Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 2, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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38/2022 - dated
29-4-2022
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Cus (NT)
Seeks to amend Notification No. 34/2022-CUSTOMS (N.T.), dated 21st April, 2022
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37/2022 - dated
29-4-2022
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
DGFT
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01/2015-2020 - dated
29-4-2022
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FTP
Amendment in import policy of ITC (HS) Codes 71123000, 71129100, 71129200, 71129910, 71129920, and 71129990 under Chapter 71 of Schedule – I (Import Policy) of ITC (HS), 2022
GST - States
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FA-3-33-2017-1-V(22) - dated
13-4-2022
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Madhya Pradesh SGST
Seeks to amend Notification No. FA3-33-2017-1-V(42), Dated 29th June 2017
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FA-3-14-2019-1-V(24) - dated
13-4-2022
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Madhya Pradesh SGST
Amendment in Notification No. F A-3-14-2019-1-V(33) Dated 17th May 2019
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F A 3-24-2017-1-V(25) - dated
13-4-2022
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Madhya Pradesh SGST
Amendment in Notification No. FA-3-24-2017-1-Five(49), Dated 30th June 2017
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F A 3-04/2022/1/V(23) - dated
13-4-2022
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Madhya Pradesh SGST
Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC
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F A 3-08-2018-1-V(20) - dated
4-4-2022
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Madhya Pradesh SGST
Corrigendum - Notification No. F A 3-08-2018-1-V(18), dated 23rd March, 2022
Income Tax
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48/2022 - dated
29-4-2022
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IT
Income-tax (Eleventh Amendment) Rules, 2022
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Validity of Conduct of GST officer - Order of Suspension - the record as was shown by the Driver was at variance with the GST records -levying penalty by rectification of order u/s 161 of GST Act instead of informing the superiors - The writ petition is disposed of finally with the direction that in case the departmental proceeding is not concluded within four weeks from today and there is no allegation of non cooperation of petitioner, the impugned suspension order dated 07.01.2022 will become inoperative/ under abeyance till the inquiry is concluded. - HC
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Grant of Default/statutory Bail - availment of illegal CENVAT Credit - This Court is of the opinion that though the complaint filed by respondent No.2 cannot be said to have been filed under Section 173 of CrPC but for the purpose of default bail, it can be said that respondent No.2, who is an authorized officer under the Act of 2017 to carry out investigation/enqiury, filed the complaint within the prescribed time limit which satisfies the requirement under Section 167 of CrPC and as such, no right accrues to the appellants to seek default bail under Section 167(2) of CrPC. - HC
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Validity of SCN - Reversal of Input Tax Credit - In the show-cause notice, the respondents have alleged that the notice i.e. petitioner has willfully filed the return on a later date than the due date of filing of GSTR 3B for the financial year 2018-19 to accommodate ITC, therefore, it is a matter of adjudication whether there was any willful delay on the part of the petitioner to submit the return or not? - Now the show-cause notice has been issued, therefore, the petitioner is required to file a return to the show-cause notice before the competent authority. - HC
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Levy of GST - Valuation - reimbursement amount received by the Applicant from Trainer - Stipend and other expenses incurred - Both the Agreements attached by the applicant as 'Specimen Copies” in respect of the subject application do not provide a clear picture of the actual facts in respect of the present matter and therefore, the questions raised cannot be answered, due to incomplete and inconclusive documentation submitted by the applicant in respect of the subject application. - AAR
Income Tax
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Exemption from income tax to specified income arising to a body or authority or Board or Trust or Commission - U/s 10(46) of IT Act 1961 - Central Government notifies, Tamilnadu Construction Workers Welfare Board a Board constituted by the state Government of Tamil Nadu - Notification
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Revised Instruction for constitution and functioning of 'Local Committees to deal with Taxpayers' Grievances from High-Pitched Scrutiny Assessment' - Order-Instruction
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Revision u/s 263 - If the CIT was of the view that the AO had not examined this issue at all, it could then led to the conclusion that the order of assessment was erroneous. That is not, however, the case here. - Even if such enquiry may not be mandatory, there has to be some basis on which the CIT can form such a view. In the present case, the basis for forming a view that the profit element in the WIP was not accounted for by the Assessee is absent in the order of the CIT. - HC
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Validity of assessment order u/s 144-C (4) - period of limitation - Neither Circular no.8/2021 nor notification no.74/2021 dated 25.6.2021 or press release dated 25.6.2021 would help respondent no.1. - it only provides for extension of time for filing of objections. It does not extend time for passing order under sub-section 4 of Section 144-C of the Act. In any case, even if, we proceed on the basis that, it would extend time to pass orders, still, as admitted in affidavit in reply itself, time to pass such order would have expired on 30.6.2021. - HC
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Validity of assessment u/s 144B - it is not just a question of giving an opportunity of hearing and for that purpose, the assessee should have the draft assessment order in his hands but, with the introduction of Section 144B of the Act, 1961, a procedure has been laid down which needs to be scrupulously followed - HC
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Penalty u/s 271C - non-deduction of tax at source from the payment of harvesting charges paid to contractors - We are aware that ignorance of law is not an excuse but at the same time, it is not practical that every taxpayer should always be aware about the latest development of fiscal laws; which are ever and fast changing. We find that, the issue at hand was highly debatable at relevant point of time and assessee was prevented by a reasonable cause for not complying with the provisions - the appellant assessee is entitled to relief from 271C penalty by virtue of provisions of section 273B - AT
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Addition on account of long term capital gains - indexed cost of acquisition - Claim of assessee that in financial year 1994- 95, the assessee has gifted certain portion of land through a release deed to Municipal Commissioner, same should be taken as cost of improvement. - According to us, that cost cannot be attributed for claim of cost of improvement and consequently indexed cost, for the purpose of Section 48 of the Act. Hence, we direct the AO to remove this amount while computing indexed cost of improvement and recomputed the capital gain accordingly.- AT
Customs
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Countervailing duty on imports of Copper Tubes and Pipes originating in or exported from Malaysia, Thailand and Vietnam imposed
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Benefit of Merchandise Exports from India Scheme (MEIS) denied - it undisputed that the petitioner, but for the error in making a choice of entering ‘N’ over ‘Y’, would be entitled for the benefit of the MESI Scheme. It would be difficult to believe that the petitioner, even if entitled for MESI benefit, would have chosen to give up the benefit unless it was for inadvertent error. These must also be relevant factors in assessing whether there is a bonafide and inadvertent error in making the choice. The PRC of the DGRT has not considered these circumstances in rejecting the petitioner’s request for MESI rewards. - HC
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Revocation of Customs Broker License - The appellant no doubt has filed Bill of Entry in the present case. But the same has been filed on the basis of material given to him by his client. He has expressed his bonafide and denied in-correctness of those documents. Merely because there is evidence on record to falsify the said statement, Customs Broker cannot be held liable for the penal action. Otherwise also, he is held not responsible for verifying the contents of his clients. - AT
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Classification of imported goods - gold coins (round) (other than legal tender) - when HSN is a safe guide for tariff classification under the Tariff Act, CTH 7118 under which the description of goods is ‘coin’ would apply to coins of any metal of officially prescribed weight and design issued under government control for use as legal tender. CTI 7118 10 00 and CTI 7118 90 00 would cover only that category of ‘coins’ which fulfill the aforesaid conditions. For the reasons stated while examining sub-heading 7118.90 of HSN, CTI 7118 90 00 would cover coins which are legal tender in the country of issue. - AT
Indian Laws
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Grant of Interim Award - There was a fundamental failure of the first Arbitral Tribunal to address the plea raised by ONGC for attracting the group of companies doctrine. Moreover, by leaving the application filed by ONGC for discovery and inspection unresolved, the first Arbitral Tribunal failed to allow evidence which may have had a bearing on the issue of whether JDIL could be considered to have an economic unity with DEPL and could hence be made a party to the arbitral proceedings - interim award of the Arbitral Tribunal on the plea raised by JDIL under Section 16 has to be set aside - SC
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Dishonor of Cheque - presumption of liability against the respondent-accused - Rebuttal of presumption or not - acquittal of the accused - Once suspicion is created by an accused, the burden of proof would thereafter shift upon the complainant to prove that the cheque had been executed in discharge of a pre-existing liability/legally enforceable debt. Existence of legally enforceable debt is a pre-requisite for issuance of a cheque. - HC
IBC
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IBC - Liquidation Process - Certain provisions of the regulation shall apply to the liquidation processes commencing on or after the date of the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 - whereas the liquidation process has commenced earlier, old provisions shall apply.
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Initiation of CIRP - Application barred by time limitation or not - The acknowledgement made by the Principal Borrower within three years’ period from the date of account being declared NPA, there shall be fresh period of limitation available to the Financial Creditor and the Application under Section 7 having been filed within three years from the date of acknowledgement, cannot be held to be barred by time - the Application filed by the State Bank of India under Section 7 was within the period of limitation and has rightly been admitted by the Adjudicating Authority. - AT
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Eligibility to submit resolution plan - the Successful Resolution Applicant working through Mrs. Rashmi Saxena, one of its directors, was not ineligible to submit a resolution plan of the Corporate Debtor/Earth Infrastructure Ltd.. Moreover, the resolution plan has been approved by the financial creditors in class voting through their authorized representative - there are no reason to interfere with the impugned order - appeal dismissed. - AT
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The Liquidator should not expect that applications filed by him will be given due consideration even if he, as applicant, does not choose to appear. There are no reason to treat the Liquidator differently from other applicants whose applications will meet the same fate if they choose not to appear on multiple occasions. - Tri
Service Tax
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CENVAT Credit - inputs and/or capital goods - towers - doors - racks - fall arrestor system - insulation material etc. - telecommunication services is provided by the appellant - credit was denied on the ground that, Towers and parts thereof are fixed to the earth on installation and become immovable and, therefore, cannot be considered to be goods - the appellant was justified in availing CENVAT credit of central excise duty, as ‘inputs’, on items indicated in Part-I of the chart contained in the paragraph 43 of this decision and as ‘capital goods’ on the items contained in Part-II of the said chart. The appellant would, therefore, be entitled to refund of the said CENVAT credit which was reversed by it ‘under protest’. - AT
Central Excise
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CENVAT Credit - input services - service tax paid on insurance premium for availing medi-claim facility for employees who had opted for ‘Voluntary Separation Scheme’ - So far as the first limb is concerned, the requirement of establishing a nexus between the ‘input services’ and the process of manufacture would stand satisfied if the expenditure incurred for the ‘input service’ forms part of the cost of production/value of the final product on which duty of the excise is levied - the appellant would be entitled to avail CENVAT credit on the service tax paid on insurance premium for employees who had opted for the ‘Voluntary Separation Scheme’ - AT
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Reversal of CENVAT Credit - provision for slow moving inventory made - Admittedly, Revenue has not been able to identify the details of inventory or asset, for which the general provision has been made. It is further evident that appellant have led evidence that such provision has been varied from year to year by way of writing back, on the usage of the inventory as required. - Further, the situation is revenue neutral as the appellant have written off the majority of the provision created on utilisation of the inventory in manufacturing and clearance of finished goods. - Demand set aside - AT
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SSI Exemption - use of brand name of others - brand name assigned in favor of appellant or not - The notification does not provide any scope for any benefit on assignment. Thus, even on assignment of right to manufacture goods, with others Brand name or trade name by the owners thereof, such manufacturer would not be eligible for exemption under the notification. - AT
Case Laws:
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GST
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2022 (4) TMI 1404
Validity of Conduct of GST officer - Order of Suspension - the record as was shown by the Driver was at variance with the GST records -levying penalty by rectification of order u/s 161 of GST Act instead of informing the superiors - petitioner submitted that petitioner is under suspension since January, 2022, therefore, prayer for revocation of suspension be allowed - HELD THAT:- learned Standing Counsel appearing for State-Respondents, submits that charge sheet has been served upon petitioner in the month of March, 2022, reply has also been submitted by petitioner and inquiry officer will conclude inquiry within a period of three months from today. The writ petition is disposed of finally with the direction that in case the departmental proceeding is not concluded within four weeks from today and there is no allegation of non cooperation of petitioner, the impugned suspension order dated 07.01.2022 will become inoperative/ under abeyance till the inquiry is concluded.
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2022 (4) TMI 1403
Attachment of Bank Accounts of petitioner - tax liability under GST Act not discharged - HELD THAT:- Considering the fact that the petitioner is agreeing to pay consolidated amount of ₹ 25,00,000/- per month for discharging/liquidating the tax liability in the respective writ petitions, the case is remitted back to the respondent to pass a speaking order after considering the petitioner's representation. However, this order will come into force only after the petitioner's representation is disposed of by the respondent. The petitioners are therefore directed to give a fresh representation with its offer together with such additional security to protect the interest of the revenue to their satisfaction by 02.05.2006 so that a workable formula for liquidating tax liability of the respective petitioners can be achieved. Petition allowed by way of remand.
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2022 (4) TMI 1402
Seeking permission to submit its revised form GST TRAN- 1 return electronically on the common portal - permission to upload the revised form GST-TRAN-1 - Rule 120-A of the Central Goods and Service Tax Rules 2017 - HELD THAT:- It is the case of the petitioner that due to technical difficulties faced on 27.12.2017, the petitioner was unable to login on the portal and file the application form as required to avail the transitional credit. The petitioner has addressed various letters to the Deputy Commissioner of GST placing its technical difficulties on record and to permit the petitioner to file transitional credit by opening the portal. The interest of justice would be served if we allow the petitioner to correct Form TRAN-1 and to file Form TRAN-2 without prejudice to the rights and contentions of both the parties. The respondents shall consider the issue whether the Form TRAN-1 and other forms that would be filed/corrected by the petitioner can be entertained in accordance with the provisions of section 140 of the Central Goods and Services Tax Act, 2017 and Rule 117 (1) of the Central Goods and Services Tax Rules, 2017 or not. Petition disposed off.
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2022 (4) TMI 1401
Cancellation of registration of appellant - cancellation of registration on the ground of non-functioning/non-existing at the place of business - HELD THAT:- Considering the facts, the authority committed a grave error in rejecting the application for revocation of cancellation of registration. That apart in the ultimate order dated 18.08.2020 which was put to challenge in the writ petition, we find that there is reference to certain details and data which may not be very germane to decide as to whether the appellant is an existing dealer who is functioning. Prima facie we are of the view that the transactions referred to by the respondent in the order dated 18.08.2020 prima facie shows that the appellant is carrying on business within the State of West Bengal. In any event, we are satisfied that the order rejecting the application for revocation of cancellation of registration is in total violation of principles of natural justice and arbitrary. The appeal is disposed off along with the writ application by setting aside the order dated 8.2.2022 by which the application for revocation of cancellation of registration was rejected and the application dated 08.02.2022 is restored to the file of the concerned authority and the appellant shall appear before the authority alongwith all records to prove that they were carrying on business within the State of West Bengal and based on such record after affording an opportunity of personal hearing take a decision on merit and in accordance with law - application disposed off.
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2022 (4) TMI 1400
Grant of Default/statutory Bail - availment of illegal CENVAT Credit - creation of fake firms - offence under Section 132(1)(b) (c) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- It is not in dispute that the accused is entitled to an indefeasible right of default bail or statutory bail if the accused is prepared to furnish bail in case the charge sheet being not filed in the Court within 90 days of custody in cases punishable with death, life imprisonment, and imprisonment not less than 10 years, and after 60 days of custody for any other offence. True it is that in this case, there is no FIR lodged by the GST authority and the Magistrate has not taken cognizance of the offence on his own but the cognizance has been taken on the complaint filed by the GST authority/respondent No.2 along with the list of witnesses and relevant documents. Under the Act of 2017, power of inspection, search and seizure is prescribed under Section 67; Section 68 deals with power of inspection of goods in movement; Section 69 relates to power of arrest; Section 70 prescribes the power to summon persons to give evidence and produce documents and Section 71 deals with the power to access to business premises. As regards the contention of the appellants that the complaint filed by the GST authority is not after completion of investigation in view of the complaint, the said argument is not acceptable for the reason that the offence allegedly committed by the appellants is an economic offence; if on further investigation any new relevant fact or document comes within the knowledge of the investigating officer, he can file the supplementary report - So far as the appellants are concerned, the material collected against them during investigation as filed with the complaint are sufficient for establishing a prima facie case against them under Section 132(1)(b) (c) of the Act of 2017 and therefore, on filing of such complaint, the Magistrate has taken cognizance of the offence against them. This Court is of the opinion that though the complaint filed by respondent No.2 cannot be said to have been filed under Section 173 of CrPC but for the purpose of default bail, it can be said that respondent No.2, who is an authorized officer under the Act of 2017 to carry out investigation/enqiury, filed the complaint within the prescribed time limit which satisfies the requirement under Section 167 of CrPC and as such, no right accrues to the appellants to seek default bail under Section 167(2) of CrPC. This Court finds no illegality or infirmity in the impugned judgment of the learned Single Judge - Appeal dismissed.
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2022 (4) TMI 1399
Validity of SCN - Reversal of Input Tax Credit - time limitation - constitutional validity of Section 16(4) of the CGST Act - HELD THAT:- Admittedly, the petitioner has filed a return beyond the prescribed limit, therefore, the entries have been reversed under section 16(4) of the CGST Act. In the show-cause notice, the respondents have alleged that the notice i.e. petitioner has willfully filed the return on a later date than the due date of filing of GSTR 3B for the financial year 2018-19 to accommodate ITC, therefore, it is a matter of adjudication whether there was any willful delay on the part of the petitioner to submit the return or not? - Now the show-cause notice has been issued, therefore, the petitioner is required to file a return to the show-cause notice before the competent authority. Writ petition is dismissed.
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2022 (4) TMI 1398
Levy of GST - Valuation - reimbursement amount received by the Applicant from Trainer - Stipend and other expenses incurred by the Applicant in accordance with AICTE (NEEM) Regulations to ensure wealth, safety and health of NEEM Trainees - pure agent services or not - includible in the value of taxable supply made by the Applicant to Trainer for the purpose of payment of Goods and Service Tax or not - HELD THAT:- It is clear that the whereas Agreement mandated the applicant as responsible for the purpose of payment of stipend or other required contributions in respect of the NEEM Trainees, statement of Work attached (Sr. No. 4 of the 'Other Terms and Conditions') to the said Agreement mentions payment of reimbursement the actual cost of uniform, safety shoes, etc. provided to NEEM Trainees - there appears to be some contradictions between clause 4 of the Agreement, where the applicant is held responsible for payment of stipend or other required contributions and from a reading of the Statement of Work (Annexure B- Sr. Sr. No. 4 of the 'Other Terms and Conditions'), it appears that the 'client' (not known whether it applies to IEIPL) is required to reimburse the actual cost of uniform, safety shoes, etc. provided to NEEM Trainees. Both the Agreements attached by the applicant as 'Specimen Copies in respect of the subject application do not provide a clear picture of the actual facts in respect of the present matter and therefore, the questions raised cannot be answered, due to incomplete and inconclusive documentation submitted by the applicant in respect of the subject application.
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2022 (4) TMI 1397
Scope of Advance Ruling Application - Classification of supply - rate of GST on sub-contractor - Tariff Head applicable to Aryan Contractor Private Ltd (Subcontractor) - HELD THAT:- The questions for obtaining an Advance Ruling can be asked by a supplier of goods or services or both, only in relation to the supply being undertaken or proposed to be undertaken and not in relation to any supply of goods or services or both which has already been undertaken and completed before. Since provisions of Sec 95 (a) are very clear and unambiguous that a supplier can file application for advance ruling only in relation to the supply being undertaken or proposed to be undertaken and in the subject case the supply is supposed to have been completed on 31.12.2019 as per the impugned Work Order, the questions raised by the applicant cannot be answered, in terms of Section 95. The Advance Ruling application is not maintainable and is dismissed.
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Income Tax
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2022 (4) TMI 1406
Disallowance of deduction claimed u/s 10AA - CIT(A) has confirmed the addition observing that since the Form No. 56F was to be filed electronically along with return of income which the appellant had failed, therefore the AO was right in disallowing the claim of appellant - HELD THAT:- The order indicates that the assessee had filed copy of Form No. 56F vide letter dated 14.03.2016 to claim deduction u/s 10A during the assessment proceedings and on 22.03.2016 the assessment order was passed. The Bench is of considered opinion that the Proviso to Sub Rule 2 of Rule 12 of the Income Tax Rules, 1962 has made furnishing of report electronically mandatory and as per the Rule 12 cited before the Bench, which is available on page no. 2 to 11 of the paper book, as with regard to Section 10A this mandatory requirement is effective retrospectively from 01.04.2014 so in the present assessment year of 2013-14, it was not actually applicable. Then furnishing the report by electronic means is merely one of the modes and nothing is cited on behalf of revenue to show that the noncompliance would result into non-consideration of the report submitted in physical form. The judgment which ld. Counsel for assessee has cited firmly lay down that the requirements under various provisions of the Act requiring assessee to file any report, are generally directory in nature and the compliance is expected from the assessee any time before the framing of assessment. Particular reference can be made to the judgment of Commissioner of Income Tax vs Web Commerce (India) Pvt. Ltd. [ 2008 (12) TMI 13 - HIGH DELHI COURT] . CIT(A) had fallen in error in confirming the addition, for mere reason that although hard copy was filed before the assessment was completed, the same was not filed electronically along with return of income. Decided in favour of assessee.
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2022 (4) TMI 1405
Exemption u/s 11 - Corpus donation receipts - A.O. had treated the donations received for building fund as a revenue receipt by holding that the rent have been accounted in the guise of donation - whether corpus donations for building fund is a capital receipt and cannot be brought to taxHELD THAT:- AO has not disclosed any documents to show that the hall rent have been accounted for in the guise of donation and how he arrived that there is direct nexus between the hall rent and the donations. The donors of the building fund are entirely different from booking of hall rent. AO summarily dismissed the books of account, which depict all the donation entries. AO after making local enquiries, came to an assumed conclusion that such donations were in the nature of revenue receipts. On confronted for the alleged local enquiry details to be examined by the assessee, the AO failed to furnish such local enquiry details nor during the appellate proceedings, the details were parted with the assessee. Therefore, in the context of the above, the assessee was deprived of all principles of natural justice and additions were made behind the back of the assessee. Statement of AO in the assessment order that AR has admitted that one has to make compulsory donation while taking hall on hire was denied by the AR and the same is made clear in the written submission filed before the CIT(A). Therefore, in the interest of justice and equity, we are of the view that the matter needs to be examined afresh by the AO. AO is directed to come out with the details how he has come to the conclusion that the hall rents have been accounted in the guise of donation. The assessee is directed to cooperate with the AO and furnish the necessary documents for expeditious conclusion of the assessment. Appeal filed by the assessee is allowed for statistical purposes
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2022 (4) TMI 1396
Reopening of assessment u/s 147 - proceedings after the expiry of four years from the end of the relevant assessment year - Eligibility of reasons to believe - HELD THAT:- As noted the reasons recorded admit that Petitioner had disclosed that it had traded in the shares of Finalysis. To a query raised under Section 142(1), Petitioner has also admitted that it has traded in Finalysis and even provided documents thereto. The issue of capital gains from shares which included the shares of Finalysis was under active consideration before the Assessing Officer. That would also show there was no failure to disclose. Therefore, it cannot be stated that Respondents have crossed the threshold or the fetter provided for in the proviso to Section 147 of the Act that re-opening after the expiry of four years is permissible only when there is failure to truly and fully disclosed material facts.
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2022 (4) TMI 1395
Revision u/s 263 - CIT directing the AO to redo the assessment after verifying the valuation, made by the Assessee, of the Work in Progress ( WIP) disclosed in its return of income and further, the profit element contained therein - HELD THAT:- When the Assessee appeared before the CIT, the Assessee contradicted this assumption and contended that it had in fact accounted for the profit element in the WIP. There is nothing in the order of the CIT that indicates that the CIT formed a view that the above contention of the Assessee was erroneous by examining the order of the AO. As rightly pointed out by the ITAT in the impugned order, the AO had in fact called for the details of the closing WIP which had been furnished by the Assessee and had examined it. If the CIT was of the view that the AO had not examined this issue at all, it could then led to the conclusion that the order of assessment was erroneous. That is not, however, the case here. The CIT simply decided that even for verification of the correctness of the submission of the Assessee, the matter had to be remanded to the AO. Section 263 of the Act requires the CIT, after hearing the Assessee, to pass an order by making such enquiry as he deems necessary . The purpose of such an enquiry would be to arrive at a subjective view that the order of the AO was erroneous in so far as it is prejudicial to the interest of Revenue. Even if such enquiry may not be mandatory, there has to be some basis on which the CIT can form such a view. In the present case, the basis for forming a view that the profit element in the WIP was not accounted for by the Assessee is absent in the order of the CIT. Consequently, the Court is unable to find any error having been committed by the ITAT in interfering with the said order and setting it aside. No substantial question of law.
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2022 (4) TMI 1394
Order passed by PCIT u/s 264 dismissing the revision petition filed by the appellants - order was an ex parte order since according to the PCIT despite notice being sent to the assessee through e-mail none appeared for the hearing - intra court appeal filed by the appellant/writ petitioner - Single Judge had dismissed the writ petition by the impugned order primarily on the ground that the earlier writ petition filed by the appellant was dismissed and, therefore, the appellant cannot also again challenge the assessment order indirectly by questioning the order passed by the PCIT u/s 264 - as argued violation of principles of natural justice and as the appellant was not granted adequate and effective opportunity by the assessing officer HELD THAT:- PCIT had committed an error in rejecting the revision petition on the ground that already the appellant had filed the writ petition and challenged the assessment order and the same has been dismissed. The dismissal of the writ petition was not on the merits of the assessment. Therefore, the PCIT committed an error in making such observation. The learned writ court has also faulted the assessee for having not filed a regular appeal as against the order of the assessment by approaching the Commissioner under Section 246(A) of the said Act. It may be true that the appeal might have been time barred but nevertheless the appellant assessee cannot be foreclosed from availing the revisional remedy under Section 264 of the said Act which is an independent remedy provided to an aggrieved person in terms of the provisions of the Act. Therefore, the decision is required to be taken by the PCIT on merits of the matter. Though there is allegation made that the notice have been sent to the e-mail address which was not in operation, we do not propose to go into the correctness of the said submission as we are of the considered view that an adequate opportunity should be granted to the assessee to pursue the revision petition filed under Section 264 of the Act and since the revision petition has been manually presented, the assessee has also to be afforded an opportunity of personal hearing. We are of the view that PCIT has to take a decision on merits and in accordance with law. For the reasons given hereinabove, the appeal stands allowed and the order passed by the PCIT, Kolkata -1 dated 15.12.2021 under Section 264 of the Act is set aside and the revision petition is restored to the file of the said authority. Consequently, the order passed in the writ petition is set aside
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2022 (4) TMI 1393
Validity of assessment order u/s 144-C (4) - period of limitation - HELD THAT:- Neither Circular no.8/2021 nor notification no.74/2021 dated 25.6.2021 or press release dated 25.6.2021 would help respondent no.1. In Circular No. 8/2021 dated 30.4.2021, sub-clause (b) of Clause 1 only provides for objections to Dispute Resolution Panel u/s 144-C of the said Act for which, last date of filing under that Section is 1.4.2021 or thereafter may be filed within the time provided under that Section or by 31.5.2021 whichever is later. Therefore, it only provides for extension of time for filing of objections. It does not extend time for passing order under sub-section 4 of Section 144-C of the Act. In any case, even if, we proceed on the basis that, it would extend time to pass orders, still, as admitted in affidavit in reply itself, time to pass such order would have expired on 30.6.2021. Now coming to the notification no.74/2021 dated 25.6.2021 relied upon by respondent no.1, in our view that notification does not apply to assessment u/s 144-C of the Act. In fact press release clarifies Extension of Timelines- .. provided through notification nos.74/2021 and 75/2021 dated 25.06.2021 .. . None of the notifications referred in the press release pertains to any timeline prescribed u/s 144-C of the said Act. In the circumstances, we will have to agree with petitioner s case that the assessment order dated 27.09.2021 has been passed beyond prescribed time limit. WP Allowed.
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2022 (4) TMI 1392
Rejection of books of accounts - Percentage of gross profit of an assessee on being unsatisfied as to the correctness of the accounts - whether the percentage of gross profit as determined by the Commissioner of Income Tax (Appeals) 11, Kolkata [CIT(A)] at 40 per cent was justified or not? - HELD THAT:- Assessee was not put on specific notice that the gross profit should have been determined at 40 per cent qua their claim of gross profit at 57.01 per cent. Thus, the best course that should have been adopted by the CIT(A) was to remand the matter back to the assessing officer to re-do the assessment and issue certain guidelines or on the other hand directed the assessing officer to submit a remand report. CIT(A) did not adopt either of these two courses but proceeded to determine the gross profit once again by way of guess work which in our opinion was incorrect in so far as the AO had completed the assessment. As pointed out earlier the tribunal has not given any independent reason for affirming the order of the CIT(A). Thus, taking note of the peculiar facts and circumstances of the case, we are of the considered view that the matter should be remanded back to the assessing officer to consider only the aspect as to whether the denial of the gross profit to the extent of 17.01 per cent by the CIT(A) as affirmed by the tribunal was correct or not. In this regard, the assessee should be given an opportunity by the assessing officer to place the records and documents to justify that the gross profit as determined by them at 57.01 per cent was correct. We make it clear that whatever relief granted by the CIT(A), namely, determination of gross profit at 40 per cent cannot be altered and the same stands affirmed and what remains is only to consider as to whether the remaining amount of gross profit, namely, 17.01 per cent of which relief was denied to the assessee by the CIT(A) which requires to be considered by the assessing officer. Appeal is allowed.
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2022 (4) TMI 1391
Reopening of assessment u/s 147 - live link or close nexus between the material before the ITO in the case at hand and the belief which he was to form recording the escapement of income - HELD THAT:- No doubt true that Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income Tax Officer on the point as to whether action should be initiated for re-opening assessment but at the same time, it is not any and every material, however vague and indefinite or distant, remote and far-fetched which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. It is also settled law that the reasons for re-opening assessment has to be tested / examined only on the basis of the reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to re-open the assessment. These reasons cannot be improved upon and/or supplemented much less substituted by an Affidavit and/or oral submissions (First Source Solutions Limited vs. The Assistant Commissioner of Income Tax - 12(2)(1) and Another [ 2021 (9) TMI 248 - BOMBAY HIGH COURT] ). Therefore, the submission of Mr. Sharma that respondent no.2 has explained in the order on objections what was the report and information and details on which he formed a reason to believe, will be of no assistance to respondents.
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2022 (4) TMI 1390
Validity of assessment u/s 144B - As argued no draft assessment order was served upon the writ applicant in accordance with the provisions of Section 144B prior to passing of the impugned assessment order - whether the respondent committed any error in passing the impugned order? - HELD THAT:- What is important to be noted in the present case is that it is not just a question of giving an opportunity of hearing and for that purpose, the assessee should have the draft assessment order in his hands but, with the introduction of Section 144B of the Act, 1961, a procedure has been laid down which needs to be scrupulously followed. If in any action is in complete disregard to the statutory provisions then it is always open for this Court to overrule the objection of alternative remedy available to the assessee. In the result, this writ application succeeds and is hereby allowed. The impugned assessment order dated 20.04.2021 is hereby quashed and set aside. The matter is remitted to the respondent for denovo proceedings. The respondent shall undertake denovo proceedings in accordance with the provisions of Section 144B of the Act, 1961. The respondent shall issue a fresh Notice cum draft assessment order and the writ applicant upon receipt of the same, shall file its response in accordance with law.
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2022 (4) TMI 1389
Cessation of the Settlement Commission - validity of the amendment to the Income Tax Act, 1961 in Section 245A by inserting sub-clauses (da), (ea) and (eb), and Sections 245B, 245BC, 245BD, proviso to Sections 245C, 245D, 245DD, 245F, 245G, 245H and insertion of new Sections 245AA and 245M by way of Sections 54 to 65 of Finance Act, 2021 with retrospective effect from 01.02.2021, on the ground that such amendment is arbitrary, illegal and void and infringing the fundamental rights conferred under Articles 14, 19(i)(g), 20, 20(2) and 21 of Constitution of India 1950, thus unenforceable and unconstitutional - HELD THAT:- Since during the pendency of the writ petitions, the CBDT came out with a press release dated 7.9.2021, followed by an order dated dated 28.9.2021, directing to admit all applications filed after 31.1.2021 and before 30.9.2021 and treat such applications as valid and process them as pending applications for consideration by the Interim Board, learned counsel for the petitioners are not pressing the writ petitions in regard to the challenge to the constitutional validity of the amended provisions, referred to above, as all the petitioners submitted applications on or before 30.9.2021. However, learned counsel for the petitioners seek clarification about the pendency of the proceedings as on 31.1.2021. It has been agreed by the parties to govern the issue aforesaid by Explanation (iv) to Section 245A(b) of the Act of 1961. The provision aforesaid has been quoted in the preceding paragraph. In view of the above, we dispose of all these writ petitions with a direction to the respondents to send applications for consideration by the Interim Board, if submitted before 30.9.2021. The consideration of applications by the Interim Board would be if the proceedings were pending as on 31.1.2021. To determine the pendency of the proceedings, the Interim Board would be governed by Explanation (iv) to Section 245A(b) of the Act of 1961. The Interim Board would exercise the jurisdiction as conferred by the order dated 28.9.2021 passed by the CBDT.
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2022 (4) TMI 1388
Revision u/s 263 - Taxability being entrance fees received from the members treating the same to be a revenue receipt and taxable income of the Appellant - HELD THAT:- Since the assessee has been validated that from AY 2004-05, he has been receiving entrance membership, which has never been brought to tax as revenue receipts in the hands of the assessee, even on the principles of consistency, the Ld. Pr. Ld. CIT(A), in our view, has erred in revising the order passed u/s 263 of the Act, without bringing on record any material change in facts from the previous years. In the result, we are of the view that in light of the discussion above, Ld. Pr. CIT has erred in facts and in law, erred in initiating proceedings u/s 263 of the Act and setting aside the assessment order on the ground that it is erroneous and prejudicial to the interests of the Revenue. - Decided in favour of assessee.
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2022 (4) TMI 1387
Addition u/s 68 - unexplained Cash credit - HELD THAT:- The assessee has been able to reasonably demonstrate that he has substantial landholding capable of earning regular agricultural income and also received a sum by way of cash and jewellery from his father. This fact was also affirmed by the village Panchayat. The assessee also produced inheritance certificate in support of the above contention as proof of inheritance of the above sum. Further, vide Panchrojkam dated 09-01-2018, the Talati cum Mantri of Kukad Gram Panchayat gave a declaration that the assessee is owner of considerable landholding from which yearly income is ₹ 3 to 4 lakhs. The assessee also filed copy of Form 7/12 giving details of landholding and details of crop grown on the same. CIT(A) made a specific note of these facts in the appellate order and Revenue has not challenged the above facts stated by the assessee. Even during the impugned assessment year, the assessee has declared agricultural income. Thus, in our view, the assessee has been able to demonstrate ability to invest the sum from his personal savings to buy the immovable property. Unexplained unsecured loan u/s.68 in respect of loan taken from lenders - The assessee though has been able to establish the identity of creditors / lenders, but has not been able to establish their creditworthiness. The Courts have taken a consistent position that the assessee is expected to establish proof of identity of creditors, capacity of creditors and genuineness of creditors in order to discharge onus cast on assessee. Mere production of parties or confirmation from parties will not suffice, unless the assessee is also able to substantiate their creditworthiness i.e. ability to advance the sum to the assessee. Assessee has not been able to establish the creditworthiness of lenders nor has he been able to establish the genuineness of transaction. The lenders could not produce bills of agricultural produce, landholdings have been found to be insufficient to enable the lenders giving loan ranging from ₹ 11 lakhs to ₹ 15 lakhs to the assessee, the lenders are residing in mud houses, the lenders have granted loan in cash, land owned by the lenders are under charge of concerned banker against loan taken by them, the lenders are first time lenders who have given ₹ 11 lakhs to 15 lakhs without charging any interest from the assessee, the assessee has not repaid the loan till date back to the lenders, at the time of giving loan there was no proof in writing to the effect that such a huge loan and purpose why such loan was given to the assessee- all these facts raise serious doubt both on the creditworthiness of the parties and genuineness of the transaction. In our considered view, since the assessee has failed to establish the creditworthiness of parties, he has not been able to discharge the onus cast upon him u/s 68 of the Act. Therefore, we are of the considered view that Ld. CIT(A) has not erred both in law and on the facts of the case in confirming the action of AO of making an addition as unexplained unsecured loan u/s.68 of the Act in respect of loan taken from lenders.
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2022 (4) TMI 1386
Addition on account of excess interest paid - HELD THAT:- As the assessee itself has worked out that excess interest has been charged by the various banks, naturally this amount cannot be said to be an expenditure incurred by the assessee for the purpose of the business of the assessee for the assessment year 2009 10. However, the whole interest expenditure stated to be excess charged cannot be disallowed, as it has not been claimed as expenditure during the year. During the year the total expenditure claimed which has been charged excessively by those banks is amounting to ₹ 2,629,006 and 49 only. In view of this, even if there is any disallowance it could be restricted only to the sum. Therefore, we direct the learned assessing officer to restrict the disallowance only to ₹ 2,629,649. Accordingly, ground number 1 of the appeal is partly allowed. Addition on account of charging of 2% as guarantee fees by the Maharashtra government and then converting it into a capital by disallowing the guarantee fee of that amount - HELD THAT:- It is an undisputed fact that guarantees fee is an expenditure incurred by the assessee. It is also not in dispute that it has been incurred by the assessee during the year and crystallized during the year. Therefore, the corporate guarantee fee payable by the assessee to the government of Maharashtra has OF an expenditure incurred by the assessee for the purposes of the business. Therefore, we hold that the expenditure has been incurred by the assessee during the year for the purposes of the business therefore it is allowable to the assessee under the provisions of Section 37 (1) of the. Mere fact that it has been converted into equity capital by government of Maharashtra does not change the character of expenditure of guarantee fee paid by the assessee. It is a manner of payment of such expenditure by assessee to government of Maharashtra. Further, the conversion of guarantee fee is also backed by the Cabinet committee decision of the government of Maharashtra. Therefore, it cannot be stated that these are mere paper transactions. In view of this, we reverse the findings of the lower authority and direct the learned assessing officer to delete the disallowance of ₹ 9283 lakhs on account of guarantee fee paid to government of Maharashtra. Accordingly, ground number 2 of the appeal is allowed.
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2022 (4) TMI 1385
Penalty u/s. 271(1)(b) - assessment u/s 153C - Assessee argued AO had levied multiple penalties for non-appearance on three different dates without appreciating that there was neither proper service of notice nor was there any query - HELD THAT:-. As could be seen, the AO issued only one notice u/s 274 read with Section 271(1)(b) in each of the three cases where penalty u/s 271(1)(b) was levied, for ay: 2014-15, before prejudicing the assessee, which SCN itself is disputed by the assessee to have not been served on the assessee as the assessee has denied that he was never served with SCN s, which also touches upon the adherence to the principles of natural justice. It is also observed that tribunal passed a common order dated 16. 10. 2019, for ay: 2012-13, 2013-14 and 2016-17, wherein penalty levied u/s 271(1)(b) by AO and confirmed/upheld by ld. CIT(A) stood deleted, but we have observed that factual matrix in the case before us for impugned assessment year 2014-15 differs from the facts as are emerging from records for ay: 2012-13, 2013-14 and 2016-17, as in those years, there were no additions made by the AO while framing assessment u/s 153C read with Section 144 and the returned income stood accepted, while in the year under consideration viz. ay: 2014-15, there are finding by the AO that there are incriminating material belonging to the assessee which was found during search operations conducted by Revenue in the case of Genus Group of cases, on 30. 07. 2015 u/s 132 of the 1961 Act, which has bearing on determination/computation of income of the assessee for ay: 2014-15, and the AO wanted to confront assessee with the seized material, but the assessee did not co-operated with Revenue and no details were filed by the assessee, for ay: 2014-15 in compliance to questionnaire/directions issued by the AO, which ultimately led to additions being made by the AO while framing quantum assessment for ay: 2014-15. Even, the assessee did not appeared before the AO in response to summons issued by the AO u/s 131 of the 1961 Act. The appeal against quantum assessment filed by the assesse is pending before ld. CIT(A) for adjudication. Thus, the order dated 16. 10. 2019 passed by tribunal is clearly distinguishable on the facts. We are of the considered view in the impugned case before us one more opportunity be provided to assessee to bring on record complete details/evidences in support of its contentions. Thus, based on totality of facts and circumstances of the case, we are setting aside the matter to the file of ld. CIT(A) for fresh adjudication of the issue. Further, if advised, the assessee can file condonation application before ld. CIT(A) explaining sufficient cause, and it is for ld. CIT(A) to adjudicate the admissibility of appeal or otherwise, on merits in accordance with law. We clarify that we have not commented on the merits of the issue in these three appeals, for ay: 2014-15, and all the contentions are kept open. Thus, the assessee s three appeal(s) for ay: 2014-15, are allowed for statistical purposes.
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2022 (4) TMI 1384
Disallowance of deduction u/s 80P(2)(d) - Consideration of interest income received from Axis Bank - income from other sources OR income from business or profession - HELD THAT:- There is no dispute at the end of the assessee that interest income has been earned from term deposit/other deposits with scheduled banks or other banks other than cooperative banks. There is no iota of evidence which could show that the interest income has any connection with the income from its members. As relying on M/S. PANDITPUR SAMABAY KRISHI UNNAYAN SAMITY LTD [ 2022 (4) TMI 1347 - ITAT KOLKATA] clearly states that such interest income which is earned from other banks and not earned from members of the Society or from deposits with any other cooperative Society no deduction is allowable u/s 80P(2) of the Act. Only any expenditure incurred to earn such income not eligible for deduction u/s 80P(2) of the Act can be claimed. In the instant case, the interest income from banks other than cooperative banks/cooperative Societies/members is ₹ 23,00,239/-. The net profit shown in the profit loss account is only ₹ 6,96,233/-. Though details of profit loss account have not been placed on record but even otherwise against the interest income from banks, deduction of ₹ 16,04,006/- has already been claimed by the assessee, there hardly remains any case for the assessee to claim any other benefit. AO has already allowed deduction of ₹ 50,000/- against the net profit of ₹ 6,96,233/-. The alternative submission of the assessee is that the disallowance should be restricted only to 3.12% being the net profit rate to be applied on the interest income of ₹ 23,00,239/- cannot stand for as the assessee has already claimed an expenditure of ₹ 16,04,006/- against the interest income of ₹ 23,00,239/-. We, therefore, confirm the finding of the ld. CIT(A) sustaining the addition made by the AO and dismiss the ground nos. 2 3 raised by the assessee. CIT(A) rightly dismissed the claim of deduction u/s 80P interest income received from Axis Bank, Kalna Branch by the appellant. We, therefore, confirmed the finding of the ld. CIT(A) sustaining the addition - Decided against assessee.
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2022 (4) TMI 1383
Deduction u/s 80IC - assessee is a partnership firm engaged in the business of manufacturing of herbal Velvette shampoo of various types and Nivaran-90 cough syrup - HELD THAT:- Where the authorized officer had given that most of the machinery physically verified during the survey were found to be old/second hand and were never used by the assessee allowed the claim of deduction u/s 80IC - the findings of the AO that some of the machinery were transferred to assessee s business premises from Chennai where machines had been used by the assessee were not considered by CIT(A) before allowing the claim of deduction u/s 80IC which in our opinion is not justified under the facts and circumstances of the case. We further find the assessee did not file any revised form No.10CCB of the audit report before the survey to prove his claim of inadvertent error and value of old machinery and depreciation claimed and this issue was not properly dealt with by the CIT(A). Since the ld.CIT(A) has allowed the claim of the assessee without appreciating the findings of the survey report and the fact that the assessee has failed to prove that the items of old machinery excluded from manufacturing process is not more than 20% for the purpose of deduction u/s 80IC, therefore, such order of the CIT(A), in our opinion is not a speaking order. We, therefore, deem it proper to restore the issue to the file of the CIT(A) with a direction to pass a speaking order considering the findings in the survey report and decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the Revenue is accordingly allowed for statistical purpose.
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2022 (4) TMI 1382
Unexplained cash credit u/s 68 - Addition by CIT- A in view of the provisions of section 251(2) - cash and cheque deposit in the bank account of the assessee on the ground that the assessee could not substantiate the source of such deposit - CIT-A sustained addition - - HELD THAT:- CIT(A) shall not enhance the assessment without giving a reasonable opportunity to the assessee to show-cause against such enhancement, which is a mandatory requirement. However, the Ld. CIT(A) in the instant case has not followed the mandatory requirement of law. Therefore, we find merit in the argument of the ld. counsel for the assessee that the addition as deposited through various cheques, which was accepted by the AO as no addition has been made on this issue has to be deleted. We accordingly direct the AO to delete the addition sustained by the ld. CIT(A). Unexplained cash deposit in the bank account - We do not find merit in the arguments of the ld. Counsel for the assessee that no addition should be made on this account. However, at the same time, the entire addition of the cash deposit in the bank account cannot be made in the instant case especially when the purchases have been made through banking channel and sales have been made in cash and at the end of the year all the shares purchased have been sold leaving no balance. The assessee in the instant case in our opinion has typically acted as broker/mediator/commission agent. The various Coordinate Benches of the Tribunal under such type of bogus purchases/sales are estimating the profit ranging from 0.25% to 3% of the purchases/sales as the case may be. Considering the totality of the facts of the case and in the interest of justice, we are of the considered opinion that adoption of profit @ 2.5% of the total cash deposit of ₹ 1,84,45,000/- in the instant case as against entire addition of ₹ 1,84,45,000/- will meet the ends of justice. We hold and direct accordingly. The order of the Ld. CIT(A) is accordingly modified and the grounds raised by the assessee are partly allowed.
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2022 (4) TMI 1381
Validity of the assessment under section 153C - Search in case on non resident Mr. Jean Louis Deniot, French architect and designer and his companies have rendered services for designing, decorating and renovation of palatial farm house and this farm house is used as residence of assessee - HELD THAT:- As per the provisions of Section 153C, one of the important jurisdictional requirement is that the seized document on the basis of which jurisdiction is being assumed must belong to the person other than the searched person i.e the non-resident being assessed to tax in the hands of a representative assessee, as per law applicable to search action prior to the amendment in section 153C. The amendment in section 153C modifying this requirement to the words pertains to or relates to came into effect from 1.06.2015 and is prospective in nature So far as the Hard Disc seized from the premises C-134, Defence Colony, New Delhi and recorded in the Panchnama in the name of AMQ Agro India Pvt. Ltd., is concerned, we find merit in the arguments of the Learned Counsel for the Assessee that the same would definitely belong to the AMQ group of cases and not the non-resident. The non-resident individual/entity did not have an office in India is an uncontroverted position. Even the assessing authorities have nowhere alleged that the nonresident had an office in India. Therefore, these hard discs, in our opinion, cannot be said to be belonging to the person other than the searched person. So far as the printouts of emails retrieved from the hard discs mentioned above are concerned, we find merit in the arguments of the Learned Counsel for the Assessee that the exchange of mail may be between the non-resident and AMQ group employees, but the mails found in inbox or outbox of the AMQ group employees would belong to the respective employee(s) and not the non-resident. In our opinion, although, the mail may have been initiated by the non-resident or its staff and may figure name of Jean Louis Deniot/Cabinet Jean Louis/Design Inc. but it cannot be said that the email found from the hard disc of the AMQ group, located at the premises in India, in inbox/outbox of the respective employee belongs to the non-resident. As regards the invoices raised by Jean Louis Deniot/Cabinet Jean Louis retrieved from the emails are concerned, we find merit in the arguments of the Learned Counsel for the Assessee that having raised the invoice on Mr. Mrs. Qureshi, the said invoice would be the property of the person on whom it has been raised. Even a copy of the said invoice found in the email of the respective employee would belong to the said employee and not the non-resident. In our opinion, what is to be examined is the ownership of the seized material. The authorship of the document or the fact that name of the non-resident individual/entity figure in the document is not relevant. We are of the considered opinion that none of the seized material mentioned in the satisfaction note belongs to the non-resident individual/entity and hence the jurisdictional requirement for assumption of jurisdiction u/s 153C is not met. Thus, the order passed u/s 153C being not in accordance with law has to be quashed. Respectfully following the decision of Hon ble Delhi High Court in the case of Pepsico India Holdings [ 2014 (8) TMI 898 - DELHI HIGH COURT] we are of the considered opinion that the assumption of jurisdiction under section 153C of the I.T. Act, 1961 is not in accordance with Law. Treating the assessee as representative assessee of Jean Louis Deniot on the basis of the order passed under section 163 - Even otherwise on merit also, we find the A.O. as well as the Ld. CIT(A) have categorically held that Jean Louis Deniot is a non-resident. Further the non-resident being a resident of France and rendering independent personal services in the nature of Architectural services is covered by the provisions of Article 15 of the DTAA between India and France. We find merit in the arguments of the Learned Counsel for the Assessee that on the facts and circumstances of the present case the necessity to bring on record copy of Passport of the non-resident is not required. The provisions of section 163 through which the assessee has been treated as representative assessee can only be applied in the case of a non-resident. In our opinion, if the said non-resident had stayed in India for 183 days or more during the relevant assessment year, automatically his status would not remain that of a non-resident. If that is the case, then provisions of section 163 would no longer remain applicable - We, therefore, hold that Jean Louis Deniot and his associate concern M/s. Cabinet Jean Louis Denior and Design-39 Inc. being a non-resident is entitled to claim the benefit of Article-15 of DTAA between India and France and, therefore, any income accruing to a resident of France is not taxable in India who has not stayed in India for a period of more than 180 days. We find the Hon ble Delhi High Court in the case of Comverse Networks System India Pvt. Ltd. [ 2014 (8) TMI 6 - DELHI HIGH COURT] has held that where a person in respect of whom an Agent is sought to be made the representative-assessee does not attain the status of non-resident from the relevant accounting period, provisions of Section 163 cannot be invoked in such a case. We are of the considered opinion that the Ld. CIT(A) was not justified in upholding the action of the A.O. in making the addition by treating the assessee as representative assessee of Jean Louis Deniot on the basis of the order passed under section 163 - Appeal of assessee allowed.
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2022 (4) TMI 1380
Penalty u/s 271(1) (c) - TP Addition - HELD THAT:- We note that the Hon'ble Ahmedabad ITAT in quantum appeal in relation to Transfer Pricing additions for captioned year i.e. AY 2005- 06 in assessee's own case [ 2022 (2) TMI 1220 - ITAT AHMEDABAD] has restored the matter back to the file Ld. Assessing Officer for fresh adjudication. Accordingly, in our view, respectfully following the above decision, it would be fit to restore the penalty issue to file of Ld. Assessing Officer. Penalty in respect of excess claim for depreciation - HELD THAT:- We note that on same issue and similar facts, Hon'ble ITAT Ahmedabad in appellant's case for A.Y. 03-04 [ 2015 (9) TMI 59 - ITAT AHMEDABAD ] in .[ 2012 (1) TMI 414 - ITAT AHMEDABAD ] deleted the penalty imposed on the issue of excess claim of depreciation. Penalty in respect of claim u/s 80-IA - HELD THAT:- penalty in respect of claim u/s 80-IA - HELD THAT:- We note that Hon'ble ITAT in assessee's own case for AY 2003-04 [ 2015 (9) TMI 59 - ITAT AHMEDABAD ] and for AY 2004-05 [ 2012 (1) TMI 414 - ITAT AHMEDABAD ] has deleted the penalty in respect of claim u/s 80-IA Revenue appeal dismissed.
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2022 (4) TMI 1379
Penalty u/s 271C - non-deduction of tax at source from the payment of harvesting charges paid to contractors - whether there exists reasonable cause for default trigger penalty proceedings? - HELD THAT:- Penalty section 271C and section 273B, we find that the word 'shall' is used in section 271C prima-facie makes it clear that imposition of penalty is mandatory, nonetheless it reveals the imposition of penalty is non-discretionary. Au contraire the word 'shall' used u/s 273B provides that, it is mandatory not to impose penalty if the assessee establishes the existence of reasonable cause for its failure in compliance of provision of chapter XVII-B of the Act. That is to say, even if the assessee make itself liable for penalty for violation of chapter XVII-B of the Act, provision of section 273B acts as immune on reasonable cause in the give circumstances. To our limited knowledge, there is no definition of the term reasonable cause , and it has to be decided upon the facts of each case or a situation that would stimulate or encourage a person of ordinary intelligence under the given facts and circumstances to believe, based on observations or conversations to be not applicable or applicable as the case may be. In this regards it apt to quote the decision in the case of CIT Vs M/s Eli Lilly Company (India) Pvt. Ltd. Ors [ 2009 (3) TMI 33 - SUPREME COURT] with regards to reasonable cause for failure to deduct TDS, the Hon ble Lordship on the scope of Section 271C r.w.s 273B. The expression reasonable cause gives the impression that prima facie, if a person of average intelligence has acted and under those circumstances the said action was at that point of time not infringed the settled law then it can be reasonably held that assessee was prevented by a reasonable cause under those circumstances not to act as prescribed or determined by a case law. We are aware that ignorance of law is not an excuse but at the same time, it is not practical that every taxpayer should always be aware about the latest development of fiscal laws; which are ever and fast changing. We find that, the issue at hand was highly debatable at relevant point of time and assessee was prevented by a reasonable cause for not complying with the provisions of chapter XVII-B of the Act, ergo placing reliance on the judgement of Hon ble Apex Court in CIT Vs M/s Eli Lilly Company (India) Pvt. Ltd. Ors (Supra), we are of considered view that, the appellant assessee is entitled to relief from 271C penalty by virtue of provisions of section 273B Act, on the aforestated reasoning, consequently penalty levied u/s 271C. - Decided in favour of assessee.
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2022 (4) TMI 1378
Revision u/s 263 - assessee has made investments in two properties in the year under consideration and source of the same was explained from the withdrawal of the partnership firm however, the AO has not cross verified from the accounts of the partnership firm, assessee has received unsecured loan from several parties which were accepted by the AO in the assessment proceedings without examining the genuineness of the loan as well as creditworthiness of the parties and there was a gift from the father of the assessee and payment towards the stamp duty, registration charges but the same were not examined by the AO during the assessment proceedings - HELD THAT:- The principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the revenue, for example, when an AO adopts one of the course permissible in law and it has resulted in loss of revenue; or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the AO is unsustainable in law, or the AO has completely omitted to make any enquiry altogether or the order demonstrates non-application of mind. Now in the facts before us, the case of the assessee was selected through CASS selection for Scrutiny, where the purpose of assessment was to scrutinize the substantial investment in the property in the captioned year. During the course of assessment proceedings, the Ld. AO made detailed enquiries on this issue and after consideration of time-to-time written submissions filed by the assessee and documents/evidence placed on record, the Ld. AO framed assessment under section 143(3) after making additions to the tune of ₹ 8,085/- representing interest income. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of sources of investment in property, unsecured loan, gift from assessee's father and stamp duty charges. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the Ld. AO had made detailed enquiries and after consideration of material placed on record accepted the genuineness of the investment, unsecured loan and gift from father except the payment of the stamp duty which needs to be verified. We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT except the payment of the stamp duty which needs to be verified. The ground of appeal raised by the assessee is thus partly allowed.
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2022 (4) TMI 1377
Disallowance made u/s. 14A read with Rule 8D - assessee had suo moto disallowed an amount - Mandation of recording satisfaction - HELD THAT:- We find that AO in his entire order except giving his general remarks has nowhere given any categorical satisfaction as to how the working of suo moto disallowance made by the assessee for the purpose of attributing the expenditure for earning exempt income is incorrect having regard to the accounts maintained by the assessee. Interestingly the AO has noted that assessee has not made any disallowance u/s. 14A, therefore, he is not satisfied with the correctness of the assessee even when suo moto disallowance was offered. Thus, it clearly shows that AO has not applied his mind even the working of the assessee and has mechanically proceeded to make the disallowance not only under Rule 8D(2)(ii) and under Rule 8D(2)(iii). First of all, it is not in dispute that assessee had huge interest free funds which have also been noted by the CIT(A). Thus, now in view of the judgments of South Indian Bank [ 2021 (9) TMI 566 - SUPREME COURT] wherein it has been held that where assessee had interest free funds available which exceeds the investment made in tax free fund security then no interest expenditure can be disallowed and it has to be presumed that it is out of assessee's own fund and proportionate disallowance could not warrant under section 14A even where no separate accounts were maintained by the assessee and other expenditure made for earning tax free income It is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is made and it would be not permissible for the Revenue to make an estimation of a proportionate figure. Disallowance could be legally impermissible for the investment made by the assessee in bonds/shares using interest free funds under Section 14A. Thus proportionate disallowance of interest is not warranted under section 14A for investments made in tax-free bonds/securities which yielded tax free dividend and interest to assessee banks where interest free funds are available exceeded their investments. Thus no disallowance on account of section 14A can be made. We find that AO has not recorded his satisfaction while proceeding to make the disallowance under Rule 8D. The contention of the ld. CIT DR does not find any support from the order of AO that he has recorded his satisfaction albeit he has not even applied his mind on the facts before him which is evident from the fact that he has not even seen the working of disallowance offered by the assessee before him. Therefore, aforesaid finding of the ld. CIT(A) which is based on earlier year order of the Tribunal is confirmed and accordingly, entire disallowance made u/s. 14A is deleted. - Decided in favour of assessee.
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2022 (4) TMI 1376
Addition on account of long term capital gains - claim of deduction u/s.54F - claim of deduction of the investments made in purchase of residential house - HELD THAT:- The assessee has invested this amount in purchase of residential house and he has not made any other claim of deduction u/s.54F of the Act. Admittedly, the assessee reinvested in the new asset within the due date of filing of return u/s.139(4) of the Act and not u/s.139(1) of the Act. It is also admitted position that there was only a delay of 9 days for registration of new asset due to certain compelling reasons as there were defects in the power of attorney and due to that the assessee has to re-register the power of attorney and accordingly, the sale deed has to be executed. Finally, the assessee registered the sale deed of this residential house on 12.09.2015 whereas the due date for filing of return u/s.139(1) was 07.09.2015, as noted by the AO in his order. Practically there was delay of some days. We noted that this issue has been considered in the case of Fathima Bi [ 2008 (10) TMI 563 - KARNATAKA HIGH COURT] and case of CIT vs. Rajesh Kumar Jalan,. [ 2006 (8) TMI 126 - GAUHATI HIGH COURT] . Accordingly, we are of the view that the assessee is entitled for claim of deduction of the investments made in purchase of residential house at Nanganallur for an amount of ₹ 4.41 crores and the AO will re-compute the deduction accordingly. Claim of indexed cost of acquisition - The assessee has made claim as regards to expenditure incurred towards refilling with soil and evacuation of earth work, costing ₹ 16.40 lakhs for the financial year 1994-95 and the indexed cost of which works out to ₹ 64,84,015/-. Further in financial year 2003-04, as per contractors bills, the assessee incurred expenditure towards fencing, gating, cement, concrete blocks, etc., to the extent of ₹ 19,00,000/- and the indexed cost of improvement works out to ₹ 42,02,160/-. Similarly, in financial year 2009-10, as per contractors bills, the assessee incurred expenditure towards clearing bushes, labour and material supplied which works out to ₹ 18,00,000/- and the indexed cost of improvement comes to ₹ 29,16,456/-, which the Revenue has not negated. Hence, we feel that these three items can be allowed. We direct the AO accordingly. Claim of assessee that in financial year 1994- 95, the assessee has gifted certain portion of land through a release deed to Municipal Commissioner, same should be taken as cost of improvement. The cost of said portion of land works out to ₹ 13,31,580/- and assessee has claimed indexed cost of acquisition at ₹ 52,64,623/-. We cannot accept the argument of assessee or the findings of CIT(A) that this indexed cost is to be allowed for the reason that the land has already been gifted by assessee to Municipal Commissioner through release deed and for that portion, the assessee is not entitled because the land is already gifted and no improvement in land is made. According to us, that cost cannot be attributed for claim of cost of improvement and consequently indexed cost, for the purpose of Section 48 of the Act. Hence, we direct the AO to remove this amount while computing indexed cost of improvement and recomputed the capital gain accordingly. Rectification of mistake u/s 154 - Additional sale consideration while computing long term capital gain as there is no evidence to support the claim of assessee - HELD THAT:- The admitted facts are that the assessee made this claim after completion of assessment just before the date of passing of the first appellate order i.e., 24.01.2018 and application is dated 27.01.2018, which was received in the office of ITO on 28.01.2018. We noted that the claim of additional sale consideration whether genuine or not there is no facts available on record and we find no mistake apparent from record in the order of AO and altogether this is a new claim which cannot be entertained while acting u/s.154 of the Act. The CIT(A) has completely misdirected himself on the legal situation as well as factual situation. Hence, we reverse the order of CIT(A) on this issue and uphold the rectification order passed by the AO. This appeal of Revenue is allowed.
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2022 (4) TMI 1375
Addition u/s 68 - assessee was selected for scrutiny under CASS for a limited category and one of the reasons for scrutiny was un-secured loans from the persons who have not filed the return of income - assessee had shown to have received loans from Shri Sachin Kumar, who is the Director of the company - HELD THAT:- It is very surprising that the Assessing Officer has made the addition under Section 68 of the Act only on the ground that sum has come in the account of the assessee in the next financial year and, therefore, this loan has been treated as non-genuine in this year which has been taxed under the deeming provisions of Section 68 of the Act. If the amount is credited in the bank account of the assessee in this year and has been shown as a loan in the books this year; and when the Assessing Officer is not doubting the identity, genuineness and creditworthiness of the transaction, then I do not find any reason as to why the addition under Section 68 of the Act can be made. Just because, the cheque has been cleared in the next financial year, it does not mean the amount credited in books when cheque was received on 31st March is unexplained income of this year. If Assessing Officer is treating that it is not the amount received during the year, ostensibly then the addition under Section 68 could not have been made in this year. Thus, no reason for making addition under Section 68 of the Act in this year when the assessee had shown to have received amount in its books on 31st March, 2015 and nothing has been questioned about the nature and source of the credit. Again it is reiterated that Identity, genuineness and creditworthiness for the loan received has not been doubted, albeit the credit appearing in books has been taxed just because amount credited in the bank account in the next financial year. Accordingly, the addition is deleted. Appeal of assessee allowed.
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2022 (4) TMI 1347
Disallowance of deduction u/s 80P(2)(d) on account of interest income - HELD THAT:- As relying on South Eastern Railway Employees Cooperative Credit Society Ltd. [ 2016 (9) TMI 814 - CALCUTTA HIGH COURT] clearly states that such interest income which is earned from other banks and not earned from members of the Society or from deposits with any other cooperative Society no deduction is allowable u/s 80P(2) of the Act. Only any expenditure incurred to earn such income not eligible for deduction u/s 80P(2) of the Act can be claimed. In the instant case, the interest income from banks other than cooperative banks/cooperative Societies/members is ₹ 23,00,239/-. The net profit shown in the profit loss account is only ₹ 6,96,233/-. Though details of profit loss account have not been placed on record but even otherwise against the interest income from banks, deduction of ₹ 16,04,006/- has already been claimed by the assessee, there hardly remains any case for the assessee to claim any other benefit. The ld. AO has already allowed deduction of ₹ 50,000/- against the net profit of ₹ 6,96,233/-. The alternative submission of the assessee is that the disallowance should be restricted only to 3.12% being the net profit rate to be applied on the interest income of ₹ 23,00,239/- cannot stand for as the assessee has already claimed an expenditure of ₹ 16,04,006/- against the interest income of ₹ 23,00,239/-. We, therefore, confirm the finding of the ld. CIT(A) sustaining the addition of ₹ 6,46,233/- made by the AO and dismiss the ground nos. 2 3 raised by the assessee. For rest of addition assessee had made general submissions and has not placed any material on record to claim that ld. CIT(A) erred in confirming the addition. We, on perusal of the finding of the ld. CIT(A), observe that the assessee had admitted during the course of assessment proceedings that the interest income was understated in the return of income and similarly with regard to the addition of ₹ 8,760/-, the assessee admitted before the AO that there was a difference between the closing bank balance as per bank statement and closing balance as per books of account and the said difference was reconciled and shown in the accounts of the next year. This finding of the ld. CIT(A) remained uncontroverted by the ld. Counsel for the assessee. We, therefore, confirm the finding of the ld. CIT(A) sustaining the addition of ₹ 29,053/- ₹ 8,760/- made by the AO. Thus, ground nos. 4 5 of the assessee are dismissed.
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Customs
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2022 (4) TMI 1374
Refund of Customs Duty - seeking amendment in the bills of entry - Section 149 of the Customs Act, 1962 r/w Section 154 of the Customs Act - HELD THAT:- The petitioner had imported the solar panel modules for the purpose of establishing 15 MW (AC) Grid Inter Active Solar PV Power Project in Ettankulam Village, Manoor Taluk, Tirunelveli District and had filed the Bill of Entries as detailed above. After the Bill of Entries were filed, a clarification was issued by the Board as detailed above. Sections 149 and 154 provide for a machinery for altering the assessment. These are two of the three methods available under the provisions of the Customs Act, 1962. If one of the three methods are available, the importer would be entitled to claim refund under Section 27 of the Customs Act, 1962. The Hon'ble Supreme Court in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] has categorically stated that any person is aggrieved by an order, which would include an order of self- assessment he has to get the order modified under Section 128 or under other relevant provisions of the Customs Act before he makes a claim for refund. Therefore, as long as such an application is filed within the time stipulated under the provisions of the Act, it cannot be denied. The impugned order passed by the 2nd respondent dated 07.01.2019 is set aside and the case is remitted back to the 2nd respondent to pass a speaking order within a period of 3 months from the date of receipt of a copy of this order, after examining the contemporaneous documents, which were available at the time of import with the petitioner notwithstanding the fact that the petitioner had allegedly by mistake filed Bill of Entry under the Heading 8501 of the Customs Tariff Act, 1975 - Petition allowed by way of remand.
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2022 (4) TMI 1373
Benefit of Merchandise Exports from India Scheme (MEIS) denied - petitioner, who operates under the Electronic Data Interchange (EDI), has not indicated the option of intent to avail the benefit as required in law - HELD THAT:- It is undisputed that this Court and the other Courts have granted benefits to certain exporters directing the DGFT to extend the benefit of the MEIS reward where an exporter, transacting under the Non- EDI Shipping Bills, had chosen N over Y but has declared the intent to avail remedy under MEIS on the ground of inadvertent error. It is also undisputed that the EDI Shipping Bills do not provide for a separate declaration that the exporter intends to avail the MEIS benefit as is provided for Non-EDI Shipping Bills. Whether the petitioner, who relies on EDI Shipping Bills, must be denied the MEIS benefit if inadvertence is established and the delay in seeking the benefit is also explained? - whether this Court must interfere under Article 226 of the Constitution of India or direct the petitioner to approach DGFT? - HELD THAT:- This Court must opine that if inadvertent error is the premise in which the Courts have directed DGFT to extend MESI reward where option N is chosen but with the declaration to avail benefit in the case of Non-EDI shipping bills, the similar benefit to an exporter operating under EDI shipping bills cannot be denied only because a declaration of the intent to avail the benefit is not made. This would be especially so if it is uncontested that an exporter under the EDI shipping bills did not have the option of making the declaration other than in choosing Y over N to the intent to avail the MEIS benefit under the EDI mode. There would be no reasonable justification to sustain this classification. Therefore, this Court is not persuaded to opine that an exporter operating under EDI shipping bills would not be entitled for the MEIS benefit if there is an inadvertent error in choosing the option. Further, it undisputed that the petitioner, but for the error in making a choice of entering N over Y , would be entitled for the benefit of the MESI Scheme. It would be difficult to believe that the petitioner, even if entitled for MESI benefit, would have chosen to give up the benefit unless it was for inadvertent error. These must also be relevant factors in assessing whether there is a bonafide and inadvertent error in making the choice. The PRC of the DGRT has not considered these circumstances in rejecting the petitioner s request for MESI rewards. It is declared that the petitioner would be entitled for the MESI benefits but subject to the condition that the petitioner shall furnish, within a period of eight [8] weeks from the date of receipt of a certified copy of this order, proof of withdrawal of the pending appeals - Petition allowed.
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2022 (4) TMI 1372
Revocation of Customs Broker License - time lines as prescribed under Regulation 17 of CBLR, 2018 (Regulation 22 of CBLR, 2013) has not been followed - HELD THAT:- Upon perusal of Regulation 22, it can be seen that an independent right is issued to the Commissioner to initiate action de hors the enquiry under other regulations and the Customs Act. The regulations does not only contemplate action against the erring Brokers, but also contemplates timely action. The purpose, for which such time limit has been prescribed, is to curb the smuggling of goods and in the result to cancel the licenses of the brokers if they are involved and to impose penalty. The interpretation of a statute must always be to give a logical meaning to the object of the legislation and the aim must be to implement the provisions rather than to defeat it - the use of the language shall in the regulation cannot be termed as directory as one of the consequence of the action is the revocation of the licence and it would also pave way for inaction by the officials breeding corruption. If the CHA prima facie appears to be innocent and honest and there is inordinate and unreasonable delay on the part of the department while investigating the matter and issuing the Show Cause Notice to said CHA, the word shall in Regulation 20(1) has to be treated as mandatory. Per contra when prima facie there is allegation of fraud /mis-representation / suppression or any such omission which has resulted into the alleged offence and the delay beyond 90 days was for the reasons beyond the control of the department that the said word shall has to be treated as directory in nature. From the time chart above, it is clearly apparent that the date of knowledge of Commissioner of Customs (Airport General) about the first report of impugned violations against the appellant was received by him on 23.5.2019. The show cause notice issued by him on 16.8.2019 is well within the said Notification period of 90 days. Once the Show cause Notice is well within the period of 90 days, it is held that learned Counsel has unnecessarily engaged himself arguing about the time being mandatory instead of being directory. The arguments of the appellant on the ground of limitation are therefore not sustainable. The case law relied upon by him on this issue is held not applicable to the facts of the present case. Violation of Regulation 10A, 10D, 10E, 10N of CBLR, 2018 (Erstwhile Regulation 11 of CBLR, 2013) - HELD THAT:- It is observed that violation of Regulation 10A/11A of CBLR, 2018/2017 has been alleged on the ground of failure of appellant to produce or submit at the investigation stage, the requisite authorization in his favour by the importer in his favour. However, it is apparent that the authorization was produced before the Inquiry Officer. In view of the said observation, the findings that the later submission of the authorization shall not absolve the Customs Broker of his wrong doing are not held sustainable. It is held that submitting the authorization was a mere procedural formality. It admittedly was submitted before the impugned order was passed. It is held that violation of Regulation 10A has wrongly been alleged upon the appellant. It is also coming from their statement that said Sonu only used to handover the papers to the appellant. There is nothing in their statement alleging any fault on part of the appellant. Since there is no other evidence than the said statement, it cannot be held that the appellant had any knowledge about the consignment to have been mis-declared. The registered address of the importer has been mithai shop but the same cannot be alleged to have been fault of the Customs Broker. Otherwise also, it is not the case that none for the importer was found at the said registered address. The appellant no doubt has filed Bill of Entry in the present case. But the same has been filed on the basis of material given to him by his client. He has expressed his bonafide and denied in-correctness of those documents. Merely because there is evidence on record to falsify the said statement, Customs Broker cannot be held liable for the penal action. Otherwise also, he is held not responsible for verifying the contents of his clients. There is no cogent evidence produced by the Department to prove the alleged failure on part of the CHA, the appellant. The penalties under section 112 and 114 AA of Customs Act, 1962 are therefore, held to have wrongly been imposed upon him. Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 1371
Rejection of classification - rejection of valuation declared in the bills of entry - 39 bales containing 64,350 pcs. of mixed ready-made garments of different varieties/ qualities/ size - Section 14 of the Customs Act read with the Valuation Rules - HELD THAT:- It is found that admittedly in the re-examination of the goods done, the same have been found to be used and worn clothing. Accordingly, it is held that the Court below have erred in rejecting the classification and valuation as declared in the Bill of Entry. Further, as the appellant has relinquished their title and claim on the imported goods in writing by letter dated 08.05.2008, the whole proceedings against them is vitiated and uncalled for. The impugned order so far this appellant is concerned, is set aside - appeal allowed - decided in favor of appellant.
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2022 (4) TMI 1370
Classification of imported goods - gold coins (round) (other than legal tender) - to be classified under CTI 7114 19 10 or under CTI 7114 19 10? - rejection of exemption under notification dated 31.12.2009, as amended by notification dated 31.12.2016 - recovery of differential duty with interest - HELD THAT:- The central excise tariff is broadly based on the system of classification derived from the International Convention called The Brussels Convention on the Harmonised Commodity Description and Coding System (HSN) with necessary modifications. In this connection, it will useful to reproduce the Statement of Objects and Reasons of the Central Excise Tariff Bill, 1985 which led to the enactment of the Central Excise Tariff Act, 1985. A perusal of CTH 7114 and heading 71.14 of HSN clearly shows that they are identical. Likewise, CTH 7114 19 is identical to sub-heading 7114.19 of HSN. It is also seen that CTH 7118 is identical to heading 71.18 of HSN and CTH 7118 10 and CTH 7118 90 are identical to sub-headings 7118.10 and 7118 90 of HSN. It is clear that sub-headings 7118.10 and 7118.90 of HSN will cover only that sub-category of COINS which fulfill the aforesaid conditions and the sub-headings cannot be read in a manner so to over ride or travel beyond the Explanatory Notes provided for the main heading. Thus, coins of heading 7118 of HSN would be those made by stamping sheet and struck with appropriate dies of officially prescribed weight and design and issued under government control for use as legal tender. Sub-heading 7118.10 of HSN would cover coins which are no longer legal tender or intended to be legal tender, while sub- heading 7118.90 of HSN would cover coins which are legal tender in the country of issue - when HSN is a safe guide for tariff classification under the Tariff Act, CTH 7118 under which the description of goods is coin would apply to coins of any metal of officially prescribed weight and design issued under government control for use as legal tender. CTI 7118 10 00 and CTI 7118 90 00 would cover only that category of coins which fulfill the aforesaid conditions. For the reasons stated while examining sub-heading 7118.90 of HSN, CTI 7118 90 00 would cover coins which are legal tender in the country of issue. Whether the appellant is justified in classifying the goods under CTH 7114? - HELD THAT:- If the classification under CTH 7114 is correct there is no prescription under the Foreign Trade Policy regarding restriction on the goods. Even if the goods are held to be classifiable under CTH 7118, Regulations have not been issued by the RBI in this context. Regulations can be issued by the RBI only under section 58 of the Reserve Bank of India Act, 1934 or section 47 of the Foreign Exchange Management Act, 1999 [ FEMA ]. Section 58 of RBI Act requires such Regulations to be issued only by way of a notification with the previous sanction of the Central Government. Section 48 of FEMA requires Regulations issued under section 47 FEMA to be presented before the parliament Such Regulations have not been placed by the Department and only a reference has been made to a letter issued by the RBI dated 13.09.2017 or the DGFT Memorandum. These cannot be termed as Regulations issued by RBI or under FEMA. The power of RBI to issue directions under section 11 of FEMA extends only to authorized person with regards to making payment for foreign exchange or foreign security and RBI cannot regulate imports which are in the exclusive domain of DGFT. Appeal allowed.
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Corporate Laws
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2022 (4) TMI 1369
Sanction of Scheme of Arrangement - Section 230(1) read with Sections 232(1) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (4) TMI 1368
Seeking extension of time for implementation of Resolution Plan - first submission of Appellant is that the order does not have any reason for exclusion of the time - HELD THAT:- The exclusion has been sought for principally on the ground that I.A No. 125 of 2022 remains pending from 17.01.2022 to 22.03.2022 due to which period need to be excluded since the prayer made in the Application I.A No. 125 of 2022 was not granted by the Adjudicating Authority. When we look into the facts cumulatively, including the reasons given in the Application I.A. No. 686 of 2022 and the facts noticed by the Adjudicating Authority, it cannot be said that there is no reason given in the order of the Adjudicating Authority for granting exclusion - thus there is ample reason in the order for granting exclusion of the period. The second submission of Shri Vikas Mehta Learned Senior Counsel for the Appellant is that Application I.A No. 686 of 2022 itself was not maintainable since the Application was filed in a disposed of Application I.A No. 125 of 2022 - HELD THAT:- The mere fact that in I.A No. 686 of 2022, it was mentioned that I.A No. 686 of 2022 is in I.A No. 125 of 2022 in C.P (IB) No. 2205/MB/C-I/2019 does not make it non-maintainable. The mere mention of I.A 125 of 2022 which was already disposed of does not take away the Application I.A 686 of 2022 and the prayers made therein which were separate prayers as noted above. We, thus, reject the submission of Shri Vikas Mehta, Learned Senior Counsel for the Appellant that I.A 686 of 2022 was not maintainable. Whether the extension could be granted beyond 90 + 180 days or not? - HELD THAT:- Present is a case where the Adjudicating Authority by the impugned order has not granted extension of any time rather it allowed exclusion of the time i.e. exclusion of the period which was taken in disposal of I.A 125 of 2022. As far as the submission that the decision was taken by the lenders committee, as noted above, extension of time be sought by the Applicant, suffice it to say that in the same meeting, it was noticed that Application I.A No. 686 of 2022 has already been filed for exclusion of the time. The said observation in the lenders committee meeting dated 28.03.2022 shall not detract the prayers made in the Application I.A No. 686 of 2022 nor that has any effect on order which has been passed by the Adjudicating Authority excluding the period. The last submission made by Shri Vikas Mehta is that conditions of the Resolution Plan has not been fulfilled - HELD THAT:- The Application I.A No. 686 of 2022 was filed only for praying for exclusion of the period from 17.01.2022 to 22.03.2022. Appeal dismissed.
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2022 (4) TMI 1367
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Application barred by time limitation or not - HELD THAT:- The Application under Section 7 against the Corporate Debtor has been filed on 9th March, 2018 and the limitation for filing the Application under Section 7, under Article 137 of the Limitation Act, 1963 is three years from the date when right to sue accrue. Normally, period of three years is to be counted from the date, the account is declared NPA, thus taking three years period from 10th January, 2014, the Application ought to have been filed on or before 9th January, 2017. The Application under Section 7 filed by the State Bank of India is admittedly beyond the period of three years from the date of declaration of NPA and can be held to be barred by time, unless the State Bank of India is able to satisfy that the limitation for filing Section 7 Application stands extended by virtue of provision of Limitation Act, 1963. There can be no dispute to the proposition that limitation for suit is to be calculated as on the date of filing of the suit, meaning thereby that date for filing of the suit is a crucial date to find out as to whether the suit is within the period of limitation or not. Whether the letters on which reliance is being placed by the State Bank of India dated 19th February, 2016 and 29th March, 2016 contain an acknowledgement, which can be treated as acknowledgement within the meaning of Section 18 of the Limitation Act? - HELD THAT:- It is well settled that any request by Borrower for one-time settlement tantamount to acknowledgement under Section 18 of the Limitation Act. In Dena Bank [ 2019 (3) TMI 1751 - THE NATIONAL COMPANY LAW TRIBUNAL - BENGALURU BENCH] itself Hon ble Supreme Court has laid down that offer of one-time settlement contains an acknowledgement of debt. The acknowledgement made by the Principal Borrower within three years period from the date of account being declared NPA, there shall be fresh period of limitation available to the Financial Creditor and the Application under Section 7 having been filed within three years from the date of acknowledgement, cannot be held to be barred by time - the Application filed by the State Bank of India under Section 7 was within the period of limitation and has rightly been admitted by the Adjudicating Authority. There are no merits in the appeal - appeal dismissed.
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2022 (4) TMI 1366
Eligibility to submit resolution plan - a person whose account has been declared NPA - locus standi to file the appeal and underlying application (before the Adjudicating Authority) or not? - whether the Successful Resolution Applicant Roma Unicon Designex Consortium is eligible under section 29-A to submit a Resolution Plan for the Corporate Debtor/Earth Infrastructure Ltd. since the directors of Successful Resolution Applicant and are common with the director of Zillion Infra and Zillion Infra account was declared NPA on 31.01.2018 and hence, the condition of Section 29-A (j) r/w Explanation I is infringed? Locus standi of the Appellant to file the instant appeal - HELD THAT:- The Appellant has claimed that he became aware of the ineligibility of one of the Resolution Applicants submitting plan for insolvency resolution of the Corporate Debtor and therefore, he acquired right under Section 60(5) to raise the issue before the Adjudicating Authority and also the right to file this Appeal as he found a material irregularity in exercise of the powers by the RP during the CIRP - the Appellant Bipin Sharma has the right and entitlement to file this Appeal. Non-performing assets - HELD THAT:- Mrs. Rashmi Saxena seized to be a director of Zillion Infra on 02.12.2009, and therefore, her entitlement to submit the resolution plan in the CIRP of the Corporate Debtor/Earth Infrastructure Ltd. is not hit by section 29-A (c) wherein a period of one year should not have elapsed from the date of declaration of NPA of a company (in the present case Zillion Infra) who is in the management and control of the Successful Resolution Applicant, therefore, we find no strength in the arguments of the Ld. Counsel for the Appellant that Mrs. Rashmi Saxena, who submitted the resolution plan on behalf of the Roma Unicon Designex Consortium is ineligible under Section 29-A (c) to submit the resolution plan of the Corporate Debtor/Earth Infrastructure Ltd. Interpretation of the provision in section 29-A (c) and the Explanation-I of the said provision - HELD THAT:- It is abundantly clear that the ingredients of sub-clause (c) of section 29-A do not come in the way of eligibility of the Successful Resolution Applicant to submit a resolution plan through its authorized representative Mrs. Rashmi Saxena. The issue of objections raised by certain homebuyers who form part of creditors in class to stand individually and object has also been considered by the Hon ble Supreme Court in the matter of Jaypee Infratech Ltd. [ 2021 (3) TMI 1143 - SUPREME COURT ] and held that any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person. Admittedly, the class of creditors of which Applicants are a part have already assented and approved a resolution plan and therefore, are estopped in law from preferring any objection or appeal to resolution plan which has been approved by class. Thus, the Successful Resolution Applicant working through Mrs. Rashmi Saxena, one of its directors, was not ineligible to submit a resolution plan of the Corporate Debtor/Earth Infrastructure Ltd.. Moreover, the resolution plan has been approved by the financial creditors in class voting through their authorized representative - there are no reason to interfere with the impugned order - appeal dismissed.
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2022 (4) TMI 1365
Preferential Transaction and relevant time - undervalued and fraudulent transactions - sale of inventory was entered into with the related parties at a price lower than the book value which clearly demonstrates the intent of the Corporate Debtor, or not - HELD THAT:- On perusal of the records, it is seen that the Liquidator has not entered appearance since 09 August 2021. Thereafter, the IA was listed on three dates i.e., on 01 November 2021, 12 January 2022 and 25 February 2022. Court notice had also been sent to the Liquidator, the Counsel for the Liquidator, and the Respondents on 18 January 2022. The notices have been duly delivered, yet neither did the Liquidator appear on 25 February 2022 nor did the Counsel appointed by the Liquidator appear. The Liquidator should not expect that applications filed by him will be given due consideration even if he, as applicant, does not choose to appear. There are no reason to treat the Liquidator differently from other applicants whose applications will meet the same fate if they choose not to appear on multiple occasions. The application is dismissed for non-prosecution.
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2022 (4) TMI 1364
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dispute - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- Despite sufficient opportunity given to the Corporate Debtor, no appearance was filed before this Tribunal. Notice was issued by the Registry on 28.02.2022 and as per the tracking report available on record the same was delivered on 01.03.2022 at the registered office of the Corporate Debtor. The Respondent Corporate Debtor was set ex-parte by order dated 08.03.2022, on said date too the matter was passed over and was taken up again. During the next hearing on 01.04.2022, the matter was passed over due to non-representation of the Respondent and taken up later, however none represented the Respondent and no IA was filed for setting aside ex-parte order. Further, it is also pertinent to note that the default arising in the present Application is much later to the timeline prescribed under Section 10A of IBC, 2016. Under the said circumstances, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. Application admitted - moratorium declared.
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2022 (4) TMI 1363
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existenc eof debt and dispute or not - no response to the demand notice were given - HELD THAT:- The Operational Creditor, in Part-IV of the Application, has stated that total debt due and payable is, ₹ 11,75,995.96/-, inclusive of interest. The date of default is 15.08.2018. It is pertinent to note that the Operational Creditor has placed on record the demand notice along with invoices, ledger account, bank statements with its Application, stating that the Corporate Debtor itself had acknowledged the said invoices. Once the debt is shown as due, it is for the Corporate Debtor to prove that there are no outstanding dues to be paid to the Operational Creditor. The Corporate Debtor has in its reply acknowledged its liability to pay ₹ 2,57,572/-, being a part of the debt. However, no such payment has been made by the Corporate Debtor. Further, the corporate debtor has stated about the existence of some dispute with regards to the material supplied. However, no documents/communication has been annexed to prove the existence of any dispute. Hence, it appears to be an illusionary dispute. The present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. Application admitted - moratorium declared.
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Service Tax
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2022 (4) TMI 1362
Principles of Natural Justice - opportunity for personal hearing was given to the petitioner on an earlier occasion - fresh opportunity can be granted or not - HELD THAT:- Having regard to the fact that the petitioner was not granted personal hearing in the matter, despite a mandatory requirement to that effect, we are inclined to set aside the order-in-original dated 02.02.2021 passed by the Commissioner of Central Goods and Services (CGST), Audit-II, Delhi. Petition disposed off.
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2022 (4) TMI 1361
CENVAT Credit - inputs and/or capital goods - towers - doors - racks - fall arrestor system - insulation material etc. - telecommunication services is provided by the appellant - period from March 2014 to June 2017 - refund of CENVAT credit, which was reversed under protest on 29.06.2017 21.09.2017 and 14.10.2017, without there being either a determination on the issue of eligibility to avail CENVAT credit or issue of a show cause notice - whether towers are movable property or immovable property? - HELD THAT:- The expression movable property has been defined in section 3(36) of the General Clauses Act, 1897 to mean property of every description, except immovable property. Section 3 of the Transfer of Property Act, 1882, provides that unless there is something repugnant in the subject or context, immovable property would not include standing timber, growing crops or grass. Section 3(26)of the General Clauses Act, 1897, provides that immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. The permanency test was examined at length by the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD VERSUS SOLID CORRECT ENGINEERING WORKS ORS. [ 2010 (4) TMI 15 - SUPREME COURT] . In this case the Supreme Court drew a distinction between machines which by their very nature are intended to be fixed permanently to the structures embedded in the earth and those machines which are fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because foundation was necessary to provide a wobble free operation to the machine. The appellant had repeatedly emphasized that the towers of the appellant were neither embedded nor permanently fixed or fastened to the earth/foundation and in fact, were merely attached to the foundation above the ground using nuts and bolts so that no damage was caused to any part of the tower on re-location. The show cause notice does not dispute that the towers were fastened on a foundation above the ground using nuts and bolts, nor does the order passed by the Assistant Commissioner or the Commissioner (Appeals) dispute this factual position. There is neither any allegation nor finding that the towers of the appellant are embedded in the earth. In fact, the towers of the appellant are erected above the ground on a foundation using nuts and bolts. This aspect is crucial for deciding whether the telecom towers are immovable property or moveable property as was observed by the Supreme Court in Solid and Correct Engineering Works - The towers are neither land nor benefits arising out of land nor are the same attached to the earth or permanently fastened to anything attached to earth. The towers are merely fastened above the ground to a foundation using nuts and bolts. The fastening is, therefore, not permanent, since the towers can be easily unfastened and in fact, according to the appellant, have been moved on a number of occasions without any damage from one location to another. It is seen that CENVAT credit was reversed by the appellant under protest without there being determination of the liability. After the credit was reversed, the appellant was advised that such a reversal was not warranted. It accordingly, applied for refund of the credit reversed by it which was a method by which such a credit that had been reversed could have been restored. This is what was observed by the Tribunal in USHA INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS (I) , MUMBAI [ 2017 (2) TMI 239 - CESTAT MUMBAI ]. The Tribunal held that where an assessee has reversed credit under protest, without there being any determination, such an assessee can seek restoration of such reversal by filing a claim for refund and it is impermissible for the authorities dealing with the refund claim to reject the same as being premature. The inevitable conclusion is that the appellant was justified in availing CENVAT credit of central excise duty, as inputs , on items indicated in Part-I of the chart contained in the paragraph 43 of this decision and as capital goods on the items contained in Part-II of the said chart. The appellant would, therefore, be entitled to refund of the said CENVAT credit which was reversed by it under protest . Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (4) TMI 1360
CENVAT Credit - press mud/compose emerging as a byproduct - exempted goods or not - common inputs and input services - non-maintenance of separate records as required under Rule 6 of CENVAT Credit Rules - HELD THAT:- On going through records of the case and the ratio of the cases cited by the appellants. It is found that the issue is no longer res-integra. Apex Court in the case of M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT] and UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] has enunciated the principal that Bagasse/ Press mud produced during the course of manufacture of sugar cannot be treated as exempted products and the provision of Rule 6 of Central Excise Rule, 2004 cannot be applied. This Tribunal has been consistent in holding this view. Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 1359
Reversal of CENVAT Credit - slow-moving inventory, considering closing balance as on 31.03.2017 - it is claimed that provision for slow moving inventory made to write off their value in books of account require reversal of Cenvat credit on the said inputs - Rule 3(5B) of the Cenvat Credit Rules, 2004 - revenue neutrality - HELD THAT:- The appellant have only created a general provision for slow-moving inventory and have actually not written off the inventory from the inventory or the asset account. In actuality such provision have been made by appropriation in the profit and loss account, without writing off any amount from the assets / inventory account. Rule 3(5B) of the Cenvat Credit Rules is attracted only when the value of the assets and/or inventory is written off fully or partially or wherein any specific provision to write off fully or partially has been made in the books of account. In the facts of the present case, the appellant have made a general provision, which is not attributable to any particular assets / inventory - Admittedly, Revenue has not been able to identify the details of inventory or asset, for which the general provision has been made. It is further evident that appellant have led evidence that such provision has been varied from year to year by way of writing back, on the usage of the inventory as required. Revenue Neutrality - HELD THAT:- The situation is revenue neutral as the appellant have written off the majority of the provision created on utilisation of the inventory in manufacturing and clearance of finished goods. Appeal allowed - decided in favor of appellant.
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2022 (4) TMI 1358
SSI Exemption - use of brand name of others - brand name assigned in favor of appellant or not - products bearing the brand names Cureon , Vasundhara , Healmate , assign to them by M/s Pitambari Products Pvt. Ltd. as per agreements - violation of provisions of N/N. 8/2003 CE- dated 01.03.2003 - period June 2005 to February 2011 - Extended period of limitation - levy of penalties - eligibility for duty-cum benefit - HELD THAT:- On going through the agreements, it is found that the ownership in respect of the trade marks/Brand names were always with M/s. PPPL, even during the currency of assignment; at no point of time the title of the ownership of the brands or trademarks were passed on to the appellants; the agreement was not intended to convey, transfer or passed on the ownership, title or rights of the assigners. The facts of the case conclusively establish that the appellants i.e. M/s DSHL were never owners of the title of the Brand Name/trademark and they have always manufactured the impugned goods of impugned brands for and on behalf of M/s. PPPL. The said goods were exclusively sold to M/s PPPL and the connection of the impugned products, in the course of trade, was always with M/s PPPL and not with M/s DSHL. Apex Court has been consistently holding that the exemption is only to such parties who do not associate their products with some other person and that in order to avail the benefit of the exemption notification, the assessee must established that his products is not associated with some other person - reliance can be placed in the case ofCOMMISSIONER OF CENTRAL EXCISE, TRICHY VERSUS GRASIM INDUSTRIES LTD. [ 2005 (4) TMI 64 - SUPREME COURT] and CCE, BANGALORE VERSUS M/S. VETCARE ORGANICS PVT LTD [ 2015 (6) TMI 156 - SUPREME COURT] . In the instant case, it is found that the appellants could not establish that the brand has no connection in manufacture or trade of impugned goods with some other person that is M/s PPPL. The ownership of the brand or trademark is not taken away, even when the appellants got an assignment in their favour from the brand owner. It is found that even with respect to the assignments there was dispute between the two parties which ended in a civil suit which was settled by withdrawal on mutual consent - Tribunal in the case of VEE GEE FAUCETS P. LTD. VERSUS COMMISSIONER OF C. EX., GURGAON [ 2010 (3) TMI 710 - CESTAT, NEW DELHI] held that merely because there is some arrangement between the parties giving consent for use of such brand name or trade name cannot result in nullifying the mandatory condition imposed in the notification. The notification does not provide any scope for any benefit on assignment. Thus, even on assignment of right to manufacture goods, with others Brand name or trade name by the owners thereof, such manufacturer would not be eligible for exemption under the notification. Extended period of limitation - HELD THAT:- The department had no wherewithal to find out the availment of benefit in violation of the conditions of the Notification and consequential evasion of duty by the appellants. The appellants cannot take the plea of bona fide belief. Therefore, extended period is rightly invoked in this case. Levy of equal penalty on the company as well as the Director in addition to penalty of other director of the appellants and the Director of M/s PPPL - HELD THAT:- Going through the facts of the case and the role played by directors of the appellants, it is found that the penalty is quite harsh and is not commensurate with the part played. Therefore, the penalties imposed on the directors of the appellants, is reduced. Levy of penalty on M/s PPPL - HELD THAT:- The role played by them in the evasion of duty by the appellant is not clearly coming forth. M/s PPPL have assigned/allowed the appellants to used their brand names in the manufacture of specified goods and have purchased and marketed entire production of the appellant. It was for the appellants to pay appropriate Central Excise Duty and for the nonpayment of the same M/s PPPL cannot be faulted with. Therefore, the penalty imposed on the director of M/s PPPL need to be set aside. Benefit of cum-duty benefit - HELD THAT:- There is merit in the submission of the appellants. For the purpose of computation of duty the value at which the impugned goods are cleared needs to be taken as cum-duty value and the benefit thereon should be given to the appellants. Appeals are partly allowed by way of remand to the original authority - it is directed that the duty liability shall be arrived after allowing the cum-duty benefit - interest under Section 11AB of Central Excise Act, 1944 shall be on such recalculated duty; penalty under Section 11AC shall be equal to the duty confirmed after allowing cum-duty benefit.
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2022 (4) TMI 1357
CENVAT Credit - input services - service tax paid on insurance premium for availing medi-claim facility for employees who had opted for Voluntary Separation Scheme - conflicting views - Larger Bench Decision - HELD THAT:- The two issues that have been referred to the Larger Bench of the Tribunal are, therefore, answered in following manner: (i) The answer to the first issue would be: a. The Bombay High Court in M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2009 (8) TMI 50 - BOMBAY HIGH COURT] and CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [ 2010 (10) TMI 13 - BOMBAY HIGH COURT] has settled the interpretation of input service in rule 2(l) of the 2004 Rules, as it stood prior to its amendment on 01.04.2011; b. The definition of input service can be effectively divided into the following five categories. c. So far as it concerns the dispute raised in this appeal, the definition would cover not only input services which have a nexus with the manufacture of the final product (covered by the first limb in the definition), but also other input services , which do not have such a nexus but are covered by either of the other four limbs of the definition; d. Each limb of the definition is independent and benefit of CENVAT credit would be available even if any one of them is satisfied; e. So far as the first limb is concerned, the requirement of establishing a nexus between the input services and the process of manufacture would stand satisfied if the expenditure incurred for the input service forms part of the cost of production/value of the final product on which duty of the excise is levied; f. In this view of the matter, the appellant would be entitled to avail CENVAT credit on the service tax paid on insurance premium for employees who had opted for the Voluntary Separation Scheme ; and (ii) Cost Accounting Standard-4 would be applicable for determination of eligibility to CENVAT credit even if the goods are not captively consumed. The papers of this appeal may now be placed before the Division Bench for deciding the appeal on merits.
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CST, VAT & Sales Tax
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2022 (4) TMI 1356
Recovery of dues of the bank as well as the commercial tax authority - section 33 (2) of the VAT Act, 2002 - HELD THAT:- Since the matter remained pending for almost a period of 9 years before this Court, it is deemed proper to direct the petitioner as well as respondent no.3 herein to move an application under section 33 (2) of the VAT Act, 2002 before the Commissioner, Commercial Tax taking all possible grounds including ground and objection to their respective rival claims. The petitioner/bank shall also have liberty to raise the objections as regards the right of the respondent no.3 to deposit the commercial tax dues. On such application being filed by the petitioner as well as respondent no.3, Additional Commissioner, Commercial Tax, Indore i.e. respondent no.2 herein shall consider and decide both the applications of the petitioner and respondent no.3 respectively within a period of three months without being influenced by its earlier order dated 31/10/2012 which is contained in Annexure P/4 to the writ petition. The writ petition stands disposed of.
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2022 (4) TMI 1355
Valuation - freight charges which was realized in the bills separately - will form part of the turnover ignoring the decision of the Apex Court in the case of S/s India Meters Ltd. Vs. State of Tamilnadu [ 2010 (9) TMI 878 - SUPREME COURT ] or not? - HELD THAT:- The Tribunal, while allowing the appeal of the revisionist, has relied upon the judgement rendered in the case of S/s India Meters Limited [ 2010 (9) TMI 878 - SUPREME COURT ], which is applicable to the State of Tamilnadu and not in the case of State of Uttar Pradesh. This court concerned in this matter with the provisions of U.P. Act, which shall fall for consideration before the Tribunal also. No question of law arises as the matter is concluded by finding of fact - Revision dismissed.
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2022 (4) TMI 1354
Demand of tax - transfer of right to use of telephone handset by the customers of the assessee - transfer of right of use - exclusion of service portion - Section 10 (B)) of Trade Tax Act - assessment year 2003-04 - HELD THAT:- The issue involved in the present revision has already been decided by another Bench of this Court in BHARAT SANCHAR NIGAM LIMITED VERSUS COMMISSIONER TRADE TAX U.P. LUCKNOW [ 2019 (11) TMI 535 - ALLAHABAD HIGH COURT ], in which the matter was remanded to the Tribunal for fresh decision within a period of one year after affording opportunity of hearing to the parties concerned. The present revision is allowed on the same terms as enumerated in the referred order - the matter is remanded to the Tribunal to pass a fresh order, after affording opportunity of hearing to the concerned parties, within a period of one year from the date of receipt of a copy of this order before the authority concerned. Appeal allowed by way of remand.
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2022 (4) TMI 1353
Exemption of entry tax - Indian Made Foreign Liquor (IMFL) or rectified spirit - Section 13 of the Madhya Pradesh Entry Tax Act, 1976 read with Section 53 of the Madhya Pradesh Value Added Tax Act, 2002 - validity of Entry 18 to Schedule I of the M.P. Commercial Tax Act and Entry 47 of Schedule I of the VAT Act - HELD THAT:- The rectified spirit's manufacture and sale by the present appellant is not a liquor to claim an exemption under Entry 47 of Schedule I or Entry 6 Part III-A of Schedule II of the VAT Act. The MPCTAB has also held that in common parlance meaning of Indian Made Foreign Liquor means the liquor which is being sold from the shop has a licence for human consumption which does not include the rectified spirit, therefore, it is not exempted from Entry 47 of Schedule I or Entry 6 Part III-A of Schedule II of the VAT Act. There are no substantial questions of law involved in the present appeal - appeal dismissed.
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2022 (4) TMI 1352
Maintainability of petition - time limitation - whether the impugned order passed by the respondent on 07.03.2019 can be said to have been passed within the limitation prescribed u/s 27 of the TNVAT Act, 2006 - HELD THAT:- The notice that was issued to the petitioner on 10.10.2018 merely states that a cross verification of the check post data of the department reveal that the petitioner had purchased the goods from the outside of the State. A dealer paying tax under Section 6(1) of the Tamil Nadu Value Added Tax Act, 2006 should not purchase goods from the other States and effect sales. Hence, Section 6(1) of the Act, does not apply and therefore, notice proposed to levy tax under Section 5 of the Tamil Nadu Value Added Tax Act, 2006 at 14.5% - Pursuant to the impugned order dated 07.03.2019, a notice of assessment and demand in Form 'O' was also issued calling upon the petitioner to pay the aforesaid tax of ₹ 24,18,434/-. Similarly, the notice of interest under Rule 16(5) of the TNVAT Rules, 2007 in Form 'RR' was issued on 07.03.2019 and thereafter, the petitioner was called upon to pay the aforesaid penalty of ₹ 39,01,499/-. In the present case, the notice has been issued in time for revising the assessment and therefore, to that extent, the initiation of the proceedings cannot be questioned. However, the demand is based on the data in the web portal of the respondent. Though the Circular No.5 of 2021 bearing reference No.LW10/12521/2016, dated 24.02.2021 is for mismatch in ITC claim, the method devised therein can be used to co-relate the purchase and sales turnover of a dealer and can be applied to the petitioner's case mutatis mutandis. The case is remitted back to the respondent to pass fresh order, within a period of three months from the date of receipt of a copy of this order - petition disposed off.
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2022 (4) TMI 1351
Revision of assessment order - revision sought on the ground that on verification of the web portal of the Department, it was found that there were mismatch between the turnover reported in the monthly returns filed by the Appellant company and the returns filed by the sellers at the other end - opportunity of hearing not availed - principles of natural justice - HELD THAT:- Admittedly, the appellant did not avail the opportunity said to have been provided by the respondent before passing the assessment orders, for want of service of notice dated 11.02.2021. The legal position to be noted at this juncture is that the opportunity to provide hearing before making any decision is considered to be a basic requirement in Court proceedings . This court, in order to provide an opportunity to the appellant and also sub-serve the interests of justice, sets aside the orders impugned herein as well as in the writ petitions. As a sequitur, the matter is remanded to the assessing officer for passing orders afresh, on merits and in accordance with law, after affording an opportunity of personal hearing to the appellant. The appellant shall file their reply to the notice dated 11.02.2021 along with necessary documentary evidence, within a period of two weeks from the date of receipt of a copy of this order. Appeal disposed off.
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Indian Laws
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2022 (4) TMI 1350
Grant of Interim Award - seeking deletion from Arbitral proceedings - second respondent was a party to the arbitration agreement and must be deleted from the array of parties or not - HELD THAT:- Counsel for JDIL objected to these documents on the ground of relevance and admissibility but stated that he would cross-examine the witness without prejudice to those contentions. The first Arbitral Tribunal observed that the rival contentions would be decided while disposing of the application under Section 16. ONGC also filed an application for discovery and inspection before the first Arbitral Tribunal and the annexure to the application contained a schedule indicating the disclosures which were sought. The order of the first Arbitral Tribunal notes the submission of ONGC that the applications for discovery and inspection must be decided first and it is only on the completion of the process that JDIL s challenge to jurisdiction under Section 16 could be addressed. The first Arbitral Tribunal deferred a decision on the two applications until the issue of jurisdiction was decided. The net result is that the applications for discovery and inspection which were crucial to ONGC s claim that there existed functional, financial and economic unity between DEPL and JDIL remained to be decided before the application under Section 16 was taken up. There is merit in the submission which was been urged on behalf of the ONGC that the application for discovery and inspection had to be decided before the plea of jurisdiction was adjudicated upon. The failure of the first Arbitral Tribunal to hear the application for discovery and inspection goes to the root of its interim award dated 27 October 2010 holding an absence of jurisdiction qua JDIL. The interim award of the Arbitral Tribunal in the first proceeding, dated 27 July 2010 refers to the documents which were produced by ONGC and to the submission that neither DEPL nor JDIL had led any evidence to controvert the documentary and oral evidence adduced by ONGC. The first Arbitral Tribunal upheld the plea of jurisdiction that JDIL is neither a party to the contract nor had it submitted a bid to ONGC which resulted in the formation of the contract. The Tribunal held that the agreement was only between ONGC and DEPL and that in terms of Section 7, an agreement to arbitrate is between the parties to the agreement. While observing that the arbitration agreement was only between DEPL and ONGC, the Tribunal held that neither was there an arbitration agreement between ONGC and JDIL nor was JDIL a signatory to the agreement between ONGC and DEPL. After noting the documents which were relied upon by ONGC, the Tribunal held that there was no tickle of evidence to indicate that JDIL , a distinct incorporated legal entity, ever played any role to find itself in the contract between JDIL and ONGC. The interim award of the first Arbitral Tribunal stands vitiated because of: (i) The failure of the arbitral tribunal to decide upon the application for discovery and inspection filed by ONGC; (ii) The failure of the arbitral tribunal to determine the legal foundation for the application of the group of companies doctrine; and (iii) The decision of the arbitral tribunal that it would decide upon the applications filed by ONGC only after the plea of jurisdiction was disposed of. There was a fundamental failure of the first Arbitral Tribunal to address the plea raised by ONGC for attracting the group of companies doctrine. Moreover, by leaving the application filed by ONGC for discovery and inspection unresolved, the first Arbitral Tribunal failed to allow evidence which may have had a bearing on the issue of whether JDIL could be considered to have an economic unity with DEPL and could hence be made a party to the arbitral proceedings - interim award of the Arbitral Tribunal on the plea raised by JDIL under Section 16 has to be set aside - Appeal allowed.
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2022 (4) TMI 1349
Dishonor of Cheque - legally enforceable debt or not - presumption of liability against the respondent-accused - Rebuttal of presumption or not - acquittal of the accused - Section 118/139 of the Negotiable Instruments Act, 1881 - HELD THAT:- The presumption enshrined under Section 139 of the Negotiable Instruments Act is not absolute and is rather a rebuttable presumption. The accused would be discharged of the presumption, the moment an accused raises reasonable suspicion with respect to the due execution of the cheque. It is not incumbent upon an accused to lead evidence and even subjecting the complainant to cross-examination on such aspects can be taken as sufficient grounds to shift the burden upon the complainant to establish that the debt in question was duly advanced to the drawer of the cheque. Once such suspicion is created by an accused, the burden of proof would thereafter shift upon the complainant to prove that the cheque had been executed in discharge of a pre-existing liability/legally enforceable debt. Existence of legally enforceable debt is a pre-requisite for issuance of a cheque. It is a settled proposition of law that presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from a presumption of fact, such a presumption is a rebuttable presumption and the drawer of the cheque may dispel the same - The aforesaid position in law stands settled in the judgment of the Hon'ble Supreme Court in the matter of HITEN P. DALAL VERSUS BRATINDRANATH BANERJEE [ 2001 (7) TMI 1172 - SUPREME COURT] . The law is thus well settled that in order to rebut the statutory presumption, an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. The Court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible, nor contemplated - To disprove the presumption, an accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or that their non-existence was so probable that a prudent man, would under the circumstances of the case, act upon the plea that they did not exist. It is evident from a reading of the discrepancies noticed by the Trial Court and the deficiencies culled out in the preceding, as well as the law settled by the Hon ble Supreme Court in relation to the guidelines while examining an appeal against an order of acquittal that the presumption under Section 139 of the Negotiable Instruments Act is a rebuttable presumption, it is found that there is no illegality, infirmity, perversity or miscarriage of justice in the judgment passed by the Trial Court. It cannot be held that the opinion formed by the Trial Court was incomprehensible or was unsustainable upon the reading and interpretation of the evidence or that the conclusions drawn by the Trial Court from a reading of the said evidence were not tenable. Appeal dismissed.
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2022 (4) TMI 1348
Condonation of delay of 2575 days in filing the second appeal - HELD THAT:- Question may arise the purpose and object of the law of limitation as refusal of condonation of delay sometime causes denial of rights to the litigants. However, there is a definite purpose for prescription of period of limitation for institution of litigations/appeals. Different time limits are prescribed for different kinds of litigations. However, there is a strong reason for such prescription of limitation in various statutes. The litigants are always expected to be vigilant over their rights and liabilities, duties and responsibilities - the rights of citizen and corresponding duty towards the other fellow citizen are to be balanced in such a manner without causing any prejudice, which resulted in prescription of law of limitation. Exercise of right by a citizen cannot infringe the right of other fellow citizen. Rights and duties are corresponding and therefore, the law requires a limitation for institution of litigations/appeals. The principles of reasonableness would be adopted with reference to the nature of litigations to be instituted. Various time limits are prescribed for civil litigations, appeals and other varieties of litigations, considering various factors and by applying the doctrine of reasonableness. Thus, the law of limitation became substantive and to be followed scrupulously in all circumstances and on exceptional cases, the delay is to be condoned, if the reasons are genuine and acceptable. Whenever the condone delay petitions are taken into consideration, there is a frequent representation from the parties that the delay is to be condoned by imposing heavy costs or otherwise? - HELD THAT:- This Court is of the humble opinion that by imposing heavy costs, long delay cannot be condoned. In the event of condoning enormous delay by imposing costs, undoubtedly, the legal principles are not only compromised, but 'justice' is not done to the parties. The Courts are not supposed to compromise the legal principles under the guise of imposing heavy costs. Costs are imposed on certain exceptional circumstances, when the Courts form an opinion that lapses are minor and on account of such minor lapses, the parties should not suffer or their rights cannot be denied. However, costs cannot be in terms with reference to the number of days of delay. It is not an arithmetic principle, where long delay is to be condoned with heavy costs and meagre delay is to be condoned with meagre costs. Once the delay petition is filed, it is to be dealt with independently by considering the reasons furnished by the petitioner. If the reasons are candid and convincing, then the petitions are to be considered. However, condonation of delay cannot be allowed merely based on the merits in the main appeal. Of course, it is not a trite law to follow. However, in certain circumstances, the Courts can take a lenient view if the reasons are genuine. If the delay is about three months or upto five or six months, the Courts may take a lenient view, but not in respect of longer delay. This Court is not inclined to condone the delay of 2575 days in filing the appeal - Petition dismissed.
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