleted. Whether the Revenue authorities were justified in disallowing a sum being sales commission paid by the assessee to one Mr. Neeraj Gupta, a non-resident and tax-resident of USA, by invoking the provisions of section 40(a)(ia) of the Act and for non deduction of tax at source and the payments made to Mr. Neeraj Gupta? - The findings on applicability of Article 12(4)(b) of the Indo US treaty while deciding the disallowance of sums paid to iRunway Inc., USA, will equally apply to this disallowance also, ie., the disallowance of payments made to Mr. Neeraj Gupta u/s. 40(a)(ia) of the Act. Mr. Neeraj Gupta was paid commission on the basis of sales orders procured. Merely because he was technically qualified, sales commission paid for enabling sale cannot become payment for rendering technical services. Even in terms of Article 15 of the Indo US Treaty, the sum in question qualifies as that income derived by a person from the performance of professional services and therefore shall be taxed in the country of which he is resident except where the professional has a fixed base regularly available to him in India for the purpose of performing his activities or has stayed in India for a period or periods amounting to or exceeding in the aggregate 90 days in the relevant taxable year. Admittedly, Mr. Neeraj Gupta did not satisfy the criteria as provided in Article 15 of the India-US Tax Treaty since neither he had a fixed base regularly available to him in India, neither he stayed even for a single day in India. Accordingly, sales commission paid to Mr. Neeraj Gupta is not taxable under Article 15 also of the India-US Tax Treaty as it does not satisfy either of the criteria specified therein. We therefore hold that the disallowance of the sum paid to him u/s. 40(a)(ia) of the Act cannot be sustained and the addition is directed to be deleted. Whether the Revenue authorities were justified in disallowing under section 40(a)(ia) of the Act on the ground that the assessee did not deduct tax at source on the provisions created towards professional charges? - We are of the view that the statutory provisions require deduction of tax at source even when the nomenclature used by the assessee for describing as an expenditure as in the nature of suspense account or a profession. The learned Counsel for the assessee however made a prayer that if the disallowance is upheld, the same amount should not be disallowed when the provision is reversed on the first day of April of the subsequent Assessment Year as doing so would result in double disallowance. The prayer so made by the learned Counsel for the assessee is accepted and the AO is directed to ensure that there is no double disallowance of the same amount. With these observations, we dismiss this issue also.
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2022 (5) TMI 669
Revision u/s 263 - Assessment u/s 153A - addition of unaccounted receipts found in 15 red colored notebooks - Reference of relevant seized documents - HELD THAT:- AO has made total addition of unaccounted receipts found in 15 red colored notebooks was already made in A.Y. 2011-12. The initiation of 263 proceedings based on the invalidation of manual return filed by the assessee u/s. 153C is not proper, considering the fact that same income cannot be added in two Assessment Years. Therefore, we are in agreement with the submissions of the Ld. AR. Accordingly, we are inclined to set-aside the order passed u/s. 263 of the Act, hence, grounds raised by the assessee in this regard is allowed.
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2022 (5) TMI 668
Deduction u/s 10AA - Denial of claim as appellant is not carrying on the activity of manufacturing - as argued appellant is carrying on the activity of assembling and contract manufacturing at the factory. The word assembling is covered under definition of manufacturing as per SEZ rules, 2005 - HELD THAT:- Undoubtedly, finished goods have moved out from the SEZ units only for the purpose of exports. We observe that the assessee has imported the key materials and sourced the local material thru their Mumbai unit and assembled the solar lantern, Ld AR demonstrated sample parts which goes into the lantern which consist of battery and other components which includes several tiny parts, which was assembled in the SEZ unit following a standard process. We observe that as per the definition of the manufacture, assemble or process which bring into existence, more of hands and less of machine work in the case of the assessee, new product namely solar lantern, which is distinct from the raw material used in the assembling of the lantern. Therefore, the process demonstrated by the Ld AR and process sheet shown by the assessee falls within the established definition of the Manufacture. The AO has raised doubt on the existence of the proper machinery compared to Mumbai units, we observe that the assembling process does not need much of the machinery except tools which is used to assemble the lantern. Ld AR demonstrated the purchase of tools in the expenses booked under the head consumables. Ld AR has elaborately addressed all the issues raised by AO and CIT(A). CIT(A) casually observed that import and export transactions are carried out on the basis of self-declaration, under mining the appointment of inspector for movement of various goods inside or outside the SEZ, without the knowledge and verification of the custom documents, nothing can be removed or deposited. There is fixed system and formalities prescribed in the SEZ manual. Revenue authorities cannot undermine the Customs formalities. Further we observe that the Mumbai unit has produced 68190 pcs during this year compared to 75680 pcs in the previous AY. It clearly shows that the Mumbai unit worked almost full capacity this year under consideration and presuming that the quantity exported by the SEZ unit must have produced in Mumbai unit is farfetched. As such, we are of considered view that the CIT(A) was not justified in denying the deduction under section 10AA. Further, the decisions relied upon by the Department Representative are actually distinguishable particularly on the aspect of assembly and process aspect. Accordingly, we direct the Assessing Officer to allow the deduction claimed under section 10AA Disallowance of labour charges - HELD THAT:- We do not find any merit in the action of the Assessing Officer inasmuch as the assessee has actually availed the labour services for which necessary labour charges have been paid. The Assessing Officer and the Ld.CIT(A) has not disputed the aforesaid fact, however, made the disallowance only for the reason that some bills were raised in the name of husband. Further, the Assessing Officer has not allowed the assessee opportunity of cross examination and as such there is gross violation of principles of natural justice. Accordingly, we direct the Assessing Officer to delete the aforesaid disallowance. Appeal of assessee allowed.
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2022 (5) TMI 667
Unexplained source of cash deposit - AO was of the view that the entire cash deposits in bank account maintained with SBBJ Durgapura is unexplained income of the assessee and the assessee has failed to explain the sources of the same by submitting factually incorrect submissions - CIT-A deleted the addition partly - HELD THAT:- AR relying to the written submission further made the oral arguments at the time of hearing and have analyzed written submission before us. AR filed a detailed submission wherein he has filed a chart showing details in respect of realisation made from the old debtors in the year under consideration - As regard the fact that the debtors were outstanding in A. Y. 2008-09 being the just preceding year, he has filed copy of the ITR, Balance Sheet and Profit loss account, summary of debtors for A. Y. 2008-09 and copy of Value added tax return filed by the assessee - AR of the assessee also filed the details in respect of advance received from debtors and copy of their ledger account were submitted. We considered the contentions of the both the parties, considered the decision cited and relied upon and based on information and analyses of facts supported by evidence and argument we feel that the ld. CIT(A) has erred in not granting the relief to the assessee fully. Thus, based on the above discussion the ground no. 1 raised by the assessee is allowed. Addition u/s 80C - while filling the return of income he has claimed rebate under section 80C for an amount of Rs. 55,000/- out of which receipts of Rs. 32,653 submitted but while finalizing the assessment the same was not allowed - Even the ld. CIT(A) has dismissed this ground on technical issued and not decided on merits - HELD THAT:- Ongoing through the finding of the ld. CIT(A) it is apparent that he has on technical ground not considered claim of the assessee and even though the proof were filed before him partly. DR submitted that the assessee has not submitted the full claim details and submitted part proof and even at the stage of CIT(A) and submitted that without evidence claim is not allowable. Thus it would be in the interest of justice this evidence be presented to the AO and ld.AO after considering the details and proof of the amount claimed may consider the issue of allowability of the deduction claimed under Chapter VIA. Thus, the grounds of appeal is technically allowed.
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2022 (5) TMI 666
Revision u/s 263 - Disallowance u/s 36(1)(iii) for investment is overseas entities - HELD THAT:- PCIT is not entitled to invoke the revisional power u/s 263 of the Act regarding the issue mentioned above. So far as the other issue regarding expenses of Rs.8.90 crores is concerned, we find that the AO issued the notice u/s 142(1) of the Act dated 02.10.2017 in which the relevant enquiry has been raised. Subsequently, after the reply of the assessee, the AO passed the order u/s 143(3) r.w.s. 144C(13) of the Act. In the said order, one possible view has already been taken. Examining the issue again and again nowhere seems justifiable. When a possible view has been taken by AO then the assessment is not liable to be reopened again on the basis of the second view if any taken by Ld. PCIT. In this regard, we also find support of the decision in the case of Malabar Industrial Co. Ltd. [ 1997 (4) TMI 5 - SUPREME COURT] , CIT Vs. Nirav Modi [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] , Aditya Builders [ 2015 (9) TMI 1304 - BOMBAY HIGH COURT] CIT Vs. Tata Teleservices (Mah) Ltd. [ 2014 (7) TMI 175 - BOMBAY HIGH COURT] , CIT Vs. Fine Jewellery (India) Ltd. [ 2015 (2) TMI 732 - BOMBAY HIGH COURT] . Therefore, taking into account of all the above mentioned facts and circumstances, we are of the view that the order u/s 263 of the Act is wrong against law and facts, therefore, the same is hereby ordered to be set aside.
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2022 (5) TMI 665
Addition u/s 41(1) - creditors treated as ceased/waived liability - recalling of appeal - AO during assessment proceeding observed certain trade liabilities (trade creditors) outstanding for more than five years but on verification, those parties denied any outstanding due from the assessee - MA to limited extent of examining the application of decision in Elde Electricals Agencies Private Limited and Lotus India Ltd to the present case.HELD THAT:- Tribunal in case of Lotus Investment Ltd. [ 2019 (3) TMI 467 - ITAT MUMBAI] has deleted the addition under section 41(1) of the Act mainly on the ground that genuineness of the transaction was to be examined in the year of incurring expenditure and not in the year of cessation of liability. The Assessing Officer also not examined whether assessee had obtained a benefit either in cash or in any in any form in respect of such liability in relevant previous year. The facts in the instant case before us are different. In the instant case, the Assessing Officer issued summons to the alleged trade creditors and recorded their statements, wherein they have denied of any payment due to the assessee. Facts of the case being distinguishable, the ratio of decision relied upon by the assessee, cannot be imported to the facts of the case. We find that in above case of Elde Electricals [ 2015 (7) TMI 16 - BOMBAY HIGH COURT] also there is no finding of denying of existence of liability in the year under consideration by the alleged trade creditors. Therefore, the decision relied upon by the assessee is distinguishable on facts. We have considered finding of the Tribunal in the light of both the decisions cited by the assessee, however in our opinion the ratio(s) of the decisions are not applicable in the facts of the instant case. - The appeal recalled to the extent of examining the two decisions, is accordingly dismissed. - Additions confirmed
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2022 (5) TMI 664
Protective addition made in the hands of the assessee - income surrendered by the assessee in the sworn statement - estimation of capitation fee alleged to have been collected for admission of students into PG Course - HELD THAT:- Tribunal, while upholding the view taken by Ld CIT(A) in deleting the addition relating to capitation fee for PG Students, has also observed that the AO was not justified in placing reliance on the above said seized documents, i.e., it is the view of the Tribunal that the seized documents do not show the collection of capitation fee from the PG students. Another important point noticed by the Tribunal is that the investigation wing had issued summons to some or all the students in the list and also recorded the statements from them - result of the said enquiry was not conveyed to the assessee in spite of specific request made in this regard. AO has also not discussed anything in the assessment order about the enquiry conducted and the results thereof. Tribunal has also expressed the view that the said investigations might not have brought out anything against the assessee. Accordingly, the Tribunal has held that the impugned seized documents lack credence and could not be relied upon. Since the allegation of collection of capitation fee from PG students itself could not be proved, the addition made on substantive basis in the hands of Venkatesha Education Society were deleted. Accordingly, the above said conclusions reached by the Tribunal would equally apply to the case of the assessee herein also. Hence the protective addition made in the hands of assessee would automatically fall to the ground. Accordingly, we do not find any reason to interfere with the decision taken by Ld CIT(A) on this issue in AY 2009-10 to 2014-15. CIT(A) in confirming addition of Rs.25 crores made by the AO on the basis of statement/letter given by the assessee - The initial declaration of Rs.20 crores was obtained in the statement taken u/s 132(4) of the Act and we have found that the same is not supported by any incriminating material. Subsequently, the amount was increased to Rs.25 crores, again without any basis. We have also noticed that the surrender was not blanket surrender as presumed by the tax authorities. We also noticed that the surrender was couched with various caveats. In any case, the surrender of income without any basis is against the circular issued by CBDT . We also noticed that the assessee has explained later before the AO that the capital gain was in his mind while making surrender. Hence the facts prevailing in the present case are totally different from the facts that prevailed in the above said cases relied upon by Ld D.R. Hence, we are of the view that these decisions cannot be taken support by the revenue. In view of the foregoing discussions, we are of the view that the order passed by Ld CIT(A) on this issue cannot be sustained. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition of Rs.25 crores made in AY 2014-15. Appeal of assessee allowed.
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Benami Property
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2022 (5) TMI 663
Offence under Prohibition of Benami Property Transactions - attachment/confiscation proceeding - HELD THAT:- Considering the arguments advanced by the learned counsel for the applicant, learned Special Counsel for the Income Tax Department and going through the pleadings in the application, impugned orders as well as other relevant documents, it is evident that attachment/confiscation order has already been stayed by the Tribunal vide order dated 04.12.2019, but in the complaint, this fact is not disclosed. Rather, emphasis has been made that the property of the applicant is already adjudicated and confiscation order was already remanded by the competent authority. The matter requires consideration. Respondent may file counter affidavit within four weeks. Rejoinder affidavit, if any, may be filed within one week thereafter. List in the 3rd week of July, 2022. Till the next date of listing, impugned proceedings shall remain stayed.
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Customs
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2022 (5) TMI 662
Seeking provisional release of detained of goods - Chinese Knotted Woollen Carpets - recovery of dues towards the container detention charges - HELD THAT:- The writ applicant invited our attention to one order passed by this Court in the case of GREEN GOLD TIMBERS PVT. LTD. THROUGH ITS DIRECTOR AKHILESH MANGLIK VERSUS COMMISSIONER OF CUSTOMS [ 2022 (1) TMI 816 - GUJARAT HIGH COURT ] wherein this Court took the view that the customs cargo service provider as defined in the Regulation No.2(1)(b) of the Regulations is not entitled in law to charge any rent or demurrage on the goods seized or detained or confiscated by the Customs or any other Authority. However, according to Mr. Verma, the order of this Court in the case of Green Gold Timbers Pvt. Ltd. is with respect to ground rent charges and not helpful to the writ applicant. This writ application is admitted and an interim order is passed reserving the liberty in favour of the respondent No.5 to raise all the legal contentions available to him including his contention as regards his contractual lien - Rule returnable on 23.08.2022.
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2022 (5) TMI 661
Seizure of mobile phones - sufficient and reasonable opportunity to the petitioners provided or not - violation of the principles of natural justice - HELD THAT:- In view of the second respondent s perfunctory dismissal of the explanation offered by the petitioners with the observation that the petitioners defence is a melodramatic narration of circumstances surrounding the seizure of the iPhones and a script for a Potboiler, and the repeated reference to the petitioners approaching this Court in W.P. No. 20110/2021 without availing the remedy of revision under Section 129DD of the Customs Act, 1962, this Court must opine that, notwithstanding any other remedy that could be available to the petitioners against the impugned order, the petition must be allowed quashing the impugned order and restoring the appeals to the file of the second respondent for reconsideration without much ado to ensure that the proceedings are decided strictly on merits and upon consideration of all material dispassionately in accordance with law after due opportunity. The petition is allowed in part.
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Corporate Laws
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2022 (5) TMI 660
Sanction of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 R/w Companies (CAA) Rules, 2016 - HELD THAT:- Various directions with regard to holding, convening and dispensation with various meetings issued - directions with regard to issuance with various notices also issued. The scheme is approved - application allowed.
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Securities / SEBI
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2022 (5) TMI 659
Related party transaction - Company proposed to enter into a transaction with one Neelkanth Realtors Private Limited for purchase of 40,000 sq. ft. of residential space - Extra-Ordinary General Meeting was convened for rescinding the resolution in which, the related parties also voted - violation of Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 - HELD THAT:- The Securities Appellate Tribunal has not approved this order passed by the Adjudicating Officer and has allowed the appeal filed by the present respondents while, inter alia, holding that the bar of voting as per Section 188 of the Companies Act, 2013 on related parties operated only at the time of entering into a contract or arrangement, i.e., when the resolution dated 15.07.2014 was passed; and therein the said related parties indeed abstained from voting. The Appellate Tribunal found no fault in the said parties voting in the recalling/rescinding of the said resolution. The view, as taken by the Appellate Tribunal, in the given set of facts and circumstances of the present case, appears to be a plausible view of the matter. In fact, nothing of ill-intent on the part of the respondents has been established in the present case. The hyper-technical stance of the appellant could have only been, and has rightly been, disapproved on the given set of facts and circumstances.
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Insolvency & Bankruptcy
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2022 (5) TMI 658
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Whether the Operational Creditor can file this Petition in terms of the Supplementary Agreement which provides for sale of the pledged property in case of default? - HELD THAT:- The contention that by issuing a notice that the pledged goods would be put to sale, the right to proceed under Section 9 of IBC is not available to the Operational Creditor, is not impressive. The Pawnee is given ample powers under Section 176 where it is said that the Pawnee can bring a suit and also retain the pledged goods as collateral security or he may sell the thing pledged by giving notice to the Pawnor. Simply by issuance of a notice it cannot be said that the right given to the Pawnee to proceed otherwise than by selling the pledged property would not be available. The Operational Creditor has stopped at the stage of issuing notice and did not go further on the sale of the pledged goods - Issue is answered in favour of the Operational Creditor holding that this Petition filed by Operational Creditor is maintainable. Whether there is a debt due by the Corporate Debtor to the Operational Creditor and whether the Corporate Debtor has defaulted in discharging the said debt? - HELD THAT:- The law is well settled that the Adjudicating Authority has to admit the application once it is found that the admitted debt due is beyond the threshold limit which in this case is Rs. 1 Lakh and it is evident that the Corporate Debtor has not discharged even the admitted debt - the Corporate Debtor is due a debt to the Operational creditor and has defaulted in discharging the same. The petition is admitted - moratorium declared.
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2022 (5) TMI 657
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor, viz., Male Square Retails Pvt. Ltd. is admitted in Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Moratorium declared. Application allowed.
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2022 (5) TMI 656
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of notice - HELD THAT:- It is seen from the records that notice of default under Section 8 has been delivered and affidavit under Section 9(3)(b) of IBC has also been filed. The last payment was made on 15th October, 2018 and this application has been filed on 23.07.2019, the application is found well within the limitation in terms of provisions of Section 19 of the Limitation Act, 1963 - It is further noted that the corporate debtor in the emails dated 10.10.2018 and 20.09.2018 has also admitted that the amount is due and further pleas raised in reply filed by the corporate debtor is found not to be substantiated by any documents, thus there are no merit in the contentions raised by the counsel for the corporate debtor. It is noted that the application filed under section 9 is complete and complies with the requirements of the relevant provisions of the Code - application admitted - moratorium declared.
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2022 (5) TMI 655
Maintainability of CIRP proceedings - stay on the CIRP proceedings by the order of the Hon'ble Allahabad High Court - security interest of the financial creditors had been made subservient to the farmers' interest - HELD THAT:- This petition filed under Section 7 is pending from March 2020. Even during this process, the Applicant/proposed intervenor, being aware of this fact, could have approached the competent constitutional courts to obtain clear-cut directions on the fate of application was filed by the Financial Creditor. This has not been done. There is nothing in the intervention petition that inhibits us from hearing the present section 7 petition - CIRP proceedings need not be stayed - application dismissed. Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - NPA - charge created against the mortgage of properties of the Corporate Debtor - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Considering the agreement entered into between the parties, the statements annexed for payment due as well as the OTS proposal wherein the corporate debtor has placed for restructuring the loan amount, thus admitting the debt. Thus, there is a debt which is due and payable both in law and in fact and default has occurred within the meaning of provisions of section 7 of IBC, 2016. The application filed under section 7 of the Code, is, therefore, complete in all respects and meet all other procedural requirements of the Code and Regulations made thereunder. Application admitted - moratorium declared.
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2022 (5) TMI 654
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is noted that on behalf of the Corporate Debtor strong plea had been made that the Operational Creditor raises invoices in one entity. However, as per the understanding the payments payable to the Operational Creditor had been paid into those three entities against the supply made by one entity. In this regard a strong reliance was placed on e-mail dated 14.07.2016 received from the Operational Creditor whereby the Operational Creditor had walked out in outstanding balance payable by the Corporate Debtor at ₹ 5,82,516/- as on 13.07.2016. Further it was strongly argued on behalf of the Corporate Debtor that the payment had been made to all the three entities against the supply made by the Operational Creditor and based upon that the Corporate Debtor had paid excess of ₹ 1,05,767/-.To substantiate this claim, reliance has been placed by the Corporate Debtor on ledger accounts of the Operational Creditor maintained by the Corporate Debtor in its books of account. No proof of payment or transfer of amounts so claimed has been attached in the reply or thereafter, Thus, such claim remains unsubstantiated for want of evidence to that effect on record. The Operational Creditor has placed on record the balance sheet of the Corporate Debtor as on 31.03.2017 wherein an outstanding sum payable to the Operational Creditor to the tune of Rs. 6,536,488.00 has been shown. This fact further raises doubts on the claim made by the Corporate Debtor as no material has been brought on record to show that this outstanding amount had been arrived at without considering the payment made to all the three entities taken together - It is further noted that Corporate Debtor entered into compromise agreement dated 21.02.2017 for settling down outstanding dues which also goes to show the Corporate Debtor liable to make payment of some liability to Operational Creditor. It is seen from the records that notice of default under Section 8 has been delivered and affidavit under Section 9(3)(b) of IBC has also been filed and debt fell due on 08.09.2017 and this application has been filed on 12.10.2018 so the application is found well within the limitation - It is noted that the application filed u/s 9 is complete and complies with the requirements of the relevant provisions of IBC, 2016 read with Rules and Regulations made thereunder. The outstanding amount is more than the threshold limit of Rs. 1,00,000/-. There does not exist any dispute within the meaning of provisions of Section 8 9 of IBC, 2016. Application admitted - moratorium declared.
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2022 (5) TMI 653
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Existence of debt and default or not - time limitation - HELD THAT:- In the present case, the occurrence of default is evidenced by the details furnished by the Petitioner including the record of financial information (Form-C) issued by NESL in respect of the debt of the Corporate Debtor. Time Limitation - HELD THAT:- The transaction involving the defaulted amount dates back to 03.03.2019 (as shown as Annexure B-31) and the application was filed on 28.09.2021. Hence, the Petition has been filed within the period of limitation. The respondent corporate debtor in his reply, admitted the debt and default - The application filed in the prescribed Form No. 1 is found to be complete. Application admitted - moratorium declared.
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2022 (5) TMI 638
Seeking permission to Liquidator i.e. the Applicant to cancel the Sale of Corporate Debtor as a going concern - seeking grant of further time to the Applicant to conduct a fresh E-Auction in the matter of the Corporate Debtor as a going concern - HELD THAT:- Keeping in view of the fact that more than seven months has passed since the last date of conclusion of sale, we are left with no option but to allow the application of liquidator to cancel the sale of corporate debtor in favour of auction purchaser in view of failure of the auction purchaser to make payment in terms of 2nd proviso to Clause 1 (12) under Schedule I of the IBBI (Liquidation Process) Regulations, 2016. The Liquidator is permitted to cancel the sale and to proceed in accordance with law. As regards the request of Ld. Counsel for the Liquidator to conduct a fresh e-auction in the matter of corporate debtor as a going concern, it is noticed that the earlier c-auction has failed on account of the failure on the part of the auction purchaser to pay the balance amount and Liquidator has taken all the steps in accordance with law promptly therefore he is not at fault. Application allowed.
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Service Tax
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2022 (5) TMI 652
Refund claim - time limitation - refund claimed within a period of twelve months from 21.09.2017 being the date of filing of revised return, or not - HELD THAT:- There is no controversy regarding the quantum of amount refundable. Further, there is no allegation nor any finding by the Court below with regard to unjust enrichment. Further, in the facts and circumstances, it is found that there is no scope to transfer any service tax liability as the credit has been taken after the appointed day and also filing of Form TRAN-1. Further it is held that no time limit is prescribed under the transition provision of Section 142(9)(b) of the CGST Act, for claim and grant of refund. The appellant is entitled to refund of the said amount of Rs. 1,18,237/-. The Adjudicating Authority is directed to disburse the refund of the said amount within a period of (60) sixty days from the date of receipt of this order alongwith interest under Section 11BB of the Central Excise Act - refund allowed - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 651
Refund claim - time limitation - Whether the statutory time prescribed under section 11B shall be applicable to the amount erroneously deposited by the appellant despite having no liability to deposit the same? - reverse charge mechanism - HELD THAT:- From the bare reading of the section 11B, it is clear that the provision refers to the claim of refund of duty of excise only, it does not refer to any other amount collected without authority of law - In the case on hand, admittedly, the amount sought for as refund was the amount paid under mistaken notion which even according to the Department / Adjudicating Authority was not the liability of the appellant due to the prevalent exemption during the relevant period for the impugned services received by the appellant (payment was made under reverse charge mechanism). There is lack of authority to collect such service tax by the appellant. It would not give the Department an authority to retain the amount paid which otherwise was not payable by the appellant. Nothing may act as an embark on the right of the appellant to demand refund of payment made by them under the mistaken notion - The issue has been dealt by Hon ble Supreme Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] . It has been held that one has to see whether the amount claimed is unconstitutional and outside the provisions of section 11B of the Act. In the present case also, due to the exemption of N/N. 25/2012 dated 20.06.2012 the services on which the appellant had paid service tax i.e. non air conditioned contract carriage under rent a cab service was the exempted service. Hence at the time of the payment the payment had no colour of liability as already discussed above section 11B of Excise Act is not applicable. Hence, the bar of limitation under section 11B also cannot be made applicable upon the said amount. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (5) TMI 650
Reversal of CENVAT Credit - clearance of LPG, which was produced as joint petroleum product with other dutiable petroleum product by chemical reaction/fraction of common blend of raw material is proper - byproduct or not - It is the case of the appellant that the respondent has been availing credit of duty paid on the input and capital goods and input service in terms of the provisions of the CENVAT Credit Rules, 2004 - HELD THAT:- In the case of COMMISSIONER OF C. EX. CUSTOMS, VADODARA-I VERSUS STERLING GELATIN [ 2010 (9) TMI 857 - GUJARAT HIGH COURT] , the assessee therein had availed credit on hydrochloric acid, which was used in the manufacture of dutiable final product viz. gelatin as well as in the manufacture of exempted goods viz. Di-Calcium Phosphate. The issue before the Court was whether the assessee was required to pay an amount of 8%/10% of the value of exempted goods under Rule 6(3)(b) of the CCR. This Court, held that since the assessee could not have manufactured gelatin (dutiable final product) using a lesser quantity of hydrochloric acid, Rules 6(1) and 6(2) of the CCR would not come into play. The issue whether the LPG is byproduct or otherwise has become academic and need not required to be decide. Appeal dismissed.
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2022 (5) TMI 649
Clandestine removal - MS Ingots - MT TMT Bar - MT Sponge Iron - unsubstantiated third party records - corroborative evidences or not - demand alongwith penalty - HELD THAT:- The demand have been confirmed against the appellants with penalty in a mechanical manner. Further there is lack of sufficient evidences or corroborative evidences in support of the allegations of the Revenue. This Tribunal in similar facts and circumstances in the case of M/S. RAMNIWAS ISPAT PVT. LTD., MR. RAKESH JALAN VERSUS C.C.E., RAIPUR [ 2018 (7) TMI 521 - CESTAT NEW DELHI] under similar facts and circumstances of alleged clandestine clearance to Pankaj Ispat, have allowed the appeal holding that demand and penalty is not sustainable on the basis of the third party evidence, in absence of any corroborative evidence/ admission on the part of the assessee. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 648
Clandestine removal - entries in Booking registers of transport commission agents, can establish clandestine removal or not - third party s records - corroborative evidences or not - preponderance of probability - cross-examination of statements - Section 9D of the Central Excise Act, 1944 - HELD THAT:- The allegation of clandestine removal of excisable goods was totally based on entries found/ recorded in the records of transporters and brokers against the name of the appellant and transporters and brokers have admitted in their statements recorded by the department specifically that they have loaded and transported the said alleged goods without the cover of invoices from the premises of the appellant. However, department has not produced any loading advices or consignment notes issued by the transporters in respect of alleged quantity of excisable goods. Further on a careful consideration of the facts and records, it is noticed that mere entries found recorded in the records of said Transporters and brokers are not sufficient to confirm the demand of duty and allegation of clandestine removal. It is settled law that documents recovered from a third party can be used against the manufacturer to prove clandestine removal only when these are supported with corroborative evidences. The Revenue has alleged that huge quantity of finished products have been manufactured and cleared clandestinely without payment of Central Excise duty - the investigation has not tried to approach any of the buyers to corroborate the documents recovered from transporter and broker. The investigation also failed to establish the procurement of raw materials attributed to the huge quantity of alleged clandestine removal. In fact on the date of search, no discrepancy was recorded in respect of stock of raw materials and finished goods vis-a-vis that recorded in statutory records. It is true that the evidence which is required to be produced in quasi judicial proceedings should be such that the charges get established on the basis of preponderance of probability. The standard of evidences need not be as high as in criminal proceedings, where the charges are required to be established beyond reasonable doubts. But in the present case, the allegation of clandestine manufacture and clearance has not been substantiated by any tangible evidences - the law as to whether the third party records can be admitted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Undervaluation of the goods - HELD THAT:- The data given by M/s Major Minors indicates the daily prices for various sizes of rolling plates as well as mixed melting scraps obtained out of ship breaking activities. After comparing both data revenue found that Appellant have undervalued the scrap and evaded Central Excise Duty. After undergoing the changes in Section 4 in the year 2000, the value of excisable goods is the transaction value and there is no provision to adopt any other deemed value. Therefore only on the basis of rate published in a publication, the transaction value can not be doubted. Except the basis of publication, there is no charge of extra consideration flowing from buyers of goods to the appellant over and above the invoice value. Therefore charge of under valuation has no legs to stand. The demands of duty, interest and penalty are not sustainable in the facts of these cases. Consequential penalty imposed on other Appellants also does not survive - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 647
Benefit of exemption notification - benefit of N/N. 15/2010-CE dated 27.2.2010 - manufacture and clearance of galvanised solar structure for the initial setting up of solar power plants - whether mounting structure cleared by the appellant can be said to be machinery, prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control) and component or not - HELD THAT:- In terms of the notification, exemption would be available to all items of machinery, including prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control)and components for initial setting up of a solar power generation project or facility; exemption is granted on the basis of a certificate issued by an Officer not below the rank of Deputy Secretary to the Government of India in the Ministry of New and Renewable Energy recommending the grant of this exemption and the said officer certifies that the goods are required for initial setting up of solar power generation project or facility. It is clear that experts in the field consider the Module Mounting Structure as an integral and essential component of the solar power systems and the Ministry implementing the projects also considers the same as components of the solar power plants and hence were covered by the notifications. Even by common understanding, a component is an essential part of the system without which the system would not function. Therefore, it is not open to the department to deny the benefit of exemption notification. Coming to the procedural compliance, it is not the case of the department that the appellant did not produce the requisite certificate from the competent authority. In such circumstances, in terms of the notification in the event of non-compliance, the project developer of such project shall pay the duty which would have been leviable at the time of clearance of goods, but for this exemption. The impugned order does not survive on merits and limitation - Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 646
Violation of principles of natural justice - Evasion of duty - clandestine removal - remand of the case - Tribunal has committed an error of law by remitting the matter back to the Commissioner for denovo inquiry on the issue concerning evasion of duty without discussion of evidence available on record which prevailed upon the Commissioner to drop this part of the demand - reliability upon the admission made by the AGM of the assessee company to sustain the order of imposition of duty - HELD THAT:- It is found from the allegations in the show cause notice that the said demand of Rs.9, 94, 65,997/- was proposed on the basis of the bilty nakal register (recovered from the two transporters) and on the basis of the statement of the two officers of the respondent assessee namely Shri S. N. Jha, AGM (Excise) and R.K. Bhadoria, AGM (Logistics) - Hon ble High Court in its order have categorically held that the statement of the said two officers cannot be relied upon by Revenue for want of fulfilment of the requirements of Section 9D of the Act. The Hon ble High Court also took notice of the fact that the said Officers have retracted their statements soon thereafter and also not supported their statement given at the time of investigation, in their cross-examination. On a careful examination of the statements and cross-examination, it is found that there is no categorical admission of clandestine removal as alleged by the Revenue. It is also found that all these persons had retracted their statement within a period of few weeks/ months of the recording of their initial statement by the officers during investigation. Thus, these statements discussed hereinabove, do not support the allegations of clandestine removal for the alleged duty evasion of Rs.9,94,65,997/-. The charge of clandestine removal and duty evasion is a serious charge having civil consequences upon the assessee. Such charge cannot be confirmed unless there is sufficient corroborative evidence which leads to the inevitable conclusion of clandestine removal - In the facts of the present case, it is found that in absence of the relevant inputs necessary for production for the alleged quantity removed clandestinely, namely raw materials, electricity, labour etc., the condition precedent of manufacture is not established and in absence of such material evidence, only on the basis of third party evidence the charge of clandestine removal is not sustainable. Thus, the presumption as to the truth and evidentiary value of the documents is available to the Revenue, if the document relied upon is recovered and seized from the premises of the assessee. However, where any incriminating documents are recovered from the premises of third party, such third party should also be jointly prosecuted by being added as co-noticee in the show cause notice. The clandestine removal is a serious charge and needs to be established with cogent evidence. Learned Commissioners order as far as it relates to the dropping of demand of duty for Rs.9,94,65,997/-, needs no intervention - the appeal filed by Revenue is liable for dismissal - appeal dismissed - decided against Revenue.
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2022 (5) TMI 645
Interest on delayed refund - relevant date for calculation of refund - refund sanctioned before issuance of SCN - HELD THAT:- Since the entire amount as was proposed to be recovered from the appellant was got deposited even prior to the issuance of Show Cause Notice and since the said demands stand already set aside, it stands clear that the said amount was not the liability of the appellant to be deposited i.e. it was not the amount of duty. Hence section 11B of Central Excise Act creating the notion of three months as impressed upon by learned Departmental Representative, is no applicable to the facts of present case. The amount which stands deposited since 06.07.2012 has been kept with the department with no authority for retaining the same. The Hon ble Apex Court also has settled this issue in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT ] holding the assessee entitled for interest along with the refund of the amount which he was not liable to pay to the department. In the Sandvik Asia case, Hon ble Apex Court has appreciated section 243 of Income Tax Act which talks about the interest of delayed refund. Section 35FF of Central Excise Act, 1944 deals with similar situation and has actually held as para materia to section 243 of Income Tax Act by the Hon ble Apex Court. Thus, it is held that Commissioner (Appeals) has committed an error while rejecting the claim of the interest on the entire amount of refund. No justification for the bifurcation have been given while sanctioning the interest only on the amount of pre deposit has been given in the order. It is also observed that the findings of the claim to be barred by time are also not correct as the relevant date for recovery period is considered as date of filing the appeal (i.e. 01.09.2014). Inspite of date of communication of the final order entitling the appellant from the impugned relief, 30.6.2017. Seeing from this angle also the order under challenge is not sustainable. The appellant is held entitled for the interest on the remaining amount of refund also that too at the rate of 12 Percent to be calculated from the date of payment thereafter - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 644
Refund of excess duty paid - Finalization of the provisional assessment - applicability of Rule 7 or Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - HELD THAT:- The appellant has no grievance as far as the computation of duty at the time of final assessment of his goods in terms of Rule 11 read with Rule 4 of Valuation Rules instead of Rule 8, thereof. There is no grievance but admission for the differential duty for entire year of 2013-14 to be calculated as Rs.10,39,750/- in appeal no. 50866/2021 and of Rs. 2,04,258/- in appeal no. 50867 of 2021. Simultaneously, it is observed that Department is not disputing that the duty determined for the entire year 2013-14 was Rs.16,30,42,152.80/- and after final assessment it comes to Rs.16,40,82,902/-. Since there is no denial that instead of the duty amount of Rs. 16,30,43,152.80/- amount of Rs. 16,39,81,197.10/- stands already paid i.e. an amount of Rs.9,38,044.30/- stands already paid in excess by the appellant in Appeal No. 50866 of 2021 and an amount of Rs.47,479/- stands paid in excess in appeal no. 50867 of 2021. Commissioner (Appeals) has failed to appreciate the said excess payment to have already been made by the appellant and to adjust the same in the differential duty demand of Rs.10,39,750/- in appeal no. 50866 of 2021. In view thereof and the no objection by learned DR for the same it is held that the differential duty in the Appeal No. 50866 of 2021 to be recovered from the appellant is only for an amount of Rs.1,01,705.7/- (Rs.10,39,750/- minus Rs.9,38,044.30/-). The order under challenge confirming the recovery of entire amount of Rs.10,39,750/- is therefore liable to be set aside on this score itself. The date of conclusion of personal hearing cannot be the relevant date for invoking the said period in case the adjudicating order pursuant to the said conclusion has not been passed. The circular is opined to be ambiguous. Otherwise also there is no provision in entire excise law to fix a time limit of one month from the date of conclusion of personal hearing to communicate the adjudicating order. In absence thereof the impugned circular is opined to not to be considered at least for rejecting the order under challenge on technical grounds. Application disposed off.
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CST, VAT & Sales Tax
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2022 (5) TMI 643
Validity of notice issued - principal grievance of the petitioner is that the objections filed in the matter to the notice of default assessment of tax, interest and penalty issued under Section 32 of the Delhi Value Added Tax Act, 2004, have not been adjudicated upon, up until now - HELD THAT:- While Mr Satyakam may have a talking point as to the mechanics set forth in the Act for service of notice under sub-section (8) of Section 74 of the Act, there is certainly an unpardonable delay on the part of the respondents in dealing with the objections; eight years is too long a time for the respondents to not have moved the matter. Given the fact that the physical interaction often, for various reasons, is not possible with the Commissioner, the respondents/revenue are directed to create a portal/online mechanism for intimation of notices issued under sub-section (8) of Section 74 of the Act, read with Rule 56 of the 2005 Rules. Petition disposed off.
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2022 (5) TMI 642
Levy of Tax - Inter-State sales - whether Gold Bullian Bars send by the revisionist bank to its Branch at Jaipur was not a stock transfer as such was an Inter-State sales, without recording any finding of its own? - HELD THAT:- Admittedly, the revisionist is a nationalized bank of Government of India, which has to adhere to the policy so framed by Reserve Bank of India. It has specifically been mentioned in the grounds of appeal that the T.T. gold bars, on receipt, if not sold within ten days, the intimation has to be sent to the Head Office at Delhi for further instructions. Upon receiving the instructions, the goods were sent to Jaipur Branch. The said transfer was treated as central sales under the Central Sales Tax Act. On submission of Form-F, the assessing authority has treated the stock transfer as inter-State sale, on perusal of the stock register maintained by the revisionist Branch office at Jaipur, that the goods were sold to one party namely R.P. Gatta Jewelers and there was a pre-existing contract, but the revisionist failed to bring on record any other material to prove otherwise - The Tribunal being the last court of fact has failed to consider the fact that the revisionist is a nationalized bank and the nature of transaction is not a regular transaction. The revisionist has sent the gold bars as stock transfer to be sold at Jaipur. The Department has failed to bring on record any contract or pre-existing order of any of the parties at Jaipur. Merely the goods have been sold to one party namely R.P. Gatta Jewelers cannot be a ground for presuming that there was a pre-existing contract. The Department has miserably failed to bring on record any material, whatsoever, except the disclosure by way of showing the stock register maintained at Jaipur Branch. Merely goods have been sold on the date of receipt or within 2- 3 days of receipt at the branch cannot be a ground for treating the pre-existing contract in existence of prior order of contract. In absence of material on record with regard to existence of prior order of contract and the movement of goods to Jaipur Branch was in pursuance of those orders, the same cannot be treated as inter-State sale - this revision is allowed.
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2022 (5) TMI 641
Violation of principles of natural justice - reversal of proceedings concluded and order of assessment passed, under which, the input tax credit claimed or availed by the petitioner - HELD THAT:- Even though the notice dated 10.01.2020, prior to the impugned order, is claimed to have been sent by ordinary post, it cannot be simply presumed that, automatically that would have been served on the petitioner when the petitioner stoutly deny such service of notice - Though the post office is the agent of the addressee, when these kind of matters, where, statutory notice is a must to be issued before passing the assessment order as that will have a financial and civil consequences on the noticee, strict compliance is to be expected. Therefore, the notice claimed to have been sent on 10.01.2020 by ordinary post cannot be treated as a proper service of notice in view of the specific denial made in this regard by the petitioner. Writ petition disposed off.
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Indian Laws
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2022 (5) TMI 640
Maintainability of petition - availability of alternative remedy - Validity of assessment order and rectification order passed by the Agricultural Income Tax Officer under Section 5 (3) of the Bengal Agricultural Income Tax Act, 1944 - HELD THAT:- On perusal of relevant provisions under the West Bengal Taxation Tribunal Act, 1987, it is found that as per Section 36 of the Bengal Agricultural Income Tax Act. 1944, West Bengal Taxation Tribunal is the competent forum for adjudicating the nature of issues arise out of the impugned orders of the first Appellate authority and the nature of reliefs petitioner has sought in these Writ Petitions. Under The West Bengal Taxation Tribunal Act, 1987, the Tribunal has got exclusive jurisdiction to entertain the appeal relating to levy of tax in any assessment under the Bengal Agricultural Income Tax Act, 1944 and the impugned order of the first Appellate authority passed under Section 32 or 35 of the said Agricultural Income Tax Act. Further on perusal of relevant provisions of The West Bengal Taxation Tribunal Act, 1987, it is found that petitioner has got speedy and efficacious remedy and even can get interim relief also. The impugned orders passed by the first Appellate authority are neither without jurisdiction nor it is in violation of principle of natural justice nor there is any procedural illegality during the impugned proceeding before the first Appellate authority which petitioner intends to challenge in the instant Writ Petitions on the ground of alleged wrongful interpretation of relevant provisions of law and mode of computation of tax adopted by the assessing officer which according to me cannot be a ground for invoking the constitutional writ jurisdiction of this Court by avoiding the statutory alternative remedy by further Appeal before the West Bengal Taxation Tribunal if petitioner is so aggrieved unless petitioner is able to make out a case that the nature of dispute it wants adjudication by this Writ Court is specifically barred under the statute for the adjudication by the Tribunal or the nature of relief petitioners have asked in this writ proceeding could not be granted by the Tribunal which is the second Appellate authority. These Writ Petitions against the impugned orders cannot be entertained - petition dismissed.
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2022 (5) TMI 639
Dishonor of Cheque - acquittal of accused - Section 138 of NI Act - HELD THAT:- On perusal of the entire materials available on record, it is seen that the dispute between the petitioner and the respondent has resolved. In view of the same, the offence against the petitioner/accused is compounded and petitioner is acquitted of all the charges. This Criminal Revision Case is allowed
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